SANTA FE, N.M. (AP) — A positive forecast released Friday for state income in New Mexico provided reassurances for legislators who want to increase spending on public education in response to a court order and public concerns.
State economists reaffirmed predictions of a $1.1 billion general fund surplus for the coming fiscal year as oil production grows at a rapid pace.
However, the economists from three state agencies and the Legislature who wrote the forecast warned that the financial windfall could quickly evaporate because of volatility in world energy markets.
"The state's considerable dependence on direct and indirect oil and (natural) gas revenues means the forecast remains at risk of sudden oil price shocks," the forecast stated. "Revenues could come in $1.3 billion above or below projections depending on oil price changes and associated impacts on production and drilling activity."
The forecast was presented to a budget-writing committee at the midpoint of a 60-day annual legislative session and showed negligible changes from the previous projection in December.
The expected surplus for the fiscal year beginning July 1 represents a 17 percent increase in revenue.
Legislators are counting on that new money as they craft a state budget that boosts annual spending on public education by more than $400 million.
A district court judge has ordered the state to provide more resources to public schools after noting failures to provide adequate education to children from low-income and minority families.
State income linked to booming oil production in the southeast corner of the state has offset a potential slump in revenue from investment returns on multibillion-dollar state trusts and future taxes on sales and business services.
New Mexico is expected to finish this fiscal year on June 30 with $1.4 billion in excess revenue and the reaffirmed forecast calls for revenues to outpace spending obligations again during the next fiscal year.