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Ups and downs of NM economy in recent years driven by forces beyond local control◦ Dramatic boom & bust in the OGAS sector
State’s economy kept above water by Medicaid expansion (PIT and health care employment growth)◦ The positive effects of these external inputs has subsided since Q1 2017
Higher selective sales royalties & tax collections have contributed to short-term forecast strength◦ Balanced budget without further spending cuts
Improvements in housing markets have not materialized into an expansion of residential construction (single family homes)
Continued uncertainty regarding national affairs (ACA, tax reform)
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Protests related to High Wage Jobs, HealthSouth D&O, and Chemical Reagents claims
Federal Tax Reform effects on PIT and CIT
LANL current contract expiration and new contract uncertainty
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GRT34%
Selective Sales9%
PIT24%
CIT1%
Energy-related
14%
Investment/Earnings13%
Other5%
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$2
$3
$3
$4
$4
$5
$5
$6
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Billi
ons
Monthly Matched Taxable Gross Receipts by Fiscal Year
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
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$47,620 $48,290 $47,881
$43,831$46,599
$48,969 $50,158 $51,095$54,497
$50,872 $51,467
$1,840 $1,858 $1,832 $1,634 $1,822 $1,928 $1,918 $1,992 $2,095 $1,957 $2,014
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Mill
ions
Mill
ions
Matched Taxable Gross Receipts and General Fund Gross Receipts Tax
Matched TGR (left Axis) GF GRT (Right Axis)
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$10,
575
$1,8
49
$6,7
98
$3,9
10
$2,3
97
$969
$10,
298
$1,9
63
$5,4
37
$3,8
51
$1,7
87
$903
$10,
717
$2,0
51
$5,2
27
$3,9
86
$2,5
30
$1,1
23
$10,
994
$2,0
43
$5,1
27
$4,1
71
$3,0
20
$1,4
95
$11,
180
$2,0
83
$5,4
15
$3,9
51
$3,2
04
$1,6
67
$11,
085
$2,1
93
$5,4
31
$4,0
40
$3,3
93
$1,7
87
$11,
607
$2,4
85
$6,0
44
$5,2
38
$3,3
52
$1,8
23
$11,
124
$2,2
54
$6,1
37
$5,8
12
$1,8
61
$1,2
71
$11,
247
$2,5
55
$6,4
87
$5,8
82
$1,9
03
$1,0
65
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Retail Trade Health Care Construction Prof. Sci & TechSvcs.
Mining & Extraction Manufacturing
MatchedTaxableGrossReceiptsSelectSectorsFY2009‐ FY2017
DollarsinMillions
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
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$(27
8)
$114
$(1,
361)
$(59
)
$(61
0)
$(66
)
$419
$88
$(20
9)
$135
$743
$221
$277
$(8)
$(10
0)
$185
$490
$372
$186
$40 $2
88
$(22
0)
$184
$172
$(95
)
$111
$16
$89 $1
89
$120
$522
$292
$612
$1,1
98
$(41
)
$36
$(48
3) $(23
2)
$94
$574
$(1,
491)
$(55
2)
$123
$302
$350
$70
$42
$(20
6)
$671
$707
$(31
1)
$1,9
72
$(49
4)
$96
$(2,000)
$(1,500)
$(1,000)
$(500)
$‐
$500
$1,000
$1,500
$2,000
$2,500
Year‐Over‐YearChangeofMatchedTaxableGrossReceiptsSelectSectorsFY2009‐ FY2017
DollarsinMillions
FY09‐FY10
FY10‐FY11
FY11‐FY12
FY12‐FY13
FY13‐FY14
FY14‐FY15
FY15‐FY16
FY16‐FY17
8YearDiff.
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$(90)
$(70)
$(50)
$(30)
$(10)
$10
$30
$50
$70
$90
$110
$130
Mill
ions
LFC's Gross Receipts Tax: 60-Day and Other Credits -- Impact on General Fund
Total YTD June - May 12-Mo Period Deviation From Trend FY July forward cumulative sumSource: CRS Matrix from TRD
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-12% 31%
17% 19% 5% 8%
-27%
35%
-10% -18%
54%
-8% -35%
4%$34$44
$52
$61 $65$70
$51
$69$62
$51
$78$72
$47$49
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Mill
ions
General Fund Compensating Tax Revenue and Annual Growth Rates
YoY Growth Rate Comp Revenue Trend
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0%
10%
20%
30%
40%
50%
60%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Jul-
12
Sep-
12
Nov
-12
Jan-
13
Mar
-13
May
-13
Jul-
13
Sep-
13
Nov
-13
Jan-
14
Mar
-14
May
-14
Jul-
14
Sep-
14
Nov
-14
Jan-
15
Mar
-15
May
-15
Jul-
15
Sep-
15
Nov
-15
Jan-
16
Mar
-16
May
-16
Jul-
16
Sep-
16
Nov
-16
Jan-
17
Mar
-17
May
-17
Shar
e of
Min
ing
from
Tot
al C
Om
p Ta
x
Thou
sand
s
Total Comp Tax and Share of Comp Tax in the Mining & OGAS Extraction (RP-90)
SHARE of Mining & OGAS Extraction from Total Comp (Right Axis)
Mining & OGAS Extraction ONLY
Total Comp Excl. Mining & OGAS Extraction
Total Comp
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Column1 FY17 FY18 FY19August 2017 Estimate 1,285$ 1,310$ 1,326$ December 2017 Revisions 96$ 71$ 83$
December 2017 Consensus 1,381$ 1,381$ 1,409$ Annual Change, Dollars 54$ -$ 28$ Annual Change, Percent 3.9% 0.0% 2.0%
December 2017 CREG PIT Summary(Millions of Dollars)
NM PIT starts from Federal Adjusted Gross Income (FAGI)
◦ Any changes to FAGI will impact NM taxable income base
◦ Lines 7 through 22 on Federal 1040 enumerate sources of income
◦ Lines 23 thru 35 on Federal 1040 are adjustments to federal taxable income
◦ Line 37 is Federal AGI, the starting point for NM
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Column1 FY17 FY18 FY19August 2017 Estimate 50$ 70$ 74$ December 2017 Revisions 20$ 35$ 36$
December 2017 Consensus 70$ 105$ 110$ Annual Change, Dollars (49)$ 35$ 5$ Annual Change, Percent -70.0% 33.3% 4.5%
December 2017 CREG CIT Summary(Millions of Dollars)
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$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1000.0
FY17 FY18 FY19 FY20 FY21 FY22
Mill
ions
Energy-Related Revenues
Severance Taxes FML SLO
All three revenue areas driven primarily by oil production
FY20 drop in Severance Taxes due to Oil & Gas Emergency Tax - first forecasted distribution to Tax Stabilization Reserve (7-1-6.61 NMSA 1978)
Continued high bonus sales at federal level
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FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Volume - Dec 17 63 60 60 60 62 63 69 80 96 114 141 147 153 158 162 165 168 170
Price - Dec 17 $45.3 $60.0 $59.1 $93.7 $64.8 $71.3 $84.9 $89.6 $85.8 $95.1 $60.6 $37.8 $45.0 $47.5 $49.5 $50.5 $51.5 $52.5
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
0
20
40
60
80
100
120
140
160
180
$/ba
rrel
Mill
ions
of b
arre
lsOil Prices and Volume, FY2005 - FY2022
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FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Volume 1547 1520 1513 1431 1380 1295 1250 1227 1178 1185 1185 1175 1220 1230 1220 1200 1190 1180
Price $5.84$7.53$6.57$8.40$5.65$5.17$5.51$5.02$4.38$5.12$3.77$2.43$3.26$3.25$3.25$3.25$3.20$3.20
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
0
200
400
600
800
1000
1200
1400
1600
1800
Gas
vol
ume
mill
ions
of m
cfNatural Gas Prices and Volume, FY2005 - FY2022
A close review of the impacts of rate changes and deductions may impact New Mexico PIT and CIT
Sequestration Threat: At issue –federal tax reform if enacted is projected to trigger sequestration through Pay-as-you-go Act (PAYGO)
New Mexico Susceptibility
◦ Federal Mineral Leases – risk of holding annual sequestered amount and sequestering larger percentage
◦ Stress on Health Sector – large driver of economy 2% decrease (max) in Medicare rates to certain providers and plans; Indian Health Service (IHS) – budget decreases; Other Federal Health Centers – budget decreases. For New Mexico
prominent in rural and frontier regions of state.
◦ Drain on economic growth Contracts – Department of Energy, Department of Defense
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Pojoaque casino new pact, applied beginning late October 2017
Escrow of 2+ years revenue status: negotiation continuing (~$10.5M)
Racino/gaming forecast turns slightly positive trend from slightly negative trend
Cigarette forecast up slightly, tobacco tax growth remains strong. Vaping still untaxed
Liquor forecast continuing downward trend
MVX forecast unchanged for FYs 18-20
Facebook using Industrial Revenue Bond, but will positively affect revenue via taxes on construction, salaries and indirect gross receipts
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Thank you!
Our mission at TRD is to administer and enforce New Mexico's tax and revenue laws,
vehicle and driver licensing, and transportation programs in a manner warranting the highest degree of public
confidence.
http://www.tax.newmexico.gov/
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