Private, public partnership needed
October 15, 2009
When the Legislature meets in special session on Saturday, the state will address issues shared with many private businesses in New Mexico — declining revenues and increased costs in a challenging economic climate.
The state’s shortfall has been caused not only by declining revenues as is the case for many businesses, but also a dramatic increase in state government spending.
Until this year, spending from the general fund has increased by 40 percent since 2003. Few private businesses have increased their spending 40 percent over the last seven years as the state has.
Businesses across the state have cut expenses by at least 5 percent or more and are trying to run as efficiently as possible to protect limited resources. In an attempt to preserve jobs, many business owners have taken personal pay cuts and others have had to cut benefits for employees.
Nonetheless, New Mexico has seen its unemployment rate climb to 7.5 percent with a true rate of 11.7 percent when those who are no longer drawing benefits are included, according to the Department of Workforce Solutions.
While the private sector has cut expenses, many are calling for no cuts to government and education. Yet these are the two fastest expanding sectors in our state.
Despite so-called hiring freezes and cuts, the Department of Workforce Solutions shows there has actually been job growth in the government and education sector. Yet, some are calling for stressed private sector employers to support the public sector at the same level to which it has grown.
While it seems popular these days to call for increased taxation of businesses owners, the stark reality is the impact of increased taxation spreads far beyond the owners who, unlike the public sector to date, must reduce spending on goods and services, freezing or reducing employee salaries, reducing or eliminating benefits, and, as a last resort, layoffs.
New Mexico has substantial reserves to soften the blow of the recession on the public sector — reserves funded by private-sector taxpayers for times such as these. Just as the private sector is not requesting tax cuts to reduce the effect of the recession on its finances, the public sector should not seek tax increases to reduce the effect of the recession. Instead, we should work together to form viable solutions.
Louisiana created a group of public- and private-sector representatives who are charged with developing a long-term plan for the state. Louisiana’s Streamline Commission was created to reduce the cost of state government.
Its mission, according to its Web site, is to “reduce the cost of state government, through all means available ... to overcome the projected severe revenue reductions occurring through 2012 and to ensure that available state tax dollars are being spent efficiently and effectively.”
New Mexico needs a long-term solution to ensure sustainability in both the private and public sector. Leadership in our state should consider forming our own Streamline Commission to work for solutions.
We are in this recession together, and it is only by working together that we are going to not only survive, but to thrive once again.