Serious Challenges in the 2021 Session

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With the demise of “moderate” Senate Democrats in the 2020 election, New Mexico’s Legislature again shifts leftward. As New Mexicans turn their attention toward 2021 the state remains in the throes of COVID 19 and the virus shows no signs of letting up.

Paul Gessing, President, Rio Grande Foundation

What does all of this mean for the 2021 Session? For starters there are real questions about the logistics of a 60-day session under COVID. A “Zoom” special session like we had in June is one thing, but a 60-day session is much different. The public needs to have access to their elected officials.  

Logistics are up in the air, but we know some of the big issues. Marijuana will likely be legalized this session and that is a good thing. But marijuana can’t be a “cash cow” used to fill deficits and the state’s bottom line. New jobs and revenue are welcome, but the Legislature must also recognize that we are competing with Colorado and (now) Arizona. Taxes and regulations must be balanced against reducing the black market as well as competing with neighboring states.

In terms of economic policy, both tax hikes and tapping the permanent fund will be on the table this year to address what will likely be a very challenging budget situation. In 2019 with a billion dollars surplus due to the oil and gas boom the Legislature passed HB 6, a major tax hike. So, a more progressive Legislature may be inclined to raise taxes yet again.

According to the Federation of Tax Administrators, New Mexico has the 7th-highest tax burden in the nation. And with so many businesses and families struggling to make ends meet or stay above water during these extremely challenging times, raising taxes would be unconscionable. Former Gov. Bill Richardson, said it best in May when he wrote, “Don’t raise taxes of any kind. We need to attract new businesses and, if anything, get rid of the onerous double Social Security tax.”

Richardson is absolutely right.

We still believe that New Mexico has plenty of spending to cut, but we also recognize the economic situation imposed by the virus. And, with the departure of state Sen. John Arthur Smith, the Land Grant Permanent Fund is likely to be tapped.

The question is how the fund can be used effectively given the challenges we face as a state. Democrats will get their universal pre-K and other “early childhood” programs, but something needs to be done to help two groups that have been devastated by the pandemic and Gov. Michelle Lujan Grisham’s lockdown.   

1) During the past year student learning has been put on hold and families have faced numerous challenges with virtual schooling. Experts and parents alike predict a “lost year” for many students. The state should put financial resources behind helping families deal with the financial challenges of educating their children at home. Additionally, funds should be made available to give parents of all income levels options of public or private schools for their children;

2) The permanent fund could also be leveraged to assist businesses and get the state economy on firm footing. Lujan Grisham has proposed a $25 million fund to assist the hard-hit tourism industry. The concept should be expanded to include all manner of businesses that have been devastated by the pandemic and lockdowns.

New Mexico’s Legislature is as “progressive” as it has ever been, but we also face more serious challenges than ever. Marijuana legalization and tapping the permanent fund (if used appropriately) can help address the current situation, but there could not be a worse time than now to raise taxes.Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility. The views in this column are the author’s alone and do not reflect the view or opinions of New Mexico In Depth. This column first appeared in New Mexico In Depth’s 2021 Legislative Special Edition.

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