Las Cruces, NM – There are many persons in NM who have decided Governor Bill Richardson (NM) is running for some national office or maybe even an appointment in a new administration of Democrats. Could it be that the tax and spend economics of Governor Bill Richardson portends that which is to come by Democrats on economic policy? Please allow me to enlighten our national audience on the tax and spend economic strategies of Governor Richardson. This may serve as a case study for understanding the national economic goals of Democrats and the left wing. It reveals how they think about economics, fiscal and taxation policies.

First, Richardson raided the $11 billion dollar permanent education fund in NM in order to unleash millions of dollars to teachers without any accountability systems in place for educational results. The education fund is designed to create wealth for the state via mineral extractions in NM. After the minerals are gone, the state would have money left from a permanent fund, but Richardson believes it is ok to raid it prematurely. Why would he do this?

“Robbing Peter to pay Paul is a shell game of economic sin for state government”
Aldridge 2003

He raided the education fund to ensure that NM legislators would give the money to education and this money would then create budgetary and fiscal demands for years to come in the state system. If you give a teacher a raise this year with “funny money” from the permanent fund, then next year when the fund money runs out, you have to appropriate new funding for education salaries because you created the demand. This means Richardson cleverly raised taxes for “out years” by creating budget demand with “free money” in the permanent fund. Slight of hand tricks economically and fiscally are interesting to watch.

Richardson also raided the tobacco fund for health education. Remember the health education for the masses in return for tobacco sin money? He took $37 million of that money in NM for the general fund. Again, money designated for health care, but going to his tax and spend programs. While raiding the tobacco fund, he then raises taxes on cigarettes ($47 million) during the same time period. NM now has the highest cigarette tax in the nation. Again, does the money go for health care? This is just more shell games.

Second, during the last 18 months, Governor Richardson has raised taxes $334 million in NM according to an analysis conducted by Senator Rod Adair of NM. He did this in a state where poverty is one of the highest in the nation. He did this in NM where the state’s competitive edge to stimulate economic growth, compared with other states in the region, is poor. Richardson says, “I don’t like taxes.” Yet, he lowers taxes only $154 million while raising taxes $302 million and creates forced revenue, with raids on permanent funds of $448 million. What kind of shell game is this that he manages? The left wing Democrats tax small businesses the most in NM and small business creates 80 percent of the employment for the state. Over 52 percent of the revenues in the state come from sales taxes and selective taxation on small businesses. NM cannot and will not attract manufacturing to the state because the taxes are simply too high and the economic conditions do not favor manufacturing. They won’t come to NM. With this kind of taxation policy can you blame them? NM needs to create a manufacturing sector that is at least 15 percent of the economy of the state. The Democrats refuse to make this happen with lower taxation.

“One in four employees in NM is a government worker and $14 million was paid on overtime pay to state workers in 2002.”
Aldridge 2004

NM already ranks high in state tax revenues as a percent of personal income at 9.9 percent or 2nd in the nation. NM per capita income is 47th in the nation. When we combine state and local taxes as a percent of personal income NM is still 5th in the nation at 12.7 percent. Yet, with high taxation the total revenues are low at $ 4 billion or 35th in the nation. .. Translated: when states have low taxes, then economies grow. When they have high taxation revenues decrease. For example, in Arizona, Idaho, Maryland, Massachusetts, and Virginia the taxes were decreased. These states cut their taxes by $35.7 billion (1995-2001) and still had net gains of 6.4 percent in tax revenues. This is the kind of muddled-headed policy thinking on taxation that has the left wing Democrats in trouble all the time with the American people. Richardson seems to have been taught well how to play the shell game. Democrats just don’t like free markets and limited government. But there is more.

Third, NM along with South Dakota and Hawaii has the only gross receipts tax in the nation. Gross receipts taxation is a terrible tax on all services. Other states give a free pass to “services” businesses. With gross receipts taxation even consulting groups, medicine and food get tagged with a tax. What Richardson does, knowing that this tax is a bad tax and should be abolished, is to propose to rid the state of gross receipts tax on food and medicine while maintaining the gross receipts taxation generally. This is the shell game again. If the tax is bad for citizens who buy food and medicine, then why is it not bad for everyone else? Why the selective con game in taxation?

Fourth, there is another shell game at work in Richardson’s bag of tricks on tax and spend economics. He raised taxes on nursing homes, residential treatment facilities and intermediate care facilities in the state by $8.82. This is a tax increase of over $22.5 million that gets passed to the feds. So Governor Richardson is basically taxing the feds for his budget increases. The taxpayer pays again only now he is reaching out to all of America for his budget mismanagement.

Combine these facts with the idea that NM cons the government out of $2.08 for every $1 dollar that we send to Washington. That is right. We get $2.08 back for every dollar we send to Washington already. Some left wing and even right wing folks think this is just fine economics in NM. Why, this is a two to one return on our investment, right? This all means that NM rides on the shirt-tail of other states that do pay their fair share of taxes and more. One reason the state is out of balance is that the government is directly 24.9 percent of the total workforce and indirectly estimated to be 40 percent in NM. This is much too high for a state this size.

Finally, tax and spend Bill Richardson has managed to create a short fall deficit for 2006 in NM of $174 million. The NM legislature is not allowed to run a deficit by the constitution so other programs will suffer eventually as the legislature tinkers with the adjustments to the budget over time. It may also mean that Governor Richardson’s raid on financial vehicles like the permanent fund will be used again and again to ratchet up the cost-demand on the NM budgets in future years. But wait, it grows to a deficit of $384 million by 2008 at present rates. Richardson has clearly created a mess in NM economically while claiming he knows something about economic development. His economic shell game is a disaster. Governor Richardson is accustomed to the elegance associated with Washington D.C. so he increased his staff costs by 544 percent (2001-2003) at the Governor’s mansion.

The shell game in NM may be just the beginning of the economic mess that John Kerry ($609 billion estimated tax increase for the next ten years) and other left wingers may have for our national economy should they gain our permission to be in a position of power. Voters of America, we had better think carefully about economic policy in the next election. Results from NM suggest that the left wing, guided by folks like Richardson and forty years of legislative power in NM by socialists, leaves NM in poverty at the highest rates ever; now 4th in the nation. Is that what you want for America too? Bush has created a solid economy while protecting the homeland. Not bad for a cowboy from Texas who can spit in the eye of the French while keeping the oil money in Iraq from being used by the terrorists, UN, and our allies through corruption.

“Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty." John F. Kennedy, 1961, an older and wiser Democrat.

Professor M. Gene Aldridge
New Mexico Independence Research Institute, Inc.
galdridge@zianet.com
505 640 3447 or 505 523 8700

©Copyright NMIRI 2004
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