Mayor’s ’09 Budget Steers Right Course

We at the Rio Grande Foundation have certainly had our share of differences with Albuquerque Mayor Martin Chávez. His proposal to run a $300 million streetcar along Central Avenue was one major dust-up. We’ve also expressed concern or opposition to other initiatives, including a taxpayer-financed arena and citywide Wi-Fi.

Experiencing several high-profile political defeats is not something many politicians care to experience or admit to. But, from a taxpayers’ perspective, the failure of some of these high-profile initiatives combined with the mayor’s relative restraint in other areas is a positive that will enable Albuquerque to weather the current economic storm in better shape than the state as a whole and most other cities.

When compared with the rapid growth in New Mexico’s General Fund budget, for example, the mayor’s budgets have been downright frugal. From Fiscal Year 2005 to FY 2008, the state budget grew at an annual rate of 8.4 percent. By contrast, Albuquerque’s budget growth over the past four years has more closely mirrored annual increases in inflation and population growth with a 4.35 percent average increase.

Albuquerque, led by Chávez, has restrained budget growth. This restraint in good times should allow the city to weather turbulent economic times more easily. Of course, with the national and local economies experiencing slow or no growth and citizens being forced to cut back on personal spending, it is only fair that government officials tighten up government spending as well.

Chávez should be applauded for submitting a budget which closes the city’s expected $54-million budget deficit while going ahead with modest 1/8th-cent gross receipts tax cut (saving taxpayers $17.5 million), which is scheduled to take effect in July.

One well-publicized aspect of the mayor’s proposed 2009 budget is that 200 currently vacant positions will not be filled. Although the $11 million freed up is small in proportion to the mayor’s proposed budget of $922 million, genuine fiscal restraint only happens when elected officials make dozens of similar, small money-saving steps.

As far as the 1/8-cent cut in the gross receipts tax is concerned, it may not seem like much when taxpayers consider the vast array of taxes they must pay, but the fact that any tax cut, especially one that is made to New Mexico’s most economically-harmful tax, is a step in the right direction. This is particularly true as Albuquerque constantly competes with cities from Santa Fe to Alamogordo and Las Cruces that are now raising their gross receipts tax rates.

While the mayor certainly deserves kudos for responding to tight budgetary times with fiscal restraint and tax cuts, things could always be better.

Avoiding pitfalls like a costly streetcar and an unnecessary arena enabled Albuquerque to avoid facing even more painful decisions than it faces now, but some policies under consideration like “green” building codes and mandating high efficiency heaters could make living and doing business in the city more difficult and expensive than necessary. Careful steps to reduce the burden of costly regulations would attract business and further strengthen Albuquerque’s economy.

With home values sagging and the economic outlook uncertain, taxpayers can take some comfort in the fact that Albuquerque’s restrained fiscal management should help the city ride out this storm. While the City Council will certainly have its own views on the proposed budget, councilors should adhere to the broad tenets outlined by Mayor Chávez that include moving forward with the tax cut and fiscal restraint.

Paul Gessing is president of the Rio Grande Foundation, a research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.