New Mexico

State Budget Practice Report Cards and Budget Resource Guide

New Mexico is one of only two states to score no higher than a C in fiscal 2017 in any of the five budgetary categories evaluated by the Volcker Alliance. The other was Illinois, which enacted a budget for fiscal 2018 in July 2017 after going without one for the almost three years. New Mexico was also one of three states to receive straight D’s in transparency for fiscal 2015 through 2017, the period covered by the Alliance’s research. The other two were Alabama and Arkansas.

New Mexico’s showing in transparency was hurt by its lack of a consolidated budget website to help observers find in one place information about critical items like proposed and enacted budgets, debt service costs, capital spending, and tax expenditures. In fact, the state fails to disclose the cost of tax expenditures, which can include exemptions from sales and other levies, as well as corporate tax credits and abatements aimed at spurring economic development.

The state also received an average grade of D in reserve funds for the three years. Best practices for fiscal reserves include clear policies governing when money can be withdrawn from rainy day funds and guidelines for replenishing funds. In New Mexico, the rainy day fund can be used at the discretion of the governor or legislature.

New Mexico’s C average in legacy costs—which include public worker pensions and other postemployment benefits (OPEB), primarily retiree health care—was driven by a failure to fund OPEB in line with actuaries’ recommendations. In the budget maneuvers category, a C in 2017 reflected the state’s increased use of one-time revenues to achieve balance, though New Mexico garnered an overall score of B.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2017 Volcker Alliance report, Truth and Integrity in State Budgeting: What Is the Reality? which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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