SANTA FE – Democratic lawmakers have tried repeatedly to tap into the Land Grant Permanent Fund to pay for early childhood education.
But a slimmed-down proposal targeting a smaller permanent fund might surface next session in the Senate.
Sen. John Sapien, D-Corrales, said he’s been working behind the scenes to build support for a joint resolution that would ask voters to authorize an extra distribution from the Severance Tax Permanent Fund, which receives revenue from oil and gas production.
About 4.7 percent of the fund is already disbursed each year into the state operating budget, providing about $220 million a year.
Sapien’s proposal would boost the distribution to 5.5 percent, making another $35 million a year available and dedicating it to early childhood programs and services.
The goal would be to use the money toward early childhood education and child care programs. Supporters have been pushing New Mexico to expand pre-kindergarten for children otherwise at risk of not being ready for school, home visiting programs to help parents with young children and similar services.
The proposal would come at a cost, of course.
The Severance Tax Permanent Fund is operated like an endowment, generating some revenue for the state each year while also – usually – growing in value, which in turn generates more money the following year.
Increasing the distribution out of the fund would slow its growth.
Analysts for the Legislative Finance Committee estimated the value of the fund would be about $582 million lower – about $6.1 billion rather than $6.8 billion – by 2030 if Sapien’s proposal were in place.
Eventually, even at the higher distribution rate, the annual disbursement to the general fund would be lower than if the fund had been left alone.
Supporters say it would be worth it.
Investing in early childhood programs, Sapien said, produces a return “that can’t be matched anywhere else with the education system.”
Legislative Finance Committee analysts say children who participate in both pre-K and K-3 Plus – a program that adds days to the beginning of the school year – show lasting gains that appear to close the achievement gap among different demographic groups.
But Sen. John Arthur Smith, a Deming Democrat and chairman of the Senate Finance Committee, said the Severance Tax Permanent Fund is already an important source of revenue for the state budget. Severance taxes also provide income that allows the state to borrow money to build capital projects, he said.
“I have some concerns” about the proposal, he said.
Sapien said the Severance Tax Permanent Fund is a better source of revenue for early childhood programs than the much larger Land Grand Permanent Fund. For one thing, he said, it would take congressional action to make changes involving the land grant fund.