Ball State University’s Center for Business and Economic Research has more bad news for the Land of Enchantment.
The center’s “2015 Manufacturing & Logistics Report Card” analyzes “how each state ranks among its peers in several areas of the economy that underlie the success of manufacturing and logistics. These specific measures include the health of the manufacturing and logistics industries, the state of human capital, the cost of worker benefits, diversification of the industries, state-level productivity and innovation, expected fiscal liability, the state tax climate, and global reach.”
The report card’s metrics “were chosen as those most likely to be considered by site selection experts for manufacturing and logistics firms, and by the prevailing research on economic growth.” New Mexico flunked five of the nine categories:
Manufacturing Industry Health: F
Logistics Industry Health: F
Human Capital: F
Worker Benefit Costs: C
Tax Climate: C
Expected Liability Gap: D
Global Reach: F
Sector Diversification: F
Productivity and Innovation: D
Job-training “incentives,” increased spending on government schools, GRT deductions, and committing more severance-tax revenue to “critical community infrastructure”? The strategy isn’t working. It’s time for something different.
Solar ranks right up there with mom and apple pie among many who believe that it is the power source of our future. Unfortunately, a recent incident right here in Albuquerque, highlighted an under-appreciated problem with solar panels: fire. In fact, the Taylor Ranch Community Center which is not far from my house had a fire on Friday that seems to have been caused by the panels on the building’s roof (per KOB TV below).
Although an exact understanding of the scope of solar panel fires was difficult to find, it is a relatively common problem caused by manufacturing flaws. Solar panel fires can be particularly challenging for first-responders because the panels may remain electrified even as they (or the building burns).
Thankfully, in the case of the Taylor Ranch fire, there is a fire house literally across the street and apparently the fire fighters were on the spot quickly, but the gym floor is likely ruined. I wonder how a fire like this impacts the net carbon situation when it comes to these solar panels?
The ABQ Journal’s Winthrop Quigley has been on a real roll recently. After successive articles in support of bus rapid transit, he claims in his latest column that “Medicaid Could Boost New Mexico’s Economy.” Of course, rather than concerning himself with the additional burden that paying 10% of the program expansion’s costs ($120 million annually) starting in 2017, he simply concludes that Medicaid will make our work force healthier and economic growth will more than make up for the added expense. Really?
Apparently, Quigley hasn’t heard of the single most important study of Medicaid’s impact on health outcomes from Oregon. The study “represents the first use of a randomized controlled design to evaluate the impact of Medicaid in the United States.” According to the study’s authors:
1) Medicaid has no statistically significant effect on employment or earnings (there goes Quigley’s economoic argument right there);
Of course, Medicaid expansion did result in even more spending on other government programs:
2) Medicaid increases receipt of food stamps (SNAP);
3) Medicaid coverage increased use of the emergency department across a broad range of types of visits and subgroups.
These are all quotes taken directly from the “findings page.” There is healthy debate over what, if any health and mental wellness benefits Medicaid provides and whether those are worth the vast costs. What is not debatable (according to Oregon’s “gold standard” study) is the thesis that expanding Medicaid will not “boost the economy.” That thesis which Quigley never once mentions in his defense of Medicaid is completely unsubstantiated by real-world evidence to date.
Of course, basic logic would also call into question the idea that putting more people on government welfare will be a good thing for the economy. After all, those dollars aren’t created out of thin air, they are taxed and borrowed by government. That would be a whole different level of critical thinking about the Keynesian consensus.
Two Albuquerque city councilors have drafted the “Fair Workweek Act,” which would mandate that businesses offer nonsupervisory employees paid sick leave. It would also require the posting of schedules “three weeks in advance,” “modest compensation for last-minute schedule changes,” and “adequate rest time between shifts.”
Really? Are more regulations the answer to Albuquerque’s ailing economy?
The city has 17,100 fewer jobs today than when it reached its pre-Great Recession employment peak in March 2007. That’s not a misprint — it’s been more than eight years, and Albuquerque has yet to climb back to the number of jobs it had nearly two years before Barack Obama assumed the presidency.
New Mexico’s political establishment continues to cling to entertainment-industry tax credits as critical “economic development.” (The evidence strongly suggests that subsidizing Hollywood doesn’t boost the state’s economy, but let’s leave that trifling fact aside for now.)
This week, two states decided that movie-and-television corporatism isn’t for them.
Alaska’s governor, staring down a state fiscal crisis, signed legislation that repealed the Last Frontier’s program. State Sen. Bill Stoltze (R-Chugiak) noted that the tax credits had “done some good things to different communities around Alaska,” but “had a pretty heavy cost to our treasury.”
On Thursday, the Detroit Free Press reported that “the state Senate voted … to end incentives for the film industry and phase out funding for the state’s film office and the House quickly concurred in the action.” In comments that surely enraged noted economist and public-policy analyst Mitch Albom, Rep. Dan Lauwers (R-Brockway Twp.) declared that it was time to “time to drop the curtain on this failed experiment,” in favor of “funding our transportation system.” It’s now up to the Wolverine State’s governor to decide whether to follow legislators’ lead.
Nothing symbolizes water in New Mexico like Elephant Butte lake. With a relatively wet May and June, I got to thinking both about the Butte and whether its water levels had rebounded much and I also was contemplating the supposed connection between climate change and the recent drought we experienced in New Mexico.
This is the kind of thing I think about sometimes when I’m out walking by the Rio Grande and see it so full and running as strong as it was recently.
So, I went online to find out how much Elephant Butte Lake had rebounded with the recent, relatively wet spring and early summer. The answer is available at this website, but is summed up in the chart below and the answer is that the lake has rebounded a little, but not much:
The really fascinating thing is to look back at historical Lake levels which have fluctuated dramatically over the years. As seen below, the Lake was quite full all the way from about 1980-2004. It is currently at a far lower level (18.6% full to be exact), but this is by no means a historically-low level even going back to the early 1920s.
What does this all mean? To me it seems to indicate that while droughts will happen — we live in a desert after all — using Elephant Butte Lake as a proxy for water supplies in New Mexico, it would seem that there is not a great correlation between climate change/global warming and water. I am not a scientist. If Elephant Butte Lake (which is of course managed) is not a reasonable proxy for water supplies in New Mexico, I’d be happy to know. The lake does receive water from a majority of New Mexico’s land area as seen below:
The Albuquerque Journal’s Winthrop Quigley struck again this morning with a follow-up article on the City of Albuquerque’s proposed bus rapid transit system. Apparently I wasn’t the only reader who reacted negatively to his original piece, but rather than contemplating his point of view further, he simply doubled-down on his support.
Notably, after two columns, Quigley has still not even made the argument that BRT will improve mobility in the Central corridor. It’s all about “redevelopment” and making Albuquerque “hip” in order to attract young people. Contrary to Quigley’s point, spread out cities can be attractive to young people. I don’t hear Phoenix, Las Vegas, Dallas, or Houston complaining that they can’t attract young people. In fact people are leaving New Mexico to take well-paying JOBS in those cities. Quigley just doesn’t get it.
There’s a heaping helping of disinformation throughout the piece, but what really ticks me off is the last line when he rights “Berry, Benton, UNM, CNM and others are trying to create an environment in which a new economy can develop organically. If anyone else has a better idea, he or she has been awfully quiet.”
I’m not sure if Mr. Quigley reads his own newspaper, but the Rio Grande Foundation definitely has proposed alternative ideas to the failed liberal consensus that has controlled public policies in this state for most of its history. And, according to some liberals, we have done too good a job.
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.
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.
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.
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?
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.
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.
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  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.”
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.
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.
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.
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.”
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.