SANTA FE, N.M. (KRQE) – During the 2023 session, New Mexico’s lawmakers passed more than 200 bills. The new laws range from a limit on illegal straw purchases of firearms to laws clarifying what refrigerants are allowed in industrial equipment. But what is the net effect of all the new laws?
Financially, the total effect is a reduction in the amount of recurring revenue to the state, according to the Legislative Finance Committee (LFC). The committee – which helps lawmakers create the state budget – says that over the next three years, revenue to the state will decrease by almost $2.5 billion thanks to new laws put in place this year.
Recently, the state government of New Mexico has earned more than $10 billion in recurring revenue (i.e. revenue that isn’t just one-time income). But the newest round of new laws is expected to cut into some of that income.
Some of the decrease comes from the omnibus tax bill passed this year. Among other things, that bill includes an increased tax credit for children. The Legislative Finance Committee says this will reduce state revenues by about $102 million in fiscal year 2024.
Tax credits for the film industry will also have an impact, the LFC’s May 2023 newsletter notes. Those credits will reduce state revenue by $61 million starting in fiscal year 2025, the LFC estimates.
The LFC reports that new laws don’t pose an immediate concern to the state’s finances, despite eroding some income. But, if income from the oil and gas industry evaporates, or if income and gross receipts taxes experience a shock, the state could be in trouble, they report in their post-session review.
To help prepare for the long term, lawmakers passed Senate Bill 26. The bill is designed to effectively wean the state off of relying on funds from the oil and gas industry. It has the power to divert some funds from oil and gas away from the general fund.