SANTA FE – Forecasts for state government income have increased slightly as New Mexico legislators prepare to meet in January to craft a general fund budget.
The state's top taxation official and the lead economist for the Legislature told a panel of lawmakers Monday that state income is likely to exceed already robust expectations by at least $28 million for the fiscal year starting July 2022.
That adds slightly to a forecasted $1.4 billion surplus in state general fund income over current annual spending obligations.
The estimate hold implications for public school finances, health care subsidies, public worker salaries, public safety and more.
“The good news is that we are tracking closer to the upside. ... Employment, wages and salaries, those things are recovering," said Ismael Torres, chief economist for the Legislature's budget and accountability office.
State income is expected to increase by 9% to $8.84 billion for the fiscal year starting July 1, 2022, from $8.1 billion for the current fiscal year.
Taxation and Revenue Secretary Stephanie Schardin Clarke said the economic recovery has been limited for low-income and less-educated workers. She emphasized the continued importance of financial safety-net programs.
“Lower wage workers who probably had the least amount of saving going into the pandemic have still experienced about a 5% loss in wages,” she said.
Progressive changes to the state tax code that favor low-income households are taking a bite out of the state general fund budget for the first time.
Early this year, lawmakers expanded the state's working families tax credit and the low-income comprehensive tax rebate. Initial estimates showed the state would forgo about $74 million in annual income as a result.