Carter Bundy
One part of our state budget negotiations that has drawn almost no attention from the media or from advocates is that the bulk of revenues being discussed are scheduled to be phased out. They’re being called “temporary.”
Keeping that “T” word in revenue legislation would be an enormous mistake, both fiscally and politically.
Why box ourselves in now?
Even if we want to end some of the revenue enhancements once the economy picks up – and I think there’s a very strong case for doing so for less progressive taxes like GRT or reinstatement of the food tax – why would anyone lock it in now?
Remember, we’re going to be losing hundreds of millions in federal stimulus money during the next two years. Ending revenues automatically without any real-world circuit-breaker is going to make that cliff insurmountably high and requiring at least a partial re-raising of the revenues they called “temporary.”
Setting themselves up
There’s a good chance they wouldn’t be able to re-raise revenue, leading to a further decimation of our state services, health care, public safety and education. Even if they could re-raise revenue, imagine the political blowback from reneging on their pledge of “temporary.”
Politically, it’s especially short-sighted for the Senate to make revenue “temporary.” They’re not up for election this cycle, but if the sunset of revenues puts them in a position of having to re-raise revenue or make even deeper cuts in ’11 and ’12, they’re unnecessarily putting themselves at political risk.
It’s going to get partisan
Let’s face it: Ideological considerations aside, the state Republican Party has decided to follow a combined legislative/electoral strategy of opposing virtually every single new revenue source available.
And it’s not because government is more bloated than it used to be. Remember, we’ve already lopped $700 million off the state budget and have fewer employees per capita than at any time in at least the last 16 years – and that includes all of the GOP Johnson administration. That’s pretty damn lean, but there are as yet no Republicans voting for a balanced approach of roughly equal revenues to match our $700 million worth of cuts.
The House Republicans even voted in lockstep against the simplest of proposals: to collect taxes already due to the state from out-of-staters. I mean, whatever happened to the idea of enforcing current laws? (To their credit, Senate Republicans realized what a no-brainer this was and voted for it).
So Dems have to govern responsibly and alone, with a mix of cuts and revenues. The GOP will come after them this November whether the increases are temporary or not, and their political allies will mock Dems for calling the revenue “temporary.” It’s already happening every day on talk radio and in conservative columns.
A defense that works
The Dems’ best defense is going to be that we needed a balanced approach, because our necessary, basic services were already cut to the leanest levels in 16 years and a cuts-only approach unfairly hurt kids, seniors and public safety.
As polls and two referenda in Oregon show, if given a choice between progressive revenue enhancements and further cuts to Medicaid, education, public safety and other core services, voters are supportive of more revenue.
One of those polls showed that by a 65 percent to 31 percent margin, voters in New Mexico favor increasing the marginal rate on income over $250,000.
Interestingly, when one tells the voter that the increase is only temporary, the numbers move only by the tiniest amount: 65 percent in favor to 30 percent opposed. Why doesn’t “temporary” help?
Those who favor adding some progressivity to our income tax for fairness argue that “fair” should never be temporary. Opponents of the tax are opposed to any increase, and don’t believe that it will be temporary anyhow. “Temporary” is not a defense.
What reason is left?
If there’s no political advantage to calling something “temporary,” and there is a significant chance (read: virtual certainty) that we won’t have enough of an economic recovery to make up for both the disappearing federal funds and a phase out of this new revenue, why on earth would anyone make any of these increases temporary?
It’s not just fiscally irresponsible to sunset revenue, it’s a big political blunder: Politicians will get zero credit – none – from voters for making revenue temporary.
By contrast, if the taxes are not temporary, then when the economy does turn around, the Legislature will be in a position to take political credit for passing tax cuts, just like they did in 2003.
Hopefully Democratic strategists will point out the no-win nature of making the revenues temporary, and economists will point out the danger of boxing the state into more deficits. Sound fiscal policy and smart political strategy are aligned here, and House and Senate Dems alike would serve the public and themselves well by eliminating the “T” word during the special session.
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.