New Mexico

Contact us
To speak with a scholar or learn more on this topic, visit our contact page.

Summary 

On the basis of its fiscal solvency in five separate categories, New Mexico ranks 34th among the US states and Puerto Rico for its fiscal health. On a cash basis, New Mexico has between 1.57 and 3.01 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 6 percent, producing a surplus of $493 per capita. Net assets are 47 percent of total liabilities, and total liabilities are 18 percent of total assets. Total debt is $3.40 billion. Unfunded pension liabilities are $42.36 billion on a guaranteed-to-be-paid basis, and other postemployment benefits (OPEB) add another $3.36 billion to total unfunded liabilities. These three liabilities are equal to 63 percent of state personal income.

Key Terms

  • Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. (New Mexico ranks 25th.)
  • Budget solvency measures whether a state can cover its fiscal year spending using current revenues. Did it run a shortfall during the year? (New Mexico ranks 11th.)
  • Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are enough assets available to cushion the state from potential shocks or long-term fiscal risks? (New Mexico ranks 12th.)
  • Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? (New Mexico ranks 48th.)
  • Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, OPEB liabilities, and state debt compared to the state personal income? (New Mexico ranks 49th.) 

For a complete explanation of the methodology used to calculate New Mexico's fiscal health rankings, download the full paper and the dataset at mercatus.org/statefiscalrankings-2016-edition.