Santa Fe – New Mexico’s 2017 legislative session kicks off today at noon and anticipated to end after sixty days on Saturday, March 18th. The bills that make it out of both houses have until April 7th to be signed by the governor or are automatically vetoed by the so-called pocket veto.
The current budget deficit steering the Roundhouse legislative agenda is largely the result of a combination of tax cuts and low oil prices. According to the Legislative Finance Committee, the budget hole is $85 million for FY 2017.
A little recap: the 2013 tax package slashed the state’s top corporate income tax rate over five years and gradually phased out the “hold harmless” payments the state pays to subsidize cities and counties (while granting them the right to increase their own tax rates). The municipalities that raised rates are upset that as part of her plan to cut spending, Governor Martinez has proposed reducing the amount of taxes local governments are able to collect.
As far as New Mexico’s dependence on oil, it is embodied by the rule of thumb that each dollar change in the price of oil is worth about a $15 million net change in state government income. Oil prices were around $100 a barrel in 2013; oil has been recently hovering around $50 a barrel.
Besides the budget shortfall (the Legislature after all is constitutionally required to pass a balanced budget), additional legislation expected to reach the Governor’s desk or other movidas expected from a legislature controlled by Democrats include:
- A push to tap into the Permanent Fund for additional revenue for K-12 and funding for early childhood programs. We continue to rank near or at the bottom in education achievement leaving no doubt change is needed, but blind spending increases without an increase in accountability is not likely to lead to meaningful change. Curiously, the left-leaning talking points make no mention of the top heavy bureaucracy that plagues our education system. New Mexico ranked 34th in per-pupil spending in 2016.
- An increase in the state minimum wage higher than the federal minimum wage of $7.25. By going the constitutional amendment route – which requires getting approval by a simple majority of both houses – Dems could put the decision directly to voters and bypass Governor Martinez. The effort would coincidentally be a boost to Democrat GOTV efforts in the 2018 general election when races for Governor and U.S. Senate will occur.
- Budget patches such as taxing internet sales, increasing the per-gallon tax rate or the cost to register a car, as well as higher tax rates for the top income tax brackets.
- Legalizing and taxing marijuana (Governor Martinez opposes legalization but this could also be pushed as a constitutional amendment).
- Campaign finance reform requiring greater transparency in political spending and fundraising.
The liberal backgrounds of the two politically seasoned Santa Fe attorneys leading the Roundhouse will indeed give the 53rd Legislature a progressive bent. The dynamics of a political environment that combines a lame duck governor with an emboldened, progressive wing of the Democratic Party will yield some intriguing results, with New Mexican taxpayers’ wallets in the cross hairs as the biggest bargaining chip.
