The budget glass is half full
Must be a lot of sore backs out there, what with the Legislature balancing the budget on the backs of working people, or on the backs of poor people, or on the backs of people who eat tortillas.
The Left and the Right both found much to dislike in the compromise, so maybe it’s not too bad, after all. Let’s take a look in the glass half full.
Consider what didn’t happen. Don’t like that one-eighth-cent increase in the gross receipts tax? It started out at a half-cent. Bummed at the “tortilla tax”? It could have been a tax on all food items, if a few parties had prevailed. And it’s up to local governments if they want to make that move — a clever passing of the hot (untaxed) potato.
Smokers just weren’t going to walk away without a new tax, but drinkers were spared a similar tax, to the disappointment of some crusaders.
Republicans wailed about new taxes, of course, but failed to notice that the threatened rollback of previous tax cuts didn’t materialize. Neither did an effort to sock the rich through a 1.5 percent surtax on higher personal incomes. Eight Democrats joined Republicans to kill this one.
Which produced a corresponding wail from Progressives that because lawmakers were “reluctant to restore income-tax rates they’d grandly reduced on behalf of the rich, they pounced on the poor,” in the words of the Santa Fe New Mexican.
The tax on out-of-state corporations, also sought by Progressives, was stillborn. There will, however, be a lesser hit for those who itemize deductions and can no longer deduct state and local income and sales taxes on state returns.
Beverly McClure, president of the statewide Association of Commerce and Industry, in between griping that the Legislature tried to balance the budget on the backs of the private sector, had to admit, “In some sense, our message was heard. In some sense they met us half way.”
Another cause to cheer: The worst idea of the regular session died quietly. Senate Majority Leader Michael Sanchez, a Belen Democrat, thought we could plug the deficit by borrowing $500 million against the state’s Permanent Funds. Lawmakers quickly put this one out of our misery.
We heard a lot about “cutting the fat” in state government. State spending is down by $700 million since 2009, according to the Department of Finance. Nearly every state program including Medicaid, which provides health care to 300,000 New Mexico children, suffered cuts at a time when 27,000 people lost their jobs and increased the demand on services.
Factor in that education takes a large chunk of the budget and that New Mexico ranks fourth in children living in poverty, and I suspect there isn’t as much fat as we’re led to believe.
Viewed from another direction, maybe you think the reduction in education budgets (1.2 percent for public schools, 3.5 percent for higher education) and 3 percent for state agencies is lamentable, but the Senate originally proposed 3 percent cuts for all government sectors.
Yes, we can still govern smarter and more efficiently. One disappointment is that the governor convened a money-saving task force at the eleventh hour that tossed out a few ideas and went home. This effort deserves to be taken seriously.
Budget projections are still a big question mark. More than a few, including Senate President Tim Jennings, a Roswell Democrat, think the assumed 6 percent increase in revenues is absurdly optimistic. Lawmakers addressed that by giving the current and future governors the authority to cut budgets if revenues fall short in the next fiscal year. It’s another passing of a hot potato during an election year, but it could work.
In the next year, we should answer the big questions: What do we expect from government and how do we pay for it?