Swickard: Budget special session possibilities

© 2016 Michael Swickard, Ph.D.  New Mexico Governor Susana Martinez will call a special legislative session because of lower oil and gas revenues than projected. If there are budget cuts, will some government workers get fired? Or will there be a tax increase a month before the November election? Both solutions may cost votes for legislators in close races.
            Cutting the budget usually means someone loses their government job because much of the state’s budget is used to hire people. Often the way those people in charge respond to budget cuts is to fire the most crucially important people first because the citizen outcry may protect their budget.
            Organizations often target doctors, EMTs, fire and police along with in-classroom educators. That always gets lots of citizen outcry and media attention.
            Years ago in Albuquerque there was a budget crunch in the police department so they fired the street policemen in the worse section of town. Did they touch administrative people? No, because the citizens of Albuquerque wouldn’t care if those employees were fired.
            The citizens of Albuquerque capitulated and added more tax revenue to the budget rather than lose critical police protection. Some politicians claim that everyone employed by the State of New Mexico is essential to the state. They proclaim loudly to the media that taking any money away from existing programs will result in catastrophic damage to our state.
            The talking point: there are no workers on the state’s payroll who are not completely essential. Further, we citizens will be told we must consider that state employees are just like us with bills to pay and kids to raise so being fired is featured in the media reports letting us citizens know that firing state workers will destroy lives.
            Another option being discussed is to increase taxes. That way no one is fired. But in the middle of an election voters can express displeasure quickly. Increasing taxes is unlikely this time.
            One thing not being discussed much is that they can raid the New Mexico Permanent Funds. Some people call them “Rainy day funds.” The quick way is to confiscate needed financial resources from the New Mexico Tobacco or other small funds.
            The two funds with plenty of money are the New Mexico Land-Grant Fund created in 1912 and the 1973 created New Mexico Severance Tax Fund. It is dangerous to take money from these funds because these two funds are set to provide about one seventh of the entire New Mexico budget next year.
            It is not easy to raid these funds because legislators in the past realized the glimmering pot of money would be quite attractive to politicians who only thought short-term. States like California had vast financial resources which were taken in a short-term political frenzy years ago. Now California is close to bankruptcy.
            New Mexico’s budget increased more than fifty percent under former Governor Bill Richardson from 2003 to 2010. It went from about four billion dollars to almost seven billion dollars a year.
            The long-term solution is to increase the economy and the budget will be corrected as long as New Mexico doesn’t elect another free spender like Richardson. There is never enough money for free spenders.
            New Mexico revenues are down because the oil and gas industry is cyclically at a low point. It is a cycle but the government increase is linear. There are always difficulties when the energy resources go down.
            Roy Blunt wrote, “The shortest path to more American jobs is more American energy and more jobs that relate to American energy.” That is what New Mexico needs however the problem for New Mexico politicians is that the environmental lobby has lots of power and does not want New Mexico to increase energy jobs.
            So the source of money from the energy sector may not be politically available to some legislators. There are no other easily increased revenue sources. Raising taxes usually results in people and businesses leaving the state thereby actually lowering collected revenues.
            New Mexico’s government is still far larger than just a few years ago with the same number of citizens. Ultimately New Mexico’s state government is about creating jobs and political power. Tough decisions cannot be avoided at this time.



Mary Spence said...

So, politics as usual. Why am I not surprised?

Post a Comment