ALBUQUERQUE, N.M. (KRQE) — With the November election fast approaching, Democratic incumbent Governor Michelle Lujan Grisham and Republican challenger Mark Ronchetti are both ramping up the release of new TV ads. In the latest spot from Lujan Grisham, several people claim that Ronchetti will cut funding to educators, police, and health care.
So what’s the context behind the claims? KRQE News 13 is looking into the gubernatorial candidates’ political advertisements in the run-up to Election Day to help you get the full story. Here are the details behind Lujan Grisham’s latest ad.
“Billions in cuts”
Lujan Grisham’s ad claims that Ronchetti “would force billions in cuts to education, police, and healthcare.” That claim is based, in part, on calculations done by James Jimenez from a political advocacy group called the NMVC Action Fund. The analysis is published online.
Jimenez is the former executive director for New Mexico Voices For Children, a local non-profit that advocates for policies beneficial to New Mexico’s youth. Before that, he worked in former Governor Bill Richardson’s administration and has worked as an economist for the state’s Legislative Finance Committee. Now, he is the executive director for the NMVC action fund, a political committee that endorses local candidates.
The calculations sourced in Lujan Grisham’s ad focus on Ronchetti’s economic plan, which promises “permanent tax relief for the middle class and working families.” Ronchetti’s plan also proposes yearly oil and gas revenue rebates. Those rebates would be sent to New Mexicans, funded by oil and gas tax revenues collected by the state.
According to Jimenez’s analysis at the NMVC Action Fund, “The Ronchetti plan proposes permanent tax cuts — personal income taxes and gross receipts taxes — and rebates that in just the first year exceed $2 billion, which is about 25% of the state budget.” Jimenez goes on to claim that “This is two billion that we won’t have in future years.”
Calculations from the state’s Legislative Finance Committee (LFC) show that currently, around 80% of all taxpayers in New Mexico fall nearly evenly into two brackets as of data from 2020. 43% of taxpayers fall into the lowest bracket, earning under $5,500 as a single filer or $8,000 or less as a head of household. They currently pay 1.7% in personal income tax. The other bulk of taxpayers — and where most of the state’s income tax revenue comes from — are in the fourth bracket.
Around 44% of taxpayers fall into the fourth bracket, earning between $16,000 and $210,000 a year as a single filer (or between $24,000 and $315,000 for heads of households). According to the LFC, nearly three-quarters of the state’s personal income tax revenue comes from those taxpayers, who pay 4.9% plus a $504.50 flat fee ($768 for heads of households).
Under Ronchetti’s plan, many of those currently in the fourth bracket would be bumped down to the third bracket and pay a lower rate. Similarly, individuals with lower incomes would also be bumped down to lower brackets and pay less. The net result, seemingly, would be less personal tax revenue for the state to use.
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So would Ronchetti bring cuts to education, police, and healthcare?
Lujan Grisham’s ad broadly claims that Ronchetti’s plan would not only have a high cost, but would lead to “billions in cuts.” The allegation seems to be tied to an implication that New Mexico would take in less tax revenue under Ronchetti’s plan, and the state budget would have to be balanced out by cuts to existing programs — or else rely on continued increases in oil and gas revenue from the state, an option Jimenez told KRQE News 13 he’s concerned about due to potential volatility in that market.
That idea is echoed in Jimenez’s analysis. “Unless some magic happens . . . the state budget would have to be irresponsibly cut,” Jimenez wrote. And Jimenez predicts that the cuts would happen to “the very programs that people depend on like public education, higher education, health care, public safety, and environmental protection.”
But to be clear, Ronchetti’s tax plan doesn’t include planned cuts. And he has called for increased funding in some areas, such as a $1,500 stipend for low-income families with first, second, and third graders in order to boost education.
Here’s what Ryan Sabel, the communications director for Ronchetti’s campaign, had to say about the issue: “Mark’s plan would utilize surplus funding — absolutely no reductions to current government spending levels would be necessary,” Sabel told KRQE News 13 in an email.
“Current revenue levels — and projections on various revenue streams — indicate we have more than enough money available to fund substantial reductions in taxes for working families and small businesses,” Sabel says. “And therefore, that’s exactly what we should do.”
Recent estimates from legislators project that New Mexico will continue to receive more and more funds from oil and gas extraction into at least 2025. But there’s no guarantee oil and gas will be a continued source of steady, high income for government programs.
And Lujan Grisham’s ad points to another piece of evidence that seemingly shows Ronchetti could harm government budgets. Lujan Grisham’s ad points to what Ronchetti said on a podcast.
On the “Ruthless” podcast, Ronchetti said, in part: “You can take my own budget and try to pass it, and I won’t sign it until [legislators] bring us an end to catch and release, stiffening penalties for violent criminals, and making sure to return qualified immunity to our police officers.”
Lujan Grisham cites this claim that he’d veto any state budgets if New Mexico’s legislators don’t pass tough-on-crime legislation. And of course, if Ronchetti actually did that (if it wasn’t just hyperbole), funding to education, police and health care programs through state agencies could be tied up in a legislative battle, but that’s still not “billions in cuts.”
Another key piece of the debate over the state’s budget is what to do with income from oil and gas industries. Currently, around 9% of the gross value of each barrel of oil produced in New Mexico goes into the state’s budget. As a result, a third or more of the state’s entire multi-billion-dollar budget comes from oil and gas.
Recently Lujan Grisham and bipartisan legislators used record-high oil and gas revenues to provide rebates for New Mexicans. Now, Ronchetti is promising a plan that would give every New Mexican, including kids, $100 for every $1 billion in oil and gas revenues the state earns per year.
In 2020, oil and gas brought roughly $5.3 billion in revenue to state and local governments. The New Mexico Oil and Gas Association estimates that nearly $3 billion of that went to the state’s General Fund.
Under that level of income, Ronchetti’s plan would send out roughly half a billion dollars (That’s New Mexico’s population multiplied by $100 multiplied by three) to the public. In turn, that’s money that wouldn’t be used on public programs funded by state and local government.
Ronchetti’s plans note that the oil and gas revenues tend to have ups and downs. So, he plans to adjust the public rebates if there’s a steep downturn in oil and gas revenues. The idea there, he notes in his plan, is to avoid cuts to government programs.
It’s worth noting that from 2021 through 2022, the state has already given back nearly $1.1 billion in rebates to New Mexicans, according to an analysis by the Legislative Finance Committee. Those rebates were largely based on record oil and gas revenues. Most recently, rebates were sent out through direct deposit payments or checks to New Mexico taxpayers and citizens across May, July and August.
And amid all the discussion over statewide government funding, some state agencies have already been preparing their next budget requests for the upcoming fiscal year. Numbers from the Legislative Finance Committee indicate that some agencies will be asking for more funding than they received this year.