NewMexico’s budget is experiencing major upheaval from the recent oil market crash and the response to COVID-19. State revenues are plummeting, and many small businesses and their employees are facing untold consequences as NewMexico is on the brink of a major economic and fiscal crisis.
House Republican Leadership, in a letter delivered today, are strongly urging the Governor to take extraordinary action to reconvene the Legislature to ensure the current and next year’s budgets are balanced and to provide relief to the families and businesses in NewMexico that are being negatively impacted by the efforts to contain the spread of COVID-19. With oil and gas revenues accounting for 45 percent of current state revenues, the dramatic decline in oil prices could result in a budget shortfall of $500 million to $1 billion. For every dollar the price of oil drops in the markets, NewMexico revenues are reduced on average by $22 million. Oil prices have been hovering around $22 per barrel in recent days, which is $30 per barrel lower than the original price per barrel projections the Legislature used in building NewMexico’s record-breaking operating budget in February.
The House Republican Leadership is asking the Governor to take immediate action to quickly and proactively produce for New Mexicans a balanced budget and assist those most affected by restrictions being placed on NewMexico’s economic activities by calling a Special Legislative session:
Convene the revenue consensus group of various executive and legislative branch economists to develop updated state revenue estimates for both Fiscal Years 2020 and 2021.
Establish a working group of DFA staff, LFC staff, and legislative leaders to explore specific areas within the state budget where budget savings and fund sweeps can be made quickly for the current fiscal year.
Develop a new budget plan for Fiscal Year 2021 which is based on limiting state spending to meet those agreed upon new revenue estimates.
Due to the uncertainty whether a recession will occur this year and not knowing how long oil prices will stay depressed, commit to preserving state reserves at adequate levels in order to keep these reserves available for a potentially longer-term budget crisis that may extend beyond Fiscal Year 2021. This will also help to protect our bond rating going forward
Closely monitor the actions of the President and Congress in enacting a likely economic stimulus package and develop a comprehensive plan which blends both state and federal fiscal actions to ensure NewMexico’s immediate economic problems are mitigated as best as possible.
Consult with small business leaders across the state to determine the current economic challenges these businesses are experiencing and develop a detailed proposal to provide needed financial assistance to ensure these employers can resume their normal activity once the COVID-19 crisis has passed.
House Republican Leadership suggests the following budget considerations to protect the future for NewMexico:
Holding spending to 2020 levels until new revenue estimates can be established, at which time we can budget spending to match these new revenues.
Roll back new funds and programs that didn’t exist prior to the 2020 budget session before considering cuts to programs that New Mexican’s currently rely on.
Match the federal government’s accommodations to allow tax filers up to ninety days to pay their tax bills without penalty or interest.
