Lawmakers were told in October that New Mexico’s budget gap could be as much as $250 million, but Senate president pro tem Tim Jennings told public school and higher education officials last week that the shortfall in fiscal 2009 could be as much as $500 million.
Jennings, D-Roswell, attributed the deficit to declining energy prices and poor economic conditions.
The current revenue forecast was based on an average price for oil of $94 a barrel and $6.75 for 1,000 cubic feet of natural gas, but the current prices in the state are about $50 per barrel for oil and less than $4 per 1,000 cubic feet of natural gas.
Each decline of 10 cents in the price of natural gas costs the state $10.5 million in annual revenues. Each $1 drop in the price of oil reduces severance tax collections by about $3.5 million a year.
In October, Gov. Bill Richardson imposed a hiring freeze for state executive branch agencies and told them to trim spending. Richard said he would seek legislative approval to eliminate some capital improvement projects to save money.
The Legislature will look at cost-cutting measures and revenue enhancements when it meets in January for a 60-day session.