Tax and Budget

RGF's Gessing weighs in on de la Cruz Cannes "Economic Development" trip: Eye on New Mexico

On this week's "Eye on New Mexico" on Channel 4, KKOB, Chris Ramirez talked to Commissioner de la Cruz and Marcos Gonzales of the Bernalillo County Economic Development Department about economic development and the Commissioner's trip to France. My interview starts at the 4 minute mark and de la Cruz defends the $20K spent on the trip after that.

So far, the Commissioner admits that no specific projects have resulted from the trip. I'm sure we'll be notified if that changes.

State has many opportunities to reduce spending

Journal columnist Winthrop Quigley seems to believe that what New Mexico’s struggling economy needs right now is higher taxes. We at the Rio Grande Foundation couldn’t disagree more and believe raising taxes would have further deleterious effects on our economy.

Disagreements aside, we do share agreement with Quigley that New Mexico’s tax structure must be reformed. The gross receipts tax is uniquely harmful to the growth and development of small businesses. It also encourages businesses to lobby the Legislature to lobby for exemptions or outright subsidies before locating here. The Legislature must act to reform this harmful tax structure.

It is a myth that New Mexico is a low-tax state. According to the Federation of Tax Administrators, our tax burden as a percent of personal income is ninth-heaviest in the nation. This is far heavier than the tax burdens of our more economically successful neighbors : Arizona ranks 39, Colorado 45, Oklahoma 37, Texas 44 and Utah 31.

Now for the (substantial) disagreements.

Rio Grande Foundation Launches NEW Radio Show “Tipping Point New Mexico” This Saturday, April 9 from noon to 3pm

The Rio Grande Foundation is launching a new radio show on a new home, “The Rock of Talk” 95.9FM and 1600AM. The show called “Tipping Point New Mexico” will air Saturdays weekly from noon to 3pm.

Hosts will rotate but will include RGF's Paul Gessing, Dowd Muska, and Burly Cain.

Issues addressed on the show will include New Mexico's economy and the importance of 2016 in turning our state around. If you want to participate in the discussion, you can call in at: 505-550-5500.

This week we'll talk about Albuquerque Rapid Transit, the push by some to raise taxes in New Mexico, and more.




No Need to raise taxes in New Mexico

The budget numbers are changing (for the worse) on an almost daily basis. The latest information calls for a 12% decline in General Fund revenues which means a reduction of $700-$800 million (not factoring in rainy-day funds etc).

The point remains, as I note below, that no matter how the budget gap is filled, there are some programs that should be eliminated in their entirety prior to cuts being enacted elsewhere.

Like spring follows winter, proposals to increase taxes on hard-working New Mexicans are flourishing in Santa Fe. Dozens of such proposals have been put forth, including several by Democrat Senate Finance Committee Chairman John Arthur-Smith. Gov. Martinez has repeatedly pledged NOT to raise taxes, so it is unlikely these proposals will be enacted, but what about the merits of the issue? Should taxes be raised in New Mexico?

One of Sen. Smith's proposals that has attracted media attention is SB 281 which would re-impose the gross receipts tax on groceries. Groceries used to be taxed just like everything else bought in the store, but when he was governor, Bill Richardson decided to eliminate the tax on groceries. The broader gross receipts tax was hiked by half a cent. This all sounds simple, but was really a complex tax-shift that the Legislature has tinkered with since it was enacted.

And now, Sen. Smith wants to again tax groceries as a means of raising revenues in tight budgetary times. Taxing food is not an inherently bad idea, but it shouldn't be done without reducing the gross receipts tax on other purchases.

That is only the start. Smith and his Democrat colleagues want to add taxes to everything from cigarettes to gasoline, to personal income, while also freezing New Mexico's corporate income tax rate in place rather than continuing a scheduled phase-down to 5.9%.

The immediate concern for policymakers is New Mexico's deteriorating budget picture. Due to declining oil prices, there is “only” $35 million in “new” money. Once $85 million in new costs for half-a-year of Medicaid expansion are added to the mix, everything else in New Mexico's budget is being squeezed. Thus the calls for higher taxes.

States, not cities and counties, are paramount

COMMENTARY: “States may, if its citizens choose, serve as a laboratory.” Justice Louis Brandeis in New State Ice Co. v. Liebmann

When it comes to economic policy issues, the states are supposed to be the dominant actors. This is the view laid out by Justice Brandeis. It flows seamlessly from the United States Constitution’s design which emphasizes “federalism.”

But this isn’t another article about how Washington is overstepping its bounds. Rather, it is about how New Mexico’s Legislature might want to keep closer tabs on policymaking activities of local governments.

Local governments derive their powers from the states within which they are located. In some states they are given broad latitude. In others, like Virginia, their power is strictly limited. Virginia’s minimum wage and other employment-related policies are set by the Legislature.

For simplicity’s sake, this is a good thing, regardless of your views on the minimum wage.

RGF president Paul Gessing discusses the impact of Medicaid expansion on KNAT TV-23

Watch “Joy in Our Town” with host, Ebony Romero, and guest, Paul Gessing, President of the Rio Grande Foundation, as they talk specifically about the MEDICAID expansion in New Mexico.

Posted by KNAT - TV 23 on Tuesday, January 19, 2016

Syndicate content