Tax and Budget

Gessing and Rep. Bill McCamley discuss 2015 Legislative activities on KRWG TV

I was recently in Las Cruces and had a chance to sit down with Fred Martino of KRWG (the public television station in Las Cruces) to discuss what happened in the 2015 legislative session and special session. Las Cruces area state Representative Bill McCamley, a Democrat, was also on the air and, believe it or not, we found a few areas of agreement.

Television interview: 2015 New Mexico Legislature special session recap

Rio Grande Foundation president Paul Gessing recently sat down with KNAT TV to discuss the results of the 2015 special legislative session and its passage of a capital outlay bill and a small tax cut package.

Of Groceries, Ray Guns, and the Gross Receipts Tax

Happy New Fiscal Year. Ready for higher taxes?

Starting July 1, furniture, haircuts, toys, shoes, lawn care, and milkshakes will be more expensive for most New Mexicans. The gross receipts tax (GRT), the dominant source of local-government revenue, will rise in many communities, including Albuquerque, Rio Rancho, Las Cruces, Roswell, Las Vegas, Deming, and Silver City.

In Santa Fe, the rate is slated to increase from 8.1875 percent to 8.3125 percent. But not if the city has its way. A few weeks ago, the City Different filed a taxpayer-friendly lawsuit to block the GRT hike the county adopted in March. Citing state statutes, Santa Fe -- as well as Española and several local businesses -- allege that "within the boundaries" of incorporated Santa Fe County municipalities, the tax should not apply.

It's up to the courts to decide the validity of the lawsuit. What's not in dispute is that the the city-county faceoff would not exist were it not for governors' and legislators' never-ending tinkering with the GRT. When Santa Fe's commissioners adopted the one-eight-of-a-cent tax increase three months ago, it was justified as a way to raise money to compensate for funds the state would no longer provide. The soon-to-be-ended subsidy was created to ease the fiscal pain of the 2005 removal of groceries from the GRT.

Steve McKee's talk: How New Mexico Can Beat Texas for Real

New Mexico businessman and entrepreneur Steve McKee was the keynote speaker at a recent Rio Grande Foundation luncheon. He gave an optimistic and detailed talk about the ways in which New Mexico policymakers can turn our state around and even beat Texas in the process. Check out the informative and even inspirational talk below:

NM Supreme Court wage decision will further drive up public construction costs, column

The price of roads and schools just went up in New Mexico. New Mexico is already a mini-"Davis-Bacon" state which means that taxpayers pay substantially more (or get 10-15% less) in the way of schools, roads, and other state-funded projects (like those funded in the recently-passed capital outlay bill). Under Gov. Bill Richardson, legislation was passed that increased the labor premium under "Davis-Bacon" for public works projects. The Martinez Administration had been attempting to soften the blow of that legislation, but the New Mexico Supreme Court ruled this week that her actions were illegal.

I recently wrote a column discussing New Mexico's flawed capital funding process and how repeal of our "Davis-Bacon" law is key to improving our school buildings and roads. The article appeared at both Watchdog and NMPolitics.net.

Infrastructure and how to pay for it has been a topic of great interest recently. The Legislature returned to Santa Fe with the primary purpose of passing a capital outlay bill. Also, as David Abbey, Chair of the Public School Capital Outlay Council told legislators in testimony recently, New Mexico’s schools were facing serious funding problems.

Among Abbey’s concerns was the volatility of funding due to oil and gas prices. Abbey also said there are more needed projects than available funding. Abbey’s most newsworthy statement was that there are 16 schools that are in such poor shape they need to be torn down.

Notably, the problem is not inadequate spending. According to data from the National Education Association, New Mexico’s per-capita capital spending on K-12 schools was 7th-highest in the nation for the most recent school year on record.

New taxes aren’t necessary to improve our roads

The article below ran at the newly-relaunched NMPolitics.net which is managed by the indefatigable Heath Haussamen. We are thrilled to have Heath back at the helm of NMPolitics.net. Check out the site for more content provided by the Rio Grande Foundation and other political and policy voices from across the political spectrum.


During the 2015 legislative session various proposals were put forth, ostensibly with the goal of improving New Mexico’s roads. One proposal by Senate Finance Committee Chairman John Arthur-Smith would have increased the State’s gas tax by fully 10 cents per-gallon while tying future increases to inflation.

Smith’s plan, if passed, would have represented a 59 percent increase in New Mexico’s gas tax (from 17 to 27 cents per-gallon). It is one thing to claim that we need to spend more on infrastructure and to raise revenues accordingly. It is another thing entirely to claim, as Smith did in an opinion piece, that spending an “additional $140 million annually for road jobs” will be an economic boon.

Before we hike taxes and spend another $140 million on roads, it is important to ask whether New Mexico needs more money for roads in the first place. That is an open question. Certainly, anyone who drives around New Mexico has their “pet” pothole, bottleneck, or bumpy road that they wish could be addressed, but relative to other states, New Mexico’s roads are pretty good.

According to the Reason Foundation’s (Reason is a free market organization that does a great deal of work on infrastructure issues) latest national analysis, New Mexico’s highway system ranked 7th among the 50 states for performance and cost-effectiveness. Each of our neighbors scored lower. New Mexico’s best marks came in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th), and rural arterial pavement condition (6th).

Of course, our roads can always be better, but that doesn’t necessarily require higher taxes. We could use the resources we have more efficiently. The simplest way to make our road budget go further would be to eliminate New Mexico’s “Davis-Bacon” law which artificially raises labor costs on public works projects. The House passed a reduction in those rates during the 2015 session. It should eliminate “prevailing wage” laws entirely and allow construction workers to be paid market wages.

A report done by Ohio’s Legislature found that eliminating a similar provision on school construction in that state led to a 10.7 percent reduction in the total cost of each school. Similar savings would likely be experienced by paying market wages on roads as well. Eliminating New Mexico’s “prevailing wage” would give us 15 percent more road construction and maintenance.

NM should avoid higher gasoline tax

Some New Mexicans have convinced themselves that the challenges facing the state's highways require a higher gasoline tax. They're wrong, and here's why.

First, the true condition of New Mexico's roads contrasts with the oft-heard claims that they are "crumbling" and "in disrepair." In the Reason Foundation’s latest national analysis, the overall performance and cost-effectiveness of New Mexico’s highways ranked seventh. States graded worse included our neighbors Texas (11th), Arizona (19th), Oklahoma (22nd), Utah (29th), and Colorado (33rd).

New Mexico scored its best marks in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th) and rural arterial pavement condition (6th).

Still there's no denying that the revenue needed to build and maintain highways is stagnant. Autos are becoming more efficient, and Millennials do not drive as much as previous generations. Between the 2009 and 2014 fiscal years, New Mexico's road fund rose from $371.1 million to $380.6 million. Adjusted for inflation, the increase became a small decline.

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