SANTA FE — State economists are predicting a rebound in New Mexico state government income for the fiscal year that starts in July 2021, on top of a multibillion-dollar financial reserves, as legislators draft a new budget amid a resurgent COVID-19 pandemic.
The forecast on Tuesday leaves New Mexico well positioned to maintain funding for essential services in public education, public safety, health care and more.
Economists for the Legislature and three state agencies are forecasting an increase in general fund revenues of $163 million, or 2.3%, over current annual spending obligations.
The state is likely to finish the fiscal year in July with $2.4 billion in financial reserves — equivalent to about one-third of annual general fund spending.
Still, economists warn of uncertainty linked to the presidential transition, possible new federal relief and the path of the virus.
A new round federal stimulus could bolster spending with direct aid for households — and undermine incentives for unemployed people to return to work, the economists for the Legislature’s budget and accountability office noted.
“Current economic conditions could result in a second or prolonged recession that reverses the most recent economic progress,” a Legislative Finance Committee analysis states.