Local government revenue policies in new Mexico

This examination of the revenue patterns of local governments in New Mexico finds that communities with the greatest social needs for public services-- small population rural areas, less affluent communities, and rapidly growing districts-- are precisely those that have the weakest revenue bases. Moreover, none of these types of disadvantaged jurisdictions receives above-average redistributive assistance from the federal government.Variations in revenue effort, especially among municipalities, exacerbate this problem because certain communities gain huge revenue windfalls which bear little relationship to either their social needs or taxing efforts but stem, rather, from fortuitous geographic positions. This advantage works its way through the entire revenue system, directly because state transfers are linked to place of collection and indirectly because of the overwhelming effect of revenue effort on revenue sharing allocations in the state. The local revenue system in New Mexico, therefore, works against the communities that have the greatest need for government services. Most of these inequities, however, do not appear to be the explicit goal of economic or political policy. Instead, they are the unintended consequences of a supposedly “neutral” allocation formula. This state of affairs certainly argues for policymakers paying more attention to the actual results of their policies.