SANTA FE, N.M. (AP) - Increased retail sales and unhindered construction projects generated higher tax revenues in April and May compared with the same time last year despite the pandemic, according to a new report to state legislators.
On Friday, economists outlined the dire drops such as in energy and tourism that are still expected to create a massive deficit this year. However, they reported unexpected bright spots that are on track to generate $200 million more than expected in sales taxes and around $115 million in income taxes, sin taxes, and other fees.
Retail sales in April and May were bolstered by a one-time federal stimulus of $1,200 a person and a weekly $600 federal unemployment supplement and that led to higher incomes for some low-wage workers, said Dawn Iglesias, the Legislative Finance Committee’s Chief Economist.
“And this is particularly the case for low-wage sectors like retail and leisure and hospitality and also certain areas of health care and personal services,” said Inglesias, adding that low-wage workers “tend to spend more of their income.”
The federal benefits expired last week.
The economic situation in New Mexico is still dire, with overall tax revenue down 8 percent and unemployment hovering around 10 percent, up from 6 percent before the pandemic.
Ongoing public school closures could further harm the state’s workforce.
Iglesias and her colleagues cautioned legislators that as many parents leave the workforce to care for children and loved ones, they will be out of the workforce but not included in the unemployment count.
They don’t expect a return to pre-pandemic unemployment rates around 6 percent until the fall or winter of 2022. They said that four in 10 jobs lost will likely never return, and anticipate many businesses closing permanently.
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Attanasio is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on under-covered issues. Follow Attanasio on Twitter.
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