By Paige Knight
May 13, 2020
This virus has taught us many valuable lessons about our society, like how interconnected we are and how dependent we are on the health and well-being of our neighbors. It’s also highlighted deep inequities in health care, the importance of public services like health clinics, first responders, public education, and safety net programs like SNAP (food stamps) and unemployment insurance. Our health care facilities provide critical care and testing, our first responders rush to the aid of those in distress, and our teachers adapt to virtual classrooms so that their students can continue to learn.
To be effective during this public health emergency, New Mexico needs to do all it can to shore up these essential services and take care of frontline workers while also extending a hand to New Mexicans who are sick, unable to work, or struggling to provide for their families. But falling tax revenues – coupled with plummeting oil prices – have put at risk New Mexico’s ability to protect our communities. While the path forward won’t be easy, lawmakers can steer us toward an equitable recovery by putting families first and mitigating the pain from this economic crash.
We can do this by investing in all New Mexicans – regardless of zip code, skin color, or immigration status. We can do this by supporting the programs and services that help families thrive and build a brighter future – like quality public education, child care assistance for working parents, and mental health services, to name a few. In the last economic downturn, New Mexico chose to take an ill-informed path of austerity – cutting critical funding for these programs and more. And where did it get us? Austerity drove the state to 50th in poverty, education, and child well-being and caused New Mexico to have one of the slowest economic recoveries from the Great Recession. It was a mistake that we cannot make again. Continual investments in our community, like those that have begun in the past year, will help protect individuals who are most vulnerable and ensure that dollars are put right back into local economies, supporting small businesses throughout the state.
We also need to maximize federal relief. Congress has approved several coronavirus stimulus packages that provide some much-needed fiscal relief to state, local, and tribal governments. While still far short of what is needed, these funds provide an important safety net for the state that will mitigate some of the fallout from this pandemic. New Mexico is receiving federal funds to help with increased Medicaid enrollment and other costs related to the public health emergency, as well as education and child care. But this aid will not cover our estimated budget deficit, which keeps growing larger and larger. We need to advocate for additional state fiscal relief in the next aid package so that we can help put people back to work, shore up our budget and continue providing essential services to each New Mexican.
Once we have fully maximized federal funds, we can dip into our billions of dollars in state reserves and permanent funds that have been created specifically for times like this. By using our rainy-day funds, we can take money from savings and put it directly into the pockets of New Mexico’s workers and families who will spend it quickly and locally on goods and services. Creating this demand is one of the best things we can do for our economy. It also gives New Mexico time to respond sensibly to whatever budget shortfalls may remain in this fiscal year and beyond while keeping people working and maintaining needed services. Now is the time our economy needs a quick infusion of resources to avoid debilitating cuts to services, and our rainy-day funds must be utilized as intended.
If a shortfall still persists and additional revenue is needed to lift up our families, lawmakers need to raise revenue from those with the greatest ability to pay. In a misguided attempt to cut our way to prosperity, we have given many unnecessary tax cuts to the very wealthy and well-connected over the past 15 years. These cuts have starved our hospitals and schools, made our tax system grossly inequitable, and dangerously increased our reliance on volatile oil and gas revenues. Reversing these income tax cuts would raise fair, sustainable revenue for critical services like public health and quality education. Another way to raise revenue from those with the ability to pay would be to increase the state health insurance surtax, which would collect a portion of the recently repealed federal tax on health insurers. This revenue could go towards addressing critical coronavirus response measures and improving health coverage affordability.
Investing in our people by maximizing federal fiscal relief, tapping into our reserves, and raising fair, sustainable revenues will help address long-standing inequities and set a better course for the future of all New Mexicans. The state needs to also leverage its power to ensure that Native Americans can recover, prosper, and receive the federal funding they need and deserve. Now is the time to come together to support and invest in our children and our communities, so we can all come out stronger on the other side of this crisis.
Paige Knight, MPP, is a Research and Policy Analyst with New Mexico Voices for Children