New Mexico finance officials say the blow to the state’s economy caused by the novel coronavirus hasn’t been quite as bad as expected so far, which could lead state revenues to be higher than anticipated for the past fiscal year.

Still, economic recovery remains a distant goal, and officials are bracing for more cuts to state agencies during what is expected to be a difficult 2021 legislative session.

Gross receipts tax declined less than anticipated in April and May as ongoing projects propped up the construction industry, online sales gave a boost to retail sectors and federal stimulus payments likely helped consumer spending, a leading state economist told state lawmakers Friday.

Additionally, New Mexico’s employment rate didn’t plunge quite as much as officials had feared in the second quarter, and a rebound in global crude oil prices helped push up state oil revenue, said Dawn Iglesias, head economist for the Legislative Finance Committee.

As a result, state revenue for fiscal year 2020, which ended in June, could be between $315 million and $360 million higher than economists forecast two months ago, said Debbie Romero, acting secretary for the Department of Finance and Administration.

“The revenue is actually tracking a little bit better than we anticipated,” Romero told members of the legislative Revenue Stabilization and Tax Policy Committee during a hearing Friday. “So that’s promising.”

Total gross receipts revenue declined 6 percent in April and 1.5 percent in May compared with the previous year as sectors such as leisure and hospitality services, oil and gas, and manufacturing plummeted amid the pandemic, Iglesias said at the hearing.

Yet gross receipts from the construction, retail, trade and transportation industries actually grew in April.

Meanwhile, oil prices have reached higher levels than state economists had forecast in June, with futures markets indicating West Texas Intermediate crude will be priced at over $41 per barrel at the end of 2020.

During the hearing, state Senate Majority Leader Peter Wirth, D-Santa Fe, called the fiscal year 2020 figures “a glimmer of positive news in otherwise incredibly challenging times.”

That news does not revert the overall trend of a huge economic downturn, officials said.

The administration of Gov. Michelle Lujan Grisham is instructing most state agencies to reduce their budgets by another 5 percent next year after they already suffered cuts of between 1 percent and 4 percent during June’s special session, Romero said.



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