Category: Legislature

Opinion piece: Governor’s Disdain For Democracy Nothing New

Post author By Paul Gessing
Post date September 20, 2023

The following appeared in Las Cruces Sun-News on September 15, 2023 and in other papers across New Mexico.

New Mexico Gov. Michelle Lujan Grisham recently gained national headlines for her public health order which essentially banned carrying a gun in Bernalillo County, the State’s largest county by population. Her justification for this dramatic action was a recent shooting outside Isotopes Park, but residents of Bernalillo County and Albuquerque face and have faced these issues for years.

Each time a criminal uses a gun to kill or steal it is frustrating and sad event. Both the causes and solutions are complicated and controversial. No matter the crisis one person (including the Gov.) cannot simply suspend the rule of law and the US Constitution.

Many New Mexicans like me believe Albuquerque’s crime problem is the result of weak leadership at multiple levels: The City fails to enforce the law, Department of Justice policies further hamstring the police, “catch and release” judges that voters (sadly) keep electing, and an unwillingness of the Gov. and Legislature to pass laws addressing our serious crime problems. And those are just the public policy failures, not the societal ones.

Many New Mexicans carry guns in response to the threat of violence they face.

Any attempt to deal with crime needs to involve the Legislature and other State and local elected officials. This would be true even if New Mexico had Republicans in positions of political power which they don’t.

Sadly, Lujan Grisham is only taking the next logical step in accumulating political power to herself. Declaring a “health emergency” and then making all manner of policies regarding school and business openings as well as vaccines and masks with little public input or say-so was her approach during COVID.

Sadly, the same Democrats who run the Legislature and who failed to pass basic restrictions on the Gov.’s COVID powers (like a 45-day limit on her emergency powers) remain largely unwilling to address the Gov.’s latest overreach on guns (Sen. Joe Cervantes is one notable exception as he has spoken out in opposition).

This is not just about guns. Lujan Grisham has exhibited a pattern of taking powers whether they are hers to use or not. She is currently working through an unelected Environmental Improvement Board, not the elected Legislature, to impose drastic new mandates that will soon require 82% of vehicles sold in New Mexico to be electric.

Occasionally the Gov.’s anti-Democracy tactics are on seemingly minor issues. Back in the 2022 special session of the Legislature the Gov. requested $1 million to reduce fees on the struggling New Mexico Rail Runner Express. The funds were not allocated by the Legislature, but the Gov. decided to cut fares anyway on her own.

Gov. Lujan Grisham may or may not have a political future beyond the remainder of her current term of office. Despite impeachment proceedings that have been filed by the GOP, we will likely be stuck with this Gov. until her term expires the end of 2026 when her term expires.

But the entire Legislature is up next November. And when they are running for office, one of the very first questions voters need to ask them is what they will do to hold the Gov. accountable when she ignores the law.

They should start by speaking clearly and publicly in opposition to her “gun grab” and then they should enact limits on the duration and scope of executive power in public health emergencies.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Education Events Legislature Notable News Top Issues

Opinion piece: Time for all-above approach to education

Post author By Paul Gessing
Post date September 1, 2023

The following piece appeared recently in numerous news outlets including Eastern New Mexico News. In addition to the link below you can click on the picture above to register for the conference.

New Mexico should be in crisis mode. Our K-12 education system is certainly facing a crisis. Problems abound: recent reports highlight serious school attendance issues, the NAEP (known as the “Nation’s Report Card”) test places New Mexico 52nd across ALL age groups and subjects studied, the Kids Count report shows New Mexico kids are losing ground, and no one seems to have a solution. Education spending has increased markedly in recent years with nothing to show for it.

With New Mexico already suffering from poor educational outcomes the COVID pandemic and lockdowns instigated by Gov. Lujan Grisham truly put our children into a crisis. Getting our children out of last place and into something resembling a functional, successful system that prepares them for future success should be THE issue that everyone in New Mexico is concerned with.

Sadly, for reasons that include the unions’ hegemony over education policy in New Mexico and the fact that many New Mexicans have resigned themselves to policy failure, our political leadership rarely addresses the need to dramatically reform our education system. Instead, we’ve seen money poured into an education system that has seen a massive reduction in the number of students served.

There are many ways to measure this, but perhaps the most direct is a recent analysis from Wallethub, which found that New Mexico spends 20th-most among states on K-12 education for results that rank 51st. Being in the “High spending, weak system” category is obviously the worst place to be in education, but here we are. More money is not the answer.

So, what IS the answer? That may not even be the right question. Rather, we at the Rio Grande Foundation are advocating for an “all of the above” approach to education in New Mexico. For example, Mississippi has done some amazing things in education to the point where The Associated Press labeled their success “the Mississippi Miracle.”

By reforming the existing education system Mississippi has achieved major gains in student outcomes. New Mexico policymakers should take note and enact similar reforms.

New Mexico has long had charter schools. They are the major form of “school choice” in our state and they include a disproportionate share of the state’s best performing schools. But more is needed to make our charter schools the best they can be for New Mexico kids. This can mean everything from making it easier to start a new charter school to making it easier to close failing or under-performing charters.

Finally, we’ll talk about private options. Arizona and several other states have boldly embarked on a path where money for schools follows the student, but there are other options including school choice tax credits and “microschools” that are worthy of discussion and analysis. What do these options mean in practice and can we get them in “blue state” New Mexico?

At the Rio Grande Foundation (and our education project “Opportunities for All Kids New Mexico”) we believe New Mexico’s education challenges are an existential threat to both our children and our economic prospects. So, we are hosting a free, day-long education conference in which experts from across the nation and state discuss these and other potential solutions.

The conference, set for 9 a.m. to 4 p.m. Sept. 22, will be held at St. Pius X High School on Albuquerque’s West Side. The event is free but sign up is required at: http://www.oaknm.org. Let’s all work to solve New Mexico’s existential education crisis.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, which promotes limited government, economic freedom and individual responsibility. Contact him at: pgessing@riograndefoundation.org

Economy Legislature Notable News Tax and Budget Taxes Top Issues

New Mexico could learn a lot from Texas about governance

Post author By Paul Gessing
Post date July 30, 2023

The following appeared in the Albuquerque Journal on July 30, 2023.

A recent editorial cartoon highlighted the vastly different approaches towards governance of New Mexico and Texas. The cartoon is of the state border circa 2030 as New Mexicans head to Texas for gas-powered vehicles (due to the recent regulations proposed by Gov. Lujan Grisham) while Texans visit NM for abortions and marijuana.

These are hardly the only differences between the two nowadays as Texas has no income tax or job-killing gross receipts tax, it is a right to work state, and state spending per-person is less than half of what it is in New Mexico. Not coincidentally, Texas is also one of the fastest growing states in the nation while New Mexico’s population is stagnant with young people leaving and being replaced by older people and retirees.

People have been talking about Texas’ economic success for decades, but a recent family vacation gave me the opportunity to see it firsthand. I have flown to several major Texas cities and have driven across the Panhandle more times than I care to recall, but this trip involved flying to Dallas and driving from all the way to Corpus Christi and the Gulf Coast. That’s a trip of over 400 miles including stops in major cities including Austin and San Antonio (in addition to Dallas).

We went deep in the heart of Texas and compared what we saw with our home state of New Mexico. Here’s what we saw.

It seems like all the roads in Texas are under construction. Yes, this is a hassle for visitors and commuters alike, but it also highlights the fact that more people and businesses require more infrastructure. Aside from the road construction, the interchanges are often complicated with extremely high overpasses. Finally, just the sheer amount of construction equipment involved highlights the size and scale of these projects. Construction projects are definitely bigger in Texas.
Setting aside roads and bridges, businesses are flocking to Texas as well. The Tesla plant outside Austin is the largest manufacturing space in the United States by floor area. Even in and around small towns construction was under way on significant buildings and cranes often dotted the skyline.
Texas rest areas are incredible. One might think that with New Mexico having two of the nation’s most important east/west highways (I-40 and I-10) running through it (and a booming budget), would invest the tiny level of resources needed to make rest areas a place people want to stop and feel safe and comfortable doing so. This is especially true given the lack of road-side amenities available on many of our highways. Sadly, New Mexico’s rest areas are meager and often in a state of disrepair. Texas has playgrounds and historical/local interest information available for those who need a potty break or just want to stretch their legs.

Texas is booming. It provides a business-friendly environment and a government that does the basics well and at less than half the cost per resident.

While New Mexicans have a long-standing historical resentment of the Lone Star State, but the entrepreneurial, pro capitalist culture and polices clearly have a lot to be said for them. New Mexico can’t and shouldn’t be Texas, but we can also learn some valuable lessons from it.

Education Legislature Notable News Top Issues

Op-ed: Kids Count Report … A Wake-Up Call

Post author By Paul Gessing
Post date June 30, 2023

The following article appeared in the Las Cruces Sun News and other media outlets on June 30, 2023.

Once again New Mexico is at the very bottom of a list. Kids Count 2023 is compiled by the Annie E. Casey Foundation with distribution and media handled by New Mexico Voices for Children.

While it is not the report Rio Grande Foundation would compile, the 16 variables considered in do highlight issues regarding the well-being of New Mexico children. Sadly, like so many similar reports, the results are not good for our state. What is unique is the positive spin being applied by Voices for Children.

As Voices for Children’s Amber Wallin recently wrote in an opinion piece, “you shouldn’t let the rankings get you down because they don’t tell us how far we’ve come.” We politely disagree and believe that Voices would not have the same sanguine viewpoint if a Republican governor or Legislature were calling the shots.

In 2019 the organization’s then Director James Jimenez said of New Mexico’s 50^th ranking, “It is very much a reflection of what happened, and more specifically, what didn’t happen during the Martinez years.”

We took a careful look through this year’s report and found that of the 16 variables, 9 of them got worse while 6 improved (one stayed the same). That is hardly cause for celebration.

Perhaps even more interesting than the overall results is New Mexico’s poor performance in four “COVID-related” indicators. In our view these include:

79 percent of New Mexico fourth graders are not proficient in reading. This number has dropped 4 percent since 2019;
87 percent of eight graders are not proficient in math. This number has dropped by 10% since 2019;
New Mexico’s child and teen death rate per 100K worsened by 16 percent since 2020;
The percent of youth who are overweight or obese has worsened by 6 percent since 2019-2020.

These four variables (of the 16 in the report) have significant connections to Gov. Lujan Grisham’s COVID lockdown policies that locked our kids out of school for over a year and encouraged New Mexicans to stay inside and isolate themselves from other people.

The good news is that the COVID pandemic is over, as are the Gov.’s restrictions. Sadly, as critics pointed out at the time, the impacts of her policies were clearly going to do more harm than good. Will the kids, especially those from poor families be able to recover? It is hard to say.

What is clear is that after more than four years in office and with the benefit of an unprecedented oil boom, massive spending increases haven’t improved New Mexico’s 50^th-place performance. We recommend going a different direction from the government-driven status quo (a status quo that has dominated New Mexico for nearly a century).

Instead of more government programs we can use the oil and gas surplus to reform our anti-business gross receipts tax and then focus on eliminating the anti-work personal income and corporate taxes. Make New Mexico the jobs and economic growth hub of the Americans Southwest and watch as good paying jobs and economic opportunity improve education, social, and economic outcomes for our children and all New Mexicans.

We are a long way psychologically and politically from breaking out of the big-government paradigm, but it is long overdue. After all, it’s for the children.

Economy Legislature Notable News Oil & Gas Tax and Budget Taxes Top Issues

Opinion piece: Don’t get too excited about those rebates

Post author By Paul Gessing
Post date June 22, 2023

The following appeared in the Las Cruces Sun News and numerous other newspapers on June 18, 2022.

According to New Mexico’s Tax and Revenue Department rebate checks (or transfers to bank accounts) will be going out at any time during the middle of June. At the Rio Grande Foundation we welcome the $500 or $1,000 (depending on single/married filing status). This is especially true at a time when inflation is rising faster than wages.

But New Mexico is in the midst of an unprecedented boom in its oil and gas industry and, while those checks are nice, they are a pittance relative to the windfall being experienced in State government. Worse, unless the Legislature and Gov. take concrete action and soon to diversify the economy, New Mexico will waste this unique opportunity.

First the numbers: according to the Legislature’s analysts, the one-time “cost” of the rebates is $667 million. You may recall that the Legislature began the 2023 session with a surplus of $3.6 billion and spent $1.2 billion of that.

Though new spending was “just” double the amount of the rebates, the reality is that almost all of the money not spent this year will be put into reserves to be spent in the future. That means that more than 80 percent of this year’s budget surplus will ultimately be spent (unless the Legislature enacts some real tax cuts in the 2024 session).

There are a few major points to be made:

During her reelection campaign Gov. Lujan Grisham decried Mark Ronchetti’s rebate proposal as a “fiscally irresponsible socialist scheme” and said it would eliminate funding for the state budget. What changed?
It is widely acknowledged that New Mexico needs to diversify its economy, but neither more spending nor one-time rebates will do that. When will Lujan Grisham and Democrats in the Legislature get serious about making New Mexico less dependent on oil and gas?
While RGF applauds genuine efforts to diversify the economy, oil and gas revenues show no sign of slowing down. That’s because New Mexico is in a production-driven boom, not a price-driven boom. So, rather than allowing a scarcity mentality to drive tax cut and tax reform decisions, policymakers should understand that strong revenues are here for the foreseeable future and should be used to get New Mexico out of its unnecessarily impoverished state.

Like all New Mexicans we at the Rio Grande Foundation welcome these rebates. What we are looking for out of Lujan Grisham and the Legislature is some kind of coherent economic strategy (besides simply spending more money). It is time to translate our oil and gas wealth into prosperity for ALL New Mexicans. That requires average New Mexicans to engage with and hold this Legislature and Gov. accountable for their policy decisions.

Economy Legislature Notable News Top Issues Videos

KOAT-TV covers RGF workforce participation rate analysis

Post author By Paul Gessing
Post date June 2, 2023

The Rio Grande Foundation recently analyzed workforce participation data for New Mexico and its neighboring states. Separate data from New Mexico’s Legislative Finance Committee was also discussed in the post.

This attracted the attention of KOAT Channel 7 which did an excellent report on RGF’s data and analysis including discussing the data with a UNM economist who added his cogent thoughts. Check out the KOAT report here.

Economy Energy and Environment Legislature Notable News Oil & Gas Tax and Budget Taxes Top Issues

National Review Capital Matters opinion piece: New Mexico Wins the Lottery

Post author By Paul Gessing
Post date May 4, 2023

The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.

Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.

A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011

For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.

One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.

The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.

New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).

Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.

Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they tend to make poor decisions. And all that brings New Mexico’s politicians to mind.

Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:

Two additional tax brackets of 6.5 and 6.9 percent . New Mexico’s current top rate is 5.9 percent (already increased from the 4.9 percent rate charged during Bill Richardson’s days as governor) would have been further augmented by even higher rates with the 6.5 percent kicking in at $200,000 for married filers;
Tax hikes on capital gains and corporate income;
Higher taxes on tobacco and alcohol;
Subsidies for electric-vehicle buyers, charging stations, and additional handouts for the already-heavily-subsidized film industry.

There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.

In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.

She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.

In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government. Spending grew by another $1.2 billion in the latest budget thanks to a 14 percent year-over-year increase.

As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.

Economy Legislature Notable News Oil & Gas Tax and Budget Taxes Top Issues

Opinion piece: New Mexico’s misguided approach to economic development

Post author By Paul Gessing
Post date May 1, 2023

The following opinion piece appeared in Las Cruces Sun News and other papers recently.

In her message in which she explained her veto of large portions of the Legislature-passed tax bill, Gov. Lujan Grisham wrote, “Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole.”

She wrote this while the State of New Mexico sits on a $3.6 billion budget surplus thanks to oil and gas revenues (a boom that shows no signs of slowing down). She also signed a 14 percent budget increase which grew the size of government by $1.2 billion and included everything from increased film subsidies to $10 million for an abortion clinic primarily to serve Texans. Last year’s budget increase was over 13 percent as well.

The “tax reform” effort in Santa Fe got off to a bad start when the House didn’t seriously attempt to reform the unfair and job-killing “pyramiding” of the gross receipts tax. That “original sin” of New Mexico tax policy (reform of which was supported by the Gov.) should have been the Legislature’s top priority. It clearly was not, and it was never included in any version of the bill.

Worse, instead of just cutting taxes, both houses of the Legislature sadly included tax increases in versions of the bill including the final version. Raising taxes is inexcusable with a $3.6 billion budget surplus. Worse still, the tax hikes included anti-economic-growth policies like imposing two new top rates on personal income and increasing both capital gains and corporate income taxes.

Each of these tax hikes would have done great harm to our economy. The Gov. was right to veto them. Gov. Lujan Grisham’s tax policy agenda is hardly above reproach, however. The Legislature initially planned to reduce the GRT by 0.5 percentage points. This should not be mistaken for reform, but it is much better than nothing. Reducing the GRT also fits nicely with “progressive” economic policy goals as the GRT is a classic “regressive” tax meaning that poor pay a higher percentage of their incomes on it.

But, in the waning days of the session as the Gov. expressed concerns about the size of the tax package legislators adjusted the package by phasing-in the gross receipts tax reductions “to make room for” the film subsidies which had been added during the legislative process.

It would be hard to come up with worse tax policy than delaying broad-based tax relief to pile even more generous subsidies on top of those already given to a favored special interest (Hollywood). Adding insult to injury these GRT rate reductions were vetoed by the Gov. while film subsidies were left intact.

The best that can be said for tax package is that New Mexicans will get one-time rebates and medical doctors will no longer be taxed on deductibles and copays.

Watching the many twists and turns of the tax bill in the 2023 session highlighted that New Mexico’s political leadership simply does not understand basic economics. Given their ignorance, it is no wonder New Mexico performs so poorly economically. And it’s not just the Gov.’s vetoes, but the Legislature’s approach which was misguided from the start.

Economically, the 2023 session was a big disappointment. But, unless something dramatic happens, the State will likely again be awash in oil and gas revenues when the 30-day session rolls around next January. Can the Legislature and Gov. come up with a real tax reduction plan that will diversify our economy and move New Mexico out of last place?

Constitution and Criminal Justice Legislature Notable News Top Issues

RGF op-ed: A small victory for free speech — barely

Post author By Paul Gessing
Post date April 11, 2023

The following appeared in the Santa Fe New Mexican on Apr 8, 2023.

In a small but significant victory for free speech during the recent legislative session, Senate Bill 42, a measure that would have made New Mexico’s already-hostile privacy laws for nonprofit causes even worse, was miraculously killed on the House floor. The bill already had been adopted by the Senate, so this was truly a last-ditch effort.

Current laws relating to forcing nonprofits to disclose their donors are already being challenged by the Rio Grande Foundation in court. That original law (adopted in 2019) dramatically expanded New Mexico’s campaign finance laws to cover nonprofit groups that merely mention lawmakers in their communications near an election. As a result, many organizations that have long had a voice in state policy debates would have been forced to publicly expose their supporters’ names and home addresses to the harsh light of public scrutiny.

That’s a major violation of personal privacy and a threat to free speech. Americans who have their identities, locations and support for social causes exposed can suffer harassment and retaliation for their beliefs. Privacy-conscious citizens may send their donations elsewhere instead of supporting New Mexico-based causes. Many nonprofits will self-censor to protect their supporters.

The result may be a win for some politicians since many critics of their ideas and voting records will be silenced. But it’s a loss for nonprofits, New Mexicans who support them and free speech throughout the state.

The Supreme Court has consistently struck down laws that chill the speech of nonprofit advocacy groups by publicly exposing their members and supporters. It has upheld laws that require candidates, political parties and other groups formed to elect or defeat candidates to disclose their contributors, but New Mexico’s law reaches far beyond elections and imperils speech about public policy. That’s where it runs into trouble with the Constitution.

SB 42 was like the current law but on steroids. It would have made it explicit that donors who support nonprofits for any purpose, not just a political purpose, must be exposed. That requirement would have created disclosure reports filled with junk. For most nonprofits, commenting on ongoing debates in the Legislature is only a small part of what they do. Their general donors may not know about or even agree with the messages they are publicly listed as funding.

For this reason, SB 42 could have been found unconstitutional even if New Mexico’s current law survives in the courts.

In the age of cancel culture, New Mexico is moving in the wrong direction. People deserve more control over their personal information, not less. They deserve more protection from being targeted and attacked for their beliefs, not to be thrown to the wolves.

In poll after poll, Americans admit they are afraid to speak openly about their views on issues as basic as their preferred presidential candidate. Plastering citizens’ donation records to nonprofits on the internet will not create accountability. It will enshrine cancel culture into New Mexico law.

Despite an ongoing legal battle, the New Mexico Legislature has only paused its ongoing efforts to put privacy and free speech at risk. SB 42 was another overreach and another lawsuit waiting to happen. Thankfully it was narrowly killed, but we’ll undoubtedly face similar threats to free speech next year.

Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity.

Economy Legislature Tax and Budget Taxes Top Issues

Final tax package analysis: actual tax cuts account for 1.4% of $3.6 billion surplus

Post author By Paul Gessing
Post date April 10, 2023

As usual, Albuquerque Journal cartoonist John Trever summarizes the situation perfectly with his cartoon from Sunday, April 19, 2023.

Here are a few notes about the final tax bill as line-item vetoed by Gov. Lujan Grisham. New Mexico had a $3.6 billion surplus going into the session. The Legislature originally allocated $1.1 billion for “tax cuts.” $1.2 billion of that $3.6 billion was for new spending. That means over $1 billion would have been set aside for the future. The point is that (contrary to MLG’s veto statements about having anxiety over future revenues) plenty of money was available.

To her credit, MLG vetoed all the tax hikes in the bill (corporate, capital gains, alcohol, and tobacco), not just the tax cuts.

Here are the so-called “tax cut” provisions approved by the Gov. in the final bill (we used the 2027 fiscal impact for the tax/spending bills):

Film subsidies: $87 million by FY 2027. This is NOT a tax reduction. It is new spending;
Health practitioner deductible/copay: $38.5 million (this is the one ACTUAL tax cut passed and signed);
The Child Tax Credit: $111 million; While a small portion of this will indeed represent a tax cut, this is a very “progressive” and “refundable” credit (it is given whether you make money or not). We estimate $100 million of this is spending and only $11 million is an actual “tax cut.”
$500 or $1000 tax rebates: The one-time “cost” of these rebates is $667 million.

So, here are the tallies for what happened to New Mexico’s $3.6 billion surplus:

1) $1.2 billion or 33% was spent (adding in film subsidies and refundable child tax credit as spending;

2) $667 million or 18.5 percent of the surplus was returned in the form of one-time “rebates.”

3) $50 million or 1.4 percent comes in the form of “recurring” tax cuts.