Pub. 15 2018 Issue 4

Issue 4 • 2018-2019 5 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S will decide new spending with the financial windfall is anyone’s guess. Clearly, a large portion will be expended on educa- tion. Also, we would expect some of the excess funding will be utilized to shore up state pension funds. The two state pension funds, which combined cover approximately 200,000 active and retired state employees, had a combined $13.5 billion in unfunded liabilities. Other excess funds will likely be appropri- ated for school and highway repairs. There are bills before the Legislature to address tax reform. This may come in the form of eliminating certain existing GRT tax credits and deductions and adjusting the GRT rate. Anti-Donation Clause There has been much discussion over the last several years as to whether New Mexico’s Anti-donation Clause in the Con- stitution should be repealed or significantly revised. Many have argued that the clause often stands in the way of state economic development. So, what does the clause provide? Article IX, Section 14 provides in part: Neither the state nor any county, school district or munici- pality, except as otherwise provided in this constitution, shall directly or indirectly lend or pledge its credit or make any donation to or in aid of any person, association or public or private corporation or in aid of any private enterprise for the construction of any railroad except as provided in Subsections A through G of this section. A. Nothing in this section prohibits the state or any county or municipality from making provision for the care and mainte- nance of sick and indigent persons. B. Nothing in this section prohibits the state from establish- ing a veterans' scholarship program for Vietnam conflict veter - ans who are post-secondary students at educational institutions under the exclusive control of the state by exempting such veterans from the payment of tuition… C. The state may establish by law a program of loans to stu- dents of the healing arts, as defined by law, for residents of the state who, in return for the payment of educational expenses, contract with the state to practice their profession for a period of years after graduation within areas of the state designated by law. D. Nothing in this section prohibits the state or a county or municipality from creating new job opportunities by providing land, buildings or infrastructure for facilities to support new or expanding businesses if this assistance is granted pursuant to general implementing legislation that is approved by a majority vote of those elected to each house of the legislature… E. Nothing in this section prohibits the state, or the instru- mentality of the state designated by the legislature as the state's housing authority, or a county or a municipality from: (1) donating or otherwise providing or paying a portion of the costs of land for the construction on it of affordable housing; (2) donating or otherwise providing or paying a portion of the costs of construction or renovation of affordable housing or the costs of conversion or renovation of buildings into afford - able housing;  or (3) providing or paying the costs of financing or infrastruc - ture necessary to support affordable housing projects. F. The provisions of Subsection E of this section are not self-executing…for the recipients of land, buildings and infrastructure. G. Nothing in this section prohibits the state from establish- ing a veterans' scholarship program, for military war veterans who are post-secondary students at educational institutions under the exclusive control of the state and who have exhausted all educational benefits offered by the United States department of defense or the United States department of veteran’s affairs, by exempting such veterans from the payment of tuition… Many states have enacted anti-donation clauses principally due to government giveaways to the railroads in the 1800s. As noted in an excellent article entitled “Understanding the An- ti-Donation Clause: A Historical Perspective by Alan Hall of the Rodey Law Firm: “Compared to other parts of the United States, the railroad came late to NewMexico. Not until 1878 did the Atchison, Tope- ka & Santa Fe cross Raton Pass. The Southern Pacific, pushing east from Tucson, entered the territory two years later. New Mexicans therefore had ample opportunity to consider the po- litical storms ignited elsewhere by railroad aid bonds. This may have averted some problems, but not all, for at least two New Mexico jurisdictions nevertheless issued railroad bonds, and both of these (Santa Fe and Grant Counties) soon defaulted. The ensuing lawsuits and recriminations dragged on for years. They featured many of the populist arguments honed in other locales, plus some peculiar to New Mexico. For example, New Mexico Supreme Court Justice Alfred Free- man complained, in a dissent to an 1890 decision upholding the Santa Fe bonds, that “the pretended contract” between the county and the railroad had been written in a language (i.e., English) that two-thirds of the electorate could not understand. Justice Freeman passionately argued that courts had a duty to see that the homes and property of an unsophisticated populace were not “confiscated to satisfy the greed of corporations.” As it was, the legal disputes over the two bond issues were not settled until 1912, when, at the insistence of Congress and as a condition of statehood, revenues from certain public lands were dedicated to pay off the bonds. In light of this history, it is unsurprising that the drafters of New Mexico’s constitution included an anti-subsidy provision. In doing so, they merely followed the prior example of numer - ous other states. But their reason for adopting the Anti-dona - tion Clause is much clearer than how they imagined it would work in practice. A literal application of the Anti-donation Clause seems fundamentally inconsistent with the existence of a mixed economy, whether in 1912 or today. n EXECUTIVE VICE PRESIDENT’S MESSAGE continued on page 6