Across the board raises, “revenue enhancements” unfortunate moves for 2018 session

Governor Martinez and the Democratically-controlled Legislative Finance Committee released their budget proposals for the upcoming legislative session. A brief comparison of the two documents can be found here.

The first shocker is that Gov. Martinez’s budget would increase spending by $250 million while the LFC budget would “only” grow spending by $178 million.

Martinez proposes a 1% raise for all state employees and 2% specifically for teachers while the LFC asks for a 1.5% raise. We understand the desire to raise state employee wages since most government workers haven’t received raises since 2014, but the reality is that New Mexico government workers are compensated quite well. The following chart from Key Policy Data shows that New Mexico state & local workers make 16% more than their private sector counterparts. A separate study by American Enterprise Institute found similar disparities.

So, suffice it to say that we think across-the-board raises are unwise and that any raises should be focused on areas where government employees may not be compensated especially well.

The biggest shocker was that Gov. Martinez plans to raise taxes by $99 million. While taxing non-profit and for-profit hospital the same may be good tax policy and would have received enthusiastic support from RGF had it been part of a broad, revenue-neutral tax reform, this looks suspiciously like a straight tax increase with nothing so much as hinting at tax reform. In fact the Democrats’ plan contains no such tax hike.

We know New Mexico taxes are already high. Gov. Martinez has held the line on taxes in the past earning praise from RGF mere weeks ago. This is a deeply-troubling development.

Update: Kudos to Republican House Minority Whip Rod Montoya has come out against the Gov.’s tax hike proposal.