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If it was easy to measure the impact of state government, we would just look up the planned spending for the budget year starting July 1 (FY 15) and say, through our state government, we spend $2,954 for each New Mexican. But we would overlook the $413 per capita spent on roads. The nearly $396 million appropriated for capital outlay (buildings and things) is separate.
The per capita figures come from totals discussed in the Legislative Finance Committee’s “2014 Post-Session Review” and dividing by our July 1, 2013, estimated population of 2,085,287. Planned spending means the $6.16 billion of what is called “recurring revenue” appropriated through the general fund, the state’s main pot of money for operations. The road spending is via road fund.
The state does not plan to spend all its income; estimated “total recurring revenue” will be $6.18 billion with the difference going to reserves, which is good because always there is the question of how much will appear. All the numbers including the current budget year (FY 14, which ends June 30) are estimates; estimates change.
Estimated employment growth has already changed as New Mexico has solidified the status as the worst state economy. The estimates for FY 14 were for growth. Moody’s Analytics estimated 1 percent growth. The more optimistic Bureau of Business and Economic Research at the University of New Mexico figured 1.2 percent.
Those positive estimates have become job losses. The problem for our government financial review is that the employment estimates are a big part of creating the state revenue estimates; people work, pay taxes and various governments get money.
The simplistic analysis here is that fewer people working at some point turns into less money for governments. Certainly, barring something remarkable, the FY 15 estimated growth isn’t going to happen. Those estimates are 1.6 percent from BBER and 1.8 percent from Moody’s.
A comment from the Legislative Council Service “Highlights 2014” report, discussed in last week’s column, brings another perspective. “…only Nevada has more workers who are involuntarily employed part-time or are unemployed but seeking employment.”
Before moving next week to summarizing the LFC’s report about financial aspects of the Legislature, a few words about income to state government are appropriate. Income mostly means taxes from us. Neither the LFC nor the Legislative Council said much about income. The following numbers are from the Department of Finance and Administration.
An even three-fifths (60 percent) of the FY 15 estimated general fund revenue will come from two main sources — sales taxes and income taxes. The estimates were done last December. Sales taxes will provide 35 percent ($2,145.1 billion) of the $6.2 billion expected to hit the general fund through July 1, 2015.
The gross receipts tax provides nearly all the sales tax revenue. An eight percent rate is no longer outlandish, much less rare. Ruidoso has the state’s highest rate, 8.625 percent.
Income taxes will bring in a quarter of the general fund or $1.57 billion. Personal income taxes account for 82 percent of the income taxes with the rest from corporations.
Interest from the permanent funds is the only other income category, at 11 percent of the total, with a double-digit general fund impact. For the Land Grant Permanent Fund, the largest of the three funds, the money comes from royalties and interest from investing money already in the fund. The remaining large categories of state income are rents and royalties, especially from federal mineral leasing, 9 percent; selective sales taxes and severance taxes, both eight percent.
A $6 billion enterprise, that’s our state government. The money has to come from somewhere.