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Editorial: Voters should think hard about drilling deeper into permanent fund

After more than a decade of legislative wrangling, it appears a proposal to dip deeper into the state’s Land Grant Permanent fund will finally go to New Mexico voters. It’s appropriate they have final say. It is their money and an important revenue source for their children, grandchildren, great-grandchildren and on and on.

And it’s a bit more complicated than one might glean from proponents’ long-running pitch that we need to spend a lot more money now to help our children. It would be wise to approach this $2-billion-plus question with a bit of skepticism and demand answers to some legitimate questions.

The issue will go to voters after legislative Democrats in the just-concluded session passed a proposed constitutional amendment to increase the annual distribution from the Land Grant Permanent Fund, which was established at the time of statehood in 1912. Lands conveyed to the Territory of New Mexico in 1893 and additional lands received by the Enabling Act of 1910 in anticipation of statehood essentially were put into a trust account, along with income from their associated minerals and natural resources, to provide a benefit to New Mexico schools, universities and a handful of other beneficiaries in coming years. That’s exactly what has happened, with 5% being distributed annually.

Flush with oil and gas revenues in recent years and managed by the State Investment Council, the fund now stands at about $22 billion and generated about $980 million for this year’s state budget.

Democratic majorities in the House and Senate and Gov. Michelle Lujan Grisham have for years eyed drilling deeper into the fund, insisting more funding is needed for education and other services. This year they had the votes to do it, so it will be up to voters to determine whether it makes sense to preserve future income or take out more now and eventually diminish the fund. That’s a question all the more compelling as we move to renewable energy and the inevitable reduction in income from oil and gas. We not only face a future of less income going into the fund, but a bigger draw coming out. In the words of Sen. Steven Neville, R-Aztec, withdrawing more now “hurts the future.”

This session’s debate to take out more had centered on early childhood and a proposed 1% bump in the overall distribution. However, a last-minute amendment changed the math. It bumped the overall distribution from the current 5% (what most funds see at the upward limit) to 6.25%, and cut early childhood from 1% to .75%. The extra .50% would go for K-12 and other beneficiaries. Bottom line: an extra $127 million a year for early childhood, $85 million for K-12.

Approval of the congressional delegation is needed because early childhood is a new beneficiary.

Putting aside the underlying concern of the long-term fiscal health of the fund and its future importance, other questions arise:

⋄ Do we need a huge injection of new money into early childhood programs? We already are spending a significant amount now on a bevy of early childhood programs that range from home visits, to K-5 Plus, to Pre-K, to Families, Infant and Toddler, to child care assistance. According to a legislative analysis, in fiscal 2012 the state’s total early childhood spending was $136.5 million. The amount in the budget awaiting the governor’s approval for next year: $500.9 million. Sen. Bill Tallman, D-Albuquerque, a rare Democratic skeptic, wondered whether we could spend all that new money effectively. Good question. And will it go to evidence-based programs that show results?

⋄ Does it make sense to suddenly boost K-12 funding from the fund? The money will flow through the state to districts that for the most part will spend it as they wish. Any guarantee it will be spent in the classroom, increase achievement or require accountability? None.

⋄ Voters approved tapping the fund in 2003 to increase teacher salaries in hopes of boosting achievement and graduation rates. Legislative analysts found that just didn’t happen. And while millions of dollars may have been well spent on educator pay raises, a lot of that cash just got mixed into the overall pot. Are there sufficient guarantees that won’t happen again with all this new money?

⋄ The state has a new Early Childhood Education and Care Department, but the new money isn’t appropriated to the department specifically set up to take on that task. Why not?

⋄ What happens to money that is appropriated for the various early childhood programs but isn’t spent? In some cases there just hasn’t been enough public demand for programs offered. We are a state of just 2 million, after all, with around 300,000 K-12 students. Does unspent money revert to the general fund where it essentially can be spent on whatever lawmakers wish?

⋄ If supporters are so confident of the merits, why wouldn’t they agree to a sunset provision? In 10 years, the increased distribution will have funneled more than $2 billion additional dollars into early childhood programs and public schools. There is simply no good reason not to have to at least come back and explain to legislators that tapping the public’s savings account is producing results and worth continuing. Locking in this huge spending increase in perpetuity is irresponsible and ducks accountability. Voters should wonder why.

The question could be put to voters either in the 2022 general election or in a special election before then. In either case, it needs real scrutiny and real answers beyond the platitudes that “it’s for the children” – because there simply is no guarantee that it is.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.

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