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It’s the economy, stupid – this campaign slogan helped propel Clinton into office during the 1990s and once again, the most recent presidential election hinged on the state of the economy. One cannot open a newspaper, turn on the television, or listen to the radio without reading or hearing about our fragile economy. With the media frenzy currently circulating, you may wonder how all this affects you. Paydirt asked Dr. Lopez to answer some of the vital questions that you need to know about Tech’s economic state. To provide some context to the interview, Dr. Lopez explained how the State of New Mexico and NMT manage their finances: Dr. Lopez: Everybody recognizes that we are in a very depressing economic downturn. The state generates a lot of its revenues from a series of taxes that are closely tied to the performance of the economy. A big portion of the state revenues come from oil and gas, and while that was at a high level, meaning the price of oil and gas, New Mexico was doing very well. But prices have fallen precipitously; they were at a peak of $147 a barrel and today they are down over half of that. The same is true with gas; it did not fall as precipitously, but it did fall significantly. There is also gross receipts tax, meaning sales tax. As unemployment goes up, there are fewer people in the workforce and they have less money to spend. Consequently, as they buy less, that gross receipts tax goes down and that’s a major revenue generator for the state. Finally, there is corporate tax, which is not as big as some other revenue streams, but is still significant. Investments are a big portion of the revenue portfolio for the state and as Wall Street has gone into a deep recession, that’s limiting New Mexico’s finances. Collectively, all these sources of revenues have declined significantly. That means that the state has to find a way not only to finish paying for what it budgeted for the current fiscal year, which doesn’t end until June 30, 2009, but it also has to anticipate budget cuts beginning in January, such as reducing the remaining budget by $10 million , for instance. That means we would have to compress our expenditures so at the end of June 30, we would end up spending less than had originally been budgeted. This is a possible scenario. I think there is going to be a cut back, but I hope it’s not that significant. That only takes us to June 30, 2009 and then we have a brand new budget on July 1, 2009 that goes for an entire year. That budget, in my opinion, will be no higher than what we currently have and may even be lower. You may wonder what this means for NMT. If there is less money to spend, obviously new polices have to be initiated to spend less. I suspected that the current economic situation would happen because I had experience in public finance in the past, so starting back in August 2008, NMT began to put policies into place to restrict spending. |
Plan ahead for the spring semester Performing Arts Series! The semester will be kicked off with Footloose, a musical in which a boy who, upon moving to a small Midwestern town, finds that music and dancing have been banned. However, he and his classmates are determined to have a senior prom and won’t let the alleged “sin” of dancing stand in their way. Footloose will be performed on Wednesday, February 11th.