By Paul J. Gessing

New Mexico is in a unique economic situation. Despite having the highest unemployment rate in the nation for all of 2022, our incredibly strong oil and gas industry, buoyed by high prices and rapid production growth, has given politicians in Santa Fe "more money than they know what to do with." So, in the recent 30-day session we saw spending grow by more than $1 billion and some significant tax cuts. Then, in a special session, rebates to be paid out to taxpayers and non-taxpayers alike.

The impetus to return money generated by the oil and gas industry to New Mexicans is welcome, but there are serious questions about the legality and logistics of handing out checks to those who don't pay taxes to the State. Furthermore, asking the Tax and Revenue department to hand out cash "only" to those who deserve it is an unenviable and impossible task that also seems to violate the State's anti-donation clause.

But, after three years of Lujan Grisham and the Democrats raising taxes, it is hard to complain about getting some money back.

Of course, this is an election year and by all accounts Democrats, including Gov. Lujan Grisham, face a challenging political environment. Rising inflation is never popular. And, as COVID concerns wane and voters consider Lujan Grisham's record in fighting it as balanced against economic concerns and their children's educations and mental health, the Gov.'s record appears wanting.

A recent report from the National Bureau of Economic Research found that only New York and New Jersey performed worse than New Mexico did during the COVID 19 pandemic. Considering that New Mexico's economy remains weaker than our neighbors, that our kids missed more school, and faced big declines in reading and math, and that none of this caused New Mexico to have particularly good COVID outcomes in terms of lost lives, only lends credence to the report.

In the absence of a strong track record on these core issues, the Gov. clearly plans to use handing money generated by oil and gas for her political benefit. That may aid her reelection chances, but nothing she and the Legislature have done to date will improve New Mexico's overall economy which remains challenged.

The fundamental economic problem New Mexico faces is its unattractive business climate. Addressing the gross receipts tax (GRT) and its "pyramiding" and taxation of services as business inputs has been discussed for years now, but it is time to also seriously consider bolder economic reforms like reducing or even phasing out New Mexico's personal income tax.

Indeed, the personal income tax is expected to generate just over $2 billion in FY 2023. That's a lot of money, but New Mexico is in a financial position to reduce income tax rates over time. Combined with business-friendly GRT reform, modest budgetary restraint (annual spending simply can't grow by 15%), and a focus on truly diversifying New Mexico's economy could allow New Mexico to become income-tax-free.

There are already 9 states lacking an income tax. Most New Mexicans know that Texas with its prodigious oil supplies does not tax personal incomes, but most other states lacking income taxes have nothing like our oil and gas revenues. Florida has no income tax. Same with Tennessee and South Dakota. New Hampshire has both no income tax and lacks a sales tax. None of them have significant oil revenues.

New Mexico has suffered economic and social mismanagement over the last few years. Record oil and gas revenues are helpful, but as New Mexicans contemplate the coming elections it should be more apparent than ever that more spending has not and cannot solve the State's social ills. It is time for genuinely bold solutions.

New Mexicans simply can't allow this oil and gas-fueled opportunity to pass.

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

Content on the Beat

WARNING: All articles and photos with a byline or photo credit are copyrighted to the author or photographer. You may not use any information found within the articles without asking permission AND giving attribution to the source. Photos can be requested and may incur a nominal fee for use personally or commercially.

Disclaimer: If you find errors in articles not written by the Beat team but sent to us from other content providers, please contact the writer, not the Beat. For example, obituaries are always provided by the funeral home or a family member. We can fix errors, but please give details on where the error is so we can find it. News releases from government and non-profit entities are posted generally without change, except for legal notices, which incur a small charge.

NOTE: If an article does not have a byline, it was written by someone not affiliated with the Beat and then sent to the Beat for posting.

Images: We have received complaints about large images blocking parts of other articles. If you encounter this problem, click on the title of the article you want to read and it will take you to that article's page, which shows only that article without any intruders. 

New Columnists: The Beat continues to bring you new columnists. And check out the old faithfuls who continue to provide content.

Newsletter: If you opt in to the Join GCB Three Times Weekly Updates option above this to the right, you will be subscribed to email notifications with links to recently posted articles.

Submitting to the Beat

Those new to providing news releases to the Beat are asked to please check out submission guidelines at https://www.grantcountybeat.com/about/submissions. They are for your information to make life easier on the readers, as well as for the editor.

Advertising: Don't forget to tell advertisers that you saw their ads on the Beat.

Classifieds: We have changed Classifieds to a cheaper and shorter option. Check periodically to see if any new ones have popped up. The former software failed us, so it's just a category now, with prices posted. Send your information to editor@grantcountybeat.com and we will post it as soon as we can. Instructions and prices are on the page.

Editor's Notes

It has come to this editor's attention that people are sending information to the Grant County Beat Facebook page. Please be aware that the editor does not regularly monitor the page. If you have items you want to send to the editor, please send them to editor@grantcountybeat.com. Thanks!

Here for YOU: Consider the Beat your DAILY newspaper for up-to-date information about Grant County. It's at your fingertips! One Click to Local News. Thanks for your support for and your readership of Grant County's online news source—www.grantcountybeat.com

Feel free to notify editor@grantcountybeat.com if you notice any technical problems on the site. Your convenience is my desire for the Beat.  The Beat totally appreciates its readers and subscribers!  

Compliance: Because you are an esteemed member of The Grant County Beat readership, be assured that we at the Beat continue to do everything we can to be in full compliance with GDPR and pertinent US law, so that the information you have chosen to give to us cannot be compromised.