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Why is New Mexico not realizing its potential?
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How New Mexico Taxes Tourists

Wed, 2015-06-17 15:54

The Land of Enchantment justifiably draws many visitors in search of fabulous weather, rich culture, fascinating history, and spectacular scenery. And the state’s politicians, similar to their counterparts elsewhere, see tourists as a means to boost government revenue.

For car rentals, the state imposes a tax of 5 percent, plus a surcharge of $2.00 per day. That’s generally higher than our five neighbors. (Utah’s tax is a flat 2.5 percent.)

There is no statewide hotel tax, but lawmakers permit local governments to levy their own, which “shall not exceed five percent of the gross taxable rent.” Big shock: The top rate is basically the standard. (Kudos to Moriarty, Logan, Hatch, and Corrales for going lower.)

Amazingly, New Mexico has no “meals tax.” But chowing down on green chile still costs tourists — like the locals, they pay the full gross receipts tax on all meals.

New Study: Sesame Street most affordable early childhood intervention ever

Wed, 2015-06-17 15:38

If there’s one thing liberals love it’s new government programs. More government spending leads to government agencies and employees, both of which are difficult to get rid of. Predominantly unionized government workers are even better because their dues can be used to elect politicians who further expand the size and scope of government.

These are some of the reasons why the left in New Mexico has rallied so strongly around universal pre-K.

Fortunately for taxpayers (albeit unfortunately for advocates of big-government), a new study has found that the television show “Sesame Street is one of the largest and most affordable early childhood interventions ever to take place.” See a shorter article on the new study from the Washington Post.

Among the study’s other findings:

• The introduction of Sesame Street to America’s preschoolers helped a generation of kids do better in school. When the show first aired in 1969, five million children watched a typical episode—the preschool equivalent of a Super Bowl every day.

• Boys and black, non-Hispanic children experienced the biggest improvements in school performance.

• Effects are largest for children living in economically disadvantaged areas.

Given annual expected costs (likely to rise dramatically) starting at $180 million annually, pre-k for all is a very expensive means of slightly (and temporarily) improving the educational outcomes of young children. Those are scarce dollars that could be used elsewhere, returned to overburdened taxpayers, or used elsewhere to improve educational outcomes. Obviously, Sesame Street is virtually free and even an educational campaign encouraging parents to expose their children to it could be introduced for pennies on the dollar of what a pre-k program would cost.

Unfortunately, many pre-k advocates want more government for reasons that have nothing to do with helping children. They are unlikely to be deterred by more cost-effective options.

NM Supreme Court wage decision will further drive up public construction costs, column

Wed, 2015-06-17 08:30

The price of roads and schools just went up in New Mexico. New Mexico is already a mini-“Davis-Bacon” state which means that taxpayers pay substantially more (or get 10-15% less) in the way of schools, roads, and other state-funded projects (like those funded in the recently-passed capital outlay bill). Under Gov. Bill Richardson, legislation was passed that increased the labor premium under “Davis-Bacon” for public works projects. The Martinez Administration had been attempting to soften the blow of that legislation, but the New Mexico Supreme Court ruled this week that her actions were illegal.

I recently wrote a column discussing New Mexico’s flawed capital funding process and how repeal of our “Davis-Bacon” law is key to improving our school buildings and roads. The article appeared at both Watchdog and NMPolitics.net.

Infrastructure and how to pay for it has been a topic of great interest recently. The Legislature returned to Santa Fe with the primary purpose of passing a capital outlay bill. Also, as David Abbey, Chair of the Public School Capital Outlay Council told legislators in testimony recently, New Mexico’s schools were facing serious funding problems.

Among Abbey’s concerns was the volatility of funding due to oil and gas prices. Abbey also said there are more needed projects than available funding. Abbey’s most newsworthy statement was that there are 16 schools that are in such poor shape they need to be torn down.

Notably, the problem is not inadequate spending. According to data from the National Education Association, New Mexico’s per-capita capital spending on K-12 schools was 7th-highest in the nation for the most recent school year on record.

There are immediate solutions to New Mexico’s infrastructure problems and they don’t require any more tax dollars. Unfortunately, liberal Democrats who, despite recent legislative losses, remain quite powerful would rather funnel tax dollars to supportive special-interest groups than adequately fund schools and other infrastructure needs.

The solution is for infrastructure to be built with labor paid at market rates. This is actually contrary to New Mexico law – known popularly as Davis-Bacon – which mandates that labor on such projects be paid a higher wage set by labor unions.

The Ohio Legislature actually repealed a similar law just on school construction. Now, instead of paying inflated wages on state-financed construction projects, schools in Ohio are built at market labor rates. The Legislature studied the impact that change had on school construction prices and found overall savings of 10.7 percent.

Other states are following Ohio’s footsteps. Nevada just eliminated prevailing wages on school construction while Indiana recently eliminated its entire “prevailing wage” law.

New Mexicans support paying market wages on construction projects. According to polling commissioned by the Rio Grande Foundation (carried out by Moore Information) earlier this year, 46 percent of New Mexicans want to get rid of the “prevailing wage” while only 35 percent support keeping the law in place.

Unfortunately, that 35 percent includes the Democrat-controlled New Mexico Senate, which failed to even vote on a bill – passed out of the House – reforming prevailing wage mandates on the books.

And then there is Santa Fe Mayor Javier Gonzales who, at a meeting in New York City, encountered anti-tax activist Grover Norquist, who happened to be talking about repealing Davis-Bacon laws. As reported by New Mexico Political Report, Gonzales took to the social networking site Twitter to express his outrage, saying: “Grover Norquist speaking now proposing killing Davis Bacon Act. Very hard to maintain composure and not YELL!” He followed that with: “Mind boggling to see the rhetoric up close!”

Of course, as is often the case with liberal opponents of commonsense reform ideas, Gonzales doesn’t bring up any cogent arguments in support of his position. That’s because it is extremely tough for anyone who views himself as a champion of the little guy to do the mental gymnastics necessary to support over-paying already well-paid construction workers at the expense of taxpayers and public school children.

New Mexico legislators had a real chance to improve conditions in our schools while also helping to improve conditions on roads throughout the state. Unfortunately, those who have controlled public policymaking in New Mexico for 60+ years, leading our state to the bottom of most good lists and the top of most bad ones, continue to hold veto power over much-needed reforms.

So, instead of making systemic policy changes that will make our precious tax dollars go further, benefiting more of our children, we get more of the same. Republicans and Democrats may have agreed to a special session, but that doesn’t mean that the session will really change anything for the better.

Gessing is the president of New Mexico’s 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.

New Mexico, the Region’s Growth Laggard — Again

Mon, 2015-06-15 16:33

Last week the U.S. Department of Commerce’s Bureau of Economic Analysis released another depressing finding for the Land of Enchantment. In 2014, growth in real gross state product lagged behind the performance of every one of our neighbors:

New Mexico’s 1.0 percent was less than half the rate for the nation as a whole.

It gets worse. In a new analysis, demographer Joel Kotkin puts Albuquerque at #86 of 93 medium-sized cities for “employment growth over the short-, medium- and long-term, going back to 2003,” as well as “momentum — whether growth is slowing or accelerating.” Of 258 small-sized cities, Farmington lands at a respectable #44, but Las Cruces (#184) and Santa Fe (#207) underperform.

Isn’t it time for an effective economic-development strategy for New Mexico?

Bus Rapid Transit: the latest “quick fix” for the local economy

Mon, 2015-06-15 09:54

Reliably, my old friend Winthrop Quigley was in the Albuquerque Journal helping sell the latest government scheme for “transforming” Albuquerque. There is so much nonsense contained in the article that it almost requires a point-by-point refutation. He starts with the canard that “Albuquerque has long worked to get businesses to move here, mostly by lowering the cost of doing business.” I’m not sure what Quigley means by that, but the gross receipts tax in Albuquerque has gone up by more than 20% since 2000. That is hardly going to lower the cost of business…

Anyway, Quigley shares a list of amazing things you will be able to do up and down Central once the BRT is in place. What he fails to mention is that the existing Rapid Ride bus (which in its current form is already a type of BRT) already serves much of the same area and can provide the exact same service.

And then Quigley talks up Cleveland and the wonderful things BRT has supposedly done for that town. Of course, famed urbanist Joel Kotkin has interestingly paired Cleveland and Baltimore as “Potemkin Villages” for their policies which divert tax revenue from one area of the city to another “redeveloped” tourist area. I’ve already discussed Cleveland’s myriad problems at some length.

The final point here is that, yet again, an advocate of the BRT makes every argument BUT the one you’d expect from an advocate of a new transit system…that the system will somehow make getting around easier and more efficient. In fact, Quigley doesn’t even argue that BRT would improve mobility, but he notes that “Motorists would have to be willing to tolerate slower speeds around Central.”

This project is right up there with the Rail Runner and Spaceport as a “more smoke than fire” economic development scheme. Rather than a clear path to success based on stated needs and goals, it is the scattershot “if you build it, they will come” approach. If you build a train or a spaceport you’ll generate prosperity. Unfortunately, in the real world, ballplayers don’t live in cornfields and the path to economic prosperity involves making New Mexico and Albuquerque an attractive place to do business.

New Beacon Hill Institute “competitiveness index” places New Mexico at 48th

Fri, 2015-06-12 12:15

The Beacon Hill Institute at Suffolk (Mass.) University publishes an annual index of state competitiveness. You can find the full report here. In the 2014 edition, New Mexico beat out only New Jersey and Mississippi. Regardless of whether one agrees with all aspects of this particular index, there are some interesting components once one gets beyond the aggregate ranking.

In terms of safety, New Mexico ranked 49th;

In terms of infrastructure, New Mexico ranked 42nd. This may seem like it points to poor road quality, but two of the three factors in the index were Mobile Phones per 1,000 (we came in 47) and High-speed lines per 1,000 (we came in 48);

In terms of government openness, New Mexico ranked 46th, but this is not an indicator of government openness. Rather, the rankings were based on the percent of population born abroad, exports per capita, dollars (we ranked 49th), and incoming foreign direct investment per capita, dollars 47.

Our best single factor was in the “Environmental policy subindex” in which our toxic release inventory as measured in pounds per sq. miles was ranked 5th overall.

It is an interesting report. 48th is not where we’d like to be, but a lot of the indicators are outcome-based as opposed to public policy based.

Summertime, and the Air Quality is Healthful

Fri, 2015-06-12 10:51

Summer means cookouts and bicycle rides and softball games. For those in the Albuquerque region, outdoor activities have an added bonus: clean air. In conducting research on driving and transit in the area, the Foundation ran across an interesting fact. Despite surging population growth and a huge number of new vehicles on the roads and highways, between 1984 and 2014, air pollution plummeted:

Carbon Monoxide (2nd highest non-overlapping 8-hour average): -92 percent

Sulfur Dioxide (2nd highest 24-hour average): -78 percent

Nitrogen Dioxide (98th percentile of the daily max 1-hour measurement): -40 percent

In the American Lung Association’s “State of the Air 2015″ report, “the Albuquerque-Santa Fe-Las Vegas area ranked the 16th cleanest of [220] U.S. metro areas.” In the future, air quality will only get better. David T. Hartgen, emeritus professor of transportation studies at the University of North Carolina, recently noted: “Improvements in conventional engines, along with alternatives such as fuel cells, electricity, natural gas and better batteries, will significantly increase average fuel efficiency and reduce emissions.”

Bregman, Jeter, and Taxes

Thu, 2015-06-11 15:45

Kudos to Albuquerque’s Alex Bregman for being drafted by the Houston Astros with the second pick overall in the Major League Baseball draft. Hopefully he gets to the big leagues and makes lots of money. This income, if he stays with the Astros, will not be taxed at the state level potentially saving himself a great deal of money.

Of course, athletes, while facing heavy taxes, often are very smart about shifting their activities around in order to keep more of their hard-earned money. See this story about Derek Jeter who fled high tax New York in favor of zero income tax Florida as soon as his playing days were over.

Golfer Phil Mickelson is just one other prominent athlete to consider changing residency in order to retain more of their earnings.

Why do I bring up New Mexico’s own Alex Bregman in all this? For starters, his dad was recently chairman of the New Mexico Democratic Party, an organization that in recent years has failed to grasp the ways in which taxes influence where economic activity occurs.

It remains to be seen what Alex’s future holds, but if he does make it big he’ll soon learn how governments set out to take as much of his money as possible. More than likely, he’ll also become increasingly sensitive to government efforts to take more of his hard-earned money.

For a detailed analysis of how people — no matter their profession — shift their productive efforts to those states that allow them to keep more of their own money, check out the detailed data made available at: How Money Walks.

Data show New Mexico’s government workforce is large, well-paid

Wed, 2015-06-10 10:09

Scott Moody over at Key Policy Data puts together a variety of data on states and government employment. He recently posted some data on New Mexico at his blog.

For starters, New Mexico has an extremely large number of government workers state and local workers relative to those in the private sector (this doesn’t even include federal workers and contractors).

Our government workers are relatively well-compensated:

These and other data calculated by Moody lead New Mexico to have the 5th-least productive government workforce in the nation. The next time some advocate for bigger government claims that New Mexico’s government workforce has been “cut to the bone” or that taxes need to be raised, perhaps this data will come in handy.

Trouble Along the Border

Mon, 2015-06-08 14:11

For evidence of the problems inherent in government-planned “economic development,” look no further than the controversy over a report released last week by the Borderplex Alliance.

The organization, which is “dedicated to promoting economic development and prosperity in the Ciudad Juárez, El Paso, and southern New Mexico region,” hired a consultant to produce the 155-page “2015 Strategic Recommendations.”

El Paso County Judge Veronica Escobar is upset that the authors, Austin-based Angelou Economics, didn’t get enough input from locals. (“It makes me question the thoughtfulness of the recommendations.”) She’s also angry over the incongruity of the report stressing the appeal of the region’s “abundant low-cost workforce” and advising that the area needs to address its “persistent low wages.”

Jerry Pacheco, founder of the rival Border Industrial Association, is unhappy that his entity was on the list of “Borderplex Alliance Regional Collaborators.” (“We told them we don’t want anything to do with their study.”) According to the El Paso Times, Pacheco is steamed that “the Borderplex Alliance’s … proposed plan conflicts with a number of others being compiled in New Mexico, including a huge planning project in Doña Ana County.”

A commenter on the Las Cruces Sun-News‘s website took exception with the failure to include the Organ Mountains-Desert Peaks National Monument: “The report is way off base. For instance, to attract tourists it does not even mention the national monument. Instead it heralds the development of an Old West theme park. This is such a bad idea.”

The best economic-development strategy remains an aggressive effort to limit government’s intrusiveness and cost, while promoting education-freedom measures that generate workers with widely diverse skills.

Economic-development bureaucracies are adept at spending local, state, and federal revenues on studies, commissions, and conferences. Creating wealth and jobs? The results are consistently unimpressive. For the record, the Bordeplex Alliance’s most recent investment announcement — an expansion of Douglas Steel Supply’s El Paso facility — was issued more than four months ago.

The Rail Runner: the hole that keeps on getting deeper

Mon, 2015-06-08 11:31

Fresh off my response to Councilor Rey Garduño on the Rail Runner, readers of the Albuquerque Journal were treated to the latest bad financial news about the train. Specifically, new federal regulations called positive train control which has received a great deal of attention in the wake of a Philadelphia Amtrak crash, is set to cost the State and the Rail Runner another $50 million.

Interestingly, while so many on the left think the government is there to protect them, New Mexico is now lobbying the federal government abandon the regulation. Funny how government bureaucrats can be so insensitive to regulations when they are imposed upon average businesses, but will use their tax-funded positions to postpone costly regulations facing them.

Unfortunately, the $50 million is just the start. According to the article, the train also faces $25 million worth of “midlife” refurbishing.

Perhaps the silver lining is that, with all of these expenses piling up, Gov. Martinez may finally realize the wisdom of the statement that when you are in a hole, the first thing to do is stop digging.

Contrary to the alleged wisdom of one of today’s syndicated columnists, the American rail system is indeed robust and functional. The component that works is relatively un-subsidized and transports massive amounts of freight. Unfortunately, leftist supporters of “trains” don’t really care for freight rail. They want to use your tax dollars to support passenger rail no matter what the costs. As the following chart shows, passenger rail subsidies are actually quite high, much higher than roads and air travel. How much is enough subsidy for trains? I don’t think they have an answer to that question. The answer, like their answer to most questions about how much spending is enough is always “more.”

Rey Garduño is just wrong on the Rail Runner

Thu, 2015-06-04 09:30

It figures that outgoing Albuquerque City Councilor Rey Garduño is a fan of the Rail Runner. He outlines the supposed reasons for his passenger rail fetish in today’s Albuquerque Journal.

Unfortunately, whenever he discusses specific justifications for the train, he turns to generalities like “Ample evidence exists that a high-quality transit system can make a region more competitive in attracting new workers and businesses.” What evidence? Is transit a cause or an effect? What did the Rail Runner do to boost New Mexico’s economy or that of the Santa Fe/Albuquerque corridor? Of course, he admits that the Rail Runner had no impact in the very next paragraph.

Garduño ultimately embarks upon a series of half-baked arguments as to why roads are MORE subsidized than transit which is silly as the chart from the American Dream Coalition confirms (remember that the Rail Runner is THE MOST HEAVILY SUBSIDIZED transit system in the nation in terms of operating costs (less than 10% fare box ratio) so it is going to be much worse than other commuter rail systems:

And lastly, there is the utility of roads vs. transit. Transit is a perk or service, not a necessity. No housing development or business will locate where you ONLY have transit and no roads. You can’t get emergency services from a train. You can’t make deliveries on the Rail Runner. Roads are a necessity. In sparsely-populated New Mexico, transit is an expensive luxury. If the Big I was destroyed tomorrow. It’d have to be rebuilt starting the next day lest the region’s economy fall into a steep decline. If the Rail Runner went out of service for good there would be little to no impact on our economy.

Unfortunately, Garduño who represents a poor and economically-distressed area, seems to believe that using taxpayers dollars for wasteful luxuries is a great idea.

New taxes aren’t necessary to improve our roads

Wed, 2015-06-03 12:45

The article below ran at the newly-relaunched NMPolitics.net which is managed by the indefatigable Heath Haussamen. We are thrilled to have Heath back at the helm of NMPolitics.net. Check out the site for more content provided by the Rio Grande Foundation and other political and policy voices from across the political spectrum.


During the 2015 legislative session various proposals were put forth, ostensibly with the goal of improving New Mexico’s roads. One proposal by Senate Finance Committee Chairman John Arthur-Smith would have increased the State’s gas tax by fully 10 cents per-gallon while tying future increases to inflation.

Smith’s plan, if passed, would have represented a 59 percent increase in New Mexico’s gas tax (from 17 to 27 cents per-gallon). It is one thing to claim that we need to spend more on infrastructure and to raise revenues accordingly. It is another thing entirely to claim, as Smith did in an opinion piece, that spending an “additional $140 million annually for road jobs” will be an economic boon.

Before we hike taxes and spend another $140 million on roads, it is important to ask whether New Mexico needs more money for roads in the first place. That is an open question. Certainly, anyone who drives around New Mexico has their “pet” pothole, bottleneck, or bumpy road that they wish could be addressed, but relative to other states, New Mexico’s roads are pretty good.

According to the Reason Foundation’s (Reason is a free market organization that does a great deal of work on infrastructure issues) latest national analysis, New Mexico’s highway system ranked 7th among the 50 states for performance and cost-effectiveness. Each of our neighbors scored lower. New Mexico’s best marks came in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th), and rural arterial pavement condition (6th).

Of course, our roads can always be better, but that doesn’t necessarily require higher taxes. We could use the resources we have more efficiently. The simplest way to make our road budget go further would be to eliminate New Mexico’s “Davis-Bacon” law which artificially raises labor costs on public works projects. The House passed a reduction in those rates during the 2015 session. It should eliminate “prevailing wage” laws entirely and allow construction workers to be paid market wages.

A report done by Ohio’s Legislature found that eliminating a similar provision on school construction in that state led to a 10.7 percent reduction in the total cost of each school. Similar savings would likely be experienced by paying market wages on roads as well. Eliminating New Mexico’s “prevailing wage” would give us 15 percent more road construction and maintenance.

This is the “low-hanging-fruit” of better roads (and potentially schools) in New Mexico.

Putting the Rail Runner out of its misery is admittedly more of a challenge, but it is equally necessary. The Rail Runner diverts approximately $50 million annually (between operating and infrastructure expenses) away from roads to a train that forms a miniscule portion of our State’s transportation network in terms of trips taken. Shutting down the train immediately could return nearly $25 million to the road fund. Far from being a radical position, Clifford Winston, a transportation expert with the center-left Brookings Institute recently recommended just such a course of action.

Unfortunately, the infrastructure expenses are “sunk” costs, but making the hard choices now will ensure that further operating costs are not incurred. After all, rails, engines, and train cars must be replaced at some point.

Lastly, it is time for New Mexico policymakers to embrace private sector involvement in the provision of infrastructure. Many “turnpikes” especially in the Eastern United States were built and maintained privately. Private companies manage roads in the Washington, DC suburbs and in Southern California to name just two areas that have seen private investment ameliorate overwhelmed transportation systems. New Mexico’s Legislature should at least set up a framework for greater private sector involvement in infrastructure provision through “Public Private Partnership” legislation.

Leveraging private dollars for transportation projects can help state and federal tax dollars go further, thus giving motorists more and better roads for the dollar.

The Legislature may meet for a special session to discuss infrastructure, specifically the capital outlay bill that failed at the end of the session. Repealing New Mexico’s “prevailing wage” law would immediately allow for more needed projects to be built in our state.

We all benefit from high quality infrastructure even if we never get behind the wheel of a car. New Mexico’s roads are pretty good, certainly not in a “crisis” necessitating a massive tax hike, but there are things we can do to make sure the dollars we invest actually improve mobility.

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

A Bad Idea for the BioPark

Tue, 2015-06-02 18:50

The Albuquerque Journal isn’t as anti-tax as its liberal critics believe — it favors a hike in New Mexico’s gas tax, for example — but today’s editorial convincingly demolishes the case for a GRT increase dedicated to the BioPark’s “infrastructure.”

The paper notes that traditionally, “capital projects are financed with bonds, which are paid off with property taxes, earmarked for specific projects, run for a set duration and then retired.” It also suggests other revenue-raising tools, such as raising the admission fee for adults, given that the current charge “is $3 less than El Paso charges, $8 less than Denver and $11 less than Phoenix.”

One issue the Journal didn’t examine is the long-range trend of Albuquerque’s GRT. Between January 2000 and January 2015, it rose by 20.4 percent:

Other cities and towns in the region imposed stiffer hikes, but don’t forget that Bernalillo County’s GRT increase goes into effect in less than a month.

Government created the Internet? Not so much

Mon, 2015-06-01 19:44

Charles Clements (“Rules keep Wall Street from stealing Internet,” May 24) offered plenty of liberal bromides in his letter in response to my column. (“Internet regulation and the NM Technology Corridor,” May 19).

But the claim that “the Internet exists today because of publicly funded research and infrastructure creatively used by thousands of ‘non Wall Street’ riff raff” should not go uncorrected.

The belief that the Internet is a product of government foresight and “investment” is a sacred tenet of the left, but that doesn’t make it true. The real story is more complex. As economist Michael S. Rozeff observed, the Pentagon’s “ARPANET project (started in 1969) … occurred because of earlier inventions by capitalists.”

Errata Security’s Robert David Graham wrote that the Internet “is a trillion dollars of fiber optic cables laid in the ground and under our oceans. Fiber optic technology was developed by corporations, such as Corning Glassworks, not the government. The trillion dollars in capital that was used to pay for laying cable came from Wall Street, not the government.” In addition, Graham noted that “today’s Internet is based on TCP/IP — a networking standard the government tried to kill off.”

Perhaps The Wall Street Journal’s digital-media columnist L. Gordon Crovitz put it best: “The private sector played a huge role in creating the Internet. And you may recall that liberals objected strongly in the 1990s to the idea that it should become legal for everyone to use the Internet, not just academics and the military. The modern Internet flourished only after it was deregulated and opened up for all to use.”

Dowd Muska, Research Director, Rio Grande Foundation, Albuquerque

RGF engages government entities that “partner” with left-wing organization

Mon, 2015-06-01 15:21

I recently blogged about the organization Bernalillo County PLACE Matters and their op-ed that appeared in the Albuquerque Journal.

As I wrote at the time, I noticed that the “partners” of the left-wing “Place Matters” organization included several taxpayer-financed government entities including:

New Mexico Department of Health;
UNM Health Science Center
UNM School of Architecture and Planning
Valle de Oro National Wildlife Refuge

I sent out a letter similar to the one below to each of the agencies today. This is not a trivial matter. The Rio Grande Foundation does not take government funding or support on principal. Just because an organization supports bigger government doesn’t mean that those government agencies should in turn be seen or should lend their support to political efforts to bigger government:

June 1, 2015

Ms. Geraldine Forbes Isais
Dean
School of Architecture and Planning
MSC 04-2530
University of New Mexico
Albuquerque, NM 87131-0001

Dear Ms. Forbes Isais:

I am sending this letter to alert you to what I believe may be an inappropriate use both of taxpayer dollars and your organization’s name in support of a political cause.

I read with interest the enclosed article written by Jacque M. Garcia, coordinator at Bernalillo County Place Matters. The article appeared in the Albuquerque Journal Thursday, May 28, 2015. The article was inherently political in nature and included not-so-veiled attacks on both Gov. Martinez and Albuquerque Mayor RJ Berry.

That is why I was troubled, when I went to the website of Bernalillo County Place Matters, to see that the School of Architecture and Planning was listed as a “partner” of the organization. http://www.nmhealthequitypartnership.org/about-us/bernalillo-county-place-matters/partners

It is one thing for liberal non-profits to publicly support a political agenda. We at the Rio Grande Foundation advocate for a free market policy agenda. Voices for Children and the Southwest Organizing Project advocate the opposite. However, it is disheartening and concerning that a taxpayer-funded agency like the Department of Health would line up beside left-wing advocacy organizations in advocating on behalf of a liberal political agenda.

This isn’t merely because we disagree with their perspective as explained in the article, but because government agencies should be serving the taxpayers, not lending their names and resources in support of public policy issues.

I hope this was merely an oversight and that this issue can be cleared up shortly. If you need to contact me for any reason, please do not hesitate to call me at: 505-264-6090 or email me at pgessing@riograndefoundation.org.

Sincerely,

Paul J. Gessing
President

In May, a Flowering of Jobs in RTW States

Mon, 2015-06-01 10:19

“Massacre” isn’t descriptive enough.

The Rio Grande Foundation is tracking 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.”

Last month, of 19,530 projected jobs, 18,100 — 92.7 percent — were slated for right-to-work (RTW) states:

Eleven domestic companies based in non-RTW states disclosed investments in RTW states. Just two announcements went the other way.

There were two domestic relocations from compulsory-union to RTW states: the District of Columbia to Florida, and California to Texas. And Japan’s Kubota moved its headquarters from California to Texas.

It was a big month for foreign direct investment. Here again, the disparity was wide. Thirteen investments were made in RTW states, but only three in non-RTW states.

It’s important to note that Kentucky continues to attract a wildly disproportionate share of “non-RTW” projects. In May, a whopping 44.5 percent of non-RTW jobs were located in Kentucky, which is experimenting with county-level RTW ordinances.

For the year, Area Development listed announcements of 78,985 jobs, with 84.1 percent slated for RTW states.

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases by elected officials and economic-development bureaucracies.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Intrastate relocations were not counted, interstate relocations were.

Obamacare changes could hit home in New Mexico

Fri, 2015-05-29 12:51


The U.S. Supreme Court is poised to issue its decision in King v. Burwell in June. The ruling could have tremendous consequences for the health care law commonly known as Obamacare – and more importantly, it could have a huge impact right here in New Mexico.

King v. Burwell was argued before the Supreme Court in March. The case hinges on an interpretation of the Obamacare law. The plaintiffs argued that the text authorizes premium subsidies for people in “exchanges established by [a] State.” A separate section describes the creation of a federal exchange by the Secretary of Health and Human Services for states that do not create their own exchanges.

An IRS rule issued in 2012 allowed premium subsidies to be paid through exchanges established by the secretary. The plaintiffs argue these subsidies are illegal, since there is no congressional authorization for the spending. If the justices concur, states that have not created exchanges under the law could see some dramatic changes.

However, New Mexico has a “hybrid” exchange. So the first question is whether our state will be impacted by a ruling for the plaintiffs. Amy Dowd, director of the New Mexico Health Insurance Exchange, has argued that we won’t be impacted.

Michael Cannon, a health care expert at the libertarian Cato Institute, disagrees. The liberal Kaiser Family Foundation also believes that New Mexico could be impacted by a finding for the plaintiffs.

What would such a ruling mean for New Mexico and what should policymakers do in that event? According to Kaiser, 72,280 New Mexicans could lose their subsidies, and could thus have to pay the full cost of their health care. This may be an undesirable outcome for these individuals, but those costs would no longer be borne by taxpayers.

Subsidies are not the only thing that could be at stake in a ruling for King. States that have not set up state exchanges would also find themselves exempted from several mandates within the law.

A report by the American Action Forum found that 87,296 New Mexicans would be exempted from Obamacare’s individual mandate and would no longer face average annual penalties of $1,166.

The same report found that 5,790 New Mexicans would be added to the workforce under a finding for the plaintiffs as a result of small and medium-sized employers being exempted from the employer mandate.

Obviously, there will be significant confusion in the wake of a decision in favor of the plaintiffs. Tremendous pressure will be put on states to set up exchanges in order to tap the federal subsidies. Ed Haislmaier of the Heritage Foundation recommends that states should not bow to such pressure because they “gain no meaningful flexibility from administering the exchanges while their long-term costs fall squarely on the states, as any state implementing a state exchange must develop its own revenue source to fund the exchange’s annual operations.”

Others, like Cato’s Cannon, argue that states should weigh in politically by calling on Congress to repeal Obamacare. In the meantime, he advises, states should offer transitional assistance to those with preexisting conditions that lose subsidies, and fund such efforts by withholding any funds they otherwise would have sent to the federal government, such as Medicare Part D claw-back payments.

Lastly, Cannon thinks states should pass laws showing what they would do with their insurance markets once Obamacare is lifted. This might include passing contractual medical malpractice reform to allow patients and providers to agree, in advance, on how the patient will be compensated in the event of simple negligence on the part of providers.

Supporters believe that such a model offers potential improvements in the areas of costs, patient preferences, the pursuit of more efficient liability rules and quality of care.

If the plaintiffs in King v. Burwell prevail, New Mexico’s policymakers must be prepared to offer paths forward that will actually accomplish the stated, but woefully unachieved goals of Obamacare: improving the quality and reducing the cost of health care.

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.

Española, NM, border economics and Santa Fe County’s minimum wage

Fri, 2015-05-29 10:37

Border regions are fascinating because they often highlight more clearly the impact of good and bad public policies. After all, often, border areas have similar population and geographical characteristics, thus clarifying for the public that economic policies are the ultimate arbiter of economic success (or failure). Nowhere is this more stark than the Korean border where the socialist North is completely dark at night and the capitalist South is bright and active:

Rio Grande Foundation also did some in-depth analysis of border economics a few years ago, but today I’m writing about Española which happens to be partially located in Santa Fe County (which recently raised its minimum wage to $10.66 an hour from just $7.50). Now, according to the Rio Grande Sun, two fast food restaurants in the Santa Fe County portion of town have closed.

Now, as reported in the article there are additional restaurants looking to open (or re-open) in Española, but it would seem likely that these restaurants and other businesses are going to do their best (within the scope of traffic and land-use patterns) to locate themselves outside of Santa Fe County.

HT: Samuel Z. LeDoux