Serving the High Plains
Serving the High Plains
Budget analysts in New Mexico expect the Legislature will have an incredible $907 million of so-called “new money” when it convenes in January. A vast majority of that money comes from the boom in oil and gas production in the Permian Basin.
With nearly $8 billion available in 2020, the general fund budget will be up nearly 27% over just two years. Even fans of bigger government have to be concerned about the rapid rate of government expansion in such a short period of time.
What should be done to solve this very nice problem to have?
Recently, some, including powerful Finance Committee Chairman Sen. John-Arthur Smith, discussed the creation of another New Mexico permanent fund, this one to finance early childhood programs.
Smith’s support is noteworthy for two reasons.
The powerful Finance Committee’s approval would be required for such a fund. And, of course, Smith has long stood in the way of efforts to tap the Land Grant Permanent Fund to finance a new pre-K/early childhood program. Smith’s approval of a new fund would move it a long way toward adoption.
Would such a fund be a good idea for New Mexico? Permanent funds (be it the $20 billion Land Grant fund or the somewhat smaller Severance Tax fund) are also known as “sovereign wealth funds.” By definition these funds involve governments investing in businesses and other tools meant to generate a rate of return.
We should all be concerned about government investing in big business. But, the most important reason is that it makes government less accountable to the people.
How? Normally, if government needs to raise money from taxpayers, it has to work to please taxpayers and convince them to pay taxes and possibly pay more taxes if revenues are inadequate. But when government entities are given dedicated revenue streams (without much legislative oversight or a need to show relevance), who is there to keep them accountable or demand changes as technologies and conditions evolve?
The Land Grant Fund has numerous beneficiaries that receive millions of dollars annually from the fund. A vast majority of that money goes to K-12 and higher education, but New Mexico’s Schools for the Blind/Deaf, the Boys’ School, the Miners Hospital of New Mexico, and State Hospital are all mandated to receive money from the Permanent Fund each year regardless of what is needed and with little outside oversight.
That’s not meant as criticism for any of these programs, but merely points out that permanent funds further reduce the already-limited ability for citizens and elected officials to impose accountability and oversight.
The best means of providing accountability involves individuals in a competitive free market using their own hard-earned money to pay for goods and services. This is why the best use of the impending surplus would be to return it to the citizens of New Mexico.
If government must come in to play, at least legislators and the annual appropriations process combined with elections offer better oversight than would another permanent fund.
Paul Gessing is president of New Mexico’s Rio Grande Foundation, which promotes limited government, economic freedom and individual responsibility. Contact him at: [email protected]