After two years of belt tightening and difficult austerity measures implemented to plug nine-figure holes and balance the state budget, revenues for New Mexico are once again soaring.
Revenue for the current budget year was up by $672 million through January compared to the same period last year, according to the state Taxation and Revenue Department.
That’s great news for our state. And while Roundhouse lawmakers will no doubt be tempted to go on a spending spree when they convene in January, they should hold off on that impulse because, as Senate Finance Committee Chairman John Arthur Smith points out, the state’s economy is still heavily reliant on a market-driven fossil fuel industry.
“We’re on the roller coaster of oil and gas,” says Smith, a Deming Democrat.
While revenues are up right now, they can just as easily tank. Given the boom in the Permian Basin, specifically the production occurring in Lea, Eddy and San Juan counties, we doubt revenues will sink in the near future, but it’s a boom-bust industry so what goes up eventually comes down. And as the state revenues of 2017 vs. 2018 show – what a difference a single year can make.
Realizing that, lawmakers and the governor last year created a true rainy day fund to help the state ride out some revenue lean years. And there will be more than $15 million flowing into that fund thanks to the uptick in revenue this year.
Lawmakers and the next governor should consider pumping more money into that rainy day fund. It’s not sexy, but it’s the financially responsible thing to do, and they and taxpayers will be glad they did it when the roller coaster that is our state’s revenue source takes a downturn.
Yes, we’re riding high now, but if history has taught us anything, it’s that our revenue stream is volatile and the highs don’t last.
Of course, pouring more money into the rainy day fund doesn’t mean lawmakers won’t be able to tackle other priorities. Now is the ideal time to move forward on efforts like tax reform and expanding proven early childhood education efforts.
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New Mexico desperately needs tax reform – from lowering and broadening gross receipts taxes, to eliminating pyramiding and local government double dipping on GRT, to establishing equity between brick-and-mortar and internet sales. Lawmakers began working on that project in the midst of the budget crisis in 2017, but those efforts went nowhere during this year’s legislative session. Lawmakers shouldn’t wait for another budget crisis to try to get tax reform across the finish line.
The new revenues also give lawmakers the opportunity to continue investing in data-driven early childhood education. New Mexico already ranks 16th in the nation on 4-year-olds’ pre-K participation rates and 20th on spending. And a record number of students will start elementary school five weeks early this summer as part of the K-3 Plus program. Indeed, a record $28.8 million has been awarded to schools this summer for the program.
Given N.M.’s struggles with child well-being, there’s certainly more our state must do. The additional revenues give lawmakers the opportunity to build on what’s already been done and to expand early childhood services like pre-K and even in-home visits with new parents. But funding these initiatives is not the end-all, be-all some would claim: key will be finding enough qualified individuals to deliver the services, then tracking their implementation to ensure the public is getting a meaningful return on its investment.
CHI St. Joseph’s Children, an Albuquerque nonprofit, has come up with a blueprint for rolling out these services. Part of the windfall New Mexico is experiencing could and should be invested in these programs – but it must include a mechanism for tracking outcomes not only to justify this spending but any expansion down the road.
It’s ironic that a year ago, state leaders were fretting about how to plug a massive budget deficit and this year, the state is flush with cash. Given that level of volatility, it’s incumbent on lawmakers and whomever is elected governor to invest any new money wisely.
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.