Walt Rubel Commentary: Government Spending Increases May Not Be Sustainable

Between them, the Las Cruces School Board and the Last Cruces City Council have approved combined budget increases of more than $50 million for the upcoming fiscal year.

The School Board approved an increase of more than $34 million for the next budget next year, in a vote that came long after most sensible people had gone to bed. The City Council increased spending by just under $16 million.

This comes a few weeks after the state Legislature approved a record-setting $1 billion increase in state spending during this year’s session. The state budget has increased from $6.1 billion to $8 billion in just the last five years

New Mexico and Las Cruces both have tremendous needs, and I appreciate that the new spending will help address areas of serious concern. But I fear that the spending reflects the roaring economy of the past couple of years when generous federal relief bills boosted our  emergence from the pandemic; and not the economic realities of today, with stocks slipping into a bear market.

That means the stock market fell by 20 percent from its previous high in January. It lost 3.5 percent in just one day last Wednesday. That may not matter much to those who are just trying to save up enough to pay the bills at the end of the month, but it does matter to state and local governments who rely on rising stock prices to cover their pension obligations. And, inflation is making things harder on everyone.

Many of the spending increases approved this year will be recurring, meaning their impact will be felt not just this year, but every year that follows. The state budget includes raises for teachers, school staff, State Police officers and all other state employees; the creation of a new state media academy; and recurring funding to eliminate a waiting list for developmental disability services and extend postpartum Medicaid benefits from 60 days to a year.

It also includes funding for $250 checks that will be in the mail soon to state taxpayers. Whenever the government sends me a “tax rebate,” I always wonder how much it cost to process my original tax return, how much it cost to process the rebate, and how much could have been saved if they hadn’t taken more than they needed in the first place.

The city budget includes about $10 million to give a 3.5 percent raise to all employees not represented by a union, including those at the top of the ladder. And, it adds 38.5 new positions. 

The school district budget was passed in a vote taken after midnight despite criticism that the increased spending will not adequately address the needs of students and staff. I’m not well versed enough on school district issues to evaluate the criticism. But that’s a lot of money to spend without making anybody happy.

It’s true that the labor market has tightened and public employers need to increase salaries to remain competitive. But the scale and speed of spending increases on not just salaries but all levels of government doesn’t seem sustainable.

The market downturn over the past several weeks may be a temporary correction caused by a number of unrelated events, most of which are solvable. If so, you can disregard the above.  But if the economy slows or flattens, local and state governments may not be able to meet future commitments.


Walter Rubel can be reached at waltrubel@gmail.com

Hear the audio version.