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County economist projects continued GRT and property‑tax growth but warns tariffs add uncertainty
Summary
Dr. Minghao Li presented multiple ARIMA-based forecasts showing continued local growth in gross receipts tax (GRT) and property-tax revenues; he recommended using a range of scenarios and regular updates because national tariff-driven changes create uncertain local effects.
Dr. Minghao Li, an associate professor and the Robert O. Anderson endowed chair at New Mexico State University, told Doña Ana County commissioners on April 15 that statistical forecasts based on historical data point to continuing growth in the county's gross receipts tax (GRT) and property-tax revenues.
Li said the study used autoregressive integrated moving average (ARIMA) time-series models and tested 54 specifications; he reported results as a range and highlighted an average of the top 20 models and the state’s CRAC model for comparison. “These forecasts are based on historical trends,” Li said, adding that the models do not account for policy changes such as tariffs.
The county’s GRT and property‑tax revenues together made up a substantial share of total county revenue in fiscal 2024 (about 21% and 19%, respectively, Li said), which is why the two measures were prioritized for more sophisticated forecasting. Monthly GRT distributions came from the New Mexico RP‑500 local government reports; property‑tax projections were estimated by forecasting taxable value and converting that to revenue using the county’s historically stable effective tax rate.
Li described model testing and adjustments: monthly GRT data were analyzed, anomalies (for example, the 2008 spaceport tax addition, a 2015 rate change and several monthly spikes) were adjusted, the historical series were split into training and testing sets, and the researcher compared his top 20‑model average with the state CRAC forecast to check consistency. He said the county had tended to underestimate both items in the recent past (GRT was underestimated by about 12% in fiscal 2023; property tax by about 5%).
On trade policy, Li cited published national estimates (EU Budget Lab) that, with recent reciprocal tariffs, headline prices could rise about 2.9% before substitution and about 1.7% after substitution. He also said national real GDP growth could be about 1.1 percentage points lower under those scenarios. “The end result is actually uncertain and needs further analysis,” he told commissioners, noting that national projections are challenging to downscale to local impacts.
Li advised regular updates to the forecasts and greater confidence in near‑term projections than in longer‑term estimates. He said the range of model outcomes widens farther into the future and that some uncertainty will be passed through from the economic inputs his models use.
Commissioners asked follow‑up questions about how to select a single scenario for budgeting and whether tariff effects could reduce business siting in the county. Li said the county’s budget staff could adopt a conservative scenario if desired and that more detailed local analysis would be required to apportion national tariff effects to Doña Ana County. Jonathan Macias, assistant county manager, suggested the county could also solicit input from the New Mexico Economic Development Department and the New Mexico Partnership for regional siting outlooks.
County staff said Li’s full report and the presentation slides would be shared with the commission for follow‑up questions and that additional work on tariffs and local impacts could be scheduled as needed.
The presentation informed later FY26 revenue assumptions used in the county’s budget work session.
