by Bill Jordan
April 3, 2015

Since the legislative session concluded without the passage of a capital outlay bill—money for public works projects like building community centers—there have been rumblings about the need for a special session. Amid this din, the Executive Office has indicated that it would also want tax cuts to be considered. A special session should be called, but the Legislature should limit their agenda to passing the public works projects and not even consider handing out more tax breaks.

How much more evidence do we need that tax cuts are a failed economic development strategy? After more than a decade of handing out billions of dollars in tax giveaways to corporations and the rich, New Mexico is last in the region in job growth. What we did get from that failed strategy is a lot less money for the things that really matter: education, health care and public safety—all of which improve our quality-of-life and build up our economy by making New Mexico a more attractive destination for businesses and families alike.

Over the last several years we’ve made deep spending cuts in K-12 and higher education—which will certainly not improve our dismal educational outcomes. We’ve also seen the devastating effects of having insufficient funding for public safety, courts, child abuse prevention, behavioral health needs, and substance abuse treatment. The loss of services in these areas has reached crisis levels and led to national media attention that was focused on New Mexico’s ills.

Despite these pressing needs—and the lack of revenue due to falling oil and gas prices—the Legislature nearly passed yet another tax giveaway in the just-concluded session. It’s this tax-cut package that the Executive Office wants lawmakers to revive. Legislators should not enact more tax cuts. But, if a tax cut is really worth enacting, it should at least be paid for with the repeal of some other tax break that is failing to create jobs or help our economy. There are plenty of those to choose from.

There is an even more pressing reason not to cut taxes at this time. A perfect storm of budgetary events is brewing on the near horizon:

  • A massive corporate income tax cut that was passed in 2013 is still being phased in. It gave away more than half of our corporate tax revenue and is costing much more than originally projected. That tax cut alone will eat up about $50 million of existing revenue next year.
  • The percentage of money the state budget receives every year from the Land Grant Permanent Fund will drop from 5.5 percent this year to 5 percent next year, meaning we’ll be getting about $60 million less in funding, most of which would go to education. That’s money that either needs to be made up elsewhere or must be cut from our education budget.
  • In 2017, New Mexico will have to start paying 5 percent of the cost to cover low-income adults on Medicaid under the Affordable Care Act. While the ACA brought in much-needed revenue, we’ve already spent that money to fill other budget needs. Next year, we’ll need to come up with more than $50 million for our share of the Medicaid costs.
  • And finally, if gas and oil prices don’t rebound in the next couple of years, we are not likely to have money to expand services beyond their current levels.

Lawmakers should pass the capital outlay bill in a special session to create jobs, give a little boost to our economy, and get these much-needed projects underway. But they should hold off on more tax cuts. The state’s budget is facing at least a $150 million hole next year and it would be irresponsible to dig that hole even deeper by handing out more tax cuts.

Bill Jordan, MA, is Senior Policy Advisor/Governmental Relations for NM Voices for Children. Reach him at