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Thursday, December 13, 2018

Commentary Corner: Hoarding At The Roundhouse 

Maybe they should start filming that TV show "Hoarders" at the Merry Roundhouse. A  look at the state's balance sheet shows a nearly ridiculous amount of surplus revenue being accumulated. Still, the head financial cheeses in Santa Fe continue to warn that the sky is about to fall and persist in chasing anyone away from the enormous cash stash who has the audacity to suggest some of it be used for not only "one time" projects but for long-term programs to better the lot of New Mexicans. 

For a state that ranks 50th or near 50th in poverty, child well-being and student achievement the embarrassment of riches being hidden in the nooks and crannies of the capitol are, well, embarrassing. Come along with us for a New Mexico treasure hunt as we hunt down the hoarding:

-- From the AP: The state is expected to finish this fiscal year (June 30) with $1.4 billion in excess revenue and the forecast calls for revenues to outpace spending obligations again next fiscal year, resulting in a $1.1 billion surplus, according to economists at three state agencies and the Legislature. Financial reserves are expected to swell to $2.5 billion by June 2019, equal to 40 percent of annual general fund spending.

--From the Journal: New Mexico’s revenue boom is pushing more money into a “rainy day” fund created in 2017. The tax stabilization reserve — an idea championed by the late Rep. Larry Larrañaga of Albuquerque — is expected to take in about $123 million this fiscal year and another $147 million next year.

--And no treasure hunt would be complete without a visit to the Land Grant Permanent Fund which now holds about $18 billion and the Severance Tax Permanent Fund which is at around $6 billion. 

There's more tucked away but those are the highlights.

How does a small, disadvantaged state of 2 million people justify the hoarding of such immense riches? Here's how: 

"It's not going to last. It never does. Oil will crash and we will be broke."

"We cannot trust ourselves. This place is full of crooks and incompetence and it's better to let the money sit there and just pay our basic bills."

New Mexico doesn't lack money. It lacks the will to change. The incompetence it suffers from is rooted in a deep fear that has given the state an entrenched poverty mentality, low expectations and lousy outcomes. 

Even as Santa Fe stares at stupendous amounts of money it wallows in its low self-esteem. They say change is hard. Around here it's nearly impossible. 

And they keep getting it wrong. Yes, oil prices do go through volatile ups and downs. But that wasn't the sole cause of the budget crisis the last time oil tanked. The drop was preceded by a massive personal income tax that Santa Fe approved and took $300 to $400 million a year out of the treasury. Then they passed a corporate income tax cut that further eroded the treasury so when oil crashed it took everything down. If those tax cuts--which proved completely ineffective in stimulating economic growth--had not been enacted or limited, the damage would have been much, much less.

They love getting it wrong. Just last legislative session they passed another hare-brained savings scheme mentioned above--the tax stabilization reserve. Because Santa Fe refused to believe the good news about the insane amounts of oil in the Permian Basin it again caved to its hoarder instincts and now has nearly $300 million headed to that fund that can't be put to work. That's on top of a billion dollar budget reserve in a $6.3 billion budget, the largest ever, and another $1.1. billion in new money projected for the budget year that begins in July.

Uh, hello? We are now home to the largest oil reserve in American history? Can we like go to Target and buy a little something?

New Mexico needs transformational change if it is to use this serendipitous time in its history to finally pull itself up. Most everyone agrees with that. But collectively we don't cry out for it. We just don't seem to think we deserve it. An that's how you get billions upon billions of dollars stacked as high as the Sandias. Merry Christmas. . . or something. 

This is the home of New Mexico politics.

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(c)NM POLITICS WITH JOE MONAHAN 2018
 
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