by James Jimenez, New Mexico In Depth
Jan. 13, 2018
We all want a prosperous state, but prosperity requires investments. You can’t grow a garden without good soil, sunlight, water, and some hard work. Same with a state—you can’t have prosperity without resources, infrastructure, and a skilled workforce. But instead of following an investment strategy to prosperity, New Mexico has tried to cut its way to prosperity. You could call this the “don’t build it and let’s hope they will come anyway” strategy. Or perhaps the “the-magical-thinking-of-trickle-down-economics” strategy.
If it were possible to tax-cut our way to prosperity, New Mexico should be flush. Over the last 15 years, we’ve cut taxes as if tax cuts are a panacea to our every economic woe. We’ve cut taxes for the wealthy, for corporations, and for a whole host of special interests. Governor Martinez is even fond of saying she’s cut taxes 37 times. We’ve been promised time and again that tax cuts would spur job growth but clearly that approach hasn’t worked.
And where has it gotten us?
Well, we have seen young people flee the state because of the lack of job opportunities, and we have experienced some of the deepest cuts in the nation to our higher education institutions, and according to the Annie E. Casey Foundation our children rank 49th in child well-being. All of these are indicators of poor fiscal management and misdirected priorities.
It’s bad enough that we’ve been almost entirely focused on following a long-discredited economic development scam for years. What’s worse, the scam has inhibited our ability to make the investments that actually will lead to economic activity and broader prosperity.
Instead of trying to cut our way to prosperity, we could have been collecting that money and investing it in ways that would not only improve the business community’s bottom line but would grow the state’s economy for everyone.
These ill-conceived tax cuts could have been used to put New Mexicans to work improving our roads, highways and bridges, increasing broadband access across the state, expanding and strengthening our health care system, better preparing our children for success in school, making college more affordable, and ensuring that hard-working families with fewer resources had the opportunities they need to get ahead.
Instead, we’ve starved our public education system from our kindergarten classrooms to our college campuses, forced our doctors to take a pay cut, crippled our court system to the point of dysfunction, and stopped serving thousands of young children who need child care so their parents can work.
It’s time to make investments in New Mexico.
The smartest investments are those that pay the highest returns. No investment that a state can make pays higher returns than high-quality early childhood care and education. With double-digit returns, these investments pay off more handsomely than most investments on the stock market.
Medicaid is another great investment that New Mexico should leverage to the fullest. Thanks to the federal Medicaid dollars that have grown under the Affordable Care Act, many more New Mexicans are now getting health care, with minimal cost to the state. In 2013, New Mexico was paying $905 million to cover 483,000 New Mexicans. In 2018, the state will pay $955 million to cover almost 900,000 people. In other words, the number of New Mexicans now receiving their health insurance under Medicaid has increased by almost 100 percent, while the cost to provide all that coverage has gone up just 5.5 percent.
The Working Families Tax Credit (WFTC) is another excellent investment because it helps hard-working families get ahead. Unlike tax cuts to out-of-state corporations, the money from this tax cut is spent in communities all over the state at grocery stores, gas stations, and other local businesses. We’d have gotten a much bigger bang for our buck if we’d increased the value of the WFTC instead of giving out-of-state corporations a break.
Expansion of early childhood care and education, full funding of Medicaid, and an increase in the Working Families Tax Credit are all things New Mexico Voices for Children will be fighting for in the legislative session ahead. We will also be pushing back against ill-considered tax reform. Major changes to our tax system should not be rushed. Analysts and lawmakers need to take time to consider the tax study that was just commissioned so they understand the implications before they launch into an overhaul of a tax system that’s been terribly hobbled in recent years.
Our schools, health care, courts, roads and other infrastructure—and all the jobs that depend upon them—are all at stake in the 2018 legislative session. These are investments we can’t afford to jeopardize.
James Jimenez is executive director of New Mexico Voices for Children. The views in this column are the author’s alone and do not reflect the view or opinions of New Mexico In Depth.
Copyright 2018, New Mexico In Depth (http://nmindepth.com/2018/01/13/prosperity-is-not-possible-without-investment/)