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 Best practices for fiscal reserves include clear policies governing when money can be withdrawn from rainy day funds and guidelines for replenishing funds.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.
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 found here contain grades of the state's budgetary practices during the fiscal years of 2015 through 2017. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eleven US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.