Back To The Future: Pandemic Aid Ends And Stagnant Economy Is Set To Resume; City Budget Dips, Plus: How A $165 Million Error Doomed Higher Liquor Tax

There was really no upside to the pandemic but the millions in federal money that was showered on this city did keep the economic engine humming better than expected. That's over now and we return to the pre-pandemic reality--a stagnant economy.

That new reality is reflected in ABQ Mayor Keller's proposed budget for the year that starts July 1. It projects revenue growth of 2.4 percent, down from 5.7 percent. With inflation surging that is basically no growth. The forecast for slower going mimics those of national and global crystal ball readers. 

Total citywide spending--including federal dollars--would decline by $53.6 million to a total of $1.37 billion.

Still the executive budget now calls for over 7,000 budgeted positions- up 1.5% from this year and 16% from five years ago--even though the ABQ population has gone basically nowhere in the past decade. City Councilors will look at that and more as they dig into the budget details. 

The city leadership has given up on the pipe dream of getting to 1,100 or 1,200 police officers. They are now now budgeting for 1,000 and they are still over a 100 hundred short.

The bean counters at Brookings report it's the same old tune playing when it comes to economic growth:

The states surrounding New Mexico — Texas, Arizona, Utah, Colorado — have experienced really significant growth. And New Mexico in some ways hasn’t experienced that same trajectory. 

Stagnation does not mean recession and with government employment here at high levels, there is protection from a downturn.

Also the large and growing older population means fewer residents are dependent on the whims of the economic winds as they collect reliable retirement benefits.

LATE INNING ERROR

With the state's first-in-the-nation death rate from alcohol garnering more attention, this past legislative session began with a serious move to raise alcohol taxes--enough to fund $175 million in treatment programs. But the final deal was for a mere $10 million. 

It wasn't only the liquor lobby responsible for the setback. The sponsors of the higher tax made a late inning error as revealed in this report:

 . . When (Rep. Joanne Ferry) and Sen. Antoinette  Sedillo Lopez and legislative staff met to revise the language, they introduced an error. By statute, beer is taxed per gallon and wine and liquor are taxed per liter, and the lawmakers mistakenly revised their bill to increase the tax 15¢ per those units, rather than by 15¢ per drink. Diluted over much larger volumes, the hike they wrote in was now barely more than a penny-per-drink. “We did not pick up that difference because we were in a hurry,” said Ferrary. 

When the House tax committee circulated a draft of its omnibus bill on March 4, it included those watered down rates. “I was just shocked,” said Sedillo Lopez. “It was just wrong.” Having maintained a firm position through much of the session, the bill’s sponsors had suddenly given up nearly all their bargaining power. Ferrary asked Lente to change the language but he said he had worked faithfully from what she had given him and revising it could delay the whole tax package.

Sponsors believe that the small tax increase approved--the first in decades--shows momentum for more in the future. That, as they say, remains to be seen. 

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(c)NM POLITICS WITH JOE MONAHAN 2023