In the grand scheme of things I think the budget fight in Santa Fe during the legislature will be pretty much blown out of proportion by everyone. Usually what happens is that it looks like major meltdowns are occurring when in fact most of the fighting is over one or one and a half percent of the budget. It might be a little worse than that this year, but we really are in better shape than most states.
Oil prices are rising again and will continue to do so over the long run. That is good for New Mexico for a while, but what the legislature needs to do is figure out how to permanently replace those oil and gas revenues in the future. Just like the live stock and mining industry, the oil and gas money will eventually, and maybe even quickly, shrink to a insignificant portion of budget revenues. That will happen as renewables come on board.
Thank our founding fathers for the concept of our Permanent Funds. They have been battered by the economy lately, but it is still a great revenue source for the future. The total permanent funds for the state has been up around 16 billion at a high point. Now they are just over 11 billion. Ouch.
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