The New Mexico economy is on a roll. We have the top-performing economy in the country, and our unemployment rate is the lowest it has been in a decade. We’re also looking at the largest budget surplus in state history.
The state’s entire general fund budget was $6.3 billion for the current fiscal year, and the budget surplus for next year could reach $2 billion, according to recent projections. This could mean more than 30 percent additional funding for priorities like schools, roads and public safety. This is a once-in-a-generation opportunity to boost the entire New Mexico economy that we simply cannot afford to squander.
While much of this opportunity is attributable to oil and gas development, it’s not just about energy. Numerous industries are expanding their investments in New Mexico, and the revenues from oil and gas are creating a ripple effect that will benefit families throughout the state.
Per-year education spending for K-12 public schools has increased by $450 million statewide in the past eight years, with more money going to the classrooms and increased teacher pay. We have higher high school graduation rates than ever before. Oil and gas production has led the way in generating new revenues for education, even in areas far removed from the well pad. In Santa Fe County alone, oil and gas pumped more than $47.9 million into public schools in fiscal year 2017.
But there is still more work to be done. Reports have indicated that our state’s educational infrastructure needs improvement. And while Legislative Finance Committee analysts are wary of over-committing resources to recurring expenses, the additional revenues from energy are giving New Mexicans options in funding our schools that were unheard of just a few years ago.
Those options extend to health care, recreation, transportation, and many other sectors. If managed properly, our elected officials can leverage the surplus to attract new industries, encourage companies with an existing presence to grow their operations and continue to diversify New Mexico’s economy. The best news is — we already have some of the tools in place to do so.
The Local Economic Development Act matches state and local funds for private investment throughout the state. It’s an example of how a healthy energy sector is expanding growth opportunities across the board. LEDA helped bring Netflix to Albuquerque, Facebook’s $1 billion data center to Los Lunas, nearly 1,300 jobs with Stampede Meats in Doña Ana County and a Meow Wolf expansion to Santa Fe. In the last fiscal year, more than 2,600 jobs were created using LEDA. Revenues from oil and gas accounted for about $1.5 million in funding for this program.
Finally, infrastructure is a key long-term investment that will lay the groundwork for sustainable economic growth. Repairing and upgrading critical road infrastructure will help every economic sector flourish, be it energy, health care or agriculture. Quality and dependable infrastructure will be a welcome relief for many New Mexicans who commute to work.
With the help of New Mexico’s strong economic position, the Legislature and our new governor will have many options when they convene for the 2019 legislative session. And thanks to the growth of our energy sector, we have the ability to improve the lives of New Mexicans while keeping our state on the path to long-term economic prosperity.
Approximately one-third of our state general fund comes from oil and gas revenues. As New Mexico’s energy industry continues to expand, we can broaden the tax base to insulate the state from financial hardship previously caused by an individual sector downturn. Most importantly, we can continue to create more new job opportunities in new sectors for hardworking New Mexicans.