COMMENTARY: New Mexicans have long been a self-reliant, enterprising people. The state’s government, however, now relies on the federal government for more than a third of its general revenue, getting over $5 billion a year from Uncle Sam. With a national debt over $18 trillion, heavy reliance on continued federal aid does not bode well for New Mexico’s future.
Given the federal government’s massively unsustainable debt, current levels of aid to states may not last. Even before Washington’s day of reckoning arrives, Congressional budget showdowns might easily result in short-term furloughs or cuts in federal spending, just as we saw in the summer of 2013.
States like New Mexico would do well to prepare themselves for either of these eventualities. Idaho and Utah have already begun. Through a series of actions known as “Financial Ready,” these states are taking full inventory of aid from Uncle Sam. Lawmakers and citizens alike can more easily see exactly how that money is locally spent.
Financial Ready laws require state agencies to measure the real-world impact of losing federal aid, and develop plans to continue operations in the face of sudden cuts. When the next fiscal crisis strikes, whatever its cause, Idaho and Utah will already have realistic solutions in place.
Even if federal cuts never materialize, the act of preparedness can only have a salutary impact on a state’s overall fiscal health. If New Mexico were to fully embrace Financial Ready, the state’s government would probably see its own creditworthiness enhanced.
A final consideration is that federal funding generally means federal control. Money from Washington often comes with many federal strings attached. Financial Ready states are in more of a position to say “no” to unwanted federal programs or mandates that may run counter to local residents’ interests or values.
According to a recent poll undertaken by the Rio Grande Foundation, New Mexico residents overwhelmingly favor the kinds of precautionary, commonsense measures that Financial Ready would entail.
An overwhelming 84 percent of respondents want the state to make preparations for future cuts in federal aid. More than 70 percent of New Mexicans support a law that would require state government to conduct an annual audit of all federal funds received, and make those findings available to the public.
New Mexicans instinctively know that when it comes to their own lives and personal finances, preparedness makes sense. Families and individuals routinely budget, save, and insure against disaster. Shouldn’t government do the same?
Much of the information required to implement “Financial Ready” in New Mexico is already collected by relevant state agencies. Gov. Susana Martinez could raise the level of discourse and debate over federal spending and budgetary preparedness in our state on her own.
A simple executive order that this information be released in a user-friendly format to the Sunshine Portal would allow average New Mexicans and their elected officials to make more informed decisions about federal spending and how it impacts their communities. More importantly, contingency plans could be created to prepare for the sudden elimination of those dollars.
Jonathan Haines is the executive vice president for State Budget Solutions and director of Federalism In Action, a joint project with the State Policy Network that seeks to restore local control and balance of power nationwide.