Paul J. Gessing
There is no doubt that Gov.-elect Susana Martinez faces a difficult task. Not only does she have to put together an administration to operate (and hopefully improve) New Mexico’s sprawling government, she now faces a $450 million deficit that must be dealt with in the next legislative session.
Making the situation even more difficult is the fact that Martinez, during the campaign, seemingly removed 60 percent of New Mexico’s budget from belt-tightening. Of course, that was based on “only” a $260 billion deficit and, given the recent budget news, it might be possible for Martinez to find some cost savings in K-12 without making them obvious “cuts.”
Regardless of this, we at the Rio Grande Foundation have put together a list of potential spending cuts that works from the assumption that K-12 and Medicaid are indeed “off the table.” We also assume that simply “cutting administration” and “reducing waste” will not get the job done. The fact is that tough decisions need to be made.
These are tough decisions that have been put off for years by a combination of irresponsible leadership and so-called “stimulus” money that has dumped the tough decisions onto the new governor.
Specific proposals
The following policy moves are by no means the only ones that can be made, but they should be seen as a serious starting point for the incoming Martinez Administration.
• Taxpayers could save $60 million annually by repealing legislation that expanded the impact of New Mexico’s law relating to the prevailing wage rate on public works projects. This prevailing wage law should be repealed and work should be done at market rates.
• New Mexico spends approximately $50,000 annually on salary and benefits for each government employee. With 22,000 state employees (not including higher education), New Mexico could save $20 million simply by reducing the work force by 4,000 – less than two percent of the state’s total work force.
Considering that New Mexico’s government work force is 51 percent larger than the average state’s, a cut of this size is tiny. Such reductions would not require significant layoffs, as they could be largely achieved through worker turnover.
• New Mexico taxpayers could save at least $20 million annually by shutting down the Rail Runner and its “feeder” bus routes and re-directing the state subsidies for that system elsewhere.
• $19.5 million could be saved by diverting most non-violent drug offenders out of prisons and diverting from prison probationers and parolees who are revoked for technical violations of their supervision.
• New Mexico could save $30 million annually – and gain better control of its budget – by capping the state’s 25 percent film subsidy at $30 million annually (the program cost $60 million last year).
• If the number of branch campuses found throughout the state were cut in half, with an emphasis placed on preserving the most important and cost-effective branches, taxpayers could save an estimated $35 million annually. This does not include one-time gains from selling buildings and reducing other infrastructure needs.
• According to the Legislative Finance Committee, New Mexico raised about $1,827 per student full-time equivalent (FTE) in net tuition in FY09, the second-lowest amount nationally. The national average was $4,100. With approximately 84,000 FTE students at New Mexico institutes of higher learning, the state could take in $190 million annually just by raising tuition levels to the national average.
We recommend gradually increasing tuition to the national average with a goal of $100 million in additional revenue during the coming fiscal year.
The fact is that New Mexico faces tough budget times now and into the future. Tax hikes have failed to solve the problem. Instead, it is time for bold and effective action to change the way New Mexico’s government operates.
Gessing is the president of New Mexico’s Rio Grande Foundation, 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.