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While we doubt that oil and gas prices will collapse and fall much below where they are today, they are falling and little and each drop means just a little less for the state.
And these falling gas and oil prices have caused members of the Legislature to worry that the state’s projected $400 million revenue windfall may be melting away like an ice cube on a hot summer day.
The Associated Press reported that the volatile energy prices are raising questions 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 proposed by Gov. Bill Richardson.
Recent energy price changes could translate into an annualized revenue drop for New Mexico between $200 million and $300 million, lawmakers say.
We have been warning for some time about the state spending windfalls as once you start spending, you want to continue. And if the revenues are no longer there, well, taxes go up.
Despite lawmakers’ concerns, Gov. Richardson remains optimistic about the state’s economic outlook and he’s not backing off his plan for a special session starting Aug. 15.