New Mexico Revenue Forecast for FY 25: About $659 Million in “New Money”
House an Senate Members of the New Mexico Legislative Finance Committee are conducting their meetings this week at the Inn of the Mountain Gods in Mescalero, New Mexico. – Screenshot from Legislative Webcast.
While not as much as has been generated the last few years, New Mexico will likely see $659.6 million in so-called “new money” available for legislators and Governor Michelle Lujan Grisham to craft a budget for the fiscal year beginning in July 2025. So indicates a report presented to the members of the Legislative Finance Committee this morning by the New Mexico the Consensus Revenue Estimating Group (CREG).
The CREG, which is comprised of several economists and finance experts working for the Legislative Finance Committee (LFC), the Department of Finance and Administration (DFA), the Taxation and Revenue Department (TRD), and the Department of Transportation (DOT), will look at these numbers again sometime between Thanksgiving and mid-December and update budget makers as they work on the state government’s budget for FY 2026.
According to the report, New Mexico’s revenues growth was at record pace for several years, “propped up by booming oil and gas, durable consumer spending, inflation, strong demand for employment, and robust wage growth.”
CREG economists reported those factors attributed to a 20 percent growth in revenue for FY22 and FY23.
However, the report notes, “the pace of revenue growth has slowed in FY24, though still double the average growth rate of the previous two decades.”
The Candle will be reporting on budget needs and available revenue in September.
We have included an electronic copy of the CREG report below, which readers can download and/or scroll through.
But first, here are a few out-takes from the report:
“The economic forecast has improved with respect to slowing inflation and an easing interest rate environment. Economic growth has stayed elevated but is expected to slow with wages and employment growth returning to pre-pandemic trends. Further, moderate oil prices and slowing oil production growth contribute to a flattening of the revenue forecast...
“The estimates used in the consensus revenue forecast expect the New Mexico economy will grow at a slower rate than the U.S. economy throughout the forecast period. Like the national outlook, the state’s economic outlook is tied to inflation, monetary policy, and other broader economic mechanisms.“
The following is a section related to the oil and gas production in the state and its impact on revenues:
“Over the past several years, New Mexico’s oil and natural gas industry has experienced significant growth, nearly quintupling since 2017 (381 percent growth). This rapid acceleration of production has skyrocketed New Mexico to the second-largest oil producer in the United States, behind Texas. In the last year, New Mexico production drove nearly 50 percent of the oil production growth in the United States ...
“Oil production is already experiencing a slowdown, even though moderate growth is expected throughout the forecast. The state produced an estimated 705 million barrels of oil in FY24, a 7.2 percent increase from total FY23 production but a significant slowdown from 30 percent growth in FY22 and 23.7 percent in FY23.
“The consensus estimate expects oil production will grow 4.3 percent in FY25 from FY24 levels, resulting in 735 million barrels of New Mexico-produced oil. Growth continues throughout the forecast, but moderates to an average year-over-year growth rate of 1.5 percent from FY27 through FY29 …”