SANTA FE, N.M. — New Mexico’s initiatives to save and invest a portion of its financial gains from local oil production are yielding positive results, as state income from investments has now exceeded personal income tax collections for the first time, according to a newly released forecast.
The general fund revenue, generated from the state’s two large permanent funds and interest from treasury accounts, is projected to reach $2.1 billion for the fiscal year spanning from July 2024 to June 2025, thereby surpassing the $2 billion expected from personal income tax revenues.
These investment proceeds are strategically intended to guarantee the sustainability of essential public programs, which include childcare subsidies and tuition-free education at colleges and trade schools, particularly in the event that oil revenues decline amid a potential shift towards alternative energy sources.
Concurrently, state legislators have revised personal income tax brackets this year, leading to lower taxes in New Mexico, the second-largest oil-producing state in the nation, following Texas.
“We’re not a poor state anymore,” remarked Democratic state Senator George Muñoz of Gallup. “We have initiatives that benefit us all — free education, childcare, and lower taxes for families and children. This progress results from our efforts to prepare for a better future.”
These remarks were made during a legislative panel meeting on Monday, where economists from various government agencies unveiled an income forecast for the upcoming year. These estimates will serve as a foundational basis for budget discussions when the Democratic-controlled Legislature reconvenes in January.
State revenue, which is closely tied to oil production levels in New Mexico, is continuing to rise, albeit at a decelerating rate, as lawmakers contemplate new funding for social programs aimed at addressing issues like crime and homelessness.
According to economists, the state is on track to achieve a record high of $13.6 billion in general fund income during the fiscal year spanning from July 2025 to June 2026, marking a 2.6% increase from the current fiscal year.
This year’s increase in revenue allows for an extra $892 million in state spending in the upcoming fiscal year, equating to a 7% rise, as indicated by the state’s financial accountability office. Furthermore, projections suggest that state income will surpass existing fundamental annual spending commitments by $3.4 billion.
Legislators in New Mexico are also advocating for the establishment of new savings accounts.
One significant proposal aims to allocate up to $1 billion into a trust, aimed at funding mental health and addiction treatment services, addressing rising concerns around crime and homelessness. Additionally, lawmakers are expected to revisit a previously stalled initiative to create a trust dedicated to enhancing Native American education, which could facilitate greater instruction in Indigenous languages.