The Roundhouse in Santa Fe (Photo by Peter St. Cyr)
While there will be disagreements over how to close the budget gap in the next few weeks, that gap can be made considerably smaller just by enforcing existing laws and closing loopholes
Despite population growth of over 10 percent, the State of New Mexico has fewer classified state employees than at the end of libertarian Gary Johnson’s last term as governor. Not just per capita, but in raw numbers.
Presumably, a good libertarian like Johnson wouldn’t grow government faster than the population, so assuming he didn’t, that means classified state employment is at its lowest level in at least 16 years.
Are there more exempt employees than before? Yes. But there’s a way to thin that herd without layoffs, which I’ll discuss below.
The big point is that, for the vast majority of state government, we’re lean. Leaner than under the Johnson years. We’ve already cut $700 million from state government, and state employees have already given up about three weeks’ worth of pay. That’s a big deal to people with an average income of just over $30,000 per year.
There’s no way — none — to continue using a cuts-only approach without directly hurting New Mexicans even further. The good news is that there are a variety of sensible revenue ideas that don’t hurt economic recovery. The bad news is that there’s substantial disagreement between representatives, senators, and the administration on which ones are best.
Carter Bundy
Fortunately, because we haven’t paid much attention to revenue over the last few decades, there is some low-hanging fruit just waiting to be grabbed.
Revenue without taxes
Conservatives like to say that government should be run like a business. Leaving aside that government provides critical services that should never be designed to turn a profit, at a minimum we can all agree that any good business would first collect the revenues that are owed to it.
There are two bills that would enable us to collect revenues already owed: The first is Speaker Lujan’s bill to require withholding on out-of-state workers who earn their money in New Mexico.
Even the Greater Albuquerque Chamber of Commerce and the Association of Commerce and Industry saw this as an obvious way to bring in more revenue without increasing taxes, and testified in support of House Bill 120.
And it has the added benefit of collecting revenue from out-of-staters who owe us the money and have been skipping out on their obligations.
Combined reporting is more complicated, but follows the same principle: if you make a profit in New Mexico, you have to pay taxes just like New Mexico businesses. It’s that simple.
Every other western state with a corporate tax has combined reporting, and the horror stories told by the talented, clever, powerhouse corporate lobbyists in those states never came true.
Legislators in every other western state succeeded in ending the corporate shell game and bringing tax fairness for in-state businesses. Why does New Mexico have to be the one state that gets trampled on?
A third way to generate revenue without raising any tax rates is to end the loophole that allows itemizers to pretend their income is lower this year simply because they paid their taxes last year.
Only four other states allow this fiction, and most of them are looking to end it. Why not us?
Triple play
The lowest of the low hanging fruit has bipartisan support: There is near universal agreement among Republicans and Democrats to end double dipping.
Done right, there will be three major benefits: The general fund may save about $40 million per year, PERA may save hundreds of millions in the next few years, and we can cut the size of the political appointments significantly without layoffs.
There are two ingredients in the recipe for a good double dipping bill:
First, ban all double dipping going forward. Period. If we need to hire someone, we can pay market rates, just like our state did successfully for almost all of its 98-year history.
Second, give current double dippers a year-long phase-out. Ending it immediately would be unfair to many of them, since they’ve planned their family budget for the year (and you can’t blame double dippers for taking advantage — they aren’t breaking the law).
They’ve been on notice for at least two years that double dipping might end. Many are at-will employees anyhow. Giving them until Jan. 1, 2011 to choose either retirement or full-time paychecks seems a pretty generous compromise. They don’t have to leave their jobs. They don’t have to give up their pension. They just can’t do have both simultaneously.
Sure, there will be lawsuits. But I can’t find anything in the federal or state constitution guaranteeing the right to get both checks at the same time.
The beauty of the phase-out for current double dippers is that it is fair and it will also lead many of the political exempt employees to choose retirement.
If half of the state’s 1,200 or so double dippers chose retirement, and even if we had to fill half of those positions, that would mean a reduction of 300 employees — many of them high- and mid-level political appointees.
That’s tens of millions of dollars in general fund savings without laying off a single worker. Further, most of the new vacancies would come at the upper levels of government, which wouldn’t hurt nearly as much as further cuts to already-depleted front-line services citizens expect.
While there will be disagreements over how to close the budget gap in the next few weeks, that gap can be made considerably smaller just by enforcing existing laws and closing loopholes.
Grab the low-hanging fruit first.
Bundy is the political and legislative director for AFSCME in New Mexico. The opinions in his column are personal and do not necessarily reflect any official AFSCME position. You can learn more about him by clicking here. Contact him at carterbundy@yahoo.com.