© 2016 Michael Swickard, Ph.D.
“The politicians say ‘we’ can’t afford a tax cut. Maybe we can’t afford the politicians.” Steve Forbes
The election is over so we must stop talking election politics and have these who were elected start making the tough decisions. I don’t care who is running in 2018 or 2020, we must fix serious problems now.
Running for office has little to do with fixing New Mexico’s financial problems. In fact, it may make our problems worse since running for office often entails making elaborate promises to spend more money. We don’t have more money, we have less. The problem is two-fold.
First, in the last New Mexico Legislative session in January New Mexico legislators put in the budget a far rosier revenue projection than what has actually been collected this year. No amount of posturing by politicians can change this shortfall. Hard choices must be made since New Mexico is spending more money than available.
New Mexico’s budget is unlike the federal government since New Mexico cannot spend more money than it has. The New Mexico Constitution is clear that New Mexico cannot deficit spend.
The New Mexico 2016 budget is running in the red and it is likely the same problem will be for the 2017 budget when the Legislature meets next January. Some people running for office have not worried about this problem since they put their entire attention on winning their election. Now the price for victory will be paid.
One of two things must be done. New Mexico must spend less or collect more. Perhaps they could do both. Raising taxes is problematic since it is dynamic. The higher the tax rate goes up, more New Mexicans will take legal actions to avoid those taxes. I didn’t say evade which is illegal, rather, they will avoid them.
One dramatic way is to move to a state with no state income tax such as Texas. While a pain in the keister to move, it does happen and the New Mexico budget suffers. The legislators could retroactively tax which would make it hard to avoid paying the tax but that would also drive taxpayers out of the state.
New Mexico has a great climate and yummy green chile but there are states near that have good climates and no state income tax. Yes, you would have to change the spelling to chili which doesn’t impress me. The state could tax businesses more but again it causes some businesses to leave and therefore less rather than more money to be collected.
The sensible thing would be to cut the budget down significantly but the big spending party ran the political table in much of the recent election so I do not expect this to happen. Promises of more money for many things were made and were rewarded with election victories.
What I am hearing is that these are extraordinary times so extraordinary actions are needed. New Mexico has lots and lots of money in Permanent Funds which are not supposed to be touched. But this is extraordinary.
Some people wish to spend money from NM’s Permanent Funds. It won’t be easy but it can be done. Should it be done is a better question. In a word: no. Alaska is in a big political whirl because the residents are used to getting lots of money for being a resident and the decline of oil revenue is making this impossible.
New Mexico’s troubles likewise go to oil and gas revenue which is not providing as much support as the legislators want to spend. The budget over just a few years has gone up fifty percent but going down ten percent for some legislators is out of the question.
This January New Mexico has the best chance to solve their financial woes without an election immediately on the horizon. Regardless, some wish to confiscate NM’s Permeant Funds and go on a spree of spending the likes of which this state has never seen.
One day the Permanent Funds will be gone. These politicians will sneak out of public service with their retirement. It will be our children’s problem. I refuse to betray them this way. I hope you will refuse also.