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Thursday, February 24, 2011

Sen. Steve Fischmann Guest Blog: Budget is Full of Goodies - If You Live Out of State

SFISC This is a guest blog by State Senator Steve Fischmann (D-Mesilla Park), who represents Senate District 37 in Dona Ana and Sierra Counties.

It is going to be one tough year for many New Mexicans. Near-term job growth looks to be tepid while the unemployment trust fund threatens to go bust. For those requiring medical services, the state forecasts coming up about $330 million short of anticipated needs.

Educators face a third consecutive year of salary freezes while having to sacrifice part of their paycheck to keep their failing pension fund solvent. Young families and their kids face elimination of child care services. Drivers can anticipate deteriorating roads while the Department of Transportation struggles with a projected ongoing $250 million annual shortfall in road maintenance funds.

Cost-of-living pressures will only add to the difficulties. Individual health insurance policy owners face 20 percent increases in their already astronomical premiums. Many electric utility customers can look forward to yet another large rate increase, and gasoline prices appear poised to continue their upward climb.

While community services falter, state government has proven slow and unimaginative at making the fundamental structural changes needed to provide more with less. Inertia, excessive influence from moneyed interests, and old-fashioned patronage have stymied reform. Taxpayers are the ones who suffer.

A list of beneficiaries
Whatever the trials for our own citizens, budget proposals currently before the New Mexico Legislature preserve plenty of goodies for out-of-state interests. Here is a short list of beneficiaries:

  • Multistate corporations will continue to enjoy tax loopholes not available to our own homegrown businesses. Local businesses will compete on an unfair playing field until mandatory combined tax reporting is implemented.
  • Most oil and gas companies operating in New Mexico are from out of state. Tax breaks for oil and gas Companies have grown from 8 percent of state oil and gas revenue generated in 2004 to 17 percent in 2010. Interestingly, history shows no correlation between tax breaks and oil and gas production in the state. There is a strong correlation between market prices and production. Existing tax breaks remain in the proposed budgets.

  • Internet businesses with no physical facilities in the state will continue to operate without having to pay the same gross receipts taxes as our own local businesses. We have not managed to solve the legal issues to correct this inequity.

  • Well-heeled, out-of state-taxpayers doing business in New Mexico reap a large share of the benefits from our generous capital gains tax deduction. The proposed budget keeps them on the state dole.

  • Film companies from out of state will continue to enjoy a 25 percent rebate on their production costs in New Mexico. If the rebates were the economic development boon they are purported to be, we should be offering the same deal to tourists visiting the state. Since no one is willing to make that proposal, it is probably time to recognize film subsidies as the giveaway they are.

  • Union Pacific is being offered a permanent $10 million-per-year tax break for relocating a 300-employee fueling station from El Paso to just over the border in New Mexico -- a laudable project I fully support. Company representatives acknowledge that most of the positions will initially be filled by Texas commuters. Since jobs are the justification for the tax break, I’d like to think the state would have enough sense to directly tie tax benefits to the number of jobs filled by New Mexico residents. That has not been part of the discussion so far.

We Should Do at Least as Well for New Mexicans
Lawmakers and the governor’s staff work grueling hours during the 60-day legislative session now in progress. Through hard work, we somehow manage to do quite well for a whole range of moneyed out-of-state interests. In these challenging times, New Mexicans should demand that we do at least as well for you.

This is a guest blog by Sen. Steve Fischmann. To submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.

February 24, 2011 at 10:57 AM in Corporatism, Economy, Populism, Government, Guest Blogger, Las Cruces, NM Legislature 2011 | Permalink


All good ideas EXCEPT for the film industry subsidy. We have many of those jobs here already and it's a special kind of industry that states battle over to get. It would be crazy to mess with that and lose the entire industry! Then we would get ZERO tax revenues from the industry, all its workers and all the businesses they spend at.

Michigan recently changed their film industry subsidy and lost a huge production even though a new study by Ernst and Young showed that there were significant economic advantages to their film program.

And our film industry is much farther along in developing local companies to serve the movie makers, as well as college and other training programs for people who want to work in the industry.

Posted by: Jesse | Feb 24, 2011 4:12:46 PM

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