Opinion: Legislature failed on longterm prosperity
Last updated 3/30/2021 at 5:05pm
New Mexico is in one of the most unusual economic times in its history. Profound forces have impacted our state over the last year in unforeseen ways.
• The governor and COVID shut down much of our state for much of the past year. COVID is declining, but New Mexico remains among the most locked-down states in the nation;
• Oil and gas prices plummeted last April due to the pandemic and an international price war, but have come roaring back and produced $300 million in “new” money and a budget surplus;
• Democrats in Washington recently passed a $1.9 trillion dollar “stimulus” that will dump an astounding $9 billion on New Mexico state and local governments. Meanwhile the Administration's moratorium on oil and gas production on federal lands will cost our state more than $700 million over the next few years according to Gov. Lujan Grisham;
n While New Mexico governments are awash in money, businesses are struggling to recover. The State's unemployment rate is 8.7 percent, fourth-worst in the nation.
To say we are living through unpredictable times would be an understatement. Oil and gas have always been volatile but are now more unpredictable than ever. This reflects broader economic uncertainty, but with the Biden Administration targeting the industry, the Legislature must diversify our economy (this does not mean simply new sources of government revenue).
The unprecedented stream of federal spending flowing into our state is augmented by a flow of people. Housing markets are tight in most of our cities as Americans from big, expensive, states like California embrace remote work or simply move to states like New Mexico where they can spread out and buy a house for a lot less money.
Current trends are favorable, but long-term economic prosperity requires enacting policies that make the state more attractive as a business destination. The 2021 Legislature had a few successes but ultimately failed to enact policies that will bring long-term prosperity to New Mexico.
Despite a big budget surplus, the Legislature raised taxes on health insurance (SB 317). It imposed a new sick leave mandate on businesses, including small ones (HB 20). And, passage of HB 4, the misnamed “Civil Rights Act” will impose massive new legal costs on New Mexico governments without actually improving policing or protecting civil rights.
There were bright spots. HB 255 reformed New Mexico's liquor licensing to make it easier for bars and restaurants long-term. HB 177 passed, which allows New Mexicans to start micro-businesses by making non-perishable food items in their homes for sale.
But the gross receipts tax and its taxation of business inputs and services remains a stumbling block for businesses. New Mexico also remains among a relatively small group of states that tax Social Security. No significant tax cuts or reforms were adopted. Also, no widespread reform of burdensome regulations (like the state's “prevailing wage” law that artificially increases costs on public works) projects was enacted.
Paul Gessing is president of New Mexico's Rio Grande Foundation, which promotes limited government, economic freedom and individual responsibility. Contact him at: