Economy Tax and Budget

The Other Side of the Fiscal Crisis

The inevitable consequences of New Mexico’s profoundly unwise expansion of Medicaid are coming into sharper focus. But fiscal policy has two components: expenditures and revenue. And serious pressure is starting to build on the cash side of New Mexico’s budget.

The Land of Enchantment isn’t alone. Energy-dependent states and provinces are feeling the pain:

* In Oklahoma, the governor has “ordered state agencies … to prepare to cut nonessential expenses by 10 percent.”

* Wyoming’s Consensus Revenue Estimating Group has “calculated projected losses through June 2018” of $617 million.

* Alaska is facing down a $3 billion deficit, and legislators are examining the incentives the state uses “to get companies to come to Alaska, produce oil and gas, and generate jobs and economic activity.”

* Alberta is projecting “a record deficit on falling revenue.”

It appears that austerity (being rather generous with the term) will remain the standard operating procedure for New Mexico’s budget:


But while spending has been fairly flat in recent years, a two-decade perspective reveals a very different trend. Between 1993 and 2013, per capita, inflation-adjusted spending in New Mexico rose by 47.5 percent:


There appears to be a lot of room in the budget for right-sizing. Pro-taxpayer legislators should get to work on what programs and bureaucracies to cut, combine, contract, compress, and condense.