"Errors of Enchantment" Latest Blog Postings

Transit-only lanes hurt auto mobility: Seattle’s experience

Errors of Enchantment Blog Postings - Thu, 2015-08-27 16:25

Albuquerque Mayor Berry continues to talk in platitudes and generalities about how his proposed $100 million bus system could be a “game changer” and “transformative” to Albuquerque. What he doesn’t care to discuss is how the proposed system would impact overall mobility on Central.

Thankfully, Albuquerque is not the first city to have embraced dedicated lanes for bus rapid transit. Seattle has done so as well. And, according to a new report from the Washington Policy Center (a free market think tank based in Washington), predictions of improved traffic in areas served by the new transit system have not only proven wrong, but the exact opposite has happened. Auto traffic in the area has slowed dramatically.

The first table below are the predictions offered by public officials in advance of the project being completed.

However, a recent official analysis shows that didn’t happen. According to the SDOT report, not only did officials not provide the driving public with quicker trips, but for many people, travel times actually got worse after the policy took away part of the public street.  Even bus riders heading northbound during the afternoon commute have suffered longer commute times since officials reserved the public lanes for transit.

A comparison between reality and political promises is available below:

Yes, transit travel times generally dropped, but travel by car (car trips are much more common despite the addition of transit) got far more difficult and time consuming.

There is nothing wrong with building transit systems in order to serve high-density job centers. The idea of spending $100 million or more to purposefully make motor traffic worse in a chosen area in order to encourage “transit oriented development” is just silly.

Ultimately, if we are going to spend at least $20 million and an additional $2 million annually, shouldn’t we use those dollars for real issues like policing and making our community a safer, more attractive place to live and work?

We’re number one….in federal dependency

Errors of Enchantment Blog Postings - Wed, 2015-08-26 16:00

We all know that New Mexico relies heavily on federal spending and according to a report from WalletHub which I happened to run across, New Mexico is THE MOST RELIANT state in the nation when it comes to federal money beating out even Mississippi which came in 49th (or 2nd depending on perspective).

Source: WalletHub

Source: WalletHub

There’s no doubt that New Mexico needs to build its private sector economy. Gov. Martinez’s reforms were thwarted by the hostile Democrat-controlled Senate during the 2015 session. Will the status quo persist in the 30 day 2016 session?

About Those ‘Budget Cuts’ …

Errors of Enchantment Blog Postings - Tue, 2015-08-25 17:42

The next time you hear a “progressive” decry “cuts” to New Mexico’s budget, respond with this statistic: 22.3 percent. That’s how much the state’s inflation-adjusted spending grew between 2004 and 2014.

It received scant media coverage, but earlier this month, the state’s latest Comprehensive Annual Financial Report was released. In fiscal 2014, all expenditures — from unemployment insurance to the state fair, the New Mexico Finance Authority to government schools, prisons to legislative costs — totaled $17.1 billion.

In 2010, spending peaked at $18.4 billion. (Aided, of course, by the Obama administration’s “stimulus.”) Expenditures have indeed dropped a bit since then, but remember that New Mexico is losing population. And viewed from a decade-long perspective, it’s clear that New Mexico does not suffer from slumping state expenditures.

The Animas Spill and the problem with the EPA

Errors of Enchantment Blog Postings - Tue, 2015-08-25 16:05

EPA DISASTER: An estimated three million gallons of pollutants spilled into the Animas River after an EPA reclamation project was botched.

By Paul Gessing | Watchdog Opinion

So much has been said and written about the EPA-induced debacle on the Animas River. To be clear, living in New Mexico as I do, I have spent a great deal of time in and around Silverton, Colorado and Durango as well as New Mexico’s Four Corners.

The areas are beautiful and attract tourists from all over the world for outdoor activities like skiing, fly fishing, mountain biking, and the Durango-Silverton narrow gauge train.

There is also a rich mining history in the area. You can scratch most any ski area in the region like Durango or Telluride and find that it was originally settled as a mining town.

Yes, there are abandoned mines throughout the area. The Gold King Mine last operated back in 1922 [2], long preceding EPA regulations as well as modern scientific understanding of the potential environmental impacts of allowing mine waste to flow freely into rivers and other bodies of water.

The EPA was only created in December of 1970 with Richard Nixon’s signing of an executive order. As usual, this was an example of a politician seeing a parade going by and stepping out in front so as to appear to be leading it.

The environmental movement had been growing rapidly in the preceding years with the publication of Rachel Carson’s Silent Spring in 1962 and the devastating Santa Barbara oil spill in 1969. The strength of the movement had culminated earlier in 1970 with celebration of the first Earth Day on April 22nd.

American attitudes about the environment and its stewardship were changing fast. The environmental movement is now one of the most powerful interest groups in Washington. Not surprisingly, the EPA has grown far beyond its original design with dire economic impacts. The agency’s annual budget is “just” $11 billion, but according to the Competitive Enterprise Institute’s study of federal regulations, EPA regulations alone cost the US economy a staggering $353 billion annually [3].

The way the EPA does business is also problematic and could fill many books. Just recently, The New York Times revealed [5] the agency colluded with environmentalist groups in a campaign to manufacture public comments in favor of its new “Waters of the US Rule.”

That, of course preceded the debacle on the Animas River, a 3 million gallon spill of arsenic and heavy metals which was caused by EPA contractors. From the start, this was a high-risk strategy the failure of which was predicted by a local geologist who went on to argue in a letter to the Silverton Standard, that ran a week before the disaster, that it was a “grand experiment” that would fail while creating a “Superfund blitzkrieg.”

Clearly, the EPA is doing a less than stellar job of balancing economic needs with those of the environment. Perhaps it is time to allow a new type of federalism to flourish?

Rather than a one-size-fits all regulatory power out of Washington, perhaps states could opt out of some or all EPA regulations and regulate environmental issues themselves? I don’t foresee Congress, no matter the political makeup, voting to get rid of the EPA in its entirety, but Washington clearly doesn’t have all the answers to our environmental issues.

Currently, hydraulic fracking, to name just one important activity, is regulated at the state level. And, while environmentalists have repeatedly attacked the process, even the EPA has found no ill effects on groundwater from the widely-used process.

Untying the EPA knot will not be an easy or fast process. In just 45 years, the agency has spread its tentacles into every facet of the American economy and our lives. Perhaps the Animas spill, like the Santa Barbara spill of the 1960s, will alter the direction, but in more free market direction that also respects American federalism and state prerogatives.

Article printed from Watchdog.org: http://watchdog.org

URL to article: http://watchdog.org/235085/animas-spill-problem-epa/

The Region’s Laggard in Job Creation

Errors of Enchantment Blog Postings - Mon, 2015-08-24 15:04

On Friday, the U.S. Bureau of Labor Statistics released data on July employment at the regional and state levels. And once again, New Mexico lagged behind its neighbors in job creation.

The BLS looked at employees on nonfarm payrolls in July 2014 and July 2015. At 0.5 percent, the Land of Enchantment trailed each of its bordering states:

Looking at the national picture, New Mexico was joined by just eight states — Kansas, Minnesota, Missouri, North Dakota, Oklahoma, South Carolina, South Dakota, West Virginia — in seeing either higher or unchanged unemployment rates. The absolute number of unemployed workers grew in all nine states.

With the national economy in precarious condition and losses mounting in New Mexico’s oil-production employment, it’s clear that more than ever before, the state needs an effective economic-development strategy.

Randal O’Toole Luncheon: Albuquerque’s Transportation Future

Errors of Enchantment Blog Postings - Mon, 2015-08-24 10:29
Rio Grande Foundation Speaker Series Event:
Albuquerque's Transportation Future

Click here for registration form.

The Rail Runner, Bus Rapid Transit, and land-use planning; these are just a few of the issues currently being discussed by New Mexico's political leadership and economic development establishment.

What should advocates of the free market consider on these issues? Is bus rapid transit going to help or hurt mobility in and around Albuquerque? Should we really shut down the Rail Runner? What about TIDD's and the development known as Santolina?

  • Location:  Marriott Pyramid 5151 San Francisco Rd NE, Albuquerque, NM 87109
  • When:  Tuesday, September 15, 2015, 12:00 noon to 1:00pm
  • Cost:  Seating is limited and can be purchased at the discounted price of $30 until Tuesday, September 8, 2015; $40 after the 8th

Randal O'Toole is a Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

O'Toole's research on national forest management, culminating in his 1988 book, Reforming the Forest Service, has had a major influence on Forest Service policy and on-the-ground management. His analysis of urban land-use and transportation issues, brought together in his 2001 book, The Vanishing Automobile and Other Urban Myths, has influenced decisions in cities across the country. In his book The Best-Laid Plans, O'Toole calls for repealing federal, state, and local planning laws and proposes reforms that can help solve social and environmental problems without heavy-handed government regulation.

O'Toole's latest book is American Nightmare: How Government Undermines The Dream of Homeownership. O'Toole is the author of numerous Cato papers. He has also written for Regulation magazine as well as op-eds and articles for numerous other national journals and newspapers. O'Toole travels extensively and has spoken about free-market environmental issues in dozens of cities.

An Oregon native, O'Toole was educated in forestry at Oregon State University and in economics at the University of Oregon.

Click here for registration form.

In 2013, the Exodus Continued

Errors of Enchantment Blog Postings - Fri, 2015-08-21 13:11

The IRS has released interstate taxpayer-migration data for 2013. The news isn’t good for New Mexico.

Washington’s revenue bureaucracy tallies the movement of tax filers, as well as number of exemptions claimed on each return. As the Tax Foundation explains on its migration calculator, the “number of exemptions … corresponds with the number of people the return is for; for example, a return for a married couple with two children would have four exemptions. Therefore, this number is closely correlated with the movement of individual persons.”

In 2013, there were 55,316 exemptions “arriving” in New Mexico. The outflow number stood at 63,739.

Evidently, fabulous weather, friendly people, and fantastic scenery can’t compensate for lousy public policy.

Albuquerque Public Schools to pay employees who serve in Santa Fe: will they double (or triple)-dip?

Errors of Enchantment Blog Postings - Fri, 2015-08-21 09:58

The Albuquerque Public Schools board (minus Peggy Muller Aragon who opposed the move), recognizing that it has an opportunity to increase its influence in Santa Fe at taxpayer expense, has embarked upon the misguided policy of paying its employees “political leave” while they serve in Santa Fe.

It was apparently all-too-easy for the Board to make the decision. After all, APS already has lobbyists patrolling the halls in Santa Fe, why not throw a few APS-paid legislators into the mix when it comes time to vote on the budget? At least one APS employee, Rep. Tim Lewis, has not accepted his pay as a teacher in the past and presumably will continue to do the same. I doubt the other three APS employees — Rep. Sheryl Williams Stapleton, D-Albuquerque; Rep. Patricio Ruiloba, D-Albuquerque; and Rep. Christine Trujillo, D-Albuquerque — serving in Santa Fe will take the same stance, but I’d love to be surprised.

The question that needs to be asked now is whether these legislators will be allowed to receive “per diem” pay as legislators (again at taxpayer expense). Kathy Korte who previously served on the APS board once called this “triple-dipping.”

Another serious issue with the new APS policy is that it gives APS employees, at least those who accept the “political pay” an unfair advantage over their unpaid colleagues. Board member Barbara Petersen put a positive spin on things saying that offering the pay could draw more APS employees to become lawmakers when they otherwise might not have been able to afford it.

Of course, having fewer legislators with private sector experience and more who are beholden to their government employer is the last thing New Mexico needs.

Albuquerque Isn’t Phoenix … or Cleveland

Errors of Enchantment Blog Postings - Wed, 2015-08-19 17:57

The Duke City’s transportation bureaucrats, Albuquerque Business First reported earlier today, “held presentations this week called ‘Transit Placemaking for the Central Avenue Corridor.'” Planners from Phoenix and Cleveland were on hand to tout the “benefits” of government-run buses and trains.

The events were attempts to promote Albuquerque Rapid Transit (ART), a bus rapid transit system designed to replace “Rapid Ride,” which runs three express routes along Central Avenue.

The Foundation recently weighed in on the weaknesses of the ART proposal — issues that surely went unaddressed at “Transit Placemaking for the Central Avenue Corridor.” Read the issue brief here.

Phoenix, it’s important to note, has been a boomtown for decades — long before the recent expansions of its transit systems. While both Arizona and New Mexico had about the same population a century ago, the states’ public policies diverged radically. One adopted a right-to-work law and kept taxes relatively low. The other focused on the federal government as a driver of jobs and development, enacted a cumbersome tax on gross receipts, and refused to ban compulsory unionism. The opposing approaches yielded very different results for the states’ two dominant metro regions.

As for Cleveland, it does have one thing in common with Albuquerque: vanishing locals. Between 2013 and 2014, Bloomberg found, the metro areas lost the same percentage of residents. Unlike Albuquerque, Cleveland, as a city, has experienced net population loss since the 1950s. Another key difference? Cleveland’s population density — an important determinant of transit viability — is 42 percent higher than Albuquerque’s.

Are Duke City developers clamoring for bus rapid transit? Douglas H. Peterson, principal of Peterson Properties LLC, recently wrote in Albuquerque Business First that “35 property owners representing 55 properties … have signed official letters of opposition [to ART] that I have delivered to the mayor and councilors, [and] dozens of other citizens have contacted me to express their agreement that ART would do much more harm than good for our city and be a tremendous waste of resources.”

Finally, there is no evidence to support the claim that transit attracts educated Millennials. Last year, a report by City Observatory found that 25-to-34-year-olds with at least a B.A. were flocking to places like Houston, Las Vegas, San Antonio, Oklahoma City, Jacksonville, and Denver — hardly havens for subways, light rail, and bus rapid transit.

Albuquerque needs a vibrant and growing private-sector economy. Feel-good “infrastructure” projects have proven to be spectacularly ineffective tools to achieve the goal. No self-congratulatory, dissenters-not-allowed sessions celebrating “smart growth” will change fundamental facts. The city’s policymakers must look elsewhere for effective economic-development strategies.

Employee Freedom — Good for the Economy, Too

Errors of Enchantment Blog Postings - Wed, 2015-08-19 12:01

As we continue to celebrate National Employee Freedom Week, it’s important to note the economic performance of states that empower workers, not union bosses.

On January 1, the Foundation began to track announcements of expansions, relocations, and greenfield investments published on Area Development‘s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development‘s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

The Foundation will soon release the results of an analysis of six months of Area Development announcements, comparing right-to-work (RTW) states and compulsory-unionism states. For now, here’s a fascinating finding on what we’re calling the “border-crossing phenomenon”: the incidence of firms based in non-RTW states making investments in RTW states, and vice versa.

In each of the six months, RTW states grabbed the lion’s share of jobs to be created by border-crossing companies:

Employee freedom, real economic development. The correlation is strong.

Happy National Employee Freedom Week!

Errors of Enchantment Blog Postings - Tue, 2015-08-18 10:33

It’s National Employee Freedom Week. The event is a “campaign offering an unparalleled focus on the freedoms union employees have to opt out of union membership.” With participation by 97 groups in 42 states, this year more Americans than ever will learn about their rights regarding “organized labor.”

Polling data reveal that 27.5 percent of unionized New Mexicans do not know that they cannot be forced to join and/or pay full dues:

New Mexico is not yet a right-to-work state. But workers covered by “collective bargaining” here can opt to pay an “agency fee,” which supports the non-political portion of union expenditures. Religious/conscientious objectors have the right to avoid paying a single penny to a union.

Click here for New Mexico-specific information about employee freedom. And spread the word!

Albuquerque’s painfully-high minimum wage

Errors of Enchantment Blog Postings - Mon, 2015-08-17 09:57

In listings of highest city-level minimum wages, Albuquerque rarely makes the list of those having the rates. However, as we all know, living in Albuquerque isn’t as expensive as living in San Francisco. So, a website called SmartAsset did the cost of living calculations for major cities with their own minimum wages and found Albuquerque to have the 5th-highest in the nation.

You can see the top-10 cities by “real” minimum wages below:

Shockingly enough, despite (or perhaps because of) the cities high minimum wage, Albuquerque is not exactly booming as the liberal Brookings Institute has pointed out.

Interestingly, and further buttressing the case against government-mandated minimum wages, a new report out of Seattle relating to that City’s $11/hour minimum wage indicates that the usually fast-growing restaurant industry lost jobs concurrently with the increase in the minimum wage.

In a separate article, Wendy’s CEO Emil Brolick, when asked how the franchisees who own and operate Wendy’s locations could raise prices to offset the higher wage costs in places like New York. He replied that “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.”

You’re invited: Community Discussion on Albuquerque’s Proposed Bus Rapid Transit System

Errors of Enchantment Blog Postings - Fri, 2015-08-14 12:21

What: The City of Albuquerque is applying for $80 million in federal funds to build a new "Bus Rapid Transit" system along Central. Is this a good idea or a bad one?

Two people who both care and are knowledgeable about the proposed project are going to discuss the issue — with the discussion and a public question-and-answer period moderated by yet another community leader and regular transportation writer from the state’s largest newspaper.

There is no charge for this public event!

When: Thursday, September 3, 6:00 – 7:30pm

Where: Room 2401 at UNM Law School 1117 Stanford Dr NE, Albuquerque, NM 87106


Paul Silverman
Principal at Geltmore, LLC
A commercial property
management business

Paul Gessing
President of the Rio Grande Foundation
A free market, state-based think tank
headquartered in Albuquerque


Moderated by:

D'Val Westphal
Member of Albuquerque Journal Editorial Board, writes a
regular "Road Warrior" column

  Click here for event registration form – it's free!

Thanks for your interest and support.

Hike New Mexico’s Property Taxes!

Errors of Enchantment Blog Postings - Fri, 2015-08-14 10:55

It’s the most hated tax in America. That’s why New Mexico needs more of it.

The state’s constitution limits the mill rate that may be applied to real and personal property. And in 1981, the “Big Mac” tax shift made the “property tax no longer a source of public school funding and [required] public school operations to be funded almost entirely by the state’s general fund.”

This week’s Tax Foundation map explores one consequence of New Mexico’s eschewment of the property tax. The mean effective rate on owner-occupied housing in the Land of Enchantment is one of the lowest in the nation:

Good news? Maybe not. Economist Caroline Hoxby has “consistently found evidence that both students and taxpayers are better off under locally based systems of school funding and school control.”

The Northeast gets a lot of policies wrong, but one of the few sound strategies its states follow is local funding, and thus local control, of government schools. And the property tax, which is paid in annual or biannual installments, often motivates those it impacts to demand more from educrats.

A proposal: Bring the property tax back to New Mexico in a significant way, financed by cuts in the tax rates on personal income and gross receipts.

Could the Blue Cross rate hike denial mean fewer insurers in the NM Exchange?

Errors of Enchantment Blog Postings - Wed, 2015-08-12 12:12

Recently, Blue Cross applied for and failed to receive an eye-popping 51.6% increase in insurance premiums. This denial was a clear win for consumers against the greedy insurance industry, right? Well, not so fast says David Hogberg of the National Center for Public Policy Research in a new blog posting.

Hogberg notes that Blue Cross applied for the massive increase because its plans were attracting sicker customers than the other insurers in the exchange. He also noted that Blue Cross has stated that the decision may cause them to leave New Mexico exchange.

That may seem like a minor problem, but that sick group will then be pushed to other, healthier plans that will then see their premiums skyrocket.

In other words, unless Blue Cross, which operates as a non-profit, was simply over-reaching, this rate increase is a sign that ObamaCare is eventually going to result in dramatic rate increases here in New Mexico. Regulatory denials may cause attrition among providers in New Mexico’s health insurance market but those massive rate hikes are inevitable.

As the following chart illustrates, New Mexicans saw particularly-rapid rate hikes in 2014.

A ‘Fossil Fuel’ Nowhere Near Extinction Abroad

Errors of Enchantment Blog Postings - Tue, 2015-08-11 16:47

New Mexicans concerned about coal mining in the state — and throughout the nation — should consider attending an upcoming “listening session” in Farmington. On August 20, at the Courtyard Marriott, the Bureau of Land Managment will receive input on “how the BLM can best carry out its responsibility to ensure that American taxpayers receive a fair return on the coal resources managed by the federal government on their behalf.”

The eco-left’s war on coal is going quite well. Mining companies are filing for bankruptcy, layoffs are robust, and coal’s share of the fuels used to generate electricity is declining.

In New Mexico, coal production dropped from 25.8 million to 21 million short tons between 2009 and 2014. Employment fell by 6.1 percent. (The state ranks 11th among the states in coal production.)

The good news is that export opportunities are manifold. As the Institute for Energy Research recently noted, “The International Energy Agency’s coal forecast indicates that global demand for coal is expected to continue to increase, surpassing 9 billion tons by 2019.” China is a major consumer, as is India, and according to the U.S. Energy Information Administration, “PetroVietnam … is seeking to purchase 11 million tons of coal per year starting in 2017 to supply Vietnam’s domestic power industry.”

Free trade offers New Mexico new customers for its natural gas — and soon, one hopes, crude oil. But coal is another commodity with a promising export future. The rest of the world isn’t embracing anti-coal hysteria, and that’s a good thing for the Land of Enchantment’s economy.

Work requirements for food stamps are hardly onerous

Errors of Enchantment Blog Postings - Tue, 2015-08-11 11:01

The following article appeared in various news outlets throughout the State including the Las Cruces Sun-News.

Since 2009, New Mexico has waived federal work requirements tied to the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps. Over 21 percent of all New Mexicans receive food stamps, leaving us behind only Mississippi.

Gov. Susana Martinez’ Administration has proposed to reinstate rules limiting able-bodied people – including parents of children older than six-years – to three months of SNAP benefits unless they work, do volunteer work, or attend job training classes at least 20 hours per week. Children and the myriad food programs targeted at them and those who simply cannot work are not up for changes.

New Mexico is not alone in re-instating these modest requirements. According to a September 2014 report from the Pew Center, no fewer than 17 states were working to re-instate work requirements on able-bodied adults.

In 2014 Maine re-imposed a three-month limit (out of every three-year period) on food stamps for able-bodied adults without minor dependents — unless they work 20 hours per week, take state job-training courses or volunteer for about six hours per week. The number of such people receiving food stamps in Maine has dropped nearly 80 percent since the rule kicked in, to 2,530 from about 12,000.

Maine’s work requirement has been in effect for about a year now without a reported increase in hunger. No reports of dire or exacerbated hunger exist for the decade-plus during which this policy was in effect nationwide from the time of the welfare reforms enacted by then-President Bill Clinton and a Republican Congress in the mid-1990s.

Seemingly, when presented with a set of requirements to in order to attain food stamps, able-bodied adults manage to find work attain food through working, moving to a places where work is more plentiful, or by some other means.

Food stamps were meant to provide a temporary bridge for people who are between jobs or have fallen on hard times. They were never meant to be a permanent way of life. The Administration’s proposal benefits recipients by increasing their opportunities to access gainful employment.

On the flip side, unlimited government benefits with no requirements allow people to completely remove themselves from the work or volunteer forces. Sitting at home watching television or waiting for the phone to ring is no way to look for work. Volunteering or improving one’s skills through enhanced education are great ways to find a job.

Indeed, while unemployment rates in New Mexico remain elevated, the economy in neighboring Texas is humming with unemployment at 4.2%. For generations Americans have moved to better their economic prospects. Should we really lure them to remain in economically-distressed states through government welfare?

The Martinez Administration’s proposal encourages self-reliance rather than dependency. What doesn’t work is forcing American taxpayers to spend $80 billion a year on a rapidly-expanding welfare program and imposing little or nothing in the way of requirements.

Democrats used to value an honest day’s work. As President Franklin Roosevelt said in 1935:

“Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.”

Requiring able-bodied adults without small children to work, get an education, or give back to their community is hardly too much to ask of those who wish to receive food stamps.

Gov. Martinez is wise to impose some form of requirements on able-bodied adults. It is a necessary first step towards ending New Mexico’s culture of dependency.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Keep New Mexico from being the Greece of North America

Errors of Enchantment Blog Postings - Mon, 2015-08-10 13:38

Despite (or perhaps because of) the latest bailout, Greece remains deeply-troubled. The crisis has manifested itself due to Europe’s single currency, the Euro. Greece cannot pay its bills, but because of the Euro, it cannot devalue its currency either. So a series of bailouts and “austerity” measures have been imposed.

This is a quick synopsis of the Greek situation, but what are the parallels for New Mexico?

In July of 2011, The Economist magazine noted one interesting parallel when an article “Greek Americans” noted which U.S. states are most reliant on transfers from Washington for fiscal support. According to the article, New Mexico was the most reliant U.S. state in the nation by far.

It is true that unlike Greece, the U.S. has a long-standing single fiscal policy and a culture (200+ years) of unified action. Greece could easily leave or be kicked out of the currency union after only a few decades of unity. That is not likely to happen to New Mexico.

Unfortunately, our state shares the Greek propensity to rely on outsiders for financial support along with a bloated government payroll and underdeveloped private sector.

According to Key Policy Data, New Mexico has the second-most state and local government workers per 100 private sector workers of any state in the nation — more than 25.

The proliferation of government employees has helped to create a bloated and under-funded government employee pension system. According to the Competitive Enterprise Institute, New Mexico’s government employee pension system is in the worst overall shape of any public employee pension system in the nation. This is a serious issue that makes New Mexico’s parallel to Greece quite direct.

What can be done? The Martinez Administration has been working hard to convince legislators to deregulate the New Mexico workforce and restrain the growth of government. These are good things, but New Mexico’s Senate needs to help, not hinder, efforts to spur private sector economic growth.

We need a healthy dose of transparency in terms of how much New Mexico relies on Washington dollars to keep our economy afloat. We know New Mexico is too reliant on Washington, but how reliant?

The federal debt is more than $17 trillion, yet there is no easy way for New Mexico policymakers or the public to answer such basic questions as: How many federal grants do our agencies utilize? How many state employees collect a paycheck that depends, in whole or in part, on a federal subsidy? And most importantly, what would happen if this federal money dried up?

Idaho is one state that has embraced the added transparency that we are calling “financial ready.” Simply put, Gov. Martinez should sign an executive order saying that state agencies need to delineate the federal dollars they receive so that lawmakers can be prepared for the next fiscal crisis from Washington.

We need to know today who will be impacted by the reduction or elimination of federal dollars tomorrow. Will it be seniors who depend on a home food service? Could it be law enforcement agencies who track down child predators using a federal grant? “Financial ready” would also include contingency plans to assist lawmakers in dealing with the unforeseen but rather inevitable consequences of Washington profligacy.

New Mexico has already had a close brush with real consequences from its reliance on Washington. When sequestration went into effect in Washington in 2013, New Mexico’s “payment in lieu of taxes” (PILT) money faced a dire threat. Rural communities unable to tax large swaths of federally-owned land faced a crisis situation.

Thankfully, our Senate delegation was able to get $34 million in PILT funding for New Mexico counties, but the consequences of blindly relying on Washington could have been dire.

Significant reforms to New Mexico’s economy are essential – as is tackling pension reform and funding. When it comes to relying on Washington, we should start with a healthy dose of transparency so policymakers and the public can better understand the full scope of our reliance.

Gessing is the president of the Rio Grande Foundation — an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Liberty, Opportunity, and Prosperity on the Air

Errors of Enchantment Blog Postings - Mon, 2015-08-10 10:35

Every other Saturday, on KKOB, the Rio Grande Foundation hosts the “New Mexico Freedom Hour.” We discuss our latest public-policy research, interview guests, and offer our perspectives on issues at the local, state, and federal levels.

The Foundation’s website has an archive of past programs. Our August 1 broadcast, in which Paul Gessing and Dowd Muska explore the City of Albuquerque’s proposal for bus rapid transit, was just posted. Enjoy.

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