Ortiz y Pino
By Jerry Ortiz y Pino
Since "sex" is apparently no longer dirty in these enlightened times, the last three-letter word never to be uttered in polite conversation seems to be “tax.” At least, this must be the accepted etiquette in the halls of state government in Santa Fe, where even the governor’s appointed secretary of tax and revenue goes to great lengths to avoid the term.
It's amazing to watch. The state’s books are dripping red; there’s scarcely a program or a departmental payroll not lying on the chopping block, yet days go by in the crowded Roundhouse without the dreaded term being whispered even once.
Tax is indeed the invisible presence, the elephant in the corner of the living room that must never be mentioned, the musty possibility that must never be suggested for fear that simply recognizing it might require action.
And acting to raise taxes is frightening. At least that's the conventional wisdom.
Such daintiness is puzzling. It is not as if New Mexicans are exhausted by the burden of taxation, fatigued by the pure repetition of the annual piling on of tariffs. In fact, during the Richardson years there has been a steady reduction in the level of taxation, a shutting down of the revenue spigot that totals about $1 billion a year.
Only the unprecedented oil and natural gas bonanzas made it possible to finance the expansion in state services and programs; the building and buying spree; the new economic development incentives; and the larding of the permanent reserve funds—all while reducing other taxes—that we have enjoyed during this governor’s first term and half of his second.
That was during the seven Biblical fat years. Now the locusts have arrived and we find the storehouses practically emptied before the siege of the seven lean ones. The oil and natural gas boom has slid back into line with its historic performance trends. The stock market plunge evaporated much of the permanent funds’ surpluses, leaving some funds tipping dizzily toward insolvency and all of them somberly cautious about the future.
It all happened so quickly: Just last August, the Legislature was convened in Special Session. The topic at hand was how to deal with the delightful dilemma of what to do with so much money pouring into the state’s coffers. Additional tax cuts, new taxpayer rebates and more assistance for the neediest were not only thought possible but were all enacted in just a few days’ time. It happened with minimal kvetching from a handful of fiscal cautionaries whose warnings were greeted mostly with derision by their peers (my own hoots at their timidity are a painful, guilty memory).
The locusts have arrived.
It was, after all, the crest of the wave. It was also just before the fall elections, and every legislative seat was on the ballot. The governor was no longer a presidential candidate but was running for some position or other in an Obama administration.
No more popular a route to political life exists than cutting taxes. And no quicker a route, it turns out, to fiscal peril. The wave has crested and we are tumbling toward the beach.
So just five months later, the Legislature had to cobble together an emergency solvency package of four bills designed to keep the state’s checks from bouncing before the end of the year.
Together the measures changed the original $6.1 billion budget for the fiscal year that will end on June 30, reducing it to a $5.9 billion figure. By cutting spending by about $200 million and transferring about $250 million in funds into the revenue column, the package may get New Mexico through this year’s $450 million shortfall.
That’s the good news. The bad news is that the year that starts July 1 will have projected recurring revenue of only $5.4 billion, so the trimming knives are still in operation, poised to carve another $500 million out of state government’s hide. It’s not a pretty sight.
I would be less than candid if I were to claim that slicing and dicing what amounts to a total of one-sixth of the state’s budget over two years could be accomplished without any pain to the citizenry. And believe me, the yowls are already being heard.
The cavalry is on its way, however, in the form of the just-signed fiscal stimulus package. That money will help ease the pain. New Mexico’s share is estimated to be about $2 billion spread over the next two federal fiscal years, a windfall shared between funds for state government-operated programs (schools, Medicaid, highway construction) and individual taxpayers who are slated to get rebates, added unemployment benefits and tax credits.
Whether this newly printed money from Washington actually lifts the siege permanently or just buys us a year’s respite from chipping away at state spending will depend on forces in the global economy over which we in this state have little control.
What we can do, however, is get realistic about taxes. The choices we have made over the past few years to cut income taxes for the highest bracket earners have left us unable to sustain the level of governmental services that is necessary. If we are to meet our responsibility as a society that prepares our young people, cares for our elderly and infirm, and attracts dynamic new business enterprise, we will have to act like adults and start talking dirty.
The opinions expressed are solely those of the author.
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