An Economic Update

By: Will VanOrder

New Mexico is currently ranked 47 on Forbes’ list for best states for business, and right now it is extremely evident why that is. The state is struggling financially, and for several reasons. Oil and gas prices drive a large portion of public funding for the state of New Mexico, and things are not looking good. Several news sources have recently announced that New Mexico is in the middle of overcoming a $325 million deficit for the 2016-2017 fiscal year, which could potentially worsen. Things have been rocky for New Mexico State University, but the state of New Mexico is in a downright bleak place.

According to a report by the New Mexico Tribune, “The projected $325 million deficit for the current year’s budget comes  in part because state revenue projections from January were off by more than half a billion dollars.” Budgets were originally based on the circumstances of increased prices for oil/gas, which have so far heavily disappointed the state. According to Senate Finance Committee chairman John Arthur Smith, the state is relying heavily on tobacco settlement money from previous years to help accommodate for the severe lack of accuracy in budgeting by New Mexico.

Not only is the state facing budget cuts, but they are also struggling to collect close to $200 million in unpaid taxes from insurance companies across the state, which accounts for roughly 25% of all premium taxes paid to the state by companies. While these funds can still be collected in the future, these numbers have been growing over the past five years according to the Las Cruces Sun-News. Several reports from different news sources paint a picture of a convoluted process to recover these funds from the insurance companies, with Insurance Superintendent John Frachini going as far as to confirm that his fraud bureau is still in the midst of an investigation which began in Dec. of last year (Las Cruces Sun-News).

How does this affect students at New Mexico State University? Any time the state faces a lack of funding, public education can expect to be dealt a lower budget than they would like. NMSU is already working with heavy budget cuts, and with these latest fiscal reports there is enough evidence to predict more cuts will be coming with the future. If New Mexico is forced to follow through with their current plans, then the State’s reserves would be cut to only two percent, according to NM Political Report.

One proposed solution is to implement a rotation-style funding, where older projects with stagnation lose funding in favor of newer projects with higher potentials within the state. These cuts would be determined “project by project” according to Legislative Finance Committee Director David Abbey. Ideally, these project funding initiatives would be able to cover close to $100 million of the shortcoming.

The shining city on a hill for New Mexico right now is that FaceBook recently announced their intentions to build a database center in Los Lunas in the year 2018. While this is still far off in the distance, its confirmation could help to spur local economic growth in the area. It will be FaceBook’s fifth data center in the United States, offering New Mexico the unique opportunity to place itself at the forefront of a global company. According to the Albuquerque Journal, “Los Lunas has promised Facebook up to $30 billion in industrial revenue bonds, a gross receipts tax reimbursement of up to $1.6 million and $10 million in Local Development Act funding. The state also will offer the company access to $3 million in Job Training Incentive Program money.” The project is expected to produce anywhere from 300-500 jobs for the construction phase, and 50 fulltime positions. This will be the largest capital investment New Mexico has participated in since the turn of the millennium. Governor Susana Martinez is hoping that this will help stimulate the economic development of New Mexico, something that is evidently needed.

Author: nmsuroundup

The student voice of New Mexico State University since 1907.

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