The Revenue Drought: What Is to Be Done?

Congratulations on your Election Day victories, new and reelected New Mexico legislators.

How are you going to pay the bills?

As the above chart indicates, the Land of Enchantment is one of 19 states in which Q12016 revenue hauls, adjusted for inflation, have yet to climb back to their pre-Great Recession peaks. The Pew Charitable Trusts found that with a 6.7 percent drop since its apex, New Mexico ranks behind only New Jersey, Michigan, Oklahoma, Florida, Louisiana, Wyoming, and Alaska. (It’s worth noting that the Cowboy State and the Last Frontier derive significantly higher shares of their revenue from natural-resource taxes that New Mexico.)

Will a rebound in oil prices get big dough flowing to Santa Fe again soon? Maybe. But The Wall Street Journal’s recent survey of investment banks concluded that “oil prices will stay below $60 a barrel in 2017.” Not much hope there.

Absent a significant cutback in spending — a right-sizing of the bureaucracy, rollback of Medicaid expansion, sweeping, choice-driven reforms of K-12 education, meaningful reductions in higher education’s out-of-control expenditures, and abandonment of costly, failed programs that claim to foster “economic development” — the only option will be tax hikes. And New Mexico’s left-wing activists are just full of ideas for “revenue enhancement.” The levies on alcohol, cigarettes, vaping, personal income, and corporate profits are in liberals’ crosshairs.

Watch your wallet, taxpayers!