New Mexico is enjoying enormous revenue from an oil boom. But financial experts are warning lawmakers to prepare for the ‘last bust.’ – By Dan McKay (Albuquerque Journal) / Dec 19,2022
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SANTA FE – Consultants with a national finance firm say that the once-in-a-generation oil boom now producing a budget windfall for New Mexico should be harnessed to restructure the state’s complex tax system and prepare for an eventual decline in oil production.
In a presentation to legislators Monday, members of PFM Group Consulting warned that New Mexico’s over-reliance on one industry for government revenue creates long-term risk to the state budget, especially if government spending grows alongside a source of income that may dry up eventually.
They recommended a menu of potential changes to the tax code, efforts to diversify the economy and investments in communities that have missed out on economic growth.
More broadly, the PFM consultants encouraged lawmakers to think long term, and recognize the possibility of reaching peak oil and gas production within a decade without a replacement revenue source.
