Getting swept away with the revenue crunch
by James Jimenez, MPA
January 24, 2017
As we all know, the state Legislature is struggling mightily with an unprecedented revenue disaster. While many news articles have been written attributing the fiasco to declines in oil and natural gas prices, it is less well known that much of the current pain was self-inflicted by years of tax cuts that slashed income taxes for the rich, made Swiss cheese of our gross receipts tax, and provided special tax breaks for a well-connected few. These tax cut choices made state government more reliant on oil and natural gas price fluctuations, and the consequences have been dire. We haven’t seemed to learn that depending heavily on such a volatile revenue source is not a wise move for stability, and now New Mexico is having to pay for that short-sighted strategy.
House Bill 6 (HB 6) is the bill being considered to fix the shortfall in the budget for the current year. One of the steps in HB 6 is “sweeping” money from crucial funds that were created to accomplish a wide variety of purposes. A long list of funds is being swept. On that list are the Corrective Action Fund, the Radiation Protection Fund, the Storage Tank Fund, and the Hazardous Waste Fund. All of these funds were established to help mitigate environmental damage or protect the public from real, specific health threats.
The loss of money from these funds will be harmful to all of the programs the funds were set up to support. The risk to the public from sweeping these funds is demonstrable and abundantly illustrates the harm done by poor tax policy decisions. Most worrisome is the risk we face when our precious water resources are polluted. Back in October, the Legislature took its first shot at fixing the current budget. At that point they had the option to raise revenue by freezing or reversing the ineffective corporate income tax cut, repealing the capital gains tax deduction, and taxing internet sales to help New Mexico small business. Those were better options but legislators did not choose them.
As the Legislature creates the budget for next year they must add revenue to the general fund and not put the public at further risk by depleting funds established to protect our health. It is disappointing and concerning that the choices for funding the state have come down to this.
James Jimenez, MPA, is Executive Director at New Mexico Voices for Children.