Archives For New Mexico’s Economy

There are recent Journal stories about the vibrancy of the economy in Colorado and the obvious contrast to New Mexico.

I have spent a fair amount of time in the Denver area in last couple of years and the boom is not limited to Denver but also in suburbs like Lone Tree and Centennial.

Yes, New Mexico has had its setbacks in recent years. But the big problem is that New Mexico has been acting like the business that reacts to slowing sales by reducing salaries, cutting the advertising budget and eliminating research and development. Predictably, the business fails.

We’re doing something similar in New Mexico. We reduce taxes, let our roads go to pot and cut education at all levels.

And let there be no doubt economic downturns are always accompanied by rising crime rates.

Do we really think this all will end well? No, we have to change our ways.

Here are some ideas.

We need to professionalize our state economic development efforts by bringing in the best candidates we can to lead our efforts, no matter where they come from.

We need to fix our roads using increased road taxes, especially in light of lower gasoline prices. Paying for today’s roads with bonds to be paid off from future tax revenues to be paid by our kids makes no sense at all.

We must improve our K-12 education by paying teachers better and helping them to improve using co-operation, mentoring and incentives instead of hectoring and threats based largely on an impersonal testing regime that too often fails to account for the differences in the capabilities of their students.

We need to invest much more in early childhood education and reduce the cycle of educational failure by getting many more students ready for school. There’s tons of data in New Mexico and elsewhere that prove the success of such programs.

We need to reorganize and properly fund our post-secondary education system to get our students ready for the increasingly complex new world they face.

We need to fix our state tax system that is so fouled up that married couples with $25,000 in taxable income now pay the same rate of income tax as couples with $500,000 in taxable income. What happened to progressive taxation?

And we need to continue efforts to rid the gross receipts tax of all those unjustifiable and self-defeating exemptions and deductions.

Finally, we need cooperation and collaboration, to knock off the name-calling and negativity and work together successfully.

There’s no reason why we can’t accomplish this.

Brian McDonald

Chuck Wellborn

A pending bill in the Legislature (HB 412) seeks to bring badly-needed reform to the state’s gross receipts tax (GRT) by removing ill-considered deductions and exemptions, thereby expanding the GRT tax base and  enabling the GRT tax rate  to be reduced. The latter is a well-recognized principle of state taxation—tax a broad base of economic activity at a low tax rate.

One aspect of this bill that should be widely embraced is in fact one of its most controversial provisions. That is reimposing GRT on food—though at a reduced rate.

There are more reasons to support the tax on food than many know:

  • It’s not at all clear that exempting food from GRT actually benefits the poor,
  • The benefits of the food tax exemption flow almost entirely to the non-poor,
  • The food tax break is a primary contributor to our current fiscal woes, reducing tax revenues by more than  $200 million each year,
  • These lost revenues are desperately needed for public education, early childhood development and Medicaid, which do benefit the poor, and
  • Lost GRT tax revenue on food sales has forced cities and counties to increase their GRT rates on non-food items such as utilities and clothing, further burdening the poor.

Opponents of reinstating the food tax say that even though the poor get federal SNAP (food stamp) assistance, SNAP assistance only provides a portion of their food needs. Co-author Brian McDonald, a Ph.D. economist who headed UNM’s Bureau of Business and Economic Research until his retirement, points to data that raises serious questions about this premise.

In FY 2015, SNAP (food stamp) assistance totaling $685.2 million went to 205,540 New Mexico households with each household receiving $3,333 per year on average. By federal law, SNAP benefits have never been  subject to GRT.The 2004 legislation eliminating food from the GRT tax base therefore provided little tax relief to the poor in New Mexico. New Mexico SNAP recipients today receive GRT tax benefits totaling $47.96 million (assuming a 7.0% GRT tax rate) by virtue of this federal exemption, not the 2004 New Mexico legislation exempting food.

How does the $3,333 in SNAP assistance each household received compare to the annual food purchases of similar households?

U.S. Bureau of Labor Statistics Consumer Expenditure Survey data for that year show that the lowest 10% of households in the U.S. by income spent $2,566 on “food at home” (the closest data concept to the New Mexico GRT tax base on food). The second lowest 10% of households by income spent $2,432 on food at home.

Extrapolating these data to New Mexico’s poor, the lowest 20% of households are receiving SNAP benefits which typically cover most or all of their expenditures on food and which are not subject to GRT taxation by federal law.  Under HB 412, these $685.2 million in food purchases by the poor will still be exempt from GRT.

The lower GRT tax rate proposed by HB 412 will give the poor in New Mexico real tax relief on their non-food purchases such as utilities, clothing, food consumed at restaurants, and school supplies. Arguably, the poor in New Mexico will pay more GRT if HB 214 excludes food from the tax base because the GRT tax rate will have to be increased in order to generate the same level of tax collections with a smaller tax base.

Brian McDonald

Lee Reynis

Jim Peach

Chuck Wellborn


The State’s tax system has a major structural problem and it relates to the gross receipts tax.

New Mexico enacted an Emergency School Tax in 1935 to fund public schools with a state-level sales tax. In most states, public education is funded with local property taxes but in 1935 a statewide sales tax was chosen because it was the only tax capable of raising the revenue required.

Later, New Mexico instituted a public school funding formula to deal with the inequalities in public school funding capacity across the State. Together, these actions firmly fixed the responsibility for funding public schools on the State’s General Fund.

The revenues from the sales tax (which later became the gross receipts tax) are not dedicated to public schools. So the schools, along with the State’s higher education system, are forced to compete for funding with a myriad of state spending needs, plus appropriations dictated by political agendas.

Before the 1935 school tax, public schools had been funded from local property taxes. Once property values recovered from the Depression, New Mexico could have changed course and used the State’s unused property tax authority (10 mils or so) to provide a stable source of public school funding long term.  Instead, this taxing authority was given away permanently to counties and municipalities.

So, unlike other states which primarily fund their public schools from local property taxes, New Mexico’s schools get the lion’s share of their operational funding from the State’s General Fund.  Public schools have no operational revenue source of their own. The only contribution that local property tax revenues make toward public school operations is the 0.5 mill levy each district is required to impose. However, the State’s school funding formula takes credit for much of this property tax revenue and essentially neutralizes it as an additional local revenue source for schools.

Until recently, local property taxes were the only source of funding for school capital projects. But in the last decade, state funding of school capital needs has become a more pressing need. These needs have been addressed utilizing severance tax revenue bonds and general fund surpluses. In contrast to other states, local property taxes in New Mexico remain largely untapped except to repay General Obligation bonds approved by the voters.

Is New Mexico’s gross receipts tax really the oddity it is said to be? Yes, it is: in two ways.

The first is that it is a very broad tax, even covering services. Does that mean it is bad? Not necessarily, because this broad coverage of the gross receipts tax brings in sufficient revenue that it allows property taxes to be extraordinarily low compared to other states.

The second unique feature of the gross receipts tax is not so good. That is that services are often taxed in business-to-business transactions with the result that more than one tax is paid on the ultimate product or service. More needs to be done to avoid that.

It should also be noted that the gross receipts tax is a regressive tax. As a percentage of household income, it imposes a greater burden on the poor than the rich because of the lesser ability of the poor to pay the tax.

Previously, this regressivity was offset to a greater degree by New Mexico’s progressive income tax. But when income tax rates were lowered from 8.2% to 4.9% during the Richardson administration, much of the progressivity of the income tax was lost. Now the top marginal rate of income tax kicks in at the relatively low level of $24,000 in taxable income for couples. Such a couple now pays the same marginal rate of tax as those with taxable income that is 2, 5, or even 10 times higher.


The reductions in personal income tax rates during the Richardson administration, coupled with corporate income tax reductions during the Martinez administration, have had the effect of placing more and more of the burden for funding state government operations on the gross receipts tax and, until recently, the volatile taxes on the oil and gas industry.

At the same time, revenues from gross receipts tax have gone down in recent years even though gross receipts tax rates have risen. The reason is the once broad base of the gross receipts tax has been whittled away.  Most regrettable were the food, prescription drug and medical deductions from gross receipts tax passed under the Richardson administration. Just these exclusions currently reduce the State’s revenues by hundreds of millions of dollars each year.

Despite this revenue loss, each legislative session sees dozens of bills introduced and often passed to carve out more and more exclusions from the gross receipts tax. Worse, these tax exclusion measures typically have no sunset provision offering the Legislature the opportunity to end them if the intended benefits are not being realized. As a result, many such gross receipts tax exclusions on the books serve no current benefit to the State. Further, cities and counties impose gross receipts taxes themselves and so these exclusions from gross receipts tax at the state level have caused cities and counties serious declines in tax revenues. As a consequence, many have raised their gross receipts tax rates to make up for the decline.


The choices are obvious: eliminate most of the gross receipts tax deductions, exemptions and credits and reduce the gross receipts tax rate sufficiently that its adoption becomes sufficiently politically appealing to overcome the complaints about the elimination of all the sacred cows. In addition, there should be at least some reduction in tax pyramiding in fairness to industries impacted by this now and to improve its chances for adoption. Consideration could be given to adding another income tax bracket for high earners as a means of replacing some of the lost gross receipts tax revenue and adding a little more progressivity to the income tax.


At this point, some discussion of state and local tax burdens is appropriate.

Most New Mexicans don’t realize that overall state and local tax burdens vary less from state to state than it might seem. The measurement of a state’s tax burden is complex and requires careful analysis. Each state has its own mix of taxes such as sales, income, property taxes, and others. As noted above, New Mexico funds public education with state-level taxes, whereas in other states local government property taxes are used to fund public schools.

A credible tax burden analysis must consider both state and local taxes. Comparing only state-level taxes is a common tactic by those advocating lower taxes. In a recent presentation at the New Mexico Tax Research Institute’s Annual Conference, DFA Secretary Tom Clifford indicated that the state and local tax burden in New Mexico as a percentage of personal income is slightly below the national average. That aligns with the general nonpartisan opinion. Even then, New Mexico’s state-level taxes include severance taxes on minerals and oil and gas extraction and are always included in the tax burden analyses. But few New Mexico consumers pay these severance taxes and that favorably improves the overall tax burden in New Mexico. The mantra that New Mexico taxes overall are too high is a myth.

The varying mixes of taxes from state to state account for the complaints that a certain tax in another state is lower than a similar tax in New Mexico. But when all of the taxes imposed by that state are taken into consideration, it becomes clear that there are no free lunches.


Employment levels in the State are still not yet back to the levels achieved in 2007 before the Great Recession. New Mexico has been hit hard by the federal sequestration, the bust in construction activity and now the decline in energy prices. Despite claims that recent job gains signal economic recovery, these new jobs continue to be largely healthcare jobs and are due, not to the State economic development initiatives but to enactment of the federal Affordable Care Act and the resulting increase in medical care for State residents. Albuquerque Business First reported on April 29th that though the South and West offer the best climates for small-business growth, Albuquerque ranks 93rd in business vitality out of 106 metro areas with a population of at least 500,000.

A three-step course of action is recommended.

First, fix the gross receipts tax as described above. Retain the gross receipts tax breaks that make a demonstrated contribution to our economic development efforts. But also do this overhaul in a way that will raise gross receipts tax revenues modestly so that New Mexico has the resources to invest in its future. And don’t let anyone tell you that a modest tax increase will kill our chances to attract new business activity to New Mexico.

Second, make a periodic review and refinement of the existing inducements that the State offers to job creators, including tax breaks, subsidies for job training and infrastructure, and their effectiveness.

Third, rather than relying solely on these job creation inducements, the State should implement strong measures to stimulate the State’s economy, including meaningful fiscal stimulus.

As just some examples, the State could use increased tax revenues, capital outlay money and severance tax and general obligation bonds to pay for state infrastructure projects that will materially improve the long term health of the State’s economy: roads, airports, internet connections, innovation districts, university science and engineering laboratories, tenured faculty positions, plus equipment and facilities for public schools and other improvements to New Mexico’s education system that enhance educational and training opportunities for the State’s young people.

Good examples of this type of action are recent efforts by the City of Albuquerque. It recently built the new interchange at Paseo del Norte and I-25, not by waiting for federal spending to someday arrive, but instead by largely using City bond money to pay for it. The work created many construction jobs and improved the commuting life of citizens.

The City is doing much the same thing with its Albuquerque Rapid Transit project (except that the federal government is providing tens of millions in funding). Similarly, the City, County and UNM are funding development at the Innovate ABQ project on Broadway and Central.

There will always be those who complain that the City or State is doing too little to address important challenges and then find fault with whatever action is taken. Yes, some will worry that improving roadways will lead to urban sprawl or more cars on the road. Some will not believe that the bus rapid transit will lead to increased investment in properties along Central Ave. Others will not be convinced that an innovation district will be a meaningful job creator.

But isn’t decisive but thoughtful action better than doing nothing but wringing our hands over the State’s and City’s uncertain economic future?


There always seem to be a fair number of misstatements about New Mexico’s tax system, including a few recently, and this might be a good time to review them.

Claim: The Rio Grande Foundation claimed (Op-ed Paul Gessing April 10, 2016) that New Mexico’s tax burden as a percent of personal income is ninth-heaviest in the nation, citing Federation of Tax Administrators data.

Analysis: Wrong. The Rio Grande Foundation compared only taxes levied at the state level. New Mexico funds public education with state-level taxes. Other states fund public schools with local government taxes and so the Foundation is comparing apples and oranges.

Because it utilizes state-level taxes, almost half of New Mexico’s annual state budget is devoted to its public elementary and secondary schools. So comparing New Mexico’s state-level taxes to the state-level taxes of states that fund education with local property taxes simply makes no sense.

In addition, New Mexico’s state-level taxes include a substantial amount of severance taxes that most other states do not receive. Severance taxes are paid by mining and oil and gas companies (typically out of state), not individual taxpayers. This further distorts this comparison of state-level taxes.

It might be noted that the Federation of Tax Administrators specifically warns readers not to use its comparative data to judge whether a state is a high tax or low tax state because “no single measure generally tells the whole story.”

Claim: The Rio Grande Foundation claimed in the same Op-Ed that New Mexico state and local workers make 20 percent more than their private sector counterparts if retirement and other benefits are included. It cited data from a website called “Key Policy Data”. The disparity between public and private workers is claimed to be the 12th highest in the country.

Analysis: Wrong. State and local government employees appear to be overpaid because the comparison ignored entirely the compensation of the thousands of federal employees (military, federal agencies, national labs) who reside in the State.

Again, the large federal New Mexico presence means the proportion of private sector employees is smaller than in other states.

It is true, however, that retirement benefits for state and local government employees are substantial if an employee stays in the job long enough to earn them. But many do not and therefore it shouldn’t be assumed that all government workers will receive government retirement benefits. It is a long-standing practice for government employees to be offered good retirement benefits as an inducement to remain in government service.

The measurement Key Policy Data made of the compensation of state and local government employees is somewhat skewed because employees of New Mexico Indian Tribes and their casinos are considered government employees in the data it used.

It may be noted that Key Policy Data is staffed by persons who previously worked for the American Conservative Union Foundation, the Tax Foundation and the Heritage Foundation.

Speaking generally about whether New Mexico state and local employees are or are not overpaid, there are plenty of indications that state and local government employees are not overpaid. The average salaries of New Mexico’s school teachers are 45th in the nation. The average salary for an assistant district attorney in Bernalillo County is around $42,000 (for someone who has had three years of law school and who has passed the bar exam). it’s clear that Albuquerque is not paying enough to keep or attract police officers. The same is true for Bernalillo County’s Metro Detention Center, the state police and case workers for the State’s Human Services Department.

The Rio Grande Foundation argues in its Op-Ed that in setting salaries, the government should recognize the present high unemployment rate in New Mexico and pay no more than local labor market conditions would warrant. This is not a sound strategy.  Teachers, police officers and other government employees are mobile and will go where pay is higher. Paying rock bottom salaries to government workers would diminish the quality of government services. If the public wants good government services, good employees must be attracted to government service. That is how the private sector operates, using wage levels to attract sufficient, high quality human resources.

Claim: The Rio Grande Foundation Op-Ed also claimed that New Mexico’s state and local government workforce is bloated, based on The Key Policy Data report referred to above. It says that New Mexico has the second-most state and local government employees relative to private-sector workers.

Analysis: Wrong Again. The Key Policy Data report compares the number of state and local government workers to the number of the State’s private sector workers only, ignoring again the large federal presence in the State. 

New Mexico’s private sector employment is relatively than in other states because of the large federal presence at our state’s military installations, federal agencies and national laboratories. The thousands of federal government workers in New Mexico require and are entitled to state and local government services too. So the Key Policy Data makes little sense.

Also, the number of state and local employment employees is overstated because the data for government workers includes employees of tribes and their many casinos.

Claim: The Albuquerque Journal editorialized on April 2, 2016 that New Mexico state government does a bad job of delivering return on investment for the tax dollars it spends. It also says New Mexico has the 17th highest level of state and local taxes per capita based on those 18 and older at 10.65%

Analysis: The Journal may be correct about the quality of state services. But WalletHub’s calculation of a 10.65% tax burden was based on U.S. median household incomes, not New Mexico median household incomes, and therefore came up with the wrong answer.

The first question one might ask is: who is WalletHub? It is not a research organization. It is web-based seller of financial services. It says it is a “one-stop destination for the tools and information consumers and small business owners need to make better financial decisions”. WalletHub does not appear to be ideological. It likely puts out its reports in order to get news coverage that drives consumers to its website.

The WalletHub study the Journal apparently relied upon that rated the quality of state services is “2016’s States With the Best & Worst Taxpayer ROI (

The stated purpose of this study was to contrast state and local tax rates with the quality of services provided by each state within certain categories: Education, Health, Safety, Economy and Infrastructure & Pollution.

WalletHub gave New Mexico poor rankings in each of these categories (except for infrastructure and pollution). But that came as no great surprise. On the other hand, is it fair to suggest all of the fault lies with government employees, rather than the State’s political leadership?

However, it was not the same WalletHub study but another that came up with the 10.65% tax rate calculation. This other WalletHub study is entitled “2016’s States with the Highest & Lowest Tax Rates” (

First, this other WalletHub surveyed effective total state and local tax rates and it stated that the effective rate of New Mexico’s state and local taxes was 10.65% and it said that 10.65% was the level of state and local taxes on households, not per capita as the Journal said.

However, WalletHub came up with the 10.65% tax rate by applying New Mexico’s total state and local tax rates to the median income of U.S. households, not to the median income of New Mexico households. Using this method, WalletHub calculated the annual New Mexico tax bill at $5,741and gave New Mexico taxes an “Overall Ranking” of 26th lowest.

But when Wallethub applied New Mexico’s total state and local tax rates to New Mexico’s median household income, WalletHub came up with annual taxes of $4,912 rather than $5,741. It further ranked New Mexico state and local taxes as 20th lowest when it applied the cost of living index.

What is demonstrated by all this is that there are all kinds of comparisons and it’s important to know just what is being compared and whether the comparison being made by an unbiased and reputable research organization.

Things are not good in the New Mexico economy. The job situation is desperate and getting worse. Worse, ten years of reduced state tax revenues from tax cuts is limiting the state’s ability to respond in a compelling fashion.

What is being proposed? 

The Governor proposes the New Century Economy Jobs Agenda: a corporate income tax cut, infrastructure money for local economic development, re-prioritization of capital outlay projects plus continuing the Main Street and job training incentive programs.

Democratic legislators are pushing for an increase in the minimum wage, an increase in the film production credit, a $97 million public works program, a 1% pay raise for state workers and creation of a governmental jobs council.

Options are limited

These economic development efforts don’t seem equal to the state’s dire situation.

Yet can we criticize these choices by policymakers when the state has relatively little General Fund revenue available for economic development?

This shortfall is not just because of the economic downturn. It’s because over the last ten years taxes have been reduced in the hope that the lower tax burden will aid the state in luring out-of-state businesses to New Mexico.

Gov. Richardson’s started down this path in 2003. He pushed a number of tax cuts. But the most far-reaching were exempting food and some medical services from the gross receipts tax, reducing tax revenues by about $270 million in 2012. He also lowered personal income taxes by reducing the maximum rate from 8.2% to 4.9%, reducing state revenues by more than $400 million annually.

By 2010 it was clear that with the downturn and the tax cuts, the state couldn’t balance its budget. Richardson agreed to some tax increases including minor increases in the gross receipts tax and personal income taxes that increased revenues by $170 million. He also vetoed a bill to reinstate the tax on food.

Though the half billion dollars in tax cuts over ten years were intended to make the state more attractive for businesses to locate operations here, the effort has shown little success.

Notwithstanding, Gov. Martinez is following the same path.

Last year she secured an anti-pyramiding gross receipts tax cut projected to cost $91 million annually. This year, she is proposing a corporate income tax cut in this legislative session whose full cost would be $255 million each year.

Will another $350 million in tax cuts make a difference in New Mexico’s ability to attract new business relocations? Yes, the business climate is improving but can New Mexico compete against states with the ability to offer greater incentives or have superior geographic locations?

The publication Governing carried a recent article about state economic development incentives in which one expert said that tax incentives are only part of the picture in what appeals to relocating businesses. Chris Lafakis, a Moody’s analyst who helped compile that firm’s Cost of Doing Business Index, says in this article that states with low tax burdens often lose out to others with higher burdens. Each state has its own attractions. Another commentator suggests states consider at what cost to the state are relocation incentives being given.

That is what New Mexico citizens should ask themselves. We’ve been at this tax cutting for some time with not much to show for it. Would it be better if we had spent these hundreds of millions each year on a more robust economic development effort focused on existing employers and job training for local workers? On improving our early childhood, K-12 and post-secondary education systems? On addressing the state’s $1.5 billion unfunded road construction needs?

Is it time to change direction?

Are we chasing the right rainbows?

[This post originally appeared in the Albuquerque Journal on February 25, 2013]


The economic situation in New Mexico is astonishingly bad. There’s not a lot of vigor to the proposed legislative solutions but it’s also true that state revenues are so diminished, options are limited.

Yet there are a few useful things that could be done in this legislative session.

The Governor’s Agenda

There’s little of consequence in the Governor’s New Century Economy Jobs Agenda beyond the proposed corporate income tax cut. This cut would make it easier to attract out-of-state corporations to locate business facilities in New Mexico, say its supporters.

But adoption of this measure would reduce annual state revenues by $255 million. This is on top of the anti-pyramiding tax cut for manufacturers the Governor requested last year. That tax cut is projected to reduce tax revenues by $91 million each year, but likely to be pared back as its effect was originally underestimated.

These tax cuts represent a continuation of policies instituted under former Gov. Richardson whereby the state reduces its gross receipts and income taxes in order to make New Mexico more “business-friendly”. The major Richardson tax cuts presently cost the state $500 million each year. The results achieved by these tax cuts to date are minimal but even as each tax reduction fails to produce the promised results, it seems another tax-cutting idea is right around the corner.

If these new tax cuts are approved by the Legislature, how to make sure the state can still balance its budget as the tax cut takes effect? Keep in mind that revenues from the current oil and gas boom are propping up the budget now and that revenue could go away in a heartbeat, just as it has several times in the past 20 years.

The simple answer would be to identify a replacement revenue source and the first place to look would be the personal income tax.

Reducing the maximum personal income tax rate from 8.2% to 4.9% under Gov. Richardson was done so inartfully that a married couple with $24,000 in taxable income now pays the same marginal tax rate as a couple with $250,000 or more. The progressivity of the income tax rates that formerly existed was able to offset the regressivity of the gross receipts tax. That balancing no longer exists.

A new income tax bracket could be created at say $150,000 of taxable income to be taxed at a tax rate slightly higher than 4.9% that is sufficient to replace the revenues lost by the new corporate income tax cut and the other tax cuts sought by the Governor. If her tax cuts work, the state’s economy will pick up and everyone will be happy.

Public Works Projects

The best thing government can do to create jobs is fund construction of needed public works projects. This would be a boon to the beleaguered construction industry. Assuming it has identified the right mix of projects, House Bill  337 providing for $97 million in public works projects to be financed by Severance Tax bonds makes good sense.

New Mexico’s Roads

It would be great if something could be done about the dismal state of our roads and at the same time create jobs. The New Mexico Legislative Finance Committee budget report says that New Mexico has at least $1.5 billion in unfunded road construction needs. Fixing more of these roads and bridges than is now possible would create jobs and the resulting expenditures would add to local tax revenues.

But that would require a General Fund appropriation.

That is because the state’s Road Fund is vastly diminished and even routine road maintenance is a challenge. The Fund’s woes have several causes. One is that Governors Johnson and Richardson both chose to issue bonds secured by New Mexico’s future state and federal highway funding. This enabled them to spend future revenues to build roads chosen by them during their terms of office.

Now the state has some awfully bad roads but much of its present and future road funding has already been spent. The LFC reports that a full 20% of future highway funding is currently needed just to make payments on the bonds issued under Gov. Richardson’s GRIP program. Wisely, such bonding has been discontinued by the current administration but the outstanding bonds won’t be fully paid until 2027.

Another drain on the Road Fund is the legislation that allowed Indian tribes to sell gas on the reservation and retain the gasoline tax for themselves rather than passing it to the Road Fund. This costs the Road Fund as much as $10 million each year. Tribes are now seeking new legislation giving them the right to also sell diesel and other fuels that would have an even more serious effect on the Road Fund. The Legislature should reject the proposed expansion and consider curtailing the existing gasoline sales program.

What else could be done to increase funding for our roads and highways? A long-time problem is that the state gasoline tax is very low, in fact lower than that of 42 other states, and hasn’t been raised in 20 years. Yet gasoline taxes are unpopular. The state could use other revenue sources to fund road costs, including an increase to the gross receipts tax with revenues dedicated to the Road Fund. This course was recently followed by the state of Virginia. Gov. Martinez has vowed there will be no new taxes.  But without new taxes, tollroads, or a magic lamp and a genie, the General Fund is the only potential source of additional funding beyond the Road Fund to repair roads and bridges.

Healthcare Investments

The Governor wisely chose to accept the federal Medicaid money under the Affordable Care Act. Nothing else the state could do will benefit the state’s economy more in the short run than having billions of federal dollars spent on healthcare and resulting healthcare infrastructure. It will also add immeasurably to the future well-being of the more than 400,000 New Mexicans without healthcare insurance.

Concerns remain that the state lacks sufficient infrastructure and healthcare workers to handle the increased caseloads. At the same time, the Governor has blocked for several months the construction of a new $146 million UNM hospital. The issues raised, though in constant flux, never seem to be substantial. UNM’s Emergency Rooms are overloaded for lack of hospital beds. UNM already has the construction money in hand so state or local funding is not the issue.

The construction of the new hospital would instantly create 1000 badly needed construction jobs lasting 22 months, not to mention the new healthcare jobs when the facility opens. There would also be significantly increased tax revenues from both the construction and the operation of the hospital.

The delays to this project are hurting everyone.

A Pay Boost For State Workers

A pay boost for all state workers for the first time in four years is more than appropriate. While it’s fashionable to beat up on public employees, there are many capable and dedicated state employees who will leave government if their salaries remain flat. The extra money these employees receive from a raise would likely be spent and come back into the economy quickly. The House Appropriations and Finance Committee’s budget provides for a 1% increase for all employees.

Technology-based Economic Development

One of New Mexico’s principal long-term economic development strategies has been to take advantage of the science and engineering capabilities of its national labs and universities to foster tech-based industries here in the state.

The number of technology-based startup companies in New Mexico has grown much faster than many realize and they represent a promising source of tomorrow’s jobs.

For twenty years, a primary tool used by the state has been to make investments from the Severance Tax Permanent Fund in qualified local venture capital funds. These funds in turn finance promising local start-up companies. But the program has been inactive since the Martinez administration came into office and is only now resuming activity. Meanwhile, significant momentum has been lost because even successful startup companies need a steady stream of financing in their early stages to remain viable. Getting this program in back operation with vigor makes great sense.