After too many years of kicking the fiscal can down the road, the 2017 legislative session must take charge of the chronic budget problems it has been avoiding or else risk having our state’s house-of-cards economy fall completely apart.
No use looking to the governor for leadership in this regard. Her administration’s refusal to offer even a rudimentary road map for our fiscal malaise was made absolutely clear during the “special” session she called last fall right before the election.
Instead of any courage or actually even any executive behavior, we were treated to a completely irrelevant exercise in raw politics. To swing public opinion against Democrats, she used the families of crime victims to stir up support for a diversionary “get tough on crime” agenda that would have only made the state’s money crisis worse if it had passed.
In the absence of any executive blueprint, the Legislature patched together a barely passable “fix,” scooping up agency balances; re-configuring capital projects into cash reserves; and enacting one-size-fits-all 5 percent departmental budget cuts.
But structural problems with our budget weren’t solved; they were merely wallpapered. The inescapable reality is that, after a decade of repeated tax cuts, New Mexico’s state revenues will be lower in 2018 than they were 10 years ago. We are not over-spending. We are not wasting money. We are rather starving some of the most crucial and valuable public services that any economic recovery will need to have in place. Without them, we are locked in a death spiral: Cuts in necessary services producing lower revenues which then require more cuts; and on and on until state services become so inconsequential, they simply vanish.
The notion that any government can slash its way to prosperity is ludicrous. Laying off state employees does not make the private sector healthier; it hurts that sector, too. Cutting contracts doesn’t magically generate more business for the private sector; it squeezes that sector further. Repeat these mistakes often enough and we have what New Mexico now faces: zero economic growth; population stagnation; unemployment near the highest in the nation; and continuous out-migration of our best educated young people.
If the Legislature is to enact a budget that builds prosperity in our state, it will have to do so over the governor’s objections. She is determined to resist any attempt at increasing state revenue. Thus, it will be accomplished only if the public is persuaded that cautious, reasonable and understandable tax increases will truly improve our business climate, not hurt it. Then the public will have to express itself to the governor that a 2008 revenue stream cannot rebuild our economy in 2018.
This is not to say that close analysis of state agency spending won’t find a great many reductions in specific programs that should be taken. That is not an across-the-board meat cleaver approach, but a delicate surgery that spares the most valuable services and programs, while slicing the more expendable – such as Education Secretary Hanna Skandera’s millions spent on out-of-state consultants or Children Youth and Family Department’s millions spent on advertising.
But we should balance every dollar excised from the budget with a dollar of new revenue. Many tax proposals are on the table. Each of them deserves the same surgical analysis and careful scrutiny by the Legislature as the budget cutting will get, with nothing ruled outside the bounds beforehand.
Increasing the gasoline tax to address our deteriorating roads or imposing an in-patient provider fee on hospitals (actually suggested by the Hospital Association) to ensure Medicaid has sufficient revenue to avoid reimbursement cuts are just two of the ways we can jump-start our economy through reasonable taxation policy.
Gov. Susana Martinez’ vow to oppose all tax increases shouldn’t be adopted by legislators. We took a different oath: to work for the good of all the people of the state.
That’s what is called for at this moment: adult leadership, not sloganeering. If the governor won’t lead, the Legislature will have to.