A report last week to the New Mexico Legislative Finance Committee said revenue for fiscal 2010 will be $10 million less than expected, with the outlook for revenue in fiscal 2011 reduced by $53 million.
Finance and Administration Secretary Katherine Miller said state officials expect to receive $5.1 billion in revenue in fiscal 2011, which is less than New Mexico is spending this year on public education and general government operations.
The lower revenue would result in a $500 million to $600 million shortfall next budget year, as the state must replace $300 million in federal stimulus funds that will not be available.
Miller said the state needs to increase cash balances by $137 million in fiscal 2010, which she said could be obtained by canceling $150 million in approved capital improvement projects.
However, several key legislators said they regard those efforts as an economic development tool that generates tax revenue.
Gov. Bill Richardson said he will consider consolidating government operations to reduce spending and has formed a task force to look into increased taxes.
The Legislatures will convene Jan. 19 for a 30-day session.