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Why is New Mexico not realizing its potential?
Updated: 1 hour 32 min ago

New Mexico’s Wind Welfare

Thu, 2015-11-05 14:19

The Institute for Energy Research has released an updated analysis of “the distributional impacts of federal subsidies for wind energy across all U.S. states.” It found that taxpayers from the Northeast, Southeast, and California are getting socked to support wind turbines in the rest of the country.

Not surprisingly, New Mexico is net recipient of wind welfare. The federal “wind tax burden” in the Land of Enchantment over the past decade was $59 million, while producers here got an estimated $352 million in subsidies. That’s a staggering “gain” of $293 million.

Read the full study here. It offers more documentation of the unfairness — and ineffectiveness — of “green” corporate welfare.

No, we’re not stuck with the Rail Runner

Thu, 2015-11-05 14:17

Today, the front page of the Albuquerque Journal had an interesting story about the plight of the State’s commuter train, the Rail Runner, and whether it would be feasible to sell it or simply get rid of it.

I’ve looked at the data and the study itself (thanks for passing it along Dan Boyd) and, I have to disagree with some of the study’s conclusions. That said, it is amazing how public opinion has turned against the train which Bill Richardson said would go from El Paso to Denver. Also, the study correctly notes that selling the train is a non-starter. No one would be foolhardy to invest their own money in a money-losing train like this one.

What the study gets wrong is shutting the train down entirely, an option that would save from $28 to $32 million annually over the next few years. Unfortunately, the study “developed in this analysis mimicked the train trips’ schedules and service patterns.” That’s a bad mistake by itself because a vast majority of riders travel between Albuquerque and Santa Fe. Many of the stops in-between (and within the cities themselves) are superfluous and only slow the train.

This report also fails to account for potential private sector solutions. Why couldn’t a private company run shuttle vans between Albuquerque and Santa Fe? I have taken the Rail Runner, but it is not very convenient. If it goes away and nothing replaces it, we can at least use the savings to pay down the capital costs. If there is really a robust market for transportation between Albuquerque and Santa Fe, the state would do best by getting out of the way.

There’s no reason for taxpayers to have to pay the transportation costs for government workers who want to live in Albuquerque and work in Santa Fe.

Jay Nordlinger of National Review Institute talks “Children of Monsters” and the 2016 presidential race

Thu, 2015-11-05 08:22

Mr. Nordlinger spoke in Albuquerque on November 4, 2015 at a luncheon in Albuquerque co-sponsored by the Rio Grande Foundation and National Review Institute. His comments can be watched or listened to below:

Albuquerque’s strange Cleveland Fetish

Wed, 2015-11-04 17:07

Another day, another news story touting Cleveland as a model for Albuquerque.

According to the article linked to above from the ABQ Biz First, Randy Royster of the Albuquerque Community Foundation had some high praise for Cleveland as a model for Albuquerque recently saying,

Our newest effort in this arena of economic and workforce development came about by a trip that was made in August by the Health Sciences Center…The purpose of the trip was to learn about Cleveland’s 10-year effort for creating new companies, new jobs and basically revitalizing the downtown area, which had been basically shuttered a little more than 10 years ago, and not only revitalizing downtown but also its surrounding neighborhoods. And at the core of their process were anchor institutions.

We already know about Cleveland’s bus rapid transit and how Albuquerque’s leaders wish to emulate that model. Now, a consortium of “nonprofit corporations and publicly owned enterprises” is being touted. I just don’t get the Cleveland fetish.

Perhaps it is the fact that I grew up in Cincinnati and have seen Cleveland deteriorate and shrink over the decades, but I know Cleveland is NOT a model Albuquerque should emulate. In 2010, Cleveland native son, game show host, and libertarian, Drew Carey did a whole video series on “saving Cleveland.” That is the kind of thing you do in a struggling city that continues to hemorrhage population.

I fully admit that I don’t know all the details on this proposed medical “consortium,” but spending a bunch of tax money in order to bring in some additional private dollars is not going to do much about Albuquerque’s economic or job creation woes. Same as the bus rapid transit system. Instead, Albuquerque’s leaders would be better served checking out Carey’s video series and applying its lessons to Albuquerque.

Medicaid’s Value as ‘Stimulus’

Tue, 2015-11-03 11:48

However bizarre it sounds to fans of limited government, many Obamacare supporters believed — and continue to assert — that Medicaid expansion is a powerful economic-development tool.

The state-federal welfare program covers over 72 million Americans. Amazingly, more than a third of New Mexico’s population is on Medicaid. Later this month, the Foundation will testify in Santa Fe on the costs and benefits of the governor’s Obamacare-enabled decision to expand the program, and whether the “multiplier effect” from increased Medicaid spending is improving New Mexico’s economy.

We’ve examined the 24 states that expanded Medicaid “on schedule,” in January 2014, and the 20 states that have declined to broaden enrollment. The average job-creation percentage in the two types of states has been almost identical, with a slight edge to the states that did not expand their programs:

We’ll be examining other economic indicators as well, but at this point, it appears that making a defective and unsustainably expensive welfare program even bigger is not much of a “stimulus” in terms of employment.

NM Could gain jobs with a right to work law

Mon, 2015-11-02 14:26

New Mexico doesn’t have a jobs problem. It has a jobs crisis.

Nationally, unemployment is falling, but in the Land of Enchantment, it’s rising. Only West Virginia has a higher jobless rate.

Even worse, labor participation for prime-age workers in our state has collapsed. The Pew Research Center recently found that between 2007 and 2015, New Mexico’s employment-to-population ratio for 25-to-54-year-olds plunged by the sharpest rate in the nation.

There are many tools state policymakers can use to restore vibrant job growth, but perhaps no reform offers more promise than passage of a right-to-work law. By ending the compulsory payment of dues to union bosses, New Mexico would send a clear signal that it’s open for business.

Says who? Site-selection experts. They consistently report a significant portion of their clients prefer RTW states.

New research confirms the value of RTW in creating jobs. The Rio Grande Foundation examined investment announcements posted on the website of Area Development, “the leading executive magazine covering corporate site selection and relocation,” between January 1st and June 30th of this year.

During the period, companies declared that they would add 92,923 positions in expansions, relocations and greenfield investments. RTW states were slated to receive 79 percent of employment – a sum, not surprisingly, far in excess of the 47 percent of private-sector jobs found in RTW states.

It’s true that “correlation is not causation,” and other factors – e.g., transportation infrastructure, workforce quality, energy costs, taxes – influence site-selection decisions. That’s why our analysis looks at RTW in several unique ways.

At the broadest level, it examines “quality” jobs – middle- and high-compensation positions in manufacturing, IT, logistics, research and development, finance, and engineering. (No positions in fast food, convenience stores, landscaping, and retail sales are included.)

A further refinement is made for projects that involve “border crossings” – i.e., when a business headquartered in a non-RTW makes an investment in a RTW state, and vice versa.

Relocations, in which enterprises move entire facilities from one type of state to another, are assessed as well.

Finally, foreign direct investment (FDI) is scrutinized, in order to determine which type of states draws the most jobs from firms based abroad.

In total, 113 border-crossing investments were announced. Ninety-six – 85 percent – shifted from non-RTW to RTW. Job-creation followed suit.

In each of the six months examined, more positions were to be created in RTW states by non-RTW-based firms than vice versa. Fourteen facilities announced journeys from non-RTW to RTW, while just three planned to go the other way.

RTW states garnered 98 percent of relocation-related jobs.

In total, 132 FDI announcements were listed. Seventy-three percent were made in RTW states, which garnered 83 percent of jobs. Of the 12 nations that announced more than one FDI in the period, ten indicated a preference for RTW states.

It’s notable that high-population, non-RTW states such as California, New York, Illinois, Pennsylvania, New Jersey, Washington, and Massachusetts did not rank among top job-creators. Also interesting were stellar performances by two Rust Belt states: Indiana (which became RTW in 2012) and Michigan (which became RTW in 2013). Of the 10 states to receive the most employment, nine were RTW.

The reality of jobs growing faster in RTW states has been established for decades. But the foundation’s research shows that banning compulsory unionism does not foster a “race to the bottom.” To the contrary, worker freedom is correlated with employment in well-compensated industries.

Furthermore, firms based in non-RTW states appear to favor expansion in and relocation to RTW states. And RTW states substantially outperform their non-RTW competitors in FDI.

It is not a panacea, but a New Mexico right-to-work law would make the Land of Enchantment more attractive to companies looking to find sites for new facilities and/or relocate existing assets. Shifting New Mexico into the RTW camp is a sound, and cost-free, policy investment to address our state’s jobs crisis.

With the 2016 legislative session around the corner, it’s time for the New Mexico Senate to finally vote on right to work.

D. Dowd Muska ( is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

No more Santa Fe Studios subsidies

Mon, 2015-11-02 08:35

The following appeared in the Santa Fe New Mexican on Sunday, November 1, 2015.

When is $10 million in taxpayer money simply not enough? In the case of the people who already got a sweetheart deal to build Santa Fe Studios, when you can ask for $22 million more.

There is likely no other business in the State of New Mexico that has received as many subsidies as Santa Fe Studios. That hasn’t stopped the Studios have applied for $22 million in industrial revenue bonds to Santa Fe County.

Already, the State has provided $10 million in economic development grants. The County has provided a generous $6.5 million bank loan.

It’s not as if film studios in New Mexico require subsidies. Albuquerque Studios was built without direct taxpayer subsidy. One would think that if Santa Fe Studios’ business was good enough to require expansion, the owners could pay for it themselves like any other business. Unfortunately, once you realize that you can stick you hands into taxpayers’ pockets, the temptation to do so again is hard to resist.

And then there is the lack of transparency. In October of 2013, there was a dustup between another think tank, Think New Mexico, and the Studios over how many films had actually been produced at the Studios. Without a doubt, Think New Mexico was justified in questioning Santa Fe Studios which has given few details on how the tax money they have received has been used.

A November, 2013 story in the New Mexican noted that “Verification of the (Studio’s) job numbers has been less than vigorous. County officials appear to have accepted the hours reported by the studios as fact and have done little to substantiate them.” Santa Fe County needs to increase oversight at a bare minimum before even considering approval of another $22 million.

Of course, the millions of dollars pumped into Santa Fe Studios are only the tip of the iceberg when it comes to New Mexico’s ill-conceived and overly-generous giveaways to Hollywood. The biggest taxpayer rip-off is the $50 million or so each year New Mexico taxpayers throw at the film business in the form of its film rebate program.

Unlike other subsidies offered by the State, the film subsidy is not a reduction or elimination of taxes owed, rather it is a check cut to the film company for between 25 and 30% of taxable spending done in the State. Rather than foregoing otherwise taxable revenue, New Mexico’s film subsidies actually spend revenue collected from other sources.

That is one reason why such subsidies have drawn opposition from across the political spectrum. The liberal Center on Budget and Policy Priorities issued an entire report in 2010 called “Not too much bang for too many bucks.” Another liberal group, Citizens for Tax Justice, wrote in a 2013 blog posting, “Not only do film tax credits cost states more money than they generate, but they also fail to bring stable, long-term jobs to the state.”

Any objective organization, right, left, or center that takes a close look at the economics of film subsidies like those in place in New Mexico finds that they make no economic senses and that they ultimately harm taxpayers and the poor.

Unfortunately, the Legislature seems inclined to keep the gravy train rolling for New Mexico’s film industry at this point. But, Santa Feans can stop throwing their good money after bad by letting the County Commission know that profitable businesses should grow by reinvesting their own money, not by attaining ever-greater taxpayer subsidies.

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

Congress lays an egg on budget renewal/Export Import Bank

Fri, 2015-10-30 11:25

It has been a tough few weeks in the Albuquerque area, but for a nation that has only seen modest economic growth since a challenging recession, Congress’s budget deal is extremely troubling for a number of reasons, but mostly because it blows through the budget caps imposed under sequestration. This tool was imposed in March of 2013 when the Obama Administration and Congress could not agree on a budget. Despite a hue and cry over supposed harms to the economy, the sequester had little apparent impact from the date of its imposition in March of 2013 (as seen below).

In part, the trivial impact of the sequester is due to the fact that it simply wasn’t that big of a deal when placed within the context of the US economy:

Of course, liberals see government growth as an inherently good thing, so President Obama has been trying to get rid of the sequester since it was imposed. And, for some reason, outgoing Speaker John Boehner and many Republicans, rather than passing a fiscally-responsible budget and seeing if Obama would veto it, thus shutting down government, decided to wave the white flag in surrender of even modest fiscal restraint and spend more money. New Mexico’s Congressional delegation was split along ideological lines with Lujan-Grisham and Lujan supporting the agreement and Congressman Pearce opposing it. Congressman Pearce deserves a great deal of praise for opposing this terrible agreement. A list of the 79 Republicans who abandoned fiscal constraint to support the deal can be found here.

Unfortunately, the budget deal wasn’t the only damage inflicted upon taxpayers this week. The Export-Import Bank which had been slated for elimination was resurrected. This time New Mexico’s entire House delegation voted to renew the FDR-era corporate welfare machine. The gist of what the Bank does is to subsidize US exports using American tax dollars so foreign businesses (and governments) can purchase US products. Amazingly, New Mexico’s entire Congressional delegation supported renewal despite the Bank’s trivial impact on New Mexico-based businesses (as seen below):

While the left talks a good game about ending “corporate welfare,” the Export-Import bank often subsidizes environmentally-destructive projects in foreign nations like this one in India as reported by the LA Times.

A full roll call of that vote can be found here. The Senate is expected to follow suit by renewing the Bank.

The RTW Advantage, in Two Charts

Fri, 2015-10-30 10:12

Yesterday the Foundation released “Where the Good Jobs Are: A New Look at Right to Work and Employment Growth.” Our paper found further confirmation that businesses and entrepreneurs prefer to expand in, relocate to, and set up shop in right-to-work states, where employees cannot be compelled to surrender a portion of their pay to unions. Even more, the RTW advantage applies to middle- and high-compensation jobs — i.e., there is no “race to the bottom.”

One of the paper’s most interesting findings is that firms based in non-RTW states are shifting their assets and facilities to RTW states. In total, 92 percent of the jobs to be generated by border-crossing investments went from non-RTW to RTW:

The story was similar for foreign direct investment. Businesses based abroad preferred labor freedom, with 83 percent of their job growth to take place in RTW states:

Is it time for New Mexico, reeling from rising unemployment and a falling labor-participation rate, to go RTW?

Right to Work: Still Right for New Mexico: New Research Confirms Labor Reform’s Value in Economic Development

Thu, 2015-10-29 07:25

(Albuquerque) – A new analysis finds that right-to-work (RTW) states excel at creating quality jobs, and if New Mexico’s policymakers want the state to escape its severe economic woes, repealing compulsory unionism is essential.

“Where the (Good) Jobs Are: A New Look at Right to Work and Employment Growth,” authored by Rio Grande Foundation Research Director Dowd Muska, finds that RTW states far outpace their compulsory-union competitors in creating middle- and high-wage employment.

Muska’s research examined job-creation announcements posted on the website of the publication Area Development between January 1, 2015 and June 30, 2015. Positions were in manufacturing, finance, IT, biotech, research & development, business services, and logistics.

“These are the kinds of jobs that would make New Mexico a more prosperous state,” Muska said. “And they’re the kinds of jobs that politicians’ current economic-development strategies are not producing.”

Of the 92,923 jobs examined in the study, 79.2 percent were slated to be created in RTW states – a sum, not surprisingly, far in excess of the 46.8 percent of private-sector jobs found in RTW states. Both domestic and foreign firms prefer RTW states, and companies that relocate their facilities from one type of state to another overwhelmingly prefer to move to locations where labor freedom is respected.

Right-to-work laws, which were first adopted in the 1940s, free employees from paying compulsory dues to union coffers. Site-selection experts quoted in “Where the (Good) Jobs Are” argue that RTW is a requirement for many businesses looking to site, expand, or relocate their operations. The Rio Grande Foundation’s new research confirms their claim.

“Our organization has long argued that RTW is right for New Mexico,” said Rio Grande Foundation President Paul Gessing. “This new research offers more evidence of a trend that’s been underway for many decades: Right-to-work states outperform compulsory-union states.”

While a RTW bill passed New Mexico’s House of Representatives earlier this year, and Governor Susana Martinez pledged to sign the bill, the legislation did not receive a vote in the state’s Senate. RTW supporters are sure to press for the law in future sessions.

“Where the (Good) Jobs Are” is linked here and can be downloaded from the Rio Grande Foundation’s website,

The Other Side of the Fiscal Crisis

Wed, 2015-10-28 16:50

The inevitable consequences of New Mexico’s profoundly unwise expansion of Medicaid are coming into sharper focus. But fiscal policy has two components: expenditures and revenue. And serious pressure is starting to build on the cash side of New Mexico’s budget.

The Land of Enchantment isn’t alone. Energy-dependent states and provinces are feeling the pain:

* In Oklahoma, the governor has “ordered state agencies … to prepare to cut nonessential expenses by 10 percent.”

* Wyoming‘s Consensus Revenue Estimating Group has “calculated projected losses through June 2018” of $617 million.

* Alaska is facing down a $3 billion deficit, and legislators are examining the incentives the state uses “to get companies to come to Alaska, produce oil and gas, and generate jobs and economic activity.”

* Alberta is projecting “a record deficit on falling revenue.”

It appears that austerity (being rather generous with the term) will remain the standard operating procedure for New Mexico’s budget:

But while spending has been fairly flat in recent years, a two-decade perspective reveals a very different trend. Between 1993 and 2013, per capita, inflation-adjusted spending in New Mexico rose by 47.5 percent:

There appears to be a lot of room in the budget for right-sizing. Pro-taxpayer legislators should get to work on what programs and bureaucracies to cut, combine, contract, compress, and condense.

ObamaCare costs coming home to roost for New Mexico

Wed, 2015-10-28 13:17

Unfortunately, when you head up a free market think tank that is skeptical of grand government schemes, you spend a lot of time saying “I told you so. See the New Mexico Spaceport and Rail Runner for examples, but for a biggie, check out pre-financial crisis efforts by the National Taxpayers Union on the government-sponsored mortgage lender Fannie Mae.

Well, the latest “I told you so’s” are in order thanks to ObamaCare, the massive health care law that put the federal government in charge of 1/8th of the US economy and which the Rio Grande Foundation opposed from the start.

According to a front page story in the Albuquerque Journal which related testimony from the Legislative Finance Committee, Medicaid is going to bankrupt New Mexico in the near future. Rep. Jason Harper said, “..Medicaid is going to be a budget-buster.” and Rep. Larranaga described Medicaid as a “runaway train.” Just to be clear, New Mexico is looking at a one year Medicaid spending increase from $891.7 million to $976.9 million. That’s a 8.5 percent one-year hike. With the federal government’s share of Medicaid expansion costs declining from 100% to 95% in 2017, there is no doubt that New Mexico faces real and long-term budgetary challenges.

A second ObamaCare story got our attention as well, this one from KOB TV which reported that New Mexicans can expect an average price hike of nearly 26 percent – the fourth-highest increase in the country. In a survey of 30 US metro areas, Albuquerque and Santa Fe are seeing the third-highest increase – at 25 percent. Ouch. NOTE: KOB TV corrected its story (here) after this posting was made to indicate that the real annual increase was 7 percent, not 25 percent.  Similar data on New Mexico were reported by the national media as well. Amazing that this law is so complex that even figuring out annual price hikes is a guessing game.

Still Clueless on Millennials

Tue, 2015-10-27 14:44

It can be downright mystifying how some people attained the status of “expert.”

Maureen McAvey, the Bucksbaum Family Chair for Retail at the Urban Land Institute, was in Albuquerque yesterday for an event sponsored by her organization and NAIOP-New Mexico. She noted the Duke City’s dearth of Millennials: “The young people you have are not staying here. Jobs are always a challenge, but in lifestyle, you should be able to hit this one out of the park. I’d want to know why these young people aren’t staying here when you have a lot of assets.” After all, in other places, “festivals and music” attract young adults, who want “to be where it’s cool.”

Earth to Maureen: It’s tough to enjoy concerts, growers markets, art-house films, and pub crawls when you don’t have any money. In Albuquerque and throughout New Mexico, unemployment is rising. (Only West Virginia has a worse jobless rate than the Land of Enchantment.)

Not surprisingly, the places where Millennials are flocking — e.g., Houston, Salt Lake City, Orlando, Nashville, Denver, San Antonio, Oklahoma City, Jacksonville, and Las Vegas — tend to have robust economies. As Aaron Duke, a San Francisco-to-Denver transplant, told The Wall Street Journal earlier this year: “You don’t move just because some place is cool. You’ve also got to be able to earn a buck.”

To attract Millennials, Albuquerque needs what the vice president would call “a three-letter word: jobs. J-O-B-S.” But with carnage on the highways, rampant vagrancy downtown, a new tax hike, a burdensome minimum wage, and planning-and-zoning procedures that drive developers away, don’t expect employment growth to pick up anytime soon.

Mayor Berry: time to get the basics of government right

Tue, 2015-10-27 12:10

There it was in today’s Albuquerque Journal business section, yet another business having trouble with burdensome regulations in Albuquerque. Said Roy Solomon, developer of the Green Jeans Farmery, a new development that is struggling with permitting issues at the City, “I’m not going to do another project in this town, ever, ever again.” Ouch.

Worse, this is not the first time a businessman has said something similar about Albuquerque. According to an Albuquerque Journal story from February, Suzanne Lubar of the City’s Planning Department said of the City’s zoning structure, “Nobody has a true sense of what’s allowed and what’s not allowed…It’s not very predictable. I had developers calling and saying, I will never do a development in your city again.”

Of course the zoning and land use planning issue are not the City’s only problems, taxes are on the rise (again), the minimum wage is one of the highest in the nation in real terms, and then there are the recent high-profile violent crimes.

The big “solution” from the Mayor of our City is to foist a costly new bus system on the City’s taxpayers and a long list of businesses in the Central corridor that oppose the project.

Perhaps our City should get the basics like public safety and permitting done in a manner that helps rather than hinders the economy before it embraces a massive and expensive redevelopment of Central Avenue? How about it Mayor Berrry?

New video: Despite union threats, labor reform supporters succeed at the ballot box

Tue, 2015-10-27 08:22

Check out this new video from our friends at the Mackinac Center, the free market think tank in Michigan. The video itself is powerful, but also important in showing just how popular “right to work” and other labor reforms are with voters, not just the angry union members who show up at the capital in an effort to intimidate elected officials into putting the brakes on reform.

Will Udall and Heinrich Vote to Ban the Ban?

Mon, 2015-10-26 15:12

The Albuquerque Journal’s Kevin Robinson-Avila has an important piece today on the “volatile ups and downs in crude prices that could push the market — and ultimately production in the southeastern part of the state — to its lowest point in more than a decade.”

Citing numbers from the New Mexico Oil and Gas Association, the reporter noted that “at least 6,000 people are estimated to have lost their jobs in New Mexico since prices began to crash.”

Things are bad now, but they could get worse. Robinson-Avila highlighted the fact that Iran is slated to “aggressively ramp up its oil production next year as international sanctions are lifted following last summer’s deal designed to limit Iran’s ability to develop a nuclear weapon.”

Nearby, the United Arab Emirates wants to be a bigger player, too. Last week the U.S. Energy Information Administration disclosed that the UAE, “the world’s sixth-largest oil producer in 2014,” is “relying on the application of enhanced oil recovery … techniques in mature oil fields to increase production. Using EOR techniques, the government plans to expand production 30% by 2020.”

Lifting the nation’s ban on oil exports isn’t a silver bullet, but it would surely help shore up industry investment and employment in New Mexico. The House of Representative has voted to repeal the ban, as has the Senate Banking Committee. A vote awaits in the full Senate.

Unfortunately, New Mexico’s senators are inexcusably wishy-washy on banning the ban. Tom Udall is “studying the issue and the long-term ramifications for our economy, national security and environment,” while Martin Heinrich is in favor, but only “if it were paired up with, for example, some of the renewable tax credits … that have been so important to the growth we’ve seen in the renewables economy.”

Like passing a right-to-work law, lifting the ban on oil exports costs taxpayers nothing, but has tremendous value as a tool to “create or save” jobs. Are New Mexico’s senators really so dense that they cannot see how selling crude abroad will help the Land of Enchantment?

Forbes Dings New Mexico Business Climate

Mon, 2015-10-26 10:23

New Mexico’s business climate received negative reviews from Forbes Magazine in the publication’s latest ranking of business climate. According to the magazine, New Mexico came in a disappointing 47th. According to the report, “New Mexico ranks in the bottom six overall for a third straight year largely due to a weak labor supply and lousy current economic climate. New Mexico has the worst employment growth in the U.S. over the past five years. The state also fares poorly on quality of life metrics, a product of comparatively low school test scores and high crime.”

Among the metrics studied, New Mexico performed “best” in “business costs” at 27th (likely due to low wages). Unfortunately, low scores for 45th “labor supply” (likely the lack of a skilled workforce), 49th in economic climate (just the poor overall condition of the economy), and 43rd in “quality of life” which the magazine notes above.

Perhaps even worse for New Mexico is the fact that neighboring Utah, Colorado, and Texas all place in the top 10 making New Mexico even less attractive compared to its neighbors. Eight of the top 10 states in the ranking are “right to work” while 8 of the top bottom 10 (including New Mexico) are “forced-unionism” or non-right to work states. You can find the full listing in order here.

It is not a surprise, given each states’ relatively poor rankings from Forbes that New Mexico and West Virginia have the highest unemployment rates in the nation among US states.

‘Essential’ Corporate Welfare

Fri, 2015-10-23 12:58

In 1991, columnist George F. Will called the Essential Air Service (EAS) “just another entitlement. Congress says many small communities are entitled to air service even if market realities make it unprofitable for commercial carriers to provide it. This is foolishness; it is also routine.”

A quarter-century later, nothing has changed. Albuquerque Business First reports that Boutique Air “will begin offering three roundtrip flights a day between Albuquerque and Los Alamos.” (The airline already operates out of Carlsbad, Clovis and Silver City.)

Fares ($49, one-way) will be subsidized by the EAS. The U.S. Department of Transportation explains that the program provides “two to four round trips a day — with three being the norm — with 19-seat aircraft to a major hub airport.”

The Heartland Institute’s Eli Lehrer believes “there’s a good argument that [EAS], which cost a tick over $180 million last year, is the single most wasteful program in the government.” Even The New York Times, in a 2006 exposé, found that “the average number of passengers on each flight is about three.”

An empty spaceport, a money-losing rail line, and a taxpayer-supported airline — something is seriously wrong with transportation policy in the Land of Enchantment.

Unemployment: A Tale of Two States

Thu, 2015-10-22 17:44

Good news for Hoosiers: Governor Mike Pence has decided to use Indiana’s budget surplus to pay off the unemployment-benefits loan his state owes Washington.

The revenue became available because Indiana’s economy is on a tear. Unemployment has plunged to 4.5 percent, after reaching a staggering 10.9 percent in February 2010. (Even New Mexico’s joblessness didn’t get that bad during the Great Recession.) In the Foundation’s ongoing analysis of job creation in right-to-work states, Indiana, which repealed compulsory unionism in 2012, is a consistent performer.

As explained by the Indianapolis Star, “Pence had to make a decision by early November to pay off the loan, or businesses would have faced another year of increasing penalties to the tune of $126 per employee for 2016. State data show the average penalty employers paid was about $2,700 per year. More than 70 percent of businesses in the state employ fewer than 10 people.”

Unemployment in New Mexico, as Errors of Enchantment recently noted, is headed in the wrong direction. Job losses from the decline in the price of oil are taking a heavy toll. ConocoPhillips announced 65 layoffs in San Juan County earlier this month. And “green” power remains a persistent disappointment. DPW Solar is relocating its factory to right-to-work North Carolina, a decision that will eliminate 60 jobs in Albuquerque.

The Land of Enchantment doesn’t have an outstanding federal loan for unemployment benefits, but that’s not much of an achievement — only California, Connecticut, and Ohio still owe Washington for their bailouts. In August, the New Mexico UI trust fund’s balance stood at $233 million, far below its pre-downturn peak of $557 million. With the state’s economy stuck in stagnation, if not falling behind, pressure on the fund is sure to grow.

Update: The New Mexico Department of Workforce Solutions informs Errors of Enchantment that as of October 20, the Unemployment Insurance trust fund balance is $216 million.

‘Economic Development’ or Wishful Thinking?

Wed, 2015-10-21 13:12

Next week, the Albuquerque Journal reports, the “state will take part in an expo in Los Angeles … that aims to highlight opportunities for foreign investment in the U.S. aerospace manufacturing sector.”

The event is cosponsored by the Aerospace States Association, which New Mexico joined earlier this month.

But does the Land of Enchantment even qualify as an “aerospace state”?

As determined by the U.S. Bureau of Labor statistics, 0.654 percent of the nation’s aerospace establishments are based here. They account for 0.195 percent of total employment in the sector.

Jobs in NAICS 336411, “Aerospace Product and Parts Manufacturing,” have been stagnant in recent years (data are for March):

And let’s not even discuss the ongoing disaster that is “Spaceport America.”

This all appears to be another example of the state’s “economic development” brain trust putting the cart before the horse. Shouldn’t fundamental policy reforms — a right-to-work law, lower and simpler taxes, a better education system — be implemented before marketing New Mexico to an industry that, at this point, just isn’t interested?