It’s a little ironic that Governor Susana Martinez has been named the top performer on the Cato Institute’s “Fiscal Policy Report Card on America’s Governors 2018” at the same time that the Mercatus Center has put the Land of Enchantment near rock-bottom in its “Ranking the States by Fiscal Condition, 2018 Edition,” and Truth in Accounting has observed that the state’s “true financial condition is unknown,” because New Mexico’s “financial statements received a disclaimer of opinion.”
First, the good news. Cato’s researchers noted that the governor
scored well on previous Cato reports, and she receives the highest score on this report. Martinez has a reputation for vetoing wasteful spending, and she has kept New Mexico’s general fund budget flat in recent years. On taxes, Martinez has pursued reforms to make New Mexico more competitive, including cutting the state’s corporate tax rate. In recent years, stagnant tax revenues from the oil industry have made balancing the state budget a challenge, but Martinez has held firm against tax increases proposed by the legislature. In 2017, she vetoed bills that would have increased taxes by $350 million a year.
Looking beyond the term of a single governor, though, yields a far different perspective. The Mercatus Center ranks New Mexico “45th among the US states for fiscal health.” It’s 49th on the sub-metric of “trust fund solvency,” which “measures how much debt a state has,” and last in the nation for “service-level solvency,” which “measures how high taxes, revenues, and spending are when compared to state personal income.” (The Land of Enchantment fares somewhat better on possessing “a hedge against large long-term liabilities” and its ability to “cover its fiscal year spending using current revenues.”)
New Mexico earned a “D” in Truth in Accounting’s latest “comprehensive analysis of the fiscal health of all 50 states based on fiscal year 2017 comprehensive annual financial reports.” In addition to billions of dollars in unfunded pension and healthcare benefits, the “state’s financial statements are … unreliable because they are consistently published late, taking an average of 350 days to issue since 2009.”
Susana Martinez bears some blame for New Mexico’s long-term fiscal peril, and one wonders why in eight years, she wasn’t able to get her Department of Finance and Administration to issue CAFRs on time. But far more opprobrium is warranted for the legislature, which for decades has been wildly irresponsible with taxpayers’ money. Spendthrift “education” policies (from preschool to Ph.D.), ineffective and unaccountable corporate-welfare programs, lavish compensation for “public” employees — these and other bipartisan missteps, boondoggles, and incumbent-protection schemes have put the state on an unsustainable fiscal path. A reckoning is coming, and it won’t be pretty.