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Now is the time to balance tax increases with spending cuts
Tim Jennings
The New Mexico Legislature returns to the State Capitol this week to complete work on a budget for the upcoming fiscal year amid certain unyielding realities: State tax revenue is way down, federal funding that helped the state get by, so far, is ending soon and the economy is not recovering nearly as fast as anyone had hoped.
The New Mexico Senate recognizes these realities and, while taking no joy in it, is committed to approving a responsible state government spending plan that relies just as much on less spending as it does on more taxes.
The fiscal crisis in which New Mexico government finds itself is not temporary and will not be overcome with temporary solutions.
The state is expected to receive just $4.8 billion this fiscal year – $1.2 billion less than two years ago and a level not seen in years. Revenue for the next fiscal year – the budget that the Legislature is working on right now – is projected to be $5.1 billion, or 6 percent more than the state is receiving this year.
But no one I know who runs a business is planning on revenue growth of 6 percent, and no workers I know are counting on getting a 6-percent pay raise next year, so it is hard to imagine that state revenue from personal income taxes, corporate income taxes and gross receipts taxes will grow that much next year. If growth is only 2 percent, the state will be short $200 million.
Compounding the problem is that the state is counting on $200 million in federal funds for next year’s state budget that will not be available after that year. The state will have to make this up in fiscal year 2012’s budget.
I applaud and am proud of the Senate’s resolve to responsibly address this fiscal crisis. New Mexico government will continue to play a strong role in educating our children, providing health care and healthy meals for residents who would otherwise go without and protecting our streets and neighborhoods.
But there is a limit to how much taxes can be raised to cover state government spending. Now is the time to balance tax increases with spending cuts and enact a sustainable state government spending plan.
Working together, we will get through these difficult times.
Jennings, a Roswell Democrat, is the president pro tem of the New Mexico Senate.
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Next year when we are in even more dire straits, we will have to rescind the the 2003 tax cuts on the rich. It will likely be too late to dig us out by then when sooner is better than later.
“Compounding the problem is that the state is counting on $200 million in federal funds for next year’s state budget that will not be available after that year.” It shouldn’t be available next year either, as it will just be added to the debt at the Federal level. What a classic example of “robbing Peter to pay Paul!”
As Carter Bundy points out in the above article, there are fewer NM state employees per capita “than at any time in at least the last 16 years …” Of course, the population has increased somewhat in that time, but that still means more people relying on the services provided by the state government.
It’s time to repeal the 2003 tax cuts for the wealthy. I think maybe the legislature will acknowledge this eventually, but perhaps not until another $50,000-per-day special session this fall. It would be better to bite the bullet now and get it over with.
Jenn ings is the right guy in the right place and the special session is a fools errand (seemed appropriate …). There remains waste in state government – from some (or many) of the governors appointees to an overly bloated structure to run the government. We have NOT engaged technology to reduce costs and bloat, to best advantage, we’ve relied on temporary gifts from the feds and using sponge bonds to balance the budget is simply borrowing more on the credit card (what do we pay it back with?). The projections for income are overly generous – in fact, they are ludicrus. They are planning on a 6% bump in tax revenue when our surrounding states experienced at 18.1 % decrease last quarter (NM did not report … why would that be?). No one is talking about the $50 million shortfall for the current fiscal year (and it is growing) and the income stream, without the smoke and mirrors will be $4.5 billion (and dropping). Keep the legislators OUT of Santa Fe until there is new information – info different from what they dealt with last week. Keep in mind that the disingenuous spin of the house and senate being ‘close’ was a canard, a red herring … a lie. The Speaker never presented the senate budget to the house – he lied. Those who were talking were at least $120 million apart – if not more – so the governor lied (again). THIS IS NUTS!
What Sen. Jennings seems to conveniently forget is that we just had a few legislative sessions where they did NOT take a balanced approach, but rather only enacted cuts. Why didn’t his balanced approach apply last year during the regular and special sessions? At that time, he refused a balanced approach and would only enact deep budget cuts. We’ve had cuts deep enough to hurt our kids and working families. Now it’s time to raise significant revenue by making the rich and out of state corporations pay their fair share.
Senator,
Granted, now is the time to balance tax increases with spending cuts.
Our hope of course is that, you will not raise taxes without first ending the waste of those tax dollars. Further that you will not cut worthy programs without first cutting programs and positions that amount to nothing more than political payback for past contributions and support, cronyism, and nepotism.
We would like to watch you raise our taxes and cut our programs; we have a right to watch the sausage being made. We want to see your faces as you make decisions that affect our interests. Turn on the cameras, tighten up on your faces, and archive the results. Prove to us that you are willing to be held honestly accountable for your conduct and competence as legislators.
Give us a place where the least powerful can file complaints against the most powerful, knowing their complaint will see due process; give us an Ethics Commission that is open, transparent, impartial, and powerful.
Give us these before you give us more empty rhetoric.