With the 2015 legislative session about to end, it’s a near-certainty that right-to-work (RTW) legislation, which passed the House, will not be voted on in the Senate.
Given New Mexico’s struggling economy and declining population, it’s unfortunate that senators have rejected a powerful, and cost-fee, tool for job creation. Since the start of the year, the Rio Grande Foundation has been 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.”
Here are the findings for January:
Here are the findings for February:
In all, 27,389 jobs (80.6 percent) were to be created in RTW states. Only 6,605 jobs (19.4 percent) were planned for non-RTW states.
Notably, many projects involved shifts from non-RTW to RTW states:
* Brad Penn Lubricants moved production from Pennsylvania to Indiana.
* Mercedes-Benz USA relocated its corporate headquarters from New Jersey to Georgia.
* American Stair Corporation moved its operations from Illinois to Indiana.
Contrary to unions’ claims, the positions slated for RTW states are not limited to “McJobs,” but run the gamut, including healthcare, software/IT, manufacturing, finance, engineering, and logistics/warehousing — exactly the kind of opportunities New Mexico needs to reverse its economic woes.
In all, New Mexico’s four RTW neighbors are projected to gain 6,122 jobs, while non-RTW Colorado posted no project announcements.
Some 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.
A: When a majority of the Santa Fe City Council says it isn’t? I don’t know the real answer to that question, but if there’s any group that can raise revenues without raising taxes, the ever-creative liberals at the City of Santa Fe might just be it. See the Santa Fe New Mexican’s coverage of a new proposal to levy a 10 cent fee on each paper bag used by shoppers. A prior attempt by city councilor to tax paper bags was killed on concerns that it was illegal, but the Council has changed the name of the fee from “service fee” to “environmental fee” in an effort to skirt the law.
Interestingly, the City’s Assistant City Attorney Theresa Gheen, claimed that the new fee passes legal muster, but when asked to explain why the fee wasn’t an illegal tax, Gheen couldn’t. The fee hasn’t passed Santa Fe’s City Council yet and it only passed on 3-2 vote. There is still time to win the political argument against this tax increase, but if the tax hike is passed, there will definitely be a legal argument as well.
The end of the legislative session just a few days away, and appropriations for the new fiscal year — which starts July 1 — will soon be finalized.
For a broader perspective, the Rio Grande Foundation looked at the the trend in all state spending, adjusted for inflation, for the fiscal years 2003 to 2013. Figures are in billions, and come from the comprehensive annual financial reports issued by the Department of Finance and Administration. They include every dollar spent, from unemployment benefits to transportation, education to prisons, Medicaid to the the New Mexico Finance Authority.
In all, state expenditures rose by 30.2 percent, a sharp divergence from population growth of just 11.6 percent.
Stingy state government? Not exactly.
According to Gallup, New Mexico was among the worst states in the nation during 2014 for finding a job (only beating out Alaska and Connecticut).
Although the “right to work” bills seem to have been killed by liberals during the 2015 session, it is worth noting that 8 of the 10 best places for finding jobs are “right to work” while 8 of the 10 worst places for finding jobs are “forced-unionism.” I didn’t include Wisconsin in the “right to work” camp despite the significant reforms enacted under Gov. Scott Walker a few years back. “Right to work” only became law in Wisconsin last week. The full list can be seen below:
The City of Albuquerque has received some positive public relations in recent weeks for tackling the supposed issue of gender equity. Mayor Berry recently advanced new legislation to further the City of Albuquerque’s efforts to bridge the gender pay gap. In August of 2013 the City of Albuquerque was the first in the nation to adopt gender equity reforms at the municipal level.
Lest one believe that the City is just angling for public relations purposes, The Women’s Pay Equity Task Force completed its work in late 2014, and forwarded recommendations to Mayor Berry. Recommendations include establishment of a 5% incentive preference for businesses who can demonstrate that they are moving towards gender pay equity in their companies. Of course, with the makeup of the task force which included radical feminist Martha Burk (who has stated her support for mandatory birth control for men), any other result would have been a real shock.
But all of this is merely tiptoeing around the real questions: “Is there a gender pay gap and if so, how much is it?” For starters, no one who actually studies the issue believes, as does President Obama, that women make only 77% of what men do. According to economists June and Dave O’Neill who studied the issue for the American Enterprise Institute in 2012—nearly all of the 23% raw gender pay gap can be attributed to factors other than discrimination. The O’Neills conclude that, labor market discrimination is unlikely to account for more than 5% of the gender pay gap but may not be present at all.
So, the gender pay gap, if it exists at all, is about 5%. That is worth discussing and perhaps working to overcome, but one would have to more fully understand what, if any pay gap exists in businesses that do business with the City of Albuquerque. Opening up an entire new area to rules and regulations without adequate information could make the “cure” worse than the supposed problem.
After all, even President Obama hasn’t acted to resolve the 13% pay gap experienced by female employees at the White House.
In case you don’t already know, the Obama Administration has proposed yet another round of regulations, this time on ozone. The American Petroleum Institute says this set of regulations could be “the most expensive ever” with losses to New Mexico’s economy totaling $1.6 Billion Gross State Product Loss from 2017 to 2040 and 7,380 Lost Jobs or Job Equivalents per year. This is higher than for most states because of their impact on the oil and gas industries.
The EPA is collecting comments on the regulations through March 17. See the comments below the image below which illustrates the expected impact of the proposed regulations.
Dear Administrator McCarthy:
The Rio Grande Foundation is a New Mexico-based policy research organization based in Albuquerque, NM. Our state’s economy has struggled for several years now and we are deeply concerned about the Environmental Protection Agency’s (EPA) recently proposed rule to make ozone standards more stringent. These new regulations could have a negative impact on our state’s still struggling economy.
Ozone standards at the levels considered in EPA’s proposal could push virtually the entire country into “nonattainment” – where local communities face burdens to commercial and industrial activity not only vital to creating jobs, but also to providing tax revenue that support important local services like public safety and education. This proposal’s hardship to the American worker is real and immediate, while the benefits are unverified and uncertain. Therefore, Rio Grande Foundation strongly urges you to retain the current ozone standard when finalizing this proposal.
All of us and our families breathe the same air. We are proud that emissions of ozone-forming emissions have been cut in half since 1980, leading to a 33% drop in ozone concentrations. Moreover, EPA just updated ozone standards six years ago. These current standards are behind schedule due to EPA effectively suspending their implementation from 2010-2012 while the Agency unsuccessfully pursued reconsideration. This country can expect to see even greater reductions in ground-level ozone as states make up lost ground in putting the current standards into effect.
Indeed, states are currently committing substantial resources – both in time and money – towards achieving emissions reductions under those current ozone standards. Yet despite over three decades of cleaner air and before states can catch up with EPA’s delays in implementing existing ozone standards, EPA is now proposing a new stringent range of standards from 70 to 65 parts per billion that would bring vast swaths of the country into nonattainment. In some areas, this proposed range is at or near the level of background ozone that is naturally occurring or internationally transported, pushing even remote counties far from industrial activity into nonattainment. According to EPA data, even the Grand Canyon and Yellowstone National Parks would fail the proposed ozone standards.
If finalized, EPA’s proposed stringent ozone standards could limit business expansion in nearly every populated region of the United States and impair the ability of U.S. companies to create new jobs. EPA’s proposed range would immediately add red tape to companies seeking to grow even in areas that can attain those standards. The Clean Air Act carries even stiffer consequences for nonattainment areas, directly impacting economic vitality of local communities and making it difficult to attract and develop business. Increased costs associated with restrictive and expensive permit requirements would likely deter companies from siting new facilities in a nonattainment area. Making America a less attractive place to do business in this way risks shipping jobs overseas.
Companies building a new facility or performing major modifications to certain existing facilities resulting in increased ozone concentrations in, or near, a nonattainment area will be required to meet the most stringent Clean Air Act standard by installing the most effective emission reduction technology regardless of cost. As well, states are mandated to offset any ozone-forming emissions from new projects or projects undergoing major modifications by reducing emissions from other existing sources in a nonattainment area. If no party is willing to provide offsets, then the project cannot go forward. This offset can be a 2-to-1 ratio in certain situations. Nonattainment designation also has profound impact on infrastructure development vital to the business community. Beginning one year from the date of the nonattainment designation, federally-supported highway and transit projects cannot proceed in a nonattainment area unless the state can demonstrate that the project will cause no increase in ozone emissions.
These restrictions do not disappear when an area finally comes into attainment. Instead, former nonattainment areas face a legacy of EPA regulatory oversight. Before a nonattainment area can be redesignated to attainment, EPA must receive and approve an enforceable maintenance plan for the area that specifies measures providing continued maintenance of ozone standards and contingency measures to be implemented promptly if an ozone standard is violated.
Stringent ozone standards may have severe unintended consequences for public health. Studies show that by increasing the costs of goods and services such as energy, and decreasing disposable incomes, regulation can inadvertently harm the socio-economic status of individuals and, thereby, contribute to poor heath and premature death.
Paul J. Gessing
In today’s Albuquerque Journal, both the “For” and “Against” sides got to make their cases with Mark Mix of the National Right to Work Foundation in support and Connie Derr, Executive Director of AFSCME in New Mexico against.
Derr complains about the Koch brothers for several paragraphs and brings one salient point to bear: “average wages for all occupations in RTW states are $4 an hour less than in non-RTW states.”
Mix, on the other hand, brings myriad facts to bear citing New Mexico’s struggling economy and showing how Western RTW states are outperforming their non-RTW peers. He also notes that once cost of living is accounted for, workers in RTW states make more. Mix also illustrates how RTW empowers workers and makes unions more responsive to them while not “killing” labor unions.
For more on why unions hate RTW, check out this video:
(Albuquerque, NM) – A new website from the Rio Grande Foundation provides both accountability and an understanding of how the process is working or not working in Santa Fe. Particularly, the new website, www.michaelsanchezbillkill.com will track New Mexico’s Senate Majority Leader Michael Sanchez and his “iron-grip” on the agenda of the body he leads as legislators continue to meet during the State’s 60-day session. The site includes a count of (currently 148) and details on all of the bills that have passed the House without having been voted on in the Senate.
As of Wednesday, March 11, according to KOAT TV, only one bill, the legislative funding bill, had passed both houses.
Prior to the legislative session, Sanchez proclaimed his intent that the New Mexico Legislature “will not end up like Washington, D.C.” implying that the Legislature would see a spirit of cooperation and compromise that has not been seen in our Nation’s Capitol in recent years. Unfortunately, that has not been the case to date.
The public and media can use the new website to see how Majority Leader Sanchez is using his control over the Senate’s agenda to quash debate on a variety of important issues. While Rio Grande Foundation does not support or even take a position on several of the issues that are now awaiting action in the Senate, to the greatest extent possible one legislator should not be able to squash debate.
Examples of bills dying a quiet death in the Senate without a vote or debate are ubiquitous. During the 2011 legislatives session, for example, Sanchez killed a bill (HB 126) introduced by then Rep. Al Park, a Democrat, that would have made it a petty misdemeanor punishable by a jail term of six months or less to interfere with zoo animals. There is currently no crime relating to entering an animal enclosure at a zoo specified in New Mexico law.
After sailing through the House on a 64-0 vote and moving through the Senate, Sanchez provided the sole “No” vote in the Senate Judiciary Committee and killed the bill without a floor vote. Similar legislation has been introduced during the 2015 session.
Does New Mexico “need” to raise taxes on gasoline and diesel? Proponents of hiking the levies have gotten plenty of support on editorial pages lately. But their case isn’t as strong as they think.
* What about excessive spending?
There are two components of fiscal policy: revenue and expenditures. Politicians usually focus on problems with the former, while ignoring issues with the latter.
Let’s leave aside the the Rail Runner, on which New Mexico has squandered hundreds of millions of transportation dollars in the last dozen years.
A major driver of highway costs in New Mexico is the prevailing-wage mandate. According to Roxanne Rivera-Wiest, the president of Associated Builders and Contractors of New Mexico, prevailing-wage rates are “determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions.” But the vast majority of the construction industry in The Land of Enchantment is not unionized. Thus, highway projects in the state are unnecessarily expensive.
* Is revenue from the taxes inadequate?
There’s no question that highway spending is not growing in New Mexico. Here, in billions of inflation-adjusted dollars, is combined local and state spending on highways for the latest years available:
But the prime reason for stagnant highway spending is a poor economy. New Mexico was one of only six states to lose population between 2013 and 2104. Its unemployment rate is above the national average, and its labor-participation rate is disturbingly low. Less working means less driving. Less driving means less fuel-tax revenue. It also means that roads and highways are not sustaining the wear and tear imposed when the economy is strong. According to independent analysts, New Mexico’s highways are doing rather well. The Reason Foundation’s most recent ranking placed the state’s system at “4th in the nation in overall … performance and efficiency.” (New Mexico landed in the top slot for both “urban interstate pavement condition” and “rural interstate condition.”)
* “Pump prices for gasoline are low and projected to stay so for the near future.”
This claim, by Sen. Mary Kay Papen and Sen. Bill Soules, both of Las Cruces, is offered to support the claim that a gas-tax hike is affordable. It’s pure speculation. In the last month alone, the price of gasoline has risen by 10.6 percent. The cost of petroleum products can skyrocket overnight, given violence in the Middle East or a natural disaster in any oil-producing region. If the last decade has taught us anything, it’s that the price at the pump can rise just as quickly as it can fall.
In the rush to hike taxes on gasoline and diesel, important facts are being ignored. New Mexico’s taxpayers deserve a broader debate on highway spending.
Senator Heinrich addressed the New Mexico Legislature (from the looks of things, many legislators “boycotted” his presentation). Interestingly, Heinrich noted that New Mexico is losing jobs to Arizona and Texas. These are both Right to Work states, but Heinrich of course would never argue that such a law would be a big reason that those states are surpassing New Mexico.
And Heinrich obliquely attacked Right to Work saying that “we aren’t going to turn our economy around by passing laws that lower the wages of hard-working New Mexicans.” I agree with him, but in reading the speech I totally missed that as a reference to Right to Work. Thanks to the Journal’s Dan Boyd for catching that, but Heinrich’s facts are simply wrong. States that have such laws on the books are seeing income growth far faster than non-Right to Work states.
The article from former US Senator Fred Harris that appeared in the Journal over the weekend suffered from many of the same problems as Heinrich’s talk. Harris was clearly a far-left wing US Senator. His claim that Right to Work laws is completely unsubstantiated. According to the Fiscal Policy Institute, 5 of the 10 most unequal states are Right to Work and 5 of the least unequal states are Right to Work. There is no pattern.
Oh, and if Mr. Harris wants to find a real-world example of the positive impact Right to Work can have on wealth generation in a state, he need look no further than his home state of Oklahoma where personal income growth far outpaced the region in the wake of the law’s adoption in 2001.
Because of the industry he’s in (at least part time) as a video editor, CK who is better known as a comedian, must pay into various union pension and health care funds whether he wants to or not. The comedian also doesn’t do a whole lot of video editing as a fraction of his overall work activity, but according to the article, the judge ignored that in favor of the unions who said that without the rules, those employees could report they had worked the minimum hours necessary to qualify for a pension, and get the maximum benefit for the minimum required contribution.
Shouldn’t people be able to pay these fees if they choose to rather than being forced to do so simply by holding a particular job?
Of course the unions will likely argue that CK is a known member of the 1% and that he can afford to pay the fees for the benefit of his “brothers.” I’m sure that is true, but I’m sure CK is already paying some pretty high taxes living in New York (12.7% top state and local rate if you live in the City), isn’t that more than enough?
And while CK may be the latest individual convert to Right to Work, the latest state to do so is Wisconsin.
The residents of New Mexico’s most populated county are scheduled to be hit with a hike in the gross receipts tax. On July 1, Bernalillo County’s GRT will rise by three-sixteenths of a percent.
What’s been the general trend in the GRT for New Mexico’s most populated municipalities? The Foundation accessed state data on the 25 largest, and found that from the start of 2000 to the start of 2015, the GRT has increased by an average of 22.0 percent. Española saw the heaviest rise in burden (38.4 percent), Roswell the lightest (9.6 percent).
GRT burdens in the Albuquerque metroplex rose by an average of 25.3 percent:
GRT burdens in the southwest part of the state rose by an average of 20.6 percent:
GRT burdens in the southeast part of the state rose by an average of 19.4 percent:
GRT burdens in the northwest part of the state rose by an average of 23.0 percent:
Note: Anthony is one of the state’s 25 most populated municipalities, but since it was not incorporated in 2000, it was excluded from this analysis.
Good old UNM can always be relied upon to employ the most radical professors. Now, behold one Nathalie Martin who is apparently on a jihad to end “payday” loans.
Now, I would not choose to take out a high interest rate loan, but these loans are made to low income people who are struggling to pay their bills. In other words, loans to them are a risky proposition. And lets not forget that no one is forcing anyone to take out these loans. They are choosing them as their best option given the circumstances and this well-paid government bureaucrat is saying to poor people: this financial option you are choosing for yourself should be taken away because I know better than you do.
Talk about the very definition of modern “liberal” thought!
On the flip side, there is no doubt that lotteries are, from a mathematical perspective, at least as bad as payday loans. And the customer base of lotteries tends to be the same low-income demographic that takes out payday loans. But the State not only sponsors lotteries, but under a new bill that just passed the Senate, debit cards will now be accepted for lottery tickets.
I’m not sure under which circumstances wealthy liberals who know what is best for the poor should be able to write their preferences into law, but some consistency would be appreciated.
(Albuquerque) As the New Mexico Legislature moves into its final weeks and several important floor votes have been taken, the Rio Grande Foundation is launching an updated and easier-to-use “Freedom Index” legislative tracking tool. The goal of this tool is to review legislation impacting freedom in our state.
Lawmakers and the interested public can use the “Freedom Index” to get an independent, free market view of pending legislation. Moreover, voters can see whether their legislators are voting for free markets or for bigger government. Votes tallied are “floor” votes.
Users can see:
Our analysis will be available before final votes on those bills that are analyzed and can be used by both legislators, legislative staff and interested voters to debate the merits of a bill.
In short, the Index provides an excellent analysis of bills that will come before committees or a vote on the floor as well as tracking a legislator’s Freedom Index score. The public will find our Freedom Index to be a tool to hold elected officials accountable for their vote and to gain a better understanding of the legislation being proposed by the House or Senate members.
Rio Grande Foundation president Paul Gessing said of his organization’s new legislative tracking web site, “We are thrilled to add the freedom perspective to the legislative process in Santa Fe. For too long, the special interests have run wild with the voice of taxpayers and those who pay the bills too often pushed to the side.”
Now that the City of Albuquerque has successfully defended its construction of a river trail in the Bosque, it appears that Mayor Berry’s Administration is planning to begin construction on a far more ambitious and costly project. According to news reports, the City of Albuquerque is looking to begin construction of the $100 million bus rapid transit system down Central. This despite the fact that the City “hasn’t secured most of the estimated $100 million needed to building the project” according to the report. An astonishing 80% of that money is supposed to come from the federal government, but $20 million is no small potatoes and there are operating costs to be concerned with as well.
I attended an open house on this issue last summer, but have heard virtually nothing from City Council in terms of votes or allocations of funding.
And then there is this from Moody’s, the bond rating agency which came out earlier this month (Feb. 9, 2015):
Moody’s revised the negative outlook on its Aa1 rating of Albuquerque to stable in April 2014. We are skeptical that the city will retain its high-grade credit ratings over the intermediate term absent corrective action. Our greatest area of concern is the city’s pension liability. In its April report, Moody’s estimated Albuquerque’s adjusted net pension liability (ANPL) at USD 1.86bn, or 3.53x operating revenues, and noted that the average for the sector was below 1x.
Furthermore, according to Moody’s:
We expect Albuquerque’s unfunded pension liability to trigger more anxiety among credit analysts in the years ahead. In August 2014, Moody’s Analytics described the city as an economic “laggard” within New Mexico and in the west generally. Weak employment trends are the principal culprit. The government sector is a leading component of the economy (key employers include Sandia National Laboratory, Kirtland Air Force Base, University of New Mexico and the US Forest Service) but is not growing measurably. Any further cutbacks in military spending could represent a downside risk.”
In other words, Albuquerque’s economy stinks and it is too reliant on Washington (tell me something I don’t know). The City needs to reform its pension system and improve the local economy or see its credit rating decline, thus driving up the cost of borrowing and further increasing taxes.
Instead of tackling these nasty problems, our City is contemplating spending $20 million or more on a new bus system that will have a dubious impact on overall mobility and could negatively impact (both temporarily and in the long-term) businesses along Central.
HT: Dave Bruner
How the Birthplace of the UAW Gave
Workers Freedom and Improved its Economy!
The Rio Grande Foundation is hosting a reception with Vincent Vernuccio of, Director of Labor Policy with the Michigan-based Mackinac Center for Public Policy Research.
The reception will be held from 6:00 to 7:30pm on Monday, March 9th in a private room at Scalo Italian Grill.
Entrance to the reception is $15 per person which includes light appetizers and a cash bar. Scalo is located in Albuquerque at 3500 Central Avenue SE in Nob Hill.
Click here for registration form!
Reserve you spot now. Space is limited. Reservations can be made online for this exciting event.
The Mackinac Center is Michigan’s free market state think tank. Some 20 years before Michigan adopted a Right to Work law the Mackinac Center was plowing the way for such a law and researching what it might mean for Michigan to have such a law in place. Michigan adopted a Right to Work law in 2012.
The Mackinac Center’s research and publicity for the idea were considered both visionary and integral to the ultimate passage of Michigan’s Right to Work law.
Vernuccio has published articles and op-eds in such newspapers and magazines as The Wall Street Journal, New York Times, Investor’s Business Daily, The Washington Times, National Review, Forbes and The American Spectator. He has been cited in several books, and he is a frequent contributor on national television and radio shows, such as “Your World” with Neil Cavuto and Varney and Company.
Vernuccio is a sought-after voice on labor panels nationally and in Washington, D.C. A regular guest on Fox News channels, Vernuccio has been described by Stuart Varney as a “top union watchdog.”
He has advised senators and congressmen on a multitude of labor-related issues. He testified before the United States House of Representatives Subcommittee on Federal Workforce, Postal Service and Labor Policy.
Click here for registration form!
In case you missed the following cartoon from the Albuquerque Journal this weekend, it is worth a look:
For a more detailed understanding of how the Senate is holding up progress in New Mexico, check out our new website which tracks all bills that have passed the House and have not been acted upon in the Senate via Michael Sanchez Bill Kill.
Of course, I predicted this state of affairs prior to the legislative session.
This op-ed ran in The (Farmington) Daily Times on March 1, 2015.
On January 1, 2005, food bought at New Mexico’s grocery stores was excluded from the gross receipts tax, or GRT. In exchange for the break, the GRT was hiked on all other purchases.
A decade later, it’s clear that the tax shift was a mistake.
With several proposals before the legislature to reinstate the GRT on food, it’s time for an honest examination of how and why the well-meaning exemption failed.
Many of the state’s liberal activists and organizations opposed ending the food tax. In 2003, New Mexico Voices for Children argued that the “very poorest people will not receive the benefits,” because most “use food stamps, which are not subject to gross receipts taxes.” (A staggering 21.5 percent of our citizens participate in the federal program.) In addition, many household essentials such as soap, paper products, and toothpaste remained taxable. Utility and motor-fuels taxes were not touched, either.
Centrist organizations, too, doubted the wisdom of the switch. The Association of Commerce and Industry of New Mexico warned of “administrative and compliance burdens for … retailers and the Taxation and Revenue Department.” And the New Mexico Tax Research Institute predicted that “exempting food from gross receipts tax will narrow (the) base and may lead to higher gross receipts tax rates on other goods and services in the future.”
In 2013, Dick Minzner, a former secretary of the New Mexico Taxation and Revenue Department, and Brian McDonald, a former director of UNM’s Bureau of Business and Economic Research, concluded that the effect of the food-tax exemption “has been the opposite of that intended.” Why? By providing “only limited benefit to the poorest … of our households, combined with a tax increase on all other purchases, (it) probably made our tax system more regressive by most measures.”
Since the GRT reorganization did not include any requirements to cut public expenditures, rates continued to rise. As mentioned, in 2005, the non-GRT rate at the state level rose to 5 percent. Five years later, it jumped to 5.125 percent. Two years ago, local governments were allowed to hike their GRTs, and many did. Others, facing a stagnant economy and soaring healthcare and education costs, soon will.
A regularly-rising GRT is particularly pernicious to economic development. As William F. Fulginiti, executive director of the New Mexico Municipal League, put it, “A higher rate on business-to-business purchases of supplies, raw materials and equipment at every stage of production — known as tax pyramiding — has resulted in exponential tax increases that have made New Mexico uncompetitive.”
The best antipoverty program is expanding employment, and the low-income families proponents of the food-tax exemption seek to boost aren’t aided by an economy that does not provide plentiful, good-paying, jobs. The legislature is considering several bills to cut the state GRT, in exchange for restoration of the food tax. For example, SB274, sponsored by State Sen. John Arthur Smith, D-Deming, would return the state’s GRT to 5 percent, while allowing local government to once again apply their GRTs to food. It’s a small, but important step toward widening the GRT, which is riddled with well over 300 exemptions.
Ultimately, New Mexico must adopt a thorough tax-reform package — one that lowers the overall burden, reduces complexity, and lightens compliance costs for consumers and businesses alike. Until then, measures to broaden the GRT’s base make sense. Taxing food is a good place to start.
D. Dowd Muska (firstname.lastname@example.org) 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.
This Week on the Rio Grande Foundation
The “New Mexico Freedom Hour” is presented by the Rio Grande Foundation. It next airs on Saturday, February 28, 2015 from noon to 1:00pm on 770 KKOB AM.
On this week’s show, Gessing will be interviewing Dennis Roch on the recent activities of the New Mexico House of Representatives. Roch is from Logan, NM and represents several counties in Eastern New Mexico.
Roch is the lead sponsor of HB 75, the Right to Work bill which passed the House 37-30.
Roch, an educator, has also proposed important reforms to teacher licensure as well as worker’s compensation and licensure of dental therapists during the 2015 legislative session.
Listeners are encouraged not only to tune in and listen, but to call in with questions: 505-243-3333. The show is also available streamed online at www.770kkob.com.
Thanks for your interest and support.