Yesterday, the legislature’s Revenue Stabilization and Tax Policy Committee met for the first time. The panel took testimony from David Abbey, director of the Legislative Finance Committee, who offered a sobering assessment of the state’s budget.
“Fiscal year-to-date revenues,” in March, were down 10 percent. “Gross receipts are clearly weak,” Abbey said. The figures he presented on individual industries were scary. Compared to the previous year, gross receipts from July 2015 to March 2016 fell by 46 percent in mining, quarrying, and oil and gas extraction. Manufacturing and transportation/warehousing were each off by 28 percent. Some industries are expanding — receipts for professional, scientific, and technical services rose by 17 percent — but growth rates are generally unimpressive.
Unfortunately, Abbey veered from impartial analysis and into advocacy, making the specious claim that “New Mexico has a revenue problem and a spending problem.” The Foundation has debunked that claim, and Rep. Antonio Maestas — probably not intentionally — provided further ammunition in yesterday’s meeting. The Albuquerque Democrat asked Abbey if the state has eliminated a single program or agency since the Great Recession sent revenues into a tailspin. The director couldn’t name one — responding that New Mexico has been “trimming” spending, and “not eliminating programs.”
Fortunately, several legislators opposed tax increases as the “solution” to New Mexico’s fiscal woes. Rep. James Strickler (R-Farmington) noted that 6,000 jobs have recently been lost in San Juan County, and people he knows who have never drawn an unemployment check in their lives are considering opportunities in other states. Sen. William Sharer (R-Farmington) mounted a spirited case for his plan to cut, and greatly simplify, the gross receipts tax.
The Revenue Stabilization and Tax Policy Committee will meet several more times before the start of the 2017 session, and the Foundation will keep monitoring the panel’s activities. New Mexico has a structural-overspending problem, and serious flaws in its tax structure. With a stagnant economy and declining population, meaningful policy progress is necessary, now. Let’s hope the committee produces recommendations that will both boost the state’s economy and generate sustained fiscal health.