For the first time in two years, state lawmakers will be heading into a session with a small cushion of new money that can be used to increase reserves or restore some spending cuts to government programs, including public education.
The state’s consensus revenue estimate, outlined Monday for the Legislative Finance Committee, projects recurring general fund revenue to hit $6.1 billion this fiscal year. That is about $150 million higher than just four months ago.
Lawmakers were also told that when they convene Jan. 16 to draft a spending plan for 2019 there will be almost $200 million in so-called “new money” – the amount above what it takes to pay for all current employees and services.
A rebound in the energy markets, coupled with a stronger construction and retail sector, is behind the better outlook. The legislative staff foresees 3 percent or better revenue growth for the next several years.
For the past two years, Gov. Susana Martinez and lawmakers have faced budget deficits and a stagnant economy, factors that led to the depletion of state reserves for day-to-day services and spending cuts throughout state agencies. State reserves stood at over $700 million before dropping to zero in the midst of a fiscal crisis that led to unconstitutional deficits.
The fiscal crunch also led Moody’s Investors Service to lower the state bond rating, which has increased the cost of borrowing for major construction projects. Behind the spiral were falling crude oil prices that are vital to the state economy. Oil dropped below $30 a barrel but has climbed to the mid $50s.
“It’s really great to be here today to present some really good news,” said Duffy Rodríguez, Cabinet secretary for the Department of Finance and Administration.
The state is on track to close out the budget year on June 30 with reserves at 9 percent, or about $550 million. It would need another $63 million to reach the state’s goal of 10 percent.
Contact Bruce Krasnow at email@example.com.