Most New Mexicans think of July as a time to celebrate America’s independence, but government bureaucrats around the state celebrate the month for an entirely different reason. There are no backyard barbecues or fireworks for this celebration, however, and the nation’s Founding Fathers might not even approve of the cause.
Indeed, few New Mexicans even recognize the passing of this “other” July holiday and the Rio Grande Foundation is one of the few organizations (outside of the government) that even marks the occasion.
What is this red-letter day? The “holiday” is nothing more than the start of a new fiscal year for the state government. In other words, it is the day when government budgets officially grow and they get to start spending more money than they had during the previous fiscal year.
Most discussions about New Mexico’s budget focus on the General Fund, which will total $5.6 billion in FY 2008. But, during the 2008 fiscal year, New Mexico’s government will spend a total of 13.6 billion taxpayer dollars. Both of these numbers are rising rapidly.
The General Fund is the most well-known pot of money and barometer of spending in the state – it rose by 11 percent last year. Not included in that number is $8 billion in additional money that includes the permanent fund, various road funds, and much of the money spent on Medicaid and Medicare. Overall spending, which amounted to $13.6 billion in FY 08, rose dramatically last year as well for a robust 9 percent single-year increase.
Both the 11 percent figure for the General Fund and the 9 percent overall budget increase are far above the rates needed to keep up with inflation (about 2 percent this year) and population growth which averages about two percent annually in New Mexico. Thus, state government grew rapidly in real terms this year.
The Rio Grande Foundation marks the date by updating its “spend-o-meter.” With the start of this new fiscal year (2008) our spend-o-meter 9 percent faster than it had spun during the previous fiscal year. This 9 percent increase also explains why government bureaucrats celebrate: they get to spend even more of your money than they did before.
Unfortunately, when numbers get big, readers’ eyes sometimes glaze over. That’s because most of us never deal with anything in terms of billions, much less money. The Rio Grande Foundation created a “spend-o-meter” to allow average New Mexicans to visualize state spending and measure just how fast the state is spending our money. The meter runs continuously and is posted on our websitewww.riograndefoundation.org.
So, just how much is $13.6 billion? To spend that money over a single year, the state spends $433 per second. Put differently, based on New Mexico’s population of approximately 2 million, our government will spend $6,957 for every man, woman, and child in the state during the current fiscal year.
Based on data from the New Mexico Tax and Revenue Department estimating that there are 875,000 tax filers in the state, the state will spend $15,542 for each and every tax filer in FY 2008. That works out to over $1,295 every month for each-and-every New Mexican that filed a tax return.
While politicians might believe that they are better stewards of taxpayers’ money than the people who earned the money in the first place, this sentiment is less common among the average taxpayer. More importantly, New Mexico’s high poverty levels and low incomes call into question past efforts by government officials to “manage” the state’s economy.
Rather than continuing down the path to bigger government, taxpayers, if they are baffled by the rapid rate of spending growth here in New Mexico should question where all that money is going. More importantly, they should contact their legislators to find ways to amend the New Mexico Constitution to limit spending. Left to their own devices, politicians will spend whatever the government collects. Only the active involvement of concerned taxpayers can halt the spending spree in Santa Fe.
Paul Gessing is President of the Rio Grande Foundation, a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.