...S&P Global Ratings lowered its rating on the State of New Mexico's general obligation (GO) bonds to '##' from '##+', and on state annual appropriation secured debt to '##-' from '##'. The outlook is negative. The downgrade follows what we believe will be a sustained decline in general fund balances due to weak revenue trends because of declines in the oil and gas industry and slow federal employment growth. Following a September special legislative session to address a large midyear budget deficit, the state projects fiscal 2017 will end with a general fund balance equal to just 1.0% of recurring appropriations on a budgetary basis of accounting. While Gov. Susana Martinez has indicated an intention to pursue measures to raise reserves to 5% of recurring appropriations by the end of fiscal 2017, we believe reserves will continue to trend significantly lower than the 10% level targeted in earlier years. At the same time, future budget balancing efforts in fiscal years 2017 and 2018 will...
