Does New Mexico “need” to raise taxes on gasoline and diesel? Proponents of hiking the levies have gotten plenty of support on editorial pages lately. But their case isn’t as strong as they think.
* What about excessive spending?
There are two components of fiscal policy: revenue and expenditures. Politicians usually focus on problems with the former, while ignoring issues with the latter.
Let’s leave aside the the Rail Runner, on which New Mexico has squandered hundreds of millions of transportation dollars in the last dozen years.
A major driver of highway costs in New Mexico is the prevailing-wage mandate. According to Roxanne Rivera-Wiest, the president of Associated Builders and Contractors of New Mexico, prevailing-wage rates are “determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions.” But the vast majority of the construction industry in The Land of Enchantment is not unionized. Thus, highway projects in the state are unnecessarily expensive.
* Is revenue from the taxes inadequate?
There’s no question that highway spending is not growing in New Mexico. Here, in billions of inflation-adjusted dollars, is combined local and state spending on highways for the latest years available:
But the prime reason for stagnant highway spending is a poor economy. New Mexico was one of only six states to lose population between 2013 and 2104. Its unemployment rate is above the national average, and its labor-participation rate is disturbingly low. Less working means less driving. Less driving means less fuel-tax revenue. It also means that roads and highways are not sustaining the wear and tear imposed when the economy is strong. According to independent analysts, New Mexico’s highways are doing rather well. The Reason Foundation’s most recent ranking placed the state’s system at “4th in the nation in overall … performance and efficiency.” (New Mexico landed in the top slot for both “urban interstate pavement condition” and “rural interstate condition.”)
* “Pump prices for gasoline are low and projected to stay so for the near future.”
This claim, by Sen. Mary Kay Papen and Sen. Bill Soules, both of Las Cruces, is offered to support the claim that a gas-tax hike is affordable. It’s pure speculation. In the last month alone, the price of gasoline has risen by 10.6 percent. The cost of petroleum products can skyrocket overnight, given violence in the Middle East or a natural disaster in any oil-producing region. If the last decade has taught us anything, it’s that the price at the pump can rise just as quickly as it can fall.
In the rush to hike taxes on gasoline and diesel, important facts are being ignored. New Mexico’s taxpayers deserve a broader debate on highway spending.