Jobs Package Trumps Bad Policy

by Bernalillo County Commissioners Lonnie Talbert & Wayne Johnson

Many of us have been arguing for years that New Mexico must become more competitive by cutting our businesses taxes if we are going to compete for the jobs of tomorrow. During the recently concluded legislative session, Governor Martinez and the Democratic-controlled legislature did something many thought impossible – they came together in a bipartisan manner to pass real tax reform that will help businesses grow and create new jobs.

In the tax reform package, the business tax rate is lowered from 7.6% to 5.9%, the tax code no longer punishes manufacturers like Intel and Johnson and Johnson for exporting products, and unfair loopholes are closed to ensure New Mexico businesses are competing on a level playing field.

Any tax package will contain elements to criticize and this package is no different. As county commissioners, we understand the importance of hold harmless funds – state funding provided to local governments to help offset losses from the elimination of certain taxes in 2004. It was just another example of short-sighted policy enacted during the Richardson administration.

This new tax reform eliminates hold harmless funding over 17 years and that has caused some complaints by local officials. In our view, creating more jobs for New Mexicans and growing our economy is more important than protecting a bad policy, even when that bad policy benefits local governments. The truth is the elimination of these funds was inevitable. Hold harmless funding has cost the state 3 times as much as originally anticipated and it was just a matter of time before the legislature pulled the plug.

Given that reality, we believe this compromise strikes a fair balance. It gives cities and counties 2 years to plan for and 15 years to gradually grow into the loss of funding. Local governments are given the option of imposing their own tax, but we are confident that we can find better alternatives, such as implementing cost-savings, or simply responsibly controlling the rate of growth of county government over the next 17 years so that we grow into the reduction of state funds. In addition, cities and counties will directly benefit from business and job growth as a result of New Mexico’s more competitive tax environment – further offsetting the loss of hold harmless funding.

In these tough economic times, creating an environment where businesses can create more high-paying jobs must be our primary focus. We applaud the Governor and legislature for passing this critical tax reform package and we are more than willing to do our part in the process by working with them to ensure the loss of hold harmless funding does not lead to tax increases, or the loss of local services. Real reform is never easy, but working together, we can accomplish this goal, as well.

Editor’s Note:
The preceding was published in the Albuquerque Journal on Monday, March 25th.