NEW MEXICO (KRQE) – A billion-dollar state budget shortfall. A key state lawmaker says that’s how much the coronavirus crisis could cost New Mexico. Sen. John Arthur Smith says it could take up to two years for the state’s economy to bounce back.
“Prior to COVID, New Mexico was at the precipice of really booming,” says Sec. Alicia Keyes of the New Mexico Economic Development Dept. Those positive projections the state saw before the coronavirus outbreak are gone now. As lawmakers fear what the virus will do to the state’s economy. “I believe the magnitude of the problem is about $1.5 billion,” said Smith.
Smith says as of now, he predicts the state’s $7.6 billion budget will take a $1.5 billion hit from lost gross receipts tax revenue and plummeting oil prices. 39% of the state budget relies on the oil and gas industry. “You’re looking at close to $800 million loss on oil alone,” Smith says.
Smith believes it could take up two years to recover. “We still don’t know what the bottom is, that is somewhat of a guess but it could spiral even larger,” Smith says.
Keyes says the coronavirus has stopped businesses from relocating to New Mexico. “We had very interesting technology, space, film industry, television, hemp companies, renewable energy companies that wanted to come here,” Keyes said.
On the bright side, she says that interest isn’t completely gone. “The amount of people and the amount of companies wanting to come to New Mexico hasn’t waned yet,” Keyes says.
If the production war between OPEC and Russia stops, that could also push up crude oil prices and help. The governor has already said she will call a special session in the coming months.
Smith says he expects the state to dip heavily into reserves and ask for significant federal financial help. He also tells us if that’s not enough, they may have to re-evaluate spending and start cutting.
