Bull markets benefiting N.M. assets

Almost $900M expected for state’s general fund, government retirees

More money is expected to flow into New Mexico’s coffers, thanks to positive investment returns stemming from a bullish stock market and recovery in the oil and natural gas sector, offering hope that state can avoid more painful cuts as lawmakers gear up this fall to consider their budget options.

New Mexico’s two sovereign wealth funds showed substantial growth during the last fiscal year that ended in June, officials said last week, with the Land Grant Permanent Fund nearly doubling its annual target with a nearly 13 percent return, according to the State Investment Council.

Gov. Susana Martinez, chairwoman of the council, said that’s good news for the state, which has struggled in recent years to fill budget shortfalls as spending on government programs and services has outpaced tax revenues.

To shore up shaky state finances, the Democraticled Legislature and the two-term Republican governor reached an agreement during a special session in May to tap into borrowed money from suspended infrastructure projects. Additional cash also was swept from some state accounts.

The state’s budget crisis triggered public tuition increases at several state colleges, layoffs at state museums and a shortage of public defenders that remain in effect.

Combined distribution from the Land Grant and Severance Tax permanent funds will deliver a record $899.6 million to beneficiaries and the state’s general fund this fiscal year, officials said. That represents an increase of more than $61 million over the past year and three times what the funds were producing for the state just two decades ago.

“These funds are a critical revenue generator for the state and as we grow the permanent funds, so grow the benefits they provide to all of us,” said Steve Moise, the state investment officer.

The majority of the benefit goes to New Mexico public schools.

Much of the funds’ growth has been driven by a combination of market performance and a focus on assets that are less affected by the volatility of the stock market along with an uptick in oil and gas exploration in southeastern New Mexico. Lease revenues from development on state trust lands feed the Land Grant Permanent Fund, which is then invested by the council.

Chief Investment Officer Robert “Vince” Smith said efforts to restructure the portfolio are paying off.

Investments that fund pension benefits for the state’s public education employees also posted returns of 12 percent for the 2017 fiscal year.

Officials who oversee the New Mexico Educational Retirement Board fund say assets have reached a record high of $12.3 billion, representing a nearly $1 billion increase over the last fiscal year.

The educational retirement pension system covers about 60,000 active members and 46,000 retirees. Benefits of more than $1 billion were paid out over the last fiscal year.