Category: Taxes

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Opinion piece: Legislature’s 529 expansion a positive step for New Mexico

The following appeared in the Roswell Daily-Record on May 21, 2023.

The 2023 New Mexico legislative session was generally disappointing for New Mexicans who wish to see much-needed K-12 education reform. However, it was not a total loss. In fact, one bill did pass that could help thousands of New Mexico families pay for educational options that work best for them. Without a single “no” vote during the 2023 session, HB 342 will soon be the “law of the land.”

The bipartisan bill was sponsored in the House by Republican Minority Leader Ryan Lane and by Democrat Majority Leader Peter Wirth in the Senate. It was signed into law by Gov. Lujan Grisham, also a Democrat. HB 342 aligns New Mexico law with federal law as updated during the Trump Administration and recent legislation under the Secure 2.0 Act.

Over the years Congress has expanded the use of 529 plans to pay for kindergarten through 12th grade tuition and included student loan repayment and apprenticeship program expenses. And in 2023, Congress added a provision to allow rollovers of unused 529 plan funds into a Roth IRA for the beneficiary.

Starting on June 16 when this new law takes effect, New Mexico families will be able to deduct any contributions to their New Mexico sponsored 529 account that will be used to pay for up to $10,000 annually (per-child) on tuition expenses at an elementary or secondary public or private school (making them “qualified” expenses under New Mexico law).

Originally created to help families save for college, 529 plans have been helping families do that for years and will continue to do so into the future. For New Mexico residents, features include the fact that 100 percent of contributions to New Mexico’s plans are deductible from state taxable income in the year contributions were made to the account. If the account owner is a resident of New Mexico, then earnings and withdrawals from their 529 account are also exempt from state taxation.

New Mexico’s educational woes have been well-documented in numerous analyses. Families who are considering 529 plans or if they already have such a plan and want to know more about the latest changes can find out more at The Education Plan website https://theeducationplan.com. The Education Plan is New Mexico’s state-sponsored 529 education savings plan.

The website is informative and Rio Grande Foundation has undertaken its own efforts underway to educate New Mexicans, but it is up to families to either find this information for themselves or talk to a financial advisor.

If you have a child for whom the existing K-12 system is not working and you are considering the financial challenges of paying for school (in addition to the taxes you already pay to fund the schools), you should strongly consider looking at using a 529 plan.

This is especially true since the original purpose of 529 plans may not be as critical as in the past. That’s because many college costs in New Mexico are now covered thanks to the State’s “Opportunity Scholarship” program for “free” college. While nothing is truly free, the prospect of college being heavily subsidized by New Mexico taxpayers may change the financial equation for some New Mexico families who no longer need to prioritize saving for college and instead can use their 529 plan for K-12 tuition at a non-public school.

The Rio Grande Foundation has long been a proponent of increasing the educational options available to New Mexicans. While much work is to be done to improve educational options for families, we are pleased that New Mexico’s Legislature is allowing families to maximize the benefits of 529 plans for K-12 students. It is critical for parents of school-aged children to educate themselves on the benefits of these plans.

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

 

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

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.

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

 

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

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?

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

 

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

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.

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ABQ Journal opinion piece: Gov must address this nonsensical tax approach

The following appeared in the Albuquerque Journal on Sunday, March 26, 2023.


With $3.6 billion at its disposal, the New Mexico Legislature had the chance of the century – possibly the last century – to enact sweeping reforms of the state’s tax structure. The idea, seemingly as professed publicly by those from across the political spectrum, is to diversify the state economy to be less reliant on the vagaries of oil and gas prices.

Unfortunately, even with a positively mind-blowing 42% single-year budget surplus on top of robust spending growth in recent years and a large state and local government structure to begin with, the New Mexico Legislature abjectly failed to address our state’s problematic tax structure.

That means that New Mexico’s job-killing taxation of business service inputs will continue. And, while the gross receipts rate reduction is welcome, it is simply not a game-changer. In fact, GRT rates will remain higher in Albuquerque and most other cities than they were when Bill Richardson left office at the end of 2010.

Worse is the fact the bill contains numerous tax increases, and even more were considered. Shockingly, the original House version of the bill included major personal income tax hikes. When Richardson left office and throughout the Martinez era, New Mexico’s top income tax rate was 4.9%.

That top rate was increased to 5.9% for married couples making more than $315,000 in 2019 during Lujan Grisham’s first year in office. As originally formulated by the House, the bill would have added two new income tax rates of 6.5% and 6.9%. The 6.5% rate would have kicked in at the relatively low level of $200,000 for married couples.

This provision was amended out, but the inclusion of an income tax increase in the first place reflects the Democrat-controlled Legislature’s broader failure to grasp the opportunity at hand. As the final bill was crafted provisions to raise the capital gains and corporate income taxes were retained in the legislation. So-called “sin” taxes on alcohol and cigars were included as well.

If the goal is to diversify the New Mexico economy, you can’t do much worse than to raise capital gains and corporate income taxes. Perhaps the only thing worse is raising these taxes while the Legislature boosts spending by 14% and has a $3.6 billion surplus at its disposal.

While the tax hikes may be the worst part of the bill for businesses, the fact is that numerous other provisions of the legislation are deeply problematic. Subsidies for electric vehicles and charging stations are included. If these technologies are truly the wave of the future, why spend tax dollars on them? The same can be said for subsidies for energy storage systems.

As if those unnecessary subsidies aren’t bad enough, the Senate added massive film subsidies to the legislation. The current $110 million cap on annual film subsidies would be nearly doubled to $210 million. Worse, with another 5% subsidy boost for projects outside of Albuquerque and Santa Fe. Conceivably, some films could attain reimbursement of 40% of their taxable expenses.

Overall, New Mexico politicians are on the verge of squandering a unique chance to use a $3.6 billion surplus to diversify and improve the economy. Sadly, the Legislature has failed. Gov. Lujan Grisham will have a chance to wield her line-item veto pen. Hopefully, she, too, sees the problems inherent in enacting economically harmful tax hikes while also attempting to diversify the economy.

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.

 

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2023 New Mexico legislative session recap

Going into the 2023 legislative session, we at the Rio Grande Foundation had three goals.

1)    Use the state’s massive $3.6 billion surplus to reform the “pyramiding” and business service taxation inherent in New Mexico’s gross receipts tax;

2)    Push for SOME kind of serious education reform to improve upon New Mexico’s abysmal 52nd position in the National Assessment of Educational Progress (NAEP).

3)    Restore “democracy” by placing some kind of limit on this and future governors’ emergency powers.

Sadly, none of these ideas were taken up and thus the session must be considered a failure.

Additional goals included pushing the Legislature to address the impending electricity shortage which could hit New Mexico as soon as this summer, addressing the medical provider shortage, and helping to push back against bad bills.

The “omnibus” tax reform (HB 547) DID include a gross receipts tax reduction that will be both phased in and contingent on robust revenues. Sadly, it utterly failed to address business services taxation. It also included electric vehicle and energy storage subsidies, film subsidies, higher corporate and capital gains taxes, and taxes go up for drinkers (5 cents per drink), cigar smokers, corporations.

Perhaps Gov. Lujan Grisham will veto all or part of the bill? There is simply no reason for tax hikes with a massive surplus available.

Spending went up dramatically. At the start of the session the Legislature and Gov. largely agreed on a big-spending budget increase of 12% to $9.4 billion. When the dust settled in Santa Fe, the Legislature passed a $9.6 billion budget with an increase of 14% in a single year.  NM government is already bloated and has grown quickly in recent years. New Mexico continues to waste money.

4)    The best single bill of the session was SB 523 which passed late in the session as Gov. Lujan Grisham seemingly put the screws to Democrats reluctant to reconsider a 2021 law that was favorable to the trial attorney industry. Doctors and patients alike are breathing a sigh of relief, but that doesn’t mean New Mexico won’t face a doctors shortage moving forward.

5)    Voting bill HB4 included automatic registration at government offices like the MVD, mandatory drop boxes, felons voting before their time is completely served and a permanent absentee voting list. The bill will have negative impacts on the integrity of our voting process.

Thankfully, a number of bad ideas died in the session.

6)    A new paid leave scheme was put forth under SB 11 which would have resulted in tax increases borne by employees and employers alike. It fortunately died after passing the Senate.

7) Most big environmental schemes failed: SB 520 net zero, HB 426 clean fuel standard, and the “green amendment” HJR 4 all died ;

8) Bills to ban plastic bags statewide died;

9) HB 25 and HB 28 which would have increased New Mexico’s minimum wage both failed.

How did your legislators vote on these and other issues? Check out the Foundation’s Freedom Index here.

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Tax bill — the final analysis Part 1 (Gross Receipts Tax)

The 60 day legislative session is in the books. Fans of public policy that would result in increased economic growth, an improved education system, affordable, reliable electricity, and rule of law were sorely disappointed by the 2023 session (if they had any expectations to begin with). But, we at Rio Grande Foundation had low expectations coming into the session. Even with those low expectations we were pretty disappointed by the lack of legislative focus on improving New Mexico’s business climate or prospects for economic growth.

You can read through the complicated legislative history of the tax omnibus HB 547 here.

We hoped for fundamental reform of the gross receipts tax “pyramiding,” but we knew that even this would be an uphill battle despite the State having a $3.6 billion surplus. Indeed, no actual plan was ever put forth among the numerous “omnibus ” tax bills to address the pyramiding issue, so we can assume that the Democrat-led Legislature never made that a priority.

Here is our take on what happened in the FINAL bill (we have commented on the several previous iterations). Our comments are (broadly) in order of the overall importance of the policies considered:

Lack of pyramiding reform, but GRT rates reduced 0.5 percentage points. Sadly, instead of taking effect next year the tax reduction will take effect over FOUR years. If that’s not bad enough if GRT revenue in any fiscal year after 2025 and before 2030 is less than 95 percent of GRT revenue from the previous fiscal year, the rate would snap back to 4.75 percent. New Mexico is in the midst of an unprecedented boom in oil and gas and SHOULD see continued growth, but there is no need for these “triggers,” especially when, as Rep. Christine Chandler noted, “delaying the full implementation of the GRT rate reductions for four years was necessary in order to pay for the film tax credits.”

It is hard to conceive of a more economically-misguided approach than to put broad-based tax relief on hold in order to throw more money at an already heavily-subsidized film industry. Under the new law SOME film projects will be reimbursed for a mind-blowing 40 percent of their overall spend.

The ONLY glimmer of real GRT reform is that at the last second a provision was inserted into the bill to eliminate taxation of deductibles and co-pays for medical care. This is something we have advocated for for many years. It represents some positive movement in the effort to address the doctor shortage.

More to come on the rest of the bill in the next few days.

 

 

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House-passed tax bill is MUCH better, remains a missed opportunity

The omnibus tax bill (HB 547) passed over the weekend. It is no longer the disaster it was when introduced. In fact, it has moved from “-8” to “+1” in our Freedom Index vote tracking.  Because of its complexity and numerous pluses and minuses, it is a very difficult bill to rate and for members to vote on. Hopefully the bill is improved in the Senate, but as it stands it remains a missed opportunity.

The good:

  1. The bill cuts gross receipts tax rates significantly;
  2. It reduces personal income tax rates at lower income levels (which earners at all levels will benefit from somewhat);
  3. Social security tax cuts from 2022 are indexed to inflation;
  4. Military pension tax reduction is extended for another 5 years;
  5. Motor vehicle excise taxes would be directed to roads and more alcohol taxes would be allocated to alcohol treatment.,

The bad:

  1. The unprecedented $3.6 billion surplus SHOULD have been an opportunity to end New Mexico’s tax pyramiding on business services.This was not done.  Until it is New Mexico’s economy will continue to suffer.
  2. Numerous subsidies are tucked in the bill for EV’s, charging stations, and energy storage projects.
  3. Corporate income taxes are increased slightly (by removing a lower 4.8% rate on small corporations and taxing them all at 5.9%;
  4. Capital gains taxes are increased due to a less generous exemption;
  5. Alcohol taxes and taxes on cigars are increased.

Overall, the bill remains a mess of conflicting economic priorities. The only coherent strategy is that it attempts to remove taxes from those with lower incomes.

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Solutions for New Mexico’s medical provider shortage: part 2 of the two part series

New Mexico has a shortage of medical providers across most practice areas (as discussed in Part 1 of this series). So, as the 2023 legislative session gets rolling, what can be done about it?

The Rio Grande Foundation has looked high and low throughout New Mexico laws impacting medical providers and has produced a series of recommendations laid out in an extensive policy paper.

1) While forward looking in nature, HB 75 passed in 2021 and was revised later on that same year makes New Mexico’s medical malpractice much more plaintiff and attorney friendly through the increase in damage award caps is  causing a great deal of concern among providers even though it will not be implemented until 2024;

2) Stop taxing medical providers via gross receipts tax. The State is one of the few states in the entire nation that levies the equivalent of a “sales” tax on certain medical services. In New Mexico’s largest city, Albuquerque, the rate of taxation is currently 7.75 percent. Rates tend to be even higher in outlying areas of New Mexico. This could be part of a broad reform or more targeted.

3) Reduce Medicaid dependency.  According to the American Hospital Association, Medicaid underpaid hospitals by $24.8 billion in 2020. For Medicaid, hospitals received payment of only 88 cents for every dollar spent by hospitals caring for Medicaid patients in 2020. In 2020, 62 percent of hospitals received Medicaid payments less than cost.

4) Expand scope of practice/telemedicine.

There are several additional ideas outlined in the report along with more detailed discussion of the ideas listed above. All of it can be found here.

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Published opinion piece: Use surplus strategically to solve long-term problems

The following appeared in the Santa Fe New Mexican on December 24, 2022 and in numerous other news sources.

As the State’s Permian oil production boom continues in New Mexico the budget surpluses available to legislators each session grow as well. The latest announced budget surplus is $3.6 billion which is a positively mind-blowing 43 percent. This surplus is on top of already dramatic spending growth of 30 percent during the first four years of the Lujan Grisham Administration.

More spending growth this year is to be expected, but the capacity for government to continue expanding after years of rapid growth is somewhat limited by the ability of government to manage existing resources available to it. This is not surprising since New Mexico’s state and local government is already among the very largest in the nation.

But I’m not here to rail about the size of New Mexico government (at least not this time). Rather, I’m here to remind legislators of both parties that such massive surpluses present rare opportunities to lead our State to a better future.

Gov. Lujan Grisham has already proposed rebates of $750 or $1,500 for New Mexicans depending on marital status. Rebates are a bi-partisan idea, one supported in the recent campaign by her Republican opponent Mark Ronchetti, though details differed. To be clear the Rio Grande Foundation does not oppose tax rebates if they are not an excuse to (yet again) punt on long-overdue tax reform. Returning a portion of the budget surplus is not going to move New Mexico’s economy forward and diversify it in the same way as long-overdue tax reform would.

The same can be said for an idea that often garners bipartisan support in Santa Fe: that is bolstering various permanent and “rainy day” funds. Quite honestly, New Mexico has numerous big problems facing it. There is no better time to address these problems than right now. If policymakers use the surplus to diversify and improve the State’s economy in ways that will make it more competitive with its neighbors, the well-being of future New Mexicans won’t be so contingent on the vagaries of oil and gas.

New Mexico’s litany of current economic challenges includes:

  • A low workforce participation rate that has historically lagged behind our neighbors and remains well below pre-pandemic levels and has even dropped in recent months;
  • Poverty rates that are among the very highest in the nation;
  • A medical provider shortage that, while driven in part by regulations is worsened by gross receipts taxation of medical practitioners including Medicaid services;
  • Lack of economic diversity in a state that relies heavily on oil and gas for money and government (federal, state, and local) for employment opportunities;
  • Water and other infrastructure issues.

These problems (and more) can at least partially be solved by using New Mexico’s financial largesse wisely. New Mexico policymakers have long focused on government-driven approaches to these problems. State and local government spends a very high percentage of the economy.

Majority Democrats have an opportunity to not only pump more funding into their priorities, but they could show that they are pro-business and interested in using oil and gas revenues to diversify the State economy for a time when the oil and gas industry isn’t as bullish.

Republicans, rather than leaving the bold ideas to Democrats, should offer their own serious reform ideas and bills in the upcoming session. Ideally, the minority GOP could influence Democrats toward a more pro-growth agenda. Worst case, in two years they can point to their detailed policy ideas and use them to challenge Democrats for failing to take advantage of this unique opportunity.

Regardless of your political affiliation or beliefs we all must realize that 43 percent budget surpluses don’t come around often. We can’t solve all of New Mexico’s problems even with this massive surplus, but with strategic moves like those outlined here we can certainly move the needle.

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