Albuquerque Journal

N.M.'s Oil, Gas Windfall Dwindles
By Barry Massey, Associated Press

SANTA FE — New Mexico's projected revenue windfall has dwindled to about $225 million because of falling oil and natural gas prices, and Gov. Bill Richardson said Tuesday he'll scale back his tax rebate and other economic assistance proposals for a special session later this week.
   
The governor made his announcement after a new revenue forecast was released, which showed that the projected revenue windfall had declined since last month from almost $400 million.
   
The latest revenue projections underscored the worries voiced recently by some in the Legislature over whether the state should spend nearly $300 million of the one-time surplus money for a tax rebate, other economic assistance and highway financing as originally proposed by Richardson.
   
The governor said he's moving ahead with plans for a special session, which is to start on Friday, but he will present lawmakers with a revised package of economic assistance measures.
   
"The bottom line is the state still expects $225 million in extra money — money that should go back to New Mexico families who are struggling to make ends meet," Richardson said in a statement. "I am confident we can put money in people's pockets in a fiscally responsible way."
   
Last month, revenue collections were projected to be almost $400 million higher than anticipated in the current budget year. That was mostly because of money New Mexico collects from taxes and royalties on the production of oil and natural gas. But prices have dropped sharply since last month's revenue estimates, which are developed by administration and legislative economists.
   
Richardson had proposed using the windfall for most of his spending initiatives during the special session, including a $163 million one-time tax rebate that would have averaged slightly more than $200 for each taxpayer.
   
A legislative leader on budget issues, Sen. John Arthur Smith, a Deming Democrat, said he was concerned about the declining revenue outlook and that New Mexico was relying on volatile oil and natural gas revenues to finance government operations.
   
"They're soft numbers to begin with, and those are not numbers I'd like to bet the back 40 on, and the future of the state on," said Smith, the chairman of the Legislative Finance Committee and the Senate panel that handles tax and budget matters.
   
However, Smith said he expected continued legislative support for a one-time tax rebate.
   
"Rebate is about the only kite that will fly right now," said Smith.