As discussed in this space yesterday, New Mexico policymakers will likely have a massive surplus as they head into the 2019 legislative session. Given the size and scope of New Mexico’s existing government and the lack of diversification and job growth in the State, what can or should the Legislature do with that money when they convene?
The Rio Grande Foundation has four big ideas for the surplus. We understand that the calls for bigger government will be omnipresent and that a certain judge has demanded more education spending, but our concern is for the future of New Mexico and unleashing economic growth for the betterment of current and future citizens of the State.
1) Use the surplus as a backstop for reforming the gross receipts tax (GRT). The Rio Grande Foundation has long been a leader in pointing out the business-destroying aspects of the GRT. The existence of a major surplus can be used to transform the current code while protecting against risk that the reformed system will generate less money than the old one.
2) Address New Mexico’s serious pension shortfall while beginning the process of shifting to a defined contribution model. New Mexico has one of the worst government employee pension problems in the nation. The situation was recently discussed in the Albuquerque Journal. It would be unacceptable to use the surplus to simply “prop up” or provide a cash infusion into the system, but a serious reform effort that fundamentally transforms New Mexico’s pension system (as has been done in numerous other states like Arizona, Michigan, and Pennsylvania would be wise.
3) While candidate for Governor Steve Pearce’s plan for a network of privately-owned and operated toll roads is innovative and worthy of support, it would seem that at least a portion of the surplus generated by the Permian Basin should be returned to the Permian basin to assist with infrastructure needs.
4) If there is still money available after tax reform and pension reform are addressed, every taxpayer in New Mexico should get a one-time refund.
Are there other ways to use the money? We’re open to suggestions. We know the education lobby (backed by a judge) is on the hunt for more money and others want to spend it on pre-K regardless of effectiveness. Some would love for the State of New Mexico to spend the money “investing” in private business. There are plenty of ideas, but tax and pension reform are the only two uses we know of that would fundamentally transform the New Mexico economy in a positive, more diverse direction.
3 Replies to “What to do with New Mexico’s $1.2 billion surplus”
Put 500 million in peta and erb with stipulations. Intrrest earned pays directly to each account. Im a teacher by las cruces and the nea says ped needs 500 milloin over 5 years for pre k and more programs. I love the idea of transferring movie money to erb and pera pensions. .67 on the dollar is potential iby 2024.
This would be an opportunity to eliminate state income tax for retired military. Military retirees do not need welfare, healthcare coverage, etc. and are educated and employable.
One issue that should be addressed is our balloon payment due in a few years on the RailRunner project. Why not pay it off now so that our books are balanced? We do not know if a similar surplus will be available in the future. We could cut our strings to this project ASAP, but this is problematic as long as this balloon payment hangs out there in the future. Once we are done with that, we would be free to simply stop subsidizing it year after year.