As the economic and fiscal fallout of the COVID-19 pandemic continues to accumulate across the country and around the world, it appears more and more likely that the state legislature will have to hold a special session, whether held in person or as an unprecedented virtual session. The combination of an economic slowdown resulting from efforts to slow the spread of the coronavirus and a sharp, sudden drop in oil prices — partially the result of Saudi and Russian distribution changes — have resulted in major revenue shortfalls for the state and local governments, and further federal aid is currently uncertain.
A recent Albuquerque Journal report cited the possibility of a $2 billion state budget shortfall, a figure which would likely require a substantial portion of the state’s reserves and reductions to recurring expenditures, which have increased nearly 20% in recent years.
“In very good times, many – including the Chamber – expressed concern about the rate that government spending was growing in New Mexico. Sustainability was always going to be unlikely,” said Chamber President and CEO Terri Cole. “Then, this pandemic hit and oil prices crashed – an unforeseen one-two punch that will absolutely lead to significant budget-tightening and the draw-down of state reserves. Thankfully, the creation of the Tax Stabilization Reserve and other policies have better prepared state government for a financial crisis, but that doesn’t mean there won’t be difficult decisions ahead.”
The special session will likely occur sometime after the state’s primary election in early June, with proponents of that timeframe citing the increased knowledge we will have by then of the impact and duration of this global pandemic and the availability of federal funds to help states weather this storm.
The Chamber will continue to be a strong voice for economic growth and the private sector in state government, as we all seek to ensure our communities emerge from this difficult period with greater resilience and security.