by Bill Jordan, MA
May 11, 2016
Gas and oil prices have dropped and New Mexico families are getting a break on their home energy costs and a big break every time they fill up their gas tanks. This is great news for family budgets and is helping families make ends meet in a time when wages have stagnated and our economy is flat.
When a family has to balance its budget, it helps when basic expenses like gas for the car and home heating costs drop significantly. Thanks to low energy prices, some families are seeing savings of $50 or more a month. That helps a lot when you’re struggling to make ends meet in a stagnant economy. Although we’re all cheering this news, low oil and gas prices also work against us.
Our state budget is a mess, and that’s partly because we are overly reliant on the money we get from the gas and oil industry—so low prices hurt us. Our state budget is also a mess because—with the false promise of creating more jobs—we have foolishly cut taxes year after year.
Nevertheless, we keep cutting taxes. First it was a big personal income tax cut and a capital gains tax cut that cost us $500 million a year, then the big corporate tax cut that cost another $250 million a year and at least another $250 million a year for various other tax breaks for various business special interests. (To be fair, not all the tax breaks went to the rich and corporations. Low-income families also got a small tax break worth about 5 percent of what the rich and corporations got.) Our state budget is a little over $6 billion a year, so giving away $1 billion per year in a failed tax cut strategy is a huge loss of money.
All these tax breaks made New Mexico overly reliant on revenue from gas and oil extraction to fund our schools and pretty much everything else in state government. Lawmakers are well aware that gas and oil prices are volatile and unreliable, and should have known that the dips in the market would return at some point and cause revenues to crash. Knowing better, they still cut deeply into the more reliable sources of revenue for the state, namely personal income taxes, corporate income taxes, and gross receipts taxes.
In order to balance the budget after making these tax cuts, the Legislature has enacted budget cuts that more than offset the minimal amounts families are saving from lower energy prices. Tuition will go up again because the state cut higher education by almost $20 million. For younger families, it will still be a challenge to find affordable child care services and while the cost of child care continues to rise, the state has still not restored financial eligibility to where it was prior to 2008. More than 40 percent of New Mexicans, mostly children, the disabled and elderly, now rely on Medicaid for their health care coverage. Thanks to the lack of money, the state now needs to cut $417 million from those health care services. Part of their plan involves cutting the health care benefit plan, and adding more cost sharing like higher copays and premiums.
The Governor has made it clear she will not raise taxes or roll back any of her hundreds of millions of dollars in tax cuts for big corporations, even though they have failed the New Mexico economy. So the only other option we will have next year will be to underfund education and health care even more than we did this year. While other families around the country are enjoying a few extra dollars in their pockets, New Mexico’s families are making up the cost with the higher cost of education and health care. And we’re doing it to protect big corporations.
If you’re a low- to middle-income family, before you spend those few extra bucks in your pocket, be aware that the rich and corporations will continue to get many more extra bucks via their tax breaks and YOU will be asked to pay more for your education and health care.
Bill Jordan, MA, is Senior Policy Advisor/Governmental Relations for NM Voices for Children. Reach him at email@example.com.