The economic situation in New Mexico is dire because state government's budget relies for about a third of its revenues from oil and gas.
GDP Falls For Third Consecutive Quarter
Oil And Gas Has Biggest Loss
More Problems For State’s Budget
BY DENNIS DOMRZALSKI
New Mexico’s economy tanked for the third consecutive quarter in the three months that ended June 30 as the depressed oil and gas industry continued to drag down the state’s economy.
The state’s gross domestic product fell by 0.2 percent during the second quarter, making it one of eight states that saw GDP decreases, according to the U.S. Bureau of Economic Analysis. It was the third consecutive quarter in which New Mexico had negative GDP growth.
Other energy-dependent states, including North Dakota, Wyoming, Texas and Oklahoma, also saw their GDPs fall during the quarter.
In New Mexico, seven of 21 industry sectors suffered GDP declines, while two showed no change over the first quarter. The mining sector, which includes the oil and gas industry, suffered the biggest GDP loss in the state. It was followed by construction, which also had substantial negative growth.
The economic situation in New Mexico is dire because state government’s budget relies for about a third of its revenues from oil and gas. On Dec. 5, the state’s Legislative Finance Committee reported that state is facing an estimated $69 million shortfall for the current fiscal year, and that revenues for next year are projected to be $300 million below the original spending levels for this year.
State lawmakers have been dealing with budget deficits since oil and gas revenues began falling in 2014. During a special legislative session earlier this year, they instituted budget cuts and reduced capital outlay spending to come up with $327.8 million in savings for the current fiscal year.
In announcing the latest projected budget shortfalls, LFC Chairman Sen. John Arthur Smith, D-Deming, said the state needs money now and that the Legislature will have a “ton of work” to do between now and the end of the upcoming 60-day legislative session.
Other lawmakers said it might be time for the state to raise more money, possibly through a tax on internet sales.
With the exception of Texas and Oklahoma, New Mexico’s surrounding states saw relatively strong GDP growth during the second quarter. Utah’s economy grew by 3.3 percent, Arizona’s by 2.7 percent, Nevada’s by 2.3 percent and Colorado’s by 1.1 percent.