Rainy day fund best place for excess revenue

After two years of belt tightening and difficult austerity measures implemented to plug nine-figure holes and balance the state budget, revenues for New Mexico are once again soaring.

Revenue for the current budget year was up by $672 million through January compared to the same period last year, according to the state Taxation and Revenue Department.

That’s great news for our state. And while Roundhouse lawmakers will no doubt be tempted to go on a spending spree when they convene in January, they should hold off on that impulse because, as Senate Finance Committee Chairman John Arthur Smith points out, the state’s economy is still heavily reliant on a market-driven fossil fuel industry.

“We’re on the roller coaster of oil and gas,” says Smith, a Deming Democrat.

While revenues are up right now, they can just as easily tank. Given the boom in the Permian Basin, specifically the production occurring in Lea, Eddy and San Juan counties, we doubt revenues will sink in the near future, but it’s a boom-bust industry so what goes up eventually comes down. And as the state revenues of 2017 vs. 2018 show — what a difference a single year can make.

Realizing that, lawmakers and the governor last year created a true rainy day fund to help the state ride out some revenue lean years. And there will be more than $15 million flowing into that fund thanks to the uptick in revenue this year.

Lawmakers and the next governor should consider pumping more money into that rainy day fund. It’s not sexy, but it’s the financially responsible thing to do, and they and taxpayers will be glad they did it when the roller coaster that is our state’s revenue source takes a downturn.

Yes, we’re riding high now, but if history has taught us anything, it’s that our revenue stream is volatile and the highs don’t last.

It’s ironic that a year ago, state leaders were fretting about how to plug a massive budget deficit and this year, the state is flush with cash. Given that level of volatility, it’s incumbent on lawmakers and whomever is elected governor to invest any new money wisely.

— Albuquerque Journal