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Why is New Mexico not realizing its potential?
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SandRidge Decision Another Blow to Economic Development in New Mexico

Mon, 2016-02-29 16:36

If you haven’t already heard, SandRidge Energy which had applied for a permit to drill in Sandoval County, has pulled its application. Certainly, low oil and gas prices may be an issue, but so was strident and vocal opposition.

As I wrote in an opinion piece published awhile back in the Rio Rancho Observer, “it’s not like New Mexico can afford to simply kick investors out. We have the nation’s highest unemployment rate. The state budget is flat due largely to the decline in oil and gas prices. And, in recent years, despite the self-evident beauty of our state and its great weather, New Mexico has seen more people — especially young ones — leaving than are coming in.”

Recently, investors looking to do business in New Mexico, bringing jobs and economic development to our state, received a harsh lesson in NIMBY (Not in my backyard) politics.

Unfortunately, while we’ve come to expect anti-oil and gas hysteria in places like Mora and Santa Fe counties, relatively conservative Rio Rancho and Sandoval County are apparently not immune.

I’m referring, of course, to SandRidge Energy’s plans to drill an exploratory well in the county on privately-owned land west of Rio Rancho. The NIMBY crowd was out in full-force with one man saying he “only” lives eight miles from the proposed site and that it was simply too close.

Yes, oil prices are down right now. And, SandRidge Energy will probably give the mob what it wants and walk away from the project.

But oil prices will rise again in the future. Whether any other investors will want to deal with the emotional and misinformed NIMBY activists who apparently dominate Sandoval County’s politics is another question.

Perhaps if these people ever got out to Farmington or Carlsbad, they would see that oil and gas wells operate discreetly all over urbanized areas. Pump jacks quietly operate in parking lots and next to golf courses on a daily basis with few problems or complaints.

The worst thing about the NIMBY crowd is their hypocrisy. They live in a state where 31 percent of the budget comes from oil and gas. They drive their oil-fueled car on blacktop made with petroleum products (and maintained with a healthy dose of oil- and gas-derived tax revenue) and take their kids to schools that are largely funded by the oil and gas industries.

As long as oil and gas production is done somewhere else, they are perfectly happy to reap the rewards.

Of course, it’s not like New Mexico can afford to simply kick investors out. We have the nation’s highest unemployment rate. The state budget is flat due largely to the decline in oil and gas prices. And, in recent years, despite the self-evident beauty of our state and its great weather, New Mexico has seen more people — especially young ones — leaving than are coming in.

This may not be of concern to the relatively affluent and politically active NIMBY crowd, but a lot of people could be helped by this project.

That’s not to say that every proposed oil and gas project should be approved. After dispassionate discussion and real research, perhaps SandRidge would have been denied on its merits. But that is not what is happening. There is no acknowledgment by hysterical activists of the Obama EPA’s repeated findings of the safety of “fracking” relative to drinking water.

There’s also no discussion of the fact that the process has been commonly used to extract oil and gas since the 1940s. It’s all emotion.

In places like Farmington, Hobbs and Carlsbad, oil and gas are part of everyday life. Often it is what puts dinner on the table for middle class families. Sandoval County doesn’t have that history. Ignorance and hysteria fill the void.

Unfortunately, mindless opposition to private sector investment is a common trait in New Mexico. It is a leading cause of our systemic poverty.

Paul Gessing is president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting liberty, opportunity and prosperity for New Mexico.


Challenging School Construction as “economic development”

Mon, 2016-02-29 10:43

Last week, the Albuquerque Journal’s Business section contained an article touting the “job creation” impact of school construction on the local economy.

Of course taxing the citizens and/or oil and gas production do “create jobs” in construction, but as an economic development tool it represents nothing more than shifting money from one pocket to the other. We’re not even pilfering tax dollars from other states as that other “economic development” program Medicaid does.

Here is my article, published in today’s Business Journal explaining that school construction is not going to contribute to overall economic growth:

Sadly, the recent article about school construction providing the bulk of Albuquerque-area construction activity is just another indicator of New Mexico’s abject lack of a private sector (outside of the now-struggling oil and gas industries).

Legislators had a few small successes in Santa Fe with the passage of ride-sharing and worker’s compensation reforms, but they failed to deregulate New Mexico’s economy in any meaningful way. Another traditionally-poor state, West Virginia, raced ahead with passage of a “Right to Work” bill and repeal of “prevailing wage” laws that arbitrarily raise construction prices on public works projects like roads and schools.

The Associated Builders and Contractors, a free market construction trade association, recently rated New Mexico an astonishing 51st nationwide in terms of construction-oriented state policies. That’s behind even the District of Columbia. New Mexico’s lack of a “Right to Work” law and the existence of arbitrary construction pricing in the form of “prevailing wage” were major factors in our performance.

Every industry in our State relies on construction. With 10,000 people showing up to interview for 290 jobs at a newly-opened Cheesecake Factory, it is clear that our economy is in dire straits. Government spending simply can’t save us.


A Distressing Story

Fri, 2016-02-26 16:12

This week, the Economic Innovation Group issued its “Distressed Communities Index,” which measures “seven well-being metrics” by zip codes, cities, counties, congressional districts, and states.

You know where this is headed.

New Mexico did poorly on the index. Some locales fared worse than others, but overall, the state’s performance was abysmal — sixth in the share of population living in distressed zip codes.

Four of our five neighbors beat us on high-school graduation. New Mexico tied with Arizona for the percentage of adults not currently employed, with Oklahoma, Texas, Utah, and Colorado doing better. All five beat us in percentage change of people employed and percentage change in the number of business establishments.

A special session for real economic-development policies, please?

A Tale of Two States

Wed, 2016-02-24 15:23

Do they have to rub our face in it?

It’s bad enough that Arizona’s looking to implement an ambitious school-choice program. But as a recent article in The Arizona Republic outlined, the Grand Canyon State’s economy is surging.

The paper listed “more than 85 companies, government entities and non-profit organizations collectively advertising more than 27,000 open positions this month,” with each looking for a minimum of 100 new hires.

Yes, some of the positions are for restaurant workers, cashiers, and customer-service representatives. (Not that there’s anything wrong with that.) But many are not. Companies looking to hire include Raytheon, Aetna, Insight Enterprises, Anthem, Intel (ouch), Fresenius Medical Care, Technosoft, Lockheed Martin, Oracle, Mayo Clinic, and Wells Fargo.

In 1910, just before each state joined the union, New Mexico had a population of 327,301. Arizona lagged behind, at 204,354. A century later, much had changed. Arizona’s population is well over 6 million, while its neighbor to the east struggles to top 2 million. (And in recent years, New Mexico has lost population.)

Looking at more recent data, Arizona has soundly bested the Land of Enchantment in recovering from the Great Recession. Both states have gained jobs since their employment troughs, which both occurred in September 2010. But Arizona’s growth has been three times greater:

New Mexico has a lot to learn from Texas. But policymakers should look west, too. It starts with a right-to-work law, but regulatory reform, a simpler and less-burdensome tax system, and school choice have roles to play, too. When will the politicians in Santa Fe get it?

Get the latest (and share your views) at public meetings on Albuquerque’s Proposed Bus Rapid Transit System

Wed, 2016-02-24 14:42

I’m not saying it will do anything to stop the project. Mayor Berry seems dead-set on shoving bus rapid transit down Albuquerque’s collective throat and most city counselors of both political parties are not responding to constituent concerns. Nonetheless, there is a series of public meetings being held over the next several days. Feel free to attend and ask lots of questions including:

Why is Cleveland a model for Albuquerque when it comes to bus rapid transit?

Why is the City adopting a bus system that the City’s own consultants, Parsons Brinckerhoff (see page 110), say will reduce mobility along Central?

Overall, this analysis concludes that in the Build Condition, the operational performance at several intersections would be deteriorated. Several segments would have diminished operational performance, thereby increasing queuing and congestion along the Central Avenue corridor. This can clearly be attributed to the reduction in capacity of the general purpose lanes along the majority of the corridor.

Here is the meetings schedule:

Wednesday, Feb. 24, 6 p.m.-7:30 p.m., Special Collections Library, 423 Central NE (at Edith)
Thursday, Feb. 25, 6 p.m.-7:30 p.m., Immanuel Presbyterian Church/Fellowship Hall, 114 Carlisle SE (at Central)
Tuesday, March 1, 6 p.m.-7:30 p.m., Albuquerque Police Community Substation, 2060 Central SW (at Rio Grande)
Wednesday, March 2, 5:30 p.m.-7 p.m., Patrick J. Baca Library, 8081 Central NW (at Unser)
Thursday, March 3, 6 p.m.-7:30 p.m., Alice K. Hoppes African American Pavilion, EXPO New Mexico (San Pedro and Copper-across from the Expo N.M. Pavilion Stage)

ABQ RIDE representatives will be available to answer questions and provide project details. Participants at these public meetings will also get to review plans for:

The latest station renderings and their lighting designs
Lane configurations
Cross sections of lane alignments along neighborhoods of Central Ave served by ART
Landscaping and streetscape plans

The Freedom Index’s Final Scores

Tue, 2016-02-23 16:11

Take a cursory glance at the results of the Foundation’s 2016 Freedom Index, and you might make the mistake of thinking that our scorecard exists to promote Republicans and bash Democrats.

This session, the Index’s top ten legislators are all Republicans, with Rep. David Adkins repeating as champion. The bottom ten are all Democrats, with Rep. Christine Trujillo landing at rock-bottom.

But there are 112 member of New Mexico’s legislature. Examine all the scores. You’ll find Democrats who clustered near the top — e.g., Rep. Stephanie Garcia Richard, Rep. Dona Irwin, Rep. Patricia Lundstrom. Republicans who voted in rather disappointing fashion include Sen. Sue Wilson Beffort and Rep. David Gallegos.

Check your legislators’ scores, as well as their votes on individual bills, and let them know what you think about what you found. It’s an election year, and lawmakers should know why you’ll be voting for or against them in November.

Will Arizona Allow “Vouchers for all?”

Tue, 2016-02-23 15:16

During the recently-completed New Mexico legislative session, no progress was made in improving our State’s bottom-dwelling education system. The school choice tax credit bill, HB 207, did not make it out of the Ways and Means Committee in the House (a similar bill did pass the House last year). Fortunately, not all states are as beholden as New Mexico to teachers’ unions and the education establishment.

Take Arizona where their Senate just passed legislation that, if it becomes law, would allow every one of the more than 1 million students in Arizona the opportunity to attend private and parochial schools with tax dollars. Arizona’s plan mirrors reforms enacted first — and subsequently tied up in the courts — in Nevada.

School choice is showing results that are increasingly being verified by the empirical evidence. According to a new report from Louisiana (another school choice innovator):

* The Louisiana Scholarship Program has closed the achievement gap with the statewide average by almost half (44 percent gap reduction) over the last five years for students in grades 3-8 achieving at least “Basic” proficiency.

* Additionally, the report notes that the percentage of students in grades 3-8 receiving nonpublic school scholarships and achieving “mastery” on state assessments increased 4 percentage points, compared to a 3 percentage point increase for all students statewide. Likewise, the percentage of Scholarship students achieving at least “basic” increased 3 percentage points, compared to a 4 percentage point dip statewide.

* Program-wide, the Scholarship program’s increases in student achievement outpaced the majority of districts. If the Louisiana Scholarship Program were considered a school system with a system-wide performance score, the Louisiana Scholarship Program’s 4.7-point growth from 54.3 in 2014 to 59.0 in 2015 would have ranked 9th among all school systems for annual performance improvement.

Perhaps someday soon New Mexico will truly embrace school choice. Until then, I expect the State’s educational outcomes to lag.

Deregulate Dentistry — and Birth Control

Mon, 2016-02-22 15:01

One of the disappointments of the 2016 regular session was the failure of HB 191, a bill that would have allowed dental therapists to provide routine care such as drilling and filling cavities.

Occupational-licensing tyranny in the healthcare field is a target-rich environment for reforms that are sure to benefit both consumers and taxpayers. Last week, the Pew Research Center profiled another promising deregulation: permitting pharmacists to supply contraceptives to women without a doctor’s prescription.

“California pharmacists will begin writing their own prescriptions for birth control next month,” Pew reported, “and lawmakers in Hawaii, Missouri, South Carolina, Tennessee and Washington are considering legislation that would give pharmacists the power to prescribe contraceptives.”

Let’s add New Mexico to that list. Pew’s research shows that the Land of Enchantment ranks #9 in unintended pregnancies per 1,000 women aged 15-44, and #11 in unintended pregnancies as a percentage of all pregnancies.

In New Mexico and throughout the nation, the welfare-industrial complex is founded on illegitimacy. An enormous cohort of children born to, and raised by, single mothers acts as a force multiplier for all manner of social pathologies. Letting pharmacists sell prescription-free contraception is no cure for unwed pregancies, but it’s a step in the right direction.

The definition of dumb federal regulations

Mon, 2016-02-22 10:48

Your (the government’s) stated goal is to get food stamp recipients to eat healthier food.

Do you:

A) Limit the foods that food stamp recipients can purchase to healthier options or perhaps (using the electronic cards) require a certain percentage of food stamp purchases include fruits and vegetables? or

B) Require any store (including convenience stores) that accept food stamps stock at least three types of food in each of the four food groups making no demands on the food stamp recipients themselves?

If you are the federal government, you chose “B” (see the Albuquerque Journal story linked above or the federal comments page). Remember that grocery stores are a relatively low-margin business and that especially in densely-packed urban areas shelf space is at a premium. How many convenience stores clinging to existence will be driven out of business by this ridiculous regulation? Also, is there going to be a new corps of USDA employees checking store shelves to make sure they have adequate offerings in each food group? How much will that cost?

Lastly, while the idea of government micromanaging dietary choices is generally repugnant, if the government is going to regulate anyone, it should be recipients of a government program, not store owners.

10,000 people applied for 300 jobs at Albuquerque’s new Cheesecake Factory: Maybe this means something?

Fri, 2016-02-19 18:04

According to a new report from ABQ Biz First, 10,000 people applied for 300 positions at the City’s new Cheesecake Factory. This is the kind of statistic that screams for interpretation and there are a slew of them:

1) The obvious bad news (we already knew this) is that Albuquerque’s economy is in the tank and that competition for low-wage, low-skilled positions is really tough. Approximately 9,700 people applied for but were rejected from cooking, waiting tables, and greeting people at a restaurant.

2) The good thing is that lots of people still want to work and find jobs even at low pay. This speaks to the fact that despite all the obstacles to work and government handouts, a lot of people still want to work, they just can’t find a job.

3) If they care about these working class people who want to work, but can’t find it, our city and state leaders should allow more of those people to work by eliminating arbitrary wage floors.

4) We know “right to work” states generate jobs more readily than “forced unionism” states. Liberal opponents of “right to work” claim that wages are reduced in such states. There is plenty of research to the contrary, but New Mexicans need jobs and they need them now. Hundreds of people in the State’s largest City were TURNED DOWN work at a restaurant!

5) The “happy talk” about the local economy should cease until relatively low-wage businesses like restaurants actually have to compete for workers rather than having 10,000 to choose from.

The Good News About the Worst of the Worst

Fri, 2016-02-19 12:44

The 2016 regular session is over, and before we lament the inevitable, budget-cutting special session that is sure to follow, let us rejoice. The worst of this year’s anti-taxpayer, freedom-hostile bills did not pass.

* Each of the minimum-wage increases (HB 125, HB 154, HB 323, SB 236, and SJR 18) died.

* All three gasoline-tax-hiking bills (SB 251, SB 284, SJR 22) crumbled.

* SJR 2 and SJR 3, attempts to tap the Land Grant Permanent Fund for “early childhood education services,” fizzled.

* All three tobacco- and vaping-tax hikes (HB 300, SB 4, SB 77) failed.

* Sen. Lisa Torraco’s bill to expand the state’s spectacularly unsuccessful subsidization of Hollywood made it through the Senate, but died in the House.

* Rep. Miguel Garcia’s bill to extend “public financing” to legislative candidates was ignored.

* The “Gender Pay Equity Tax Credit,” sponsored by Rep. Nate Gentry and Sen. Mimi Stewart, went nowhere.

Sometimes, failure is success.

New Mexico’s economy and the end of the 2016 Legislative session

Fri, 2016-02-19 10:29

The New Mexico Legislature has adjourned for 2016. There were several major disappointments including lack of action on “right to work,” “Prevailing wage reform,” and school choice, (to name just a few).

But it is too easy to focus on the negatives because a few economically-helpful bills got through this session. These include (finally) legislation to reduce worker’s compensation benefits for workers who show up drunk or stoned on the job. This year’s bill was sponsored by Sen. Jacob Candelaria, but past efforts were sponsored by Rep. Dennis Roch. No matter what, this is a long-overdue reform and we are glad it finally passed.

Another positive from this session is that New Mexico’s Legislature has brought ride-sharing companies like Lyft and Uber under a reasonable system of rules and regulations. They will now be able to operate legally in New Mexico without threats from the Public Regulation Commission that they are operating illegally. Ride-sharing can improve transportation and mobility throughout our state while also reducing our State’s serious DUI problem. Kudos to Rep. Monica Youngblood who sponsored the ride-sharing bill.

Finally, being that this was a 30-day “budget” session, the Legislature passed a budget. The fast-changing (declining) revenue picture calls the viability of this budget into question, especially considering media reports indicating a 12% decline in general fund revenues. In other words, unless the price of oil rebounds dramatically later this year, we expect the Legislature to be called back for a special session to make further cuts later on in the year.

This will especially painful given that 2016 is an election year, so legislators of both parties are keeping their fingers crossed for higher oil and gas prices. We expect them to be disappointed.

Rio Grande Foundation Comments on Economically-Damaging “Venting and Flaring” Rule: Please Join Us and Submit Yours!

Wed, 2016-02-17 16:26

If you haven’t heard the news, the Federal Bureau of Land Management (BLM) recently held a well-attended public hearing in Farmington on the issue of “venting and flaring” of methane from natural gas wells. Droves of Four Corners residents came out in opposition to the costly new regulations being considered by the Obama Administration.

This is a huge issue for Farmington, NM, in particular, as the city saw the biggest jump in unemployment last year among 387 US cities. The San Juan basin is a major producer of natural gas and, while “venting and flaring” are not optimal for the industry, the amount of “venting and flaring” in recent years has declined.

The BLM is currently accepting comments and will do so until April 8, 2016. The Rio Grande Foundation has submitted the following comments and encourages you to submit comments (click here to do so) (or at the email or mailing address below) in opposition to the proposed “venting and flaring” rule.

February 17, 2016

U.S. Department of the Interior, Director (630)
Bureau of Land Management
Mail Stop 2134 LM
1849 C St. NW.,
Washington, DC 20240
Attention: OMB Control Number 1004-AE14

To Whom it May Concern:

I am the president of a free market policy research organization called the Rio Grande Foundation. We are based in Albuquerque. Our research focuses on New Mexico’s economy which is uniquely-challenged among US states. Our unemployment rate has been the highest in the nation for two months running. Our poverty levels are among the highest in the nation. As a state, New Mexico is the third-most dependent on the oil and natural gas industries as a percentage of our budget.

Given that the Bureau of Land Management controls 13.5 million of New Mexico’s surface acreage, approximately 2 million fewer acres than are occupied by the State of West Virginia, federal regulations have a tremendous impact on New Mexico’s economy.

On a statewide basis:

 There are 54,457 operating oil and gas wells in New Mexico
 The oil and gas industry employs 69,000 people in New Mexico;
 The average salary is $71,500 compared to the overall state average salary of $39,660
 56% of the oil and 63% of the natural gas is produced from Federal (BLM leases)
 In fiscal year 2014 the industry provided $2.1 billion of the state of New Mexico’s $6 billion general fund revenues (35%)

I should also note that while my organization is based in Albuquerque, we study the entire New Mexico economy. A recent report from the US Department of Labor labeled the Farmington area as suffering “extreme economic duress,” noting that it had the largest increase in its unemployment rate among 387 metropolitan areas nationwide in 2015 .

The northwestern New Mexico city saw its unemployment rate rise 2.1 percentage points last year, to 7.3 percent. The last thing New Mexico’s Four Corners area needs is a new set of costly federal regulations that negatively impact the region’s economy.

Methane Emissions are the object of the proposed regulations

 Venting and flaring of large amounts of methane represents lost profits to industry. While it is sometimes unavoidable, there are efforts already under way within industry to curtail the amount of emissions.

 Methane is both a product and by-product of oil and natural gas production. Onshore oil and natural gas operators are becoming more efficient at capturing methane emissions, and at reducing methane emissions from production activities. The national trend of methane reduction is supported by GHG reporting data, and it holds true despite a historic increase in oil and gas production over the past several years.

 Without regulations overall greenhouse gas emission in the San Juan Basin have decreased from 10.7 million metric tons in 2007 to 7.3 million metric tons in 2014.

 Vented methane emission in the San Juan are down due to cost effective and efficient practices including:

o Better operating practices that are decreasing the number and duration of venting events.
o Reduced pneumatic device emissions by reclassifying, removing, replacing and retrofitting high-bleed pneumatic devices.

Good Regulations vs. Bad Regulations

 Good regulation practices:

o Single and appropriate entity responsible for regulation;
o Effective in meeting public policy goals: environmental, health and safety;
o Based on science;
o Cost effective: the overall benefit of regulation is greater than the cost.

 The proposed venting and flaring rule is bad regulation for the following reasons:

o Redundant and contradictory with other federal regulations and state regulations;
o Requires extensive capital and operating expenses with little or no additional benefits;
o Not based on science and in fact, locks in operating and technology solutions that have been shown to be inferior;
o Cost prohibitive especially in era of low community prices will force existing wells to be plugged with the loss of future production, jobs, taxes and other revenues.

 What are weaknesses in the BLM’s approach?

o The BLM has attempted to understand economic impacts of these rules in isolation and has overestimated the benefits and underestimated the costs;
o We believe the cumulative economic impacts of the proposed changes should be considered in total across all their proposed rules;
o As proposed, these changes are significant and will have major impacts on investments in new and existing projects on federal and Indian lands, with the potential for job losses, premature well closures and significantly lower federal and tribal revenues;
o The BLM should conduct a more thorough economic impact analysis rules in isolation and has overestimated the benefits and underestimated the costs should be considered in total across all their proposed rules.

I am very concerned with the proposed BLM rule because as currently drafted it will lead to wells being prematurely plugged and devastating loss of jobs and needed economic activity in the Four Corners region and New Mexico as a whole.

Want to increase new teacher pay by 10%? Reform teacher pensions!

Tue, 2016-02-16 13:40

New Mexico’s budget is in free-fall (along with oil prices). Yet politicians of all stripes in Santa Fe have expressed a desire to pay (especially young and new) teachers more.

The case for higher teacher pay is questionable. According to the somewhat dated information over at the website “Teacher Salary Info,” New Mexico teachers are paid 16th-most in the nation.

Nonetheless, IF your desire is to pay teachers more, pensions must be reformed. In a recent article by Marcus Winters of the Manhattan Institute, he discusses a recent paper for the Center for Analysis of Longitudinal Data in Education Research which found that 10 percent of the earnings for an average public school teacher goes toward paying for pension liabilities accrued on the behalf of prior cohorts of teachers. That’s money they could be taking home in salary.

As Winters continues, “most teachers earn very little retirement compensation for each of their first two decades of teaching and then suddenly accrue large amounts of pension wealth during their late career years. The vast majority of teachers leave the system before they receive the large payouts. The money those who exit leave on the table goes to fund the comfortable retirements of the few who stuck around for their entire career.”

Obviously, reforming teacher (and other government pension systems) will be challenging and potentially-expensive in the short-term, but in the long-term, a defined-contribution (401K-style) system will attract more young, highly-qualified teachers who may want to do the job for a few years before moving on to other career opportunities.

For further research on teacher pensions in New Mexico, check out this report from the National Council on Teacher Quality. The report gives New Mexico a “D” grade for its teacher pensions and overall has a great many concerns bout their funding and fairness.

‘Doctor’ Adkins’s Prescription for New Mexico

Mon, 2016-02-15 18:07

The 2016 legislative session is winding down, and we’ll soon know how lawmakers score on the Rio Grande Foundation’s Freedom Index.

For those placing wagers, though, Rep. David Adkins would be a safe pick as a repeat champ. So far, members of his chamber could score as many as +21 points. Adkins is atop the field, with all 21 points earned.

Here’s a sampling of the legislator’s votes:

* For HB 63, which limits worker-compensation benefits for intoxicated employees.

* Against HB 166, a bill to require the licensing of home inspectors.

* For HB 168, a bill to legalize transportation-network companies such as Uber and Lyft.

* For HB 200, which provides some relief from the state’s expensive and unnecessary “prevailing wage” mandate.

* For HB 206, a pro-taxpayer measure to permit the design-and-build method for government projects.

Adkins is a husband, father, small businessman, and pastor. He’s also a consistent vote for limited government and the free market in New Mexico. More like him, please!

No Need to raise taxes in New Mexico

Mon, 2016-02-15 09:47

The budget numbers are changing (for the worse) on an almost daily basis. The latest information calls for a 12% decline in General Fund revenues which means a reduction of $700-$800 million (not factoring in rainy-day funds etc).

The point remains, as I note below, that no matter how the budget gap is filled, there are some programs that should be eliminated in their entirety prior to cuts being enacted elsewhere.

Like spring follows winter, proposals to increase taxes on hard-working New Mexicans are flourishing in Santa Fe. Dozens of such proposals have been put forth, including several by Democrat Senate Finance Committee Chairman John Arthur-Smith. Gov. Martinez has repeatedly pledged NOT to raise taxes, so it is unlikely these proposals will be enacted, but what about the merits of the issue? Should taxes be raised in New Mexico?

One of Sen. Smith’s proposals that has attracted media attention is SB 281 which would re-impose the gross receipts tax on groceries. Groceries used to be taxed just like everything else bought in the store, but when he was governor, Bill Richardson decided to eliminate the tax on groceries. The broader gross receipts tax was hiked by half a cent. This all sounds simple, but was really a complex tax-shift that the Legislature has tinkered with since it was enacted.

And now, Sen. Smith wants to again tax groceries as a means of raising revenues in tight budgetary times. Taxing food is not an inherently bad idea, but it shouldn’t be done without reducing the gross receipts tax on other purchases.

That is only the start. Smith and his Democrat colleagues want to add taxes to everything from cigarettes to gasoline, to personal income, while also freezing New Mexico’s corporate income tax rate in place rather than continuing a scheduled phase-down to 5.9%.

The immediate concern for policymakers is New Mexico’s deteriorating budget picture. Due to declining oil prices, there is “only” $35 million in “new” money. Once $85 million in new costs for half-a-year of Medicaid expansion are added to the mix, everything else in New Mexico’s budget is being squeezed. Thus the calls for higher taxes.

Of course, New Mexicans are hard-pressed right now and it is shameful that politicians in Santa Fe want to increase taxes in a state with the highest unemployment rate in the nation and residents suffer from some of the highest poverty rates in the nation.

According to the Federation of Tax Administrators, New Mexicans face the 9th-highest state tax burden as a percentage of resident incomes of any state in the nation. The last thing we need is higher taxes.

New Mexico has some relatively easy solutions to its budget woes. The State spends approximately $50 million annually to subsidize film companies and the Rail Runner costs taxpayers another $25 million to operate. When times are good, these programs seem like nice things to have around, but are supporters really going to say that education, law enforcement, and behavioral health programs for the poor should be cut instead?

That’s ultimately their argument.

Of course many will come back with the “tax the rich” mantra, but New Mexico is poor. We have some rich people and some profitable businesses, but capital is mobile. They can leave our state anytime. And, as is plain to see, plenty of businesses avoid New Mexico.

We have one publicly-traded company (on a stock market) headquartered in the state (Public Service Company of New Mexico). We have seen our best-and-brightest moving to places like Texas for several years. Raising taxes isn’t going to help the cause.

It is time for tough decisions in Santa Fe. Alaska and Michigan recently eliminated their film subsidy programs. The Rail Runner is an epic money-loser even by mass transit standards. They are the fattest targets for policymakers, but there are plenty of others.

Gov. Martinez is right to avoid tax hikes. New Mexico’s economy faces enough challenges already.

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

Legislature should approve the deregulation solution to dental care

Fri, 2016-02-12 16:57

This article was originally published at Legislation along these lines was introduced in the 2016 session, but was not placed on Governor Martinez’ “call.”

New Mexico’s Legislature faces a plethora of duties during this year’s 30-day regular session. But a measure that should be a no-brainer, deserving of bipartisan support, permits dental therapists to practice in some rural and underserved areas of the state.

Dental therapists are trained to provide routine care, including drilling and filling cavities. Last year, a bill that would have allowed dental therapists to practice in New Mexico passed the Republican-held House, with Democratic support, only to fail in the Senate without so much as a floor vote.

However, a task force of legislators, along with supporters and opponents of dental therapists, came to a compromise late last year. The bill they’ve crafted, HB 191, isn’t perfect – the establishment of a state dental director isn’t necessary, and neither is a mandate that all children receive a dental exam as a prerequisite to school enrollment. Nonetheless, allowing dental therapists to work in our state would be a promising reform.

It is not a government mandate. It doesn’t involve taxpayer subsidies. It’s working in other states, including Minnesota and Alaska. And it’s a solid step away from the ugliness of professional protectionism through government licensing.

Support for reducing or eliminating government’s role in occupational licensing has drawn support from such ideologically disparate people as Nobel-Prize-winning, libertarian economist Milton Friedman and President Obama.

Friedman railed against the evils of professional licensing in speeches and debates that can be found online. The president’s 2016 budget proposal “seeks to reduce occupational licensing barriers that keep people from doing the jobs they have the skills to do by putting in place unnecessary training and high fees.” Last year, the White House’s Council of Economic Advisers issued a detailed report questioning the benefits of occupational licensing.

The left-right agreement on dental therapists in the Land of Enchantment includes the free-market Rio Grande Foundation as well as the left-leaning Health Action New Mexico and New Mexico Voices for Children. Both of the latter support the “Affordable Care Act,” while the Rio Grande Foundation works overtime to expose Obamacare’s many disappointments and failings.

In many rural areas of our state, dental coverage is not the issue – care is. According to a 2013 report by the Legislative Finance Committee, over 63 percent of New Mexicans live in areas where there are shortages of dental-health personnel. Allowing these professionals to carry out some activities that have previously been only available under the direct care of dentists would improve accessibility in rural and underserved communities. It can also create new business opportunities for entrepreneurial dentists.

HB 191 allows dentists to supervise therapists from off-site. But remote management doesn’t apply to filling cavities, despite mounds of evidence that shows that dental therapists can do the job effectively and safely under off-site supervision. Fixing this flaw would give a dental practices more flexibility in setting up a satellite office in a small town, and/or extending their office hours to serve more patients.

Healthy teeth are in many ways the key to overall health. People with periodontal disease are two times more likely to develop heart disease and arterial narrowing as a result of bacteria and plaque entering the bloodstream through the gums. That’s not all. Poor dental hygiene is correlated with everything from dementia to diabetes and even cancer. Increasing the availability of dental care in New Mexico can have cascading positive benefits throughout our healthcare system.

New Mexico’s lawmakers and governor have a chance to bring the free-market solution of dental therapy to our state by stripping the extraneous mandates and costs out of HB 191, and expanding scope-of-practice capabilities throughout rural New Mexico. The clock is ticking on the 2016 session.

Dental therapy is good for patients, taxpayers, and the economy. Why let partisan rancor get in the way of smart policy?

Dowd Muska ( is research director for 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.

Free Markets make accountability easy; difficult to hold APS accountable

Thu, 2016-02-11 10:18

The Albuquerque Public Schools (APS) bond measures recently passed overwhelmingly, despite a slew of scandals and payouts leading to concerns from district leaders that voters might use the bond election to punish the district. With a total of $575 million at stake, this was not a trivial concern.

An outpouring of opinion pieces and editorials from community leaders urged voters to put their concerns about the district and its management aside and support the bonds “for the children.” This was seemingly effective, as turnout was nearly double what it normally is for similar elections (still low at 7 percent, but much bigger than normal).

There is no doubt that a rejection would have gotten APS’s attention. It was a blunt instrument indeed, but it would have generated a swift reaction from district leaders.

Since the blunt instrument was rejected by voters, what means do voters have of keeping APS accountable? Locally, it pretty much boils down to electing the “right” people to the school board. Since the main job of the school board is to hire a district superintendent who ultimately oversees the schools, this is another weak and indirect method of accountability.

The situation at the state level is not much better. We elect a governor and legislators based on dozens of issues (and personality traits), with their stances on education among them. The governor then hires a secretary of education who is in charge of implementing that governor’s education policies. This process is yet another indirect and slow means of holding our education system accountable. What if I like Gov. Martinez’s policies on taxes and the economy, but don’t like what Department of Public Education Secretary Hanna Skandera is doing? Or, I might strongly dislike the governor, but appreciate what Skandera is doing. How do average people communicate their concerns to these people?

This is not limited to the current administration. Accountability, specifically its absence, is endemic to government educational systems.

If businesses think accountability in education is a trivial matter, they need look no further than New Mexico’s worst-in-the-nation graduation rate, constant discussion of our “workforce preparedness/quality,” and the tremendous growth in education spending in recent decades.

An intermediate step toward improved accountability is school choice. Ironically, the week immediately prior to the APS bond election was celebrated as “National School Choice Week.” New Mexico has some choice, most notably charter schools. I’m on the board of a charter school and support them, but the approval or rejection of a school’s charter (a legal document granting from a charter-granting authority) is yet another blunt tool for reformers.

Other forms of school choice offer greater potential for success. These include: vouchers and tax credits, as well as education savings accounts, which were recently enacted in Nevada. These options – particularly tax credits in recent years – have been discussed in New Mexico’s legislature. In terms of accountability, they would be a huge improvement. If these schools don’t perform at a level that makes them significantly better than traditional public schools, those schools will go out of business. On the other hand, if more parents demand a particular choice than are available, someone will attempt to expand the supply of similar options.

That’s real, direct accountability – the kind that comes from the free market. Competition quickly allowed consumers to embrace, and then reject, Blackberry devices, while iPhones and Androids made (and continue to make) rapid advances and continually innovate in order to win greater market share.

Unfortunately, that is a level of accountability that is beyond the wildest dreams of even ambitious education reformers today. School choice is the best available option and New Mexico policymakers need to get on board with it now if our state is ever going to get out of last place both educationally and economically.

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.

How Long Can RTW Reality Be Denied?

Wed, 2016-02-10 19:05

The Senate Public Affairs Committee’s tabling of the right-to-work bill sponsored by Sen. Mark Moores (R-Albuquerque) comes at a particularly disastrous time for New Mexico. Unemployment is rising, layoffs are mounting, and the fiscal picture is darkening.

RTW is a key piece of a broader package of pro-growth reforms that must be implemented to finally build a vibrant and sustainable private sector in the state. The Foundation recently completed 12 months of analyzing job-producing investments announced by Area Development magazine.

Overall, jobs in RTW states claimed 77.8 percent of all positions to be created:

RTW states prevailed in each of the 12 months:

We also examined “border crossing,” in which investments were made by companies based in one type of state shifting to another. (For example, in December, CVS announced the hiring of 500 “pharmacists, pharmacy technicians and administrative staff” for a new facility in RTW Florida. The corporation is headquartered in non-RTW Rhode Island.) RTW bested non-RTW, 172 to 43.

Foreign direct investment also prevailed in RTW states, by a wide margin. Companies based abroad announced 186 investments in worker-freedom states, as opposed to 65 in compulsory-unionism states.

The Foundation now has a full year of data, and will be refining our findings to further probe why RTW is so attractive to companies and industries in manufacturing, logistics, finance, IT, biotech, and business services. For any New Mexico lawmaker who doubts the value of RTW, we’re happy to explain what we’ve found so far.

Post mortem on Right to Work

Wed, 2016-02-10 15:15

As was predicted and is now being reported, legislation that would have made New Mexico a “right to work” state died on partisan lines last night in the Senate Public Affairs Committee. It was, but predictable result. There are a few things that need to be discussed about this issue and the 2016 legislative session in general:

  1. I was pleased to sit beside Sen. Mark Moores (the bill’s sponsor) and provide my testimony. Moores did a great job as well;
  2. Sen. Ortiz y Pino (and Sen. Candelaria for a time) ran the Committee smoothly and in a way that respected everyone’s time. Having each side pick five people is far superior to having unlimited public comment (as happened last year in the House);
  3. I listened to testimony from Allen Sanchez, the lobbyist for the Catholic Church, relating to the late-term abortion ban — which was killed in the same committee earlier in the afternoon — he was far more passionate in his opposition to the “right to work” bill than he was earlier on the abortion issue for which he seemed to apologize and equivocate at times;
  4. As usual, there was a great deal of misinformation presented by opponents of “right to work” that I’ll address below:
    1. It increases inequality/kills the middle class: please look at state-by-state Gini coefficient data and tell me where it “kills” the middle class. 7 of the least unequal/most equal states have “right to work” and the three most unequal states are not “right to work.” There’s not even correlation, much less causation.
    2. “Right to work” kills jobs (just look at Wisconsin!): Thankfully there are 24 “right to work” states besides Wisconsin — which has been “right to work” for less than a year. Overall, these “right to work” states consistently outperform non-“right to work” states on job creation.
    3. “Right to work” reduces wages, but when you factor in cost-of-living, “right to work” states have higher actual living standards.
    4. “Right to work” forces unions to represent those who choose not to pay dues or “fair share” payments. This is simply not true. Unions can and do form “members only” units which allow them to negotiate solely on behalf of those who pay dues. A detailed explanation of this — discussed from a hard-left “progressive” perspective — was published by the left-wing In These Times magazine.  This is no academic exercise. The article notes that United Auto Workers (UAW) Local 42 at the Volkswagen plant in Chattanooga, Tennessee, was organized as a members-only union.
  5. While Democrats are criticizing Gov. Martinez for focusing on criminal justice as opposed to economic issues, the fact is that the Democrats’ agenda is more of the same unaffordable big-government that has gotten us into 49th and 50th on most economic lists. We can do economic development in this state without “right to work,” but the Senate refuses to act on almost ANYTHING put forth to reform New Mexico’s economy.