New Mexico’s budget basics
According to the National Association of State Budget Officers (NASBO), New Mexico’s total expenditures in fiscal year (FY) 2021 were $25.3 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, New Mexico’s combined state and local direct general expenditures were $23.7 billion in FY 2020 (the most recent year census data were available), or $11,192 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.
New Mexico’s largest spending areas per capita were public welfare ($3,488) and elementary and secondary education ($1,955). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
New Mexico’s combined state and local general revenues were $26.5 billion in FY 2020, or $12,531 per capita. National per capita general revenues were $10,933. New Mexico uses all major state and local taxes. After federal transfers, New Mexico’s largest sources of per capita revenue were general sales taxes ($2,146) and charges ($1,441), such as state university tuition and highway tolls. New Mexico’s per capita general sales tax revenue is relatively high in part because it taxes nearly all services while most other state exempt at least some services from tax.
New Mexico’s politics
Governor Michelle Lujan Grisham, a Democrat, was elected in 2018 with 57 percent of the vote. The next gubernatorial election is in 2022.
Democrats control both the House of Representatives (45 Democrats to 24 Republicans and 1 independent) and Senate (26 Democrats to 15 Republicans and 1 independent). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in New Mexico. All New Mexico House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms, and their seats are on the ballot in 2024.
New Mexico’s budget institutions, rules, and constraints
New Mexico uses an annual budget. The legislature is not required to pass a balanced budget, nor is the governor required to sign one, and deficits may be carried over into the following year. However, the governor must submit a balanced budget, and own-source revenue and allowed borrowing must meet or exceed expenditures. New Mexico does not have any other tax and expenditure limits. The state also does not limit either authorized debt or debt service.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
New Mexico’s current budget
Governor Lujan Grisham released her FY 2023 budget proposal and gave her state of the state address in January 2022. In February 2022, New Mexico enacted a series of tax cuts, including lowering the state’s sales tax rate from 5.125 percent to 4.875 percent, a one-time tax rebates to tax filers ($250 for individuals and $500 for married couples), and an annual rebate of $175 per child on the filer’s return. The FY 2023 budget was enacted in March 2022.
New Mexico enacted its FY 2022 budget in April 2021. According to the governor, the enacted budget included $7.5 billion in general fund spending, a 5 percent increase over the previously enacted budget. As part of the budget, New Mexico expanded its earned income tax credit from 17 percent of the federal credit to 20 percent in tax year 2021 and 25 percent in tax year 2023 and expanded access to another state tax credit that benefits low-income households (the maximum eligible income was raised from $22,000 to $36,000).
Under the American Rescue Plan, New Mexico will receive $1.8 billion in direct state fiscal aid and $579 million in local government aid from the federal government. As of January 2022, New Mexico had spent part of its ARP funds on refilling its unemployment insurance trust fund, economic development, and public health programs.
According to NASBO, New Mexico’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
FY 2022: $8.9 billion
FY 2021: $8.9 billion/$25.3 billion
FY 2020: $6.9 billion/$22.3 billion
FY 2019: $6.0 billion/$19.5 billion
For more on New Mexico’s budget, see
New Mexico’s economic trends
New Mexico’s per capita income (per the Bureau of Economic Analysis) was $49,320 in 2021, ranking 47th among the states. It was below both the national average of $63,444 and the Southwest regional average of $57,647. The state’s median household income (five-year estimate) was $51,243 in 2020, ranking 46th among the states and below the national average of $64,994. New Mexico’s poverty rate was 18.6 percent in 2020 (five-year estimate), above the national rate of 12.8 percent.
Although New Mexico’s averages tell a story about the entire state, New Mexico is composed of diverse localities. For example, the city of Las Cruces’s median household income was $45,140, and its poverty rate was 23.6 percent; the city of Carlsbad’s median household income was $69,786, and its poverty rate was 14.7 percent.
New Mexico’s unemployment rate has been among the highest in the country over the past few years. Prior to that, it generally tracked the national average and was lower the national unemployment rate during the depths of the Great Recession.
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In New Mexico, the average unemployment rate in 2021 was 6.1 percent for white residents, 10.2 percent for Black residents, and 7.4 percent for Hispanic or Latino residents.