Despite projections of a shortfall in revenue due to the falling oil and gas prices, the executive and the legislative branches neglected to seriously consider any progressive revenue sources in the last legislative session.
There were some proposals that would have generated additional revenue. They included delaying the corporate tax giveaway for at least one year; raising the capital gains tax; and raising the personal income tax rate on high-income taxpayers. None were given any serious consideration.
How did we get here? Both political parties are to blame.
Democratic Gov. Bill Richardson, hoping to boost his presidential candidacy, pushed a drastic across-the-board reduction in the capital gains and personal income tax.
Richardson also continued to promote the myth that tax giveaways are the route to economic development.
Combined, these moves blew an enormous hole in the New Mexico budget that haunts us to this day.
At the same time, Republican strategist Grover Norquist was putting pressure on Republican legislators at all levels to take the “no new taxes” pledge. Also, the American Legislative Exchange Council, made up mainly of Republican legislators and funded by large corporations, started to push legislation that gave huge tax giveaways to corporations.
Like Richardson, ALEC promised these tactics would lead to economic development that would create jobs. Instead, New Mexico is near the bottom in job growth; near the bottom in child welfare; near the bottom in poverty.
The legislative and executive branches need to generate more revenues from those able to pay. They can start with a comprehensive review of the tax breaks that have been given out over the years to see which are promoting economic growth. Those that aren’t should be repealed.
Then we need to go back to the pre-Richardson capital gains and personal income levels for high-income taxpayers. Those two actions would be a good start to fixing the revenue side of the New Mexico budget and reducing our dependency on revenues from the extraction industries.
It is easy for public officials to get elected by promising the people a free lunch. But now is the time for public officials to fulfill their responsibilities to their constituents. They must raise the revenue needed to educate our students and provide other important services.
Economic growth will follow.