An opinion by Lee Gamelsky
Our state faces a financial crisis but has the resources to weather this upheaval. We need a massive investment of monies from our state coffers. New Mexico’s needs far outweigh its current appropriations. We are a very poor state, yet we have the third largest assortment of endowment funds of all the states. It is time we put those funds to work directly for New Mexicans.
Currently, the NM State Investment Council (SIC) manages the Land Grant Permanent Fund (LGPF), the Severance Tax Permanent Fund (STPF), and four other funds and investments for 21 other government agencies. Over the past 10 years, together, all the funds have earned 9% annually, and recently distributed $1 billion into the general fund. These are not rainy day funds, which are typically reserve funds used to balance budgets during unforeseen revenue expenditures. Rainy day funds are immediately available, whereas LGPF and STPF funds can only be made available by amending the state constitution, which requires a public vote.
What we are going through now is unprecedented. Aside from a global downturn in the economy, the price of oil and gas which contributes into the STPF is at an extreme low. Since February 2020, the LGPF and the STPF have lost $2.5 billion, matching the amount of money the funds allocated to education over the past 10 years. Those funds now hover around $22 billion, with all the SIC-managed funds at around $25.1 billion. With the price of oil and natural gas not roaring back, and our state’s economy slowly opening up, we need a comprehensive approach to help the many people who are out of work and to keep businesses open so we do not lose our work force to another state, as has happened before.
I propose a two-phase investment strategy: Phase I defers accruing annual returns for 3 years and puts the money directly with New Mexicans. We need to immediately mail out ballots to be approved by the voters to allocate a one-time $5.5 billion apportionment from the funds, which will go to each New Mexican resident tax payer in the amount of $ 2,000 ($1.75 billion), and allocate the remainder to the 2020 legislative appropriations which have been threatened to be cut. The SIC has talked about a loan recovery program, but businesses will be gone before that money becomes available.
We should not be taking out the chopping block and cutting off our own livelihood just to keep Wall Street investments in our portfolio.
In Phase II, we need to look at how, when, and where the funds are allocated: Our educational system is still one of the lowest performing in the nation. Climate change affects all of us. We live in the high desert where water should be valued as a finite resource. A stable and sustainable water supply will support a stable economy. We need to transform our electrical generation system from non-renewable sources by constructing a statewide photovoltaic and wind system for our energy. The funds should be allocated to meet our needs. The amount of money maintained in the funds and the amount the legislature takes out should be reapportioned to maintain solvency. We have work to do, and we had better get moving now.