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Update 4-30-23

 

Recently, New Mexico Governor Michelle Lujan Grisham vetoed SB 292, which would have appropriated $25 million for the City of Carlsbad. The Governor also vetoed a similar bill for Hobbs.

As mentioned in media coverage, this allocation, if approved, would have gone toward the upcoming fiscal year budget. These funds would have addressed a revenue loss of approximately 30 percent because of the State’s change in the tax law from origin-based sourcing to destination-based sourcing.

Clearly, we strongly disagree with the Governor’s justifications for this veto.

The Governor’s first argument is that it is “too soon” to gauge how Carlsbad and other municipalities’ revenues will change.  We do not believe this is accurate, as the Cities of Carlsbad and Hobbs compiled several years of data documenting the changes since this went into effect. This data was viewed as substantial by the state’s legislative body, who unanimously approved the measure.

Second, the Governor argued that “the State should ensure that all local governments are treated as equally as possible.” “It would be unfair,” she wrote, “to give Carlsbad a large amount of money, when many other cities in the State could also stand to benefit from an additional infusion of funds.”

The State of New Mexico is responsible for using its resources to protect the health and safety of all its residents. This can, and should, include a targeted focus on areas when and where they are specifically needed.

Early in the COVID pandemic, the state rightly diverted additional resources to the Four Corners area. Additional resources were diverted to the Ruidoso area during wildfire season. The state did not refrain from providing resources to Ruidoso because it wanted to “ensure that all local governments are treated as equally as possible”- it allocated its resources where the need existed. All parts of the state have received an “additional infusion of funds” when the perceived need exists.

The Governor herself has diverted additional resources toward specific parts of New Mexico throughout her tenure. In 2022, for example, $30 million was provided to Clovis to provide for long-term water supply. This year, $10 million was directed toward the Las Cruces area for an abortion clinic.

The present need in Carlsbad and Hobbs is not specific to a wildfire or water system. Instead, the need here is across the board. Our cities are expected to meet an especially high burden in terms of infrastructure demand, but funds previously used to meet those needs have now been diverted elsewhere. This allocation would have been no different from other allocations utilized to meet needs in different parts of the state.

In terms of fairness, it is also worth noting that Eddy and Lea Counties generate a significant portion of the state’s annual revenue – far higher per capita than any other part of the state. It seems odd that the issue of “fairness” doesn’t include the amount of funds Carlsbad and Hobbs provides towards the State budget.

The governor also seems to be ignoring the “make whole” premise, which is critical to the political and financial world. In this instance, the cities of Carlsbad and Hobbs would have been “made whole”- at least up to this point – for the burden caused by the legislative changes to the tax code. The concept of making whole is not unique to this circumstance, and it has been applied to legislative changes in the past.

With New Mexico’s legislative session only meeting once a year, the chance of overriding a veto is minimal.  This past year, our state operated on a very healthy $12 billion budget – in no small part due to revenue from taxes generated by work out of offices located in Carlsbad and Hobbs.  All of the work taking place in our area, however, does create additional stress in terms of needing first responders and infrastructure.

It is a tragedy, therefore, that an effort by the cities responsible for so much of the state’s revenue to adequately meet the needs of its constituents is deemed as “unfair.”

This bill was intended to be a safety net to address the significant setback up to this point. We are hopeful that the Governor will keep her promise to work with us on developing a long-term solution.

Sincerely,

 

Carlsbad Mayor Dale Janway

 

Carlsbad, New Mexico - Official City Website