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The Looming N.M. Deficit

The Looming N.M. Deficit

Gov. Bill Richardson slashed personal income taxes when he was in office. That was followed by Gov. Susana Martinez wielding the knife on corporate taxes

BY JOE MOANHAN

Joe Monahan at computerWhat crashed the state budget? Simple. Sinking energy prices have cost the treasury millions in royalties, as have years of overzealous tax cutting in Santa Fe.

The state’s economy has been woefully mismanaged by both Democrats and Republicans and culminated this month with the report that there will be only $30 million in new revenue for the budget year that starts July 1 (not that anyone really believes even that token amount will come through).

In fact, there’s a decent chance we will fail to collect enough to fund the $6.3 billion budget that the Legislature is approving for the new budget year. Says Gallup Democratic Sen. George

Munoz: “I think when all is said and done, we’re going to have a deficit.”
And it’s not only the epic crash in oil and natural gas prices. The Legislative Finance Committee reports there also has been an across-the-board drop in gross receipts tax collections.

That’s a development that has put the state on a full-blown recession watch, even as we continue to stagger from the effects of the Great Recession that began in 2008.

Gov. Bill Richardson slashed personal income taxes when he was in office. That was followed by Gov. Susana Martinez wielding the knife on corporate taxes, all approved by compliant legislative Democrats. Actually, both sides have colluded to give away so many convoluted tax credits and exemptions that no one seems to know how much they’ve cost.

And then they repeatedly appropriate money for capital outlay projects and leave hundreds of millions of it unspent. Mismanagement or malpractice?
It’s not like state government is bloated.

Years of anemic state budgets and an austere Republican chief executive and legislative leadership have seen to that. If we are going to do more than keep the lights on, Santa Fe is going to have to talk about raising revenue.

We know that these days that’s like yelling the F bomb in church, but we’ve been to this movie before. Back in the 1980s, we had the Big Mac tax cut – named for Republican Rep. ColinMcMillan – which was followed by a crash in energy prices.

The Legislature eventually repealed Big Mac. That was when economic policy was flexible. Today the “no new taxes” mantra is cemented in ideology, mainly by the radical Republicans but also by fearful Democrats who believe raising new revenue is politically poisonous.

Take a look at how this is playing out in Rio Rancho.

Republican Mayor Greg Hull has flip-flopped from his initial support of a $9 million bond issue to improve Rio Rancho roads. We expressed surprise and support of Hull’s backing of bonds, which would mean a very slight increase in property taxes (only about $7.30 over two years on a $100,000 house).

Hull’s original position, as noted in the Rio Rancho newspaper, went like this: “These roads aren’t getting better and they’re not getting cheaper. We need to protect our business locations and property values by investing in infrastructure.” And the headline in Albuquerque’s business paper said: “Rio Rancho mayor makes the case to the biz community for a tax increase.”

We wondered if the GOP would revoke Hull’s membership for speaking such heresy. Well, it appears Hull flinched and reversed himself. Now look at what’s happening:

Councilors were split 3-3 on the proposal to put the road bond question on the ballot, with Mayor Hull voting in favor of the measure to break the tie. “It’s not where I stand on the road bond, but getting the (question) out to the voters so they can make an informed decision,” Hull said. “The tie I broke was to send it to the voters. As a community, we need to explore every option on how we’re going to repair our infrastructure.”

For a fleeting moment, we thought we spotted a Republican mayor with some huevos who would stand up for his city. By backing down, Hull has shown the worst instincts of today’s Republican Party – an inflexible, ideologically driven agenda that refuses to change course even when confronted with facts and circumstances that contradict their position, such as the need to repair crumbling roads in Rio Rancho.

That goes double for what is happening at the legislative session where Republicans insist that under no circumstances will the state seek new revenue to fund education or other pressing needs.
The fatal calculation made by the austerity hawks – the notion that “you get what you pay for” – is that it applies only to the private sector. It’s another reason New Mexico continues to flat-line.

Joe Monahan is a veteran of New Mexico politics. His daily blog can be found at joemonahan.com.

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  • marl
    February 13, 2016, 5:26 pm

    To all the women, poor , veterans and minority citizens around the country who have been robbed of their right to health care insurance and even the right to vote without a "poll tax," sleep a little more soundly tonight — at least for a few months. Supreme Court Justice Antonin Scalia has just died. He can’t hurt us any more. And he can’t help the rich who now control elections in all 50 states and the United States (Citizens United and mirror cases controlling state elections.)

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The following two tabs change content below.
Albuquerque’s definitive alternative newspaper publishing an inquisitive, modern approach to the news and entertainment stories that matter most to New Mexicans. ABQ Free Press’ fresh voice speaks to insightful and involved professionals who care deeply about our community.

Latest posts by ABQ Free Press (see all)