'We don't know if it's a cremation or an open casket. We had presenters last week, and when we asked about oil and gas prices, they answered, 'God only knows.' - Senate Finance Committee Chairman John Arthur Smith
BY DENNIS DOMRZALSKI
The wave of depressed oil and natural gas prices crashed into New Mexico government big time this week when state lawmakers were told that there will be only $30 million in new money to spend in the budget for the coming fiscal year.
That estimate of new revenue is down from the $293 million that was forecast in August, and from $232 million that was predicted in December. It means that legislators might have to cut budgets of some departments, dip into reserves or use unspent money from the current budget to pay for increases for things like education and Medicaid. The new revenue represents a 0.5 percent increase over this year’s revenue.
The new revenue forecast was presented to the Senate Finance Committee Wednesday afternoon and caused committee chairman John Arthur Smith, a Democrat from Deming, to exclaim, “The services will start. We don’t know if it’s a cremation or an open casket. We had presenters last week, and when we asked about oil and gas prices, they answered, ‘God only knows.’ We’re all in that boat. God only knows.”
The drop in oil prices has been big news in the state and has caused lawmakers the most worry, as most of the money the state gets from energy development and sales comes from oil. But the chief economist from the New Mexico Taxation and Revenue Department said that natural gas prices have been falling as well. The fall in prices has dramatically decreased gross receipts tax collections in Eddy and Lea counties, which are the heart of the state’s oil patch, and were a major reason for the reduced revenue forecast, the economist said, adding that collections from severance are expected to fall dramatically.
Through the first nine months of the yer, tax collections by New Mexico government were down by $65.3 million, or 1.5 percent from the same period the previous year, according to recent data from the U.S. Census Bureau. Severance tax collections—which come mostly from oil and gas production—were down 34 percent from the previous year.