A permanent fund is a fund where the principal fund may not be used and only earnings on the fund are used for the benefit of the government or its citizens.
New Mexico’s unprecedented revenue surge has led to roaring inflows into the state’s permanent funds, even as year-over-year spending levels have also spiked.
Fueled largely by booming oil and natural gas production, the total amount of money in the state’s various investment funds has nearly doubled over the last five years — from $23 billion to nearly $43 billion —and lawmakers have created new funds for early childhood and conservation programs.
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That exponential growth means a steady funding engine for New Mexico when oil production slows, though that’s not currently projected to happen until the late 2020s or early 2030s, according to a report presented Tuesday to the State Investment Council.
“To call it a record-breaking year is a complete understatement,” Iglesias said. “Last year was unlike one we’d ever seen before, and could be unlike one we’ll ever see again.”
While this year’s inflows are not projected to be as robust, the amount of money going into the state’s largest permanent fund from oil and natural gas taxes and royalties, along with other revenue sources, could continue to exceed $200 million per month for the next decade, Iglesias said.
For context, the first time the fund ever recorded a monthly inflow of more than $100 million was in January 2020.
As a result of the recent growth, New Mexico now has the 33rd largest sovereign wealth fund in the world, just ahead of the Hong Kong Future Fund and the Azerbaijan Investment Holding, according to the Sovereign Wealth Fund Institute.
Among states, only Alaska and Texas have larger total investment funds than New Mexico.
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