The state of New Mexico announced the annual state general fund income would increase to $13 billion for the fiscal year that runs from July 2024-June 2025. That is a surplus of $3.48 billion in “new money,” according to the forecast from lead economists at four state agencies, including the Legislature’s budget and accountability office.

The estimates were presented to a panel of leading legislators in August, which set the stage for budget negotiations when the Legislature meets in January 2024.

“The robust general fund proves that what we are doing in New Mexico’s economy is working,” Gov. Michelle Lujan Grisham said in a release. “As we see another record year of projected revenue, we will continue building a solid financial future for our state through meaningful and long-lasting investments, always with an eye on stewardship of public dollars and fiscal responsibility.”

“We have a huge reserve; we have new revenues. So how do we responsibly react to that?” Lente said. “Those revenues by and large in New Mexico are driven by oil and gas, and I think that comes as no surprise to any of us in this room, that oil and gas accounted for more than two-thirds of the revenue growth, or 68% of that revenue growth, earlier this year.”

Lente said that while the surplus is obviously good news, it may be setting New Mexico up for a tough financial situation as the world transitions to renewable energy.

“The state could enter perpetual budget deficits by the end of the decade if the state’s oil and tax revenues continue to rely on simply oil and gas revenue,” Lente said. “Oil-relying revenues, which in many cases, are very volatile. We cannot necessarily rely on those for the extended future.

“The Legislative Finance Committee and other committees plan to talk about the revenue surplus. How long can it last? The sustainability of higher spending and how to make an opportunity like this count, and not be squandered away. That means talking about our investments that can move the needle to improve the outlook for long term. Does that mean we create more robust business plans? Does it mean that we continue to invest in communities infrastructure? Does it mean that we continue to create opportunities for recurring spending with the hopefulness that it’s gonna last but knowing that if something happens, we’re gonna have to claw back money and cut programs? What does that look like? So those are the types of discussions that are ongoing right now in the Legislative Finance Committee.”