Permanent fund is a tool, not an artifact
Remember the awesome opening scene of Raiders of the Lost Ark? For those who don’t, Indiana Jones gets through deadly traps in an ancient jungle temple, eventually standing before a golden statue on an altar. But he screws up the last trap and ends up fleeing from a huge boulder, barely leaping out with the idol.
New Mexico treats our state permanent funds like the statue … something that if even touched will result in disaster. We shouldn’t.
Our economy is overreliant on fossil fuels and federal jobs, which combines with our chronic poverty for high unemployment and low-paying jobs. The resulting “brain drain” — where educated young people move to other states for work — hurts job creation and state tax revenue, reducing resources even more for education and investment. This downward spiral will only get worse as more electric cars result in lower oil prices and Congress continues cutting.
However, New Mexico has more than $22 billion (yes, with a “B”) in four different “permanent” funds. Most initially was generated by oil and gas taxes, with most now invested in markets to grow the funds further and generate money for projects like K-12 schools, universities and infrastructure. While this works, it is not a religious artifact like the statue in Raiders. It is a tool, and with our state’s problems, we have a responsibility to see if there are better ways to use that tool.
Our neighboring states show why. Texas has $37 billion in a fund but has 13 times our population. Arizona has about $5 billion, and Colorado only has $700 million — a fraction of ours.
Instead of letting that money sit, they have chosen to invest in education, big infrastructure projects and university research. The results are telling. Rankings for income, unemployment, poverty rate, migration rate and child well-being are consistent: Colorado, Texas, Arizona, New Mexico. In short, the more money sitting in Wall Street a state has per person, the worse off the population is.
Though results are clear, anytime anyone here mentions using our money differently, they are talked about as heretics or irresponsible. Doing things the same ways as we’ve always done, though, isn’t going to help get our people out of poverty or create jobs to give our educated young folks an option to stay. So what can we do?
Spending some of our permanent fund returns in early childhood education should be a no-brainer. Research shows the rate of return on educating our youngest kids is about 13 percent, as people with better educations mean more and higher-paying jobs, less crime (so less money is needed for jails) and less need for social programs like Medicaid.
The S&P 500, on the other hand, only returns about half that at 7 percent. Early childhood education is a damn smart investment, not a kindergartner reaching for gumballs.
Furthermore, we should consider using our money to invest in new technology and infrastructure. Research and development at The University of New Mexico, New Mexico State University and New Mexico Tech in water and clean energy can create good jobs for decades. And solar panels on every public building in the state will save dollars, help curb climate change and put money into the pockets of workers.
All of this is possible. We can get better. However, New Mexico must refuse to be satisfied with the way we’ve always done things. Looking at using our permanent fund differently isn’t sacrilegious. It won’t result in us having to flee from a massive boulder. But it might build a better life for our ourselves and our kids for generations to come.
Bill McCamley is a state representative from Las Cruces, representing District 33.