Historically, New Mexico has had difficulty estimating some expenditures. For example, it seriously lowballed Medicaid the past couple of years. But it is attacking that problem with a new consensus estimating process and a new long-term fiscal forecast that projects five years into the future for both revenue and expenditures. The state's pensions are fully funded and its bond ratings are healthy, but it could use better analysis of its debt capacity. Financial reporting continues to be a weakness here as well.
Contracting is very decentralized, leaving problems with the potential to fester unnoticed.
In addition, the legislature significantly limits managerial flexibility in financial matters. Although New Mexico doesn't have a true rainy day fund, it maintains an operating reserve level equal to at least 5 percent of recurring spending. C- New Mexico has a process for prioritizing capital projects, but it's pretty much a paper exercise. The governor, the House and the Senate each get a share of the state's capital funds, and each distributes its share according to political considerations. The state does a somewhat better job in allocating resources for its Department of Transportation than it does for its facilities.