According to revenue estimates released today by legislative and state economists, New Mexico can expect to have $1.2 billion in “new” revenue during the next budget year. This is revenue that exceeds current spending levels. The anticipated surge in revenue is largely attributed to recent increases in New Mexico oil production, which generates state revenues through taxes and royalties.
Projected state revenues are expected to be more than $7.5 billion for the next budget year that starts in July 2019, which represents an 18 percent increase from current spending levels. This new revenue could lead to record-high state spending, providing increased funding for public schools and universities, health care, infrastructure, and other vital state programs. The increase in revenue will also allow the legislature to set aside approximately $177 million next year into a “rainy-day fund” to be help guard against future budget crunches.
New Mexico is now the third largest oil producing state in the country, second behind only Texas and North Dakota. In 2017, New Mexico oil production hit a record high of 171 million barrels with annual oil production more than doubling since 2012. There are currently 104 active drilling rigs in the state, up from just 62 rigs last year. More than $13 billion was invested in New Mexico by the oil and gas industry in 2017.
This new revenue forecast comes the heels of an announcement in June by the state Land Office that it took in record-setting revenue from oil and gas lease sales. For the fiscal year-to-date, state leasing has generated nearly $107 million, breaking the previous record of $102 million set six years ago.