August 24, 2016

Playing the ‘blame game’ on New Mexico’s budget

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It is no surprise, given the gaping hole in New Mexico’s budget, that Democrat politicians are blaming Gov. Martinez and especially “tax cuts.” See Alan Webber’s piece in today’s Albuquerque Journal as well as Sen. Cisco McSorley’s piece from New Mexico Political Report.

Paul Gessing is the president of New Mexico’s Rio Grande Foundation, a libertarian-oriented think tank based in New Mexico.

Rio Grande Foundation President Paul Gessing

Rio Grande Foundation President Paul Gessing

The current talking point among many on the left is that “the Gov.’s tax cuts” were a failure and they caused the deficit. The bill in question was HB 641 sponsored by Democrat Rep. Moe Maestas which passed in the waning seconds of the 2013 session. It wasoverwhelmingly supported by House Democrats and opposed by all but one Republican although the Senate vote was bi-partisan.

It was a complicated bill with several components, but it DID reduce the corporate income tax by an estimated $70 million as of FY2017.That said, we were not big fans of the “compromise” at the time and had serious concerns about the politics of “owning” the bill down the road.

Fast forward to this year and I’d say those concerns have been borne out. The myriad shifts and slight tax cuts haven’t done much to improve New Mexico’s economy, but they have become a useful tool for liberal politicians to attack Martinez. Sen. McSorley, for example, voted “yes” on the bill.

Notably, the corporate income tax was estimated to “cost” about $70 million in revenue annually. While that sounds like a lot, it is about 10% of today’s budget deficit. That hardly makes it a driving factor. Should those cuts be re-imposed? Not unless the entire bill, including the local tax hikes, is reconsidered.

If Democrats want to blame Gov. Martinez for decisions that are exacerbating the State’s budget woes, perhaps they should consider the fateful decision to expand Medicaid? Unfortunately, as bad as the budget picture is now, Medicaid expansion will only worsen the budget picture in the years ahead as New Mexico is placed on the hook for more of that program’s cost.

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