National study says New Mexico’s debt equals $24,041 per person

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M. – James Madison once said, “I go on the principle that a public debt is a public curse.”

By that measure, New Mexico has some work to do, judging from the numbers released earlier this week by a fiscally conservative policy group.

A study by State Budget Solutions shows total state debt amounts to $24,041 for each and every person in New Mexico, placing the Land of Enchantment’s debt obligations as the seventh-highest in the country.

“This is the fourth time we’ve done this report and we’ve reached a new shocking total in state debt,” said Cory Eucalitto, who crunched the numbers by looking at a variety of debt measures for each state that go beyond what most state budget offices take into account.

For example, the State Budget Solutions study looks at market-valued unfunded public pension liabilities, benefit obligations for public employees and outstanding unemployment trust fund loans.

Using those figures, State Budget Solutions calculates that New Mexico’s state debt is more than $50 billion, which is 28th-highest. But since New Mexico’s population is relatively small, that means its per capita debt is $24,041, moving New Mexico to seventh in the country.

The state’s official debt numbers are different.

According to figures compiled by the New Mexico Board of Finance, a debt affordability study puts the state’s unfunded debt at about $3.7 billion.

“The (SBS) study includes state pension funds and other retirement benefits, which shifts the number considerably,” Department of Finance and Administration spokesman Tim Korte told New Mexico Watchdog. “Without knowing the methodology but assuming the group’s $50 billion figure for New Mexico is accurate, the figures presented in the study reaffirm the need for a cautious budgeting approach.”

By some measures, New Mexico actually fared pretty well in the SBS study.

For example, New Mexico had the nation’s 13th-lowest ranking for outstanding unemployment trust fund loans and 20th-lowest for outstanding debt.

On the other hand, New Mexico had the third-highest ranking for the amount of debt as a percentage of the gross state product, at 62 percent. Only Hawaii (64 percent) and Ohio (63 percent) finished higher.

The overall tenor of the SBS report is downbeat, claiming its numbers show state governments combine to face $5.1 trillion in debt nationwide.

“When you add in all of the other components of state debt that don’t necessarily show up in traditional state government financial reporting, the problem is so much larger,” Eucalitto said in an interview with Watchdog.org. “And too many people and too many elected officials don’t understand there are these other trillions of dollars … that states need to address.”

The DFA’s Korte said that with New Mexico’s spending restraint and budget reserves of nearly 10 percent, “we can focus on central priorities such as education, economic development, public safety and water infrastructure while remaining prepared for any unforeseen issues.”

“Concerns remain about the heavy federal presence in New Mexico as well as a natural gas market that remains flat because of large supplies,” Korte said in in an email.

Natural gas plays a large role in the relative strength or weakness in New Mexico’s economy. It’s estimated that an increase of just 10 cents in the price per thousand cubic feet of natural gas translates into $10 million more revenue into the state’s general fund.

Click here to read the entire State Budget Solutions state debt report.

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

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