KRWG

New Mexico Taxes And Budget: Reform Is Long Overdue

Jul 7, 2020

Credit Paul J. Gessing

Commentary: Paul O’Connell recently responded to a column I co-authored with national taxpayer advocate Grover Norquist. Our piece argued against raising taxes on New Mexicans while Mr. O’Connell took a different perspective. The fact is that we agree with Mr. O’Connell that New Mexico urgently needs tax reform. The Rio Grande Foundation has been a leading voice for reform of New Mexico’s broken (and regressive) gross receipts tax. We have also called for reductions in “special interest” tax loopholes and exemptions.

So, in many ways, RGF is sympathetic to what Mr. O’Connell is saying. 

However, he goes off the rails when he claims “For over 50 years, conservative policy proposals have been reducing taxes and regulations, destroying unions, and building wealth for billionaires on the backs of average workers.” Unfortunately, details are not provided and it almost appears that he is referring to federal policies as opposed to policies here in New Mexico enacted by our Legislature. 

In bringing the discussion back to New Mexico and the recently-completed Special Session, O’Connell is correct that taxes were not raised and that spending on K-12 was reduced somewhat. But the Legislature merely “kicked the can” down the road for many hard decisions to be made in the 2021 session after the election.

Worse, while we know that the K-12 system is going to require a lot of money to open in a post-COVID environment, the Gov. and Legislature kept $300 of the $320 million in the FY 2021 budget that was allocated to fund a brand new pre-K fund. The Legislature also spent $5 million for the Gov.’s “free” college programs and did not touch massive film subsidies which the Legislative Finance Committee says cost $150 million annually.  

And this issue is something that all New Mexicans should agree on. While exemptions and deductions are definitely open to question, film subsidies are tax dollars collected by the State and then sent to Hollywood film studios. This is awful public policy and should be ended at once. Unfortunately, the Legislature and Gov. refuse to curtail the subsidies and will likely instead push to raise taxes next year. This is wrong and is one of many reasons for New Mexico’s long-term economic underperformance.