Errors of Enchantment Blog Postings

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Why is New Mexico not realizing its potential?
Updated: 2 min 9 sec ago

Is New Mexico really the worst run state in the country?

Mon, 2015-12-07 09:29

Another day, another terrible ranking for New Mexico on a list of state successes/failures. According to the website 24/7 Wall Street, New Mexico is the “worst-run state in America.” As the website says:

Debt per capita: $3,468 (22nd highest)
Credit rating (S&P/Moody’s): AA+/Aaa
Unemployment rate: 6.8% (2nd highest)
Median household income: $44,803 (8th lowest)
Poverty rate: 21.3% (2nd highest)

New Mexico is the worst-run state in the country with some of the worst social and economic outcomes. Only a handful of states struggle with similar levels of extreme poverty as New Mexico. More than one in every 10 households in the state earns less than $10,000 each year, the second highest proportion after Mississippi. The state also struggles with one of the nation’s highest violent crime rates. Close to 600 violent crimes are reported each year per 100,000 state residents, one of the highest rates nationwide.

Like a number of other states towards the bottom of this list, more people left New Mexico than arrived from April of 2010 through the middle of last year. Only Illinois reported a larger net population decline over that period.

It is hard to argue with any of that, but I don’t think it is a complete picture (no ranking is). For starters, poverty rates should be adjusted for regional living cost to gain a complete picture of REAL poverty.

Also, I would argue that while government policies can have an impact on violent crime, there are cultural and geographical issues at play as well.

Lastly, it is worth noting that New Mexico has always been poor and always had relatively high crime. Our private sector economy has always been weak. Those who would point at this ranking and blame one politician would be mistaken, but there is no doubt that New Mexico faces some big challenges whether it is really the “worst-run” or not.

Winthrop Quigley’s merry band of economists discuss ways to turn NM’s economy around

Fri, 2015-12-04 11:29

Recently, the Albuquerque Journal’s economics reporter, Winthrop Quigley, decided to take some time off from pimping for Voices for Children and asked some economists what to do about New Mexico’s flailing economy. To his credit, Quigley started on a strong note by saying that governors receive too much blame when times are bad and too much credit when times are good. Obviously, this depends on the legislative hands they are dealt as well. In Gov. Martinez’s case, she has had a GOP-controlled House for one session, but nearly all of her agenda was blocked by the Democrat-controlled Senate.

Below I have summarized each economist’s points and briefly discuss their merits.

Jim Peach, NMSU: Tax incentives and job-training funds don’t work. We need a skilled workforce. Peach is generally on-target. Targeted incentives and job-training funds are inadequate. A better education system from the Kindergarten to the higher education level would help. My only quibbles with Peach are: It will take at least a decade to create a skilled workforce. Do we want to wait that long? What are your specific ideas, more spending on schools or reforms like school choice etc? While incentives don’t work, how about real policy changes that would make us more attractive to the construction industry (NM was just ranked 51st in the nation on friendliness to the construction industry)?

Jeffrey Mitchell, BBER at UNM: Similar to Peach, focus should not be on tax incentives, cheap labor and low business costs. Need to invest in human capital for decades. Mitchell echoes Peach, but implies that New Mexico has not invested in human capital. This is often a proxy for “we need to spend more on education.” According to this data — H3 on page 52 — from the National Education Association (NEA), New Mexico spends 13th-most in the nation per-capita on “all education.” I’d hardly say that represents “under-investment” in higher education.

M. Brian McDonald, former BBER director, now a consulting economist: Richardson’s tax cuts were bad, the Spaceport and RailRunner were also bad as was elimination of the grocery tax (which resulted in a higher gross receipts tax). It is certainly true that the projects mentioned as well as the grocery tax were bad public policy. I’d take issue with the idea that reducing New Mexico’s income tax didn’t have a salutary impact. They did improve it, but the national economy went into a deep recession shortly after those cuts were phased in. Again, “workforce” issues are McDonald’s focus.

Conclusion: It is easy to see that New Mexico needs to improve its workforce and its education system. Quigley seems to be making the case for expanding early childhood programs yet again when in reality there are several immediate and cost-effective policy reforms that can be undertaken first. Those have been consistently ignored by Quigley who seems to see only two options for New Mexico policymakers: 1) expand welfare 2) expand corporate welfare.

Construction industry loves Arizona & hates New Mexico

Thu, 2015-12-03 16:38

A new report put out called the “>Associated Builders and Contractors gives neighboring Arizona the nation’s highest marks among US states, but ranks New Mexico an astonishing 51st in the nation.

The story is written up hear by the folks at BizJournals and is called the Merit Shop Scorecard. It is worth a look.

New Mexico scored poorly because it is not a “right to work” state. It also has a “Davis-Bacon” prevailing wage law which raises construction prices by giving unions control over labor pricing. Interestingly, New Mexico which is not especially heavily-unionized nonetheless performed even worse in the report than several states like California, Alaska, and Pennsylvania that have much higher unionization rates. Of course, when you get beat by Washington, DC on any policy report card, you are doing A LOT wrong.

The ABC is a an organization whose mission tracks closely with that of the Rio Grande Foundation, but specifically focused on construction as their statement below shows:

According to the ABC, the general merit shop philosophy is based on free enterprise and free market principles, characterized by open and fair competition and diverse, engaged parties. The philosophy supports the concept that employees and employers have the right to determine wages and working conditions as they choose, within the law, and that all branches of government should be responsible stewards of taxpayer dollars, awarding contracts based solely on merit to the lowest responsible bidder, regardless of labor affiliation.

As even the most passive onlooker of New Mexico’s traditional public policies are aware, this is not the way things have been done in The Land of Enchantment. It has been much to our detriment.

Shame on the Albuquerque Water Authority for not standing up for their customers!

Thu, 2015-12-03 14:21

Mayor Berry’s proposed bus rapid transit system (ART) down Central saw a massive price hike recently when a study done for the Albuquerque-Bernalillo Water Authority indicated that moving sewer lines and other infrastructure would cost as much $30 million. That’s a 30% increase in the overall cost of ART or a 150% hike in the share paid by New Mexico and Albuquerque residents (as opposed to Washington).

Last night, I testified on this issue in front of the Water Authority Board, made up of: County Commissioners Hart-Stebbins, O’Malley, and De La Cruz, City Councilor: Jones and Sanchez, and Mayor Berry (a role filled last night by COO Mike Riordan). Garduno’s seat must be in a transition as he wasn’t there. I noted that already rate-payers are seeing 5% rate hikes every other year and that Gov. Martinez would be a fool to saddle state taxpayers with $30 million in costs for a local “prestige” project like ART. In other words, rate-payers, not all of whom live in Albuquerque, will be stuck with further unnecessary rate hikes for this transit boondoggle.

Sadly, despite the fact that several members of the Water Board expressed a clear understanding of the potential negative impact on the entity’s finances and rate-payers (only Riordan called tearing up Central for the ART “an opportunity”), not a single member of the Board presented a motion to remove the $30 million request. Clearly, they’d rather stick their heads in the sand than make a tough decision on behalf of their “customers.”

I’m not sure who I’m more disappointed by: Trudy Jones for simply falling in line with Mayor Berry based on party affiliation or the Democrats who were unwilling to stand up for fiscal responsibility even when it provided them a perfect opportunity to stand on behalf of rate-payers (many of whom are poor or on fixed incomes) against a profligate mayor of the opposite party.

Notably, Dowd Muska, Research Director at the Rio Grande Foundation pointed out in a policy paper released a few months ago that utility re-routing could be an added expense related to the bus rapid transit system. Of course water is by no means the only utility that uses the Central “right of way.” We don’t know how much PNM and New Mexico Gas Company will need from their customers in order to accommodate ART.

The Spacepork’s Dismal 2015

Tue, 2015-12-01 11:25

Can a spaceport be a spaceport if it never puts anything in orbit?

One month. That’s how long “Spaceport America” has to put something in orbit before it goes 0-for-2015.

The facility did launch a single suborbital rocket last month, but it was the only liftoff of the year. Awfully disappointing, given the hundreds of millions of taxpayer dollars devoted to the spaceport. (But hey, at least it’s got a nifty bus, pictured above.)

Something to remember the next time a New Mexico politician or bureaucrat pushes a subsidized scheme for “economic development.”

Hey Marvel, Where’s the Love for New Mexico?

Wed, 2015-11-25 12:54

Geeks are geeking out over the release of the trailer for Captain America: Civil War, set to premiere in the spring.

The movie looks to be mighty entertaining, but New Mexico taxpayers should know that unlike 2012’s The Avengers, Captain America: Civil War was not filmed in their state.

Six movies in the “Marvel Cinematic Universe” series have been produced since The Avengers: Iron Man 3, Thor: The Dark World, Captain America: The Winter Soldier, Guardians of the Galaxy, Avengers: Age of Ultron, and Ant-Man. Not one was shot in New Mexico. Looking further ahead, neither Doctor Strange nor the sequel to Guardians of the Galaxy will be be shot here.

The Foundation has repeatedly examined and analyzed the data that expose the state’s film-subsidy program as expensive and ineffective. But Marvel’s obvious lack of interest in returning to New Mexico makes its own statement about the Land of Enchantment’s ability to successfully compete in the Hollywood-subsidy game.

Polling supports pro-freedom ideas too

Wed, 2015-11-25 09:34

Recently, former NM State Senator had a column in the Albuquerque Journal in which he laid out several long-standing liberal priorities: a higher minimum wage, gun control, caps on interest rates for payday loans, campaign finance reform, and term limits. I like former Sen. Fischmann and we agree on several things (including term limits), but he conveniently omits a number of free market policy reforms that also poll well, but have failed to gain traction (mostly in the Democrat-controlled New Mexico Senate) in recent years.

*70 percent of New Mexicans support adoption of a”right to work” law
*68 percent support reducing worker’s compensation benefits when workers show up drunk or stoned on the job and injure themselves.
*No less than 62 percent support school choice tax credits.

These are just a few significant free market issues that have polled well. I’d like to see if the public thinks the Legislature should act to explicitly allow ride-sharing services Uber and Lyft to operate in New Mexico. Legislation on that also died in the New Mexico Senate. I’ll bet it is a strong majority though.

As much as I like polling and finding out what the public wants, we don’t have a direct democracy. Government is not run on polls alone. And then there are the ambiguities of polling. For example on the minimum wage: once job losses due to minimum wage hikes are mentioned (and we know jobs are lost when minimum wages rise), support for raising the minimum wage reverses as shown below. Polling can be helpful and we’d definitely like to see some of these free market ideas voted on (at least), but implementing public policy isn’t as easy as just doing a poll.

Vaping’s Lesson for ‘Economic Development’

Tue, 2015-11-24 14:31

Good news for Albuquerque’s vaping community: Los Angeles-based Firebrand has opened a shop on Eubank. The company’s “flagship e-liquid boutique” is the first of what “could be as many as four locations in Albuquerque by the end of 2016.”

But you’ll find nothing about the company’s plans on the websites of the various local and state bureaucracies that claim to foster “economic development” in Albuquerque and throughout the Land of Enchantment. Vaping is well along the path to demonization, so the corporatism crowd wants nothing to do with electronic cigarettes.

The process works the other way, too. When a business or industry is fashionable with government and media elites, no amount of subsidization is too much. “Green jobs” have been peddled by corporacrats for many years. The results have been lousy, but that hasn’t kept the grants, tax credits, infrastructure giveaways, and loan guarantees from flowing.

Real economic development doesn’t play favorites — it neither rewards trendiness nor penalizes political incorrectness. It keeps taxes low and regulations reasonable. Most importantly, it focuses the public sector on its proper role: the protection of lives, liberties, and property.

The Firewood Police? Seriously?

Mon, 2015-11-23 15:45

Chilly nights have more and more New Mexicans making use of their fireplaces and stoves. But watch out — state law controls how wood is “advertised and sold.”

That’s no joke. Earlier this month, the New Mexico Department of Agriculture issued a press release warning that with the exception of “packaged bundles,” wood must be sold “either by the cord or fraction of a cord.” A cord is “128 cubic feet of wood, commonly seen in a tight stack 4 feet wide by 4 feet high by 8 feet long, with logs stacked parallel to one another.” Wood can be sold “by weight, but the seller must declare the price-per-cord equivalent.”

“We sometimes see firewood sellers using a variety of terms — face cord, loose cord, Albuquerque cord, truckload, load, rack, pile — but none of these are [sic] actual legal units of measurement,” said Ray Johnson, assistant division director of the department’s Standards and Consumer Services Division. “So when you see firewood labeled in these ways, it’s impossible to know whether you’re getting a fair deal or not.”

This morning, a bureaucrat appeared on KKOB AM to remind listeners of the law. And today, the Mountain View Telegraph is running the department’s release.

Heaven forfend vendors and their customers deciding between themselves what’s being sold, and at what price. Don’t state bureaucrats have bigger concerns on their plate?

Who has the biggest city workforce of them all?

Mon, 2015-11-23 12:14

The following chart recently appeared in the Albuquerque Journal. The most relevant data point is the “full time equivalent” number of city workers per 10,000 residents. According to the chart, Santa Fe has nearly triple the number of city government workers as does Rio Rancho.

Local government size doesn’t always jibe with political ideology, but it is not a surprise that liberal Santa Fe has the largest bureaucracy in the State.

Passenger Rail, the Texas Way

Fri, 2015-11-20 10:49

Depressed about the Rail Runner? You’re not alone. New Mexico’s taxpayer-ripoff train wastes tens of millions of dollars a year, and in the middle of the next decade, $112 million in balloon payments will be due.

To our east, an intriguing plan to link Dallas and Houston by rail is underway. Texas Central Partners is working with Central Japan Railway Company, which operates 323 trains a day between Osaka and Tokyo, to cut the travel time between the Lone Star State’s two largest metro regions from several hours to 90 minutes.

Earlier this week, “Middle Class Joe” was in Texas, and praised the bullet-train proposal as leading “this country into an entire new era of transportation.”

But unlike the vice president’s beloved Amtrak, the Texas line will be run by “a privately funded company,” and is “not backed by public funds.”

There are many obstacles for Texas Central Partners to get past before its proposal becomes a reality. No matter what the outcome, though, taxpayers won’t be on the hook for its expenditures.

Once again, Texas is leading the way on pro-growth, pro-taxpayer, pro-freedom public policies. When will elected officials in New Mexico notice?

Paul Gessing’s Testimony on the economic impacts of Medicaid expansion: Before the Health and Human Services Committee New Mexico Legislature, Santa Fe

Thu, 2015-11-19 16:31

Good morning Sen. Ortiz y Pino, Rep. Espinoza, and members of the committee. I am Paul Gessing, president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico.

I appreciate this opportunity to provide my organization’s perspective on whether the benefits of Medicaid expansion in New Mexico outweigh the costs and whether a “multiplier effect” exists by which increased federal dollars will generate increased economic growth in our state.


Before discussing the economic and multiplier impacts of Medicaid expansion, I feel it is important to discuss the impact of Medicaid on actual health care outcomes. Supporters of free markets and skeptics of the efficacy of government programs are are often accused of being callous or uncaring to the poor, but we actually want government spending to be used in ways that have proven, positive results.

There is no question that Medicaid expansion is a massive expansion of a health care entitlement. According to Congressional Budget Office, between 2014 and 2022, expanding Medicaid will cost American taxpayers at the combined federal and state levels $1 trillion. Before discussing the economic impact on New Mexico, it is important to ask what kind of health care we getting for that money.

For starters, the inspector general of the Department of Health and Human Services found that over half of providers no longer accept Medicaid patients. Of doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.

Last year, The Wall Street Journal profiled Farmington family physician Holly Abernethy, who

has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13%.

For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.

Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door.” “If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”

Moving from anecdotal to empirical evidence, it is worth considering Oregon’s experience. In 2008, a total of 29,835 Oregonians were given the opportunity to apply for the state’s Medicaid program out of almost 90,000 people on the waitlist. About 30 percent of those who were selected from the waitlist both chose to apply for Medicaid and met the eligibility criteria. Because it examined a unique, real-world experiment complete with a randomly selected control group, the study of Oregon’s Medicaid expansion is considered the “gold standard” in health-care research.

The study’s results have been published in academic journals, including The New England Journal of Medicine and the The American Economic Review in 2013. Its conclusion was that “Medicaid increased health care utilization, reduced financial strain, and reduced depression, but produced no statistically significant effects on physical health or labor market outcomes.”

The Oregon study is not alone in casting a skeptical light on Medicaid’s health benefits:

• A 2010 study of 1,231 patients with cancer of the throat, published in the medical journal Cancer, found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients—even after adjusting for factors that influence cancer outcomes. Medicaid patients were 80 percent more likely than those with private insurance to have tumors that spread to at least one lymph node.

• A 2010 study of 893,658 major surgical operations performed between 2003 to 2007 published in the Annals of Surgery found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25 percent less likely than those with Medicaid to have an “in-hospital death.”

• A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59 percent more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.

• A 2011 study of 11,385 patients undergoing lung transplants for pulmonary diseases, published in the Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent less likely to survive 10 years after the surgery than their privately insured and uninsured counterparts. Medicaid insurance status was a significant, independent predictor of death after three years—even after controlling for other clinical factors that could increase someone’s risk of poor outcomes.

In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.

So why do Medicaid patients fare so badly? Payments to providers have been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.

All that being said about the most important issue, the impact of Medicaid on health outcomes, I am primarily here to discuss the financial impact of Medicaid expansion on New Mexico’s economy and state budget.

In the current fiscal year, New Mexico will spend more than $5.5 billion on Medicaid, with state revenue covering just under $900 million of the total. By 2017, fully a third of the state’s population will be on Medicaid. At a time when revenue is dropping from the decline of the oil-and-gas sector, the program is seriously jeopardizing the state’s ability to balance its budget. By 2020, it is estimated that the state’s bill for covering newly eligible Medicaid recipients will be $163 million.

A Flawed Theory

The “multiplier effect” is the theory that government spending stimulates jobs creation and income growth. Many proponents of Medicaid expansion claim that since it is largely funded with “free” money from Washington, it is an economic-development tool. But, as Harvard economist Robert Barro explained in a September 2009 National Bureau of Economic Research paper, “it is wrong … to think that added government spending is free.” The money Washington is sending to New Mexico for Medicaid must come from either taxes or borrowing.

The national debt is currently $18.6 trillion. At least in the short term, the burden is sure to grow. Unfunded liabilities for Social Security and Medicare are estimated to be in the hundreds of trillions of dollars. This level of debt-creation will not continue. New Mexico, a state uniquely dependent on Washington appropriations, cannot count on an endless spigot of federal cash, for Medicaid or any other program. A reckoning is coming. It is likely to be very ugly for taxpayers in the Land of Enchantment.

The ‘Medicaid Multiplier’ Exposed

On the issue of the multiplier itself, after conducting a survey of the economic literature, Valerie Ramey, an economist at the University of California, San Diego concluded: “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.” Studies by many others, including economists at the International Monetary fund, concur with Ramey’s finding.

In an effort to better understand the alleged “multiplier effect,” the Rio Grande Foundation recently examined economic performance in the 24 states that expanded Medicaid in January 2014, comparing it with the 20 states that did not. Despite tens of billions of “free” money flowing into expansion states with no state match required until 2017, the percentage of job growth in the two groups was essentially the same, with a slight edge to the non-expanding states:

The absence of a Medicaid “multiplier” is particularly stark in New Mexico. Residents continue to leave our state, the labor participation rate is falling, and unemployment is rising. Our state has yet to recover the number of jobs it had during its employment peak, more than seven years ago. The state’s extensive matrix of welfare programs is surely an incentive to remain on public assistance rather than seek opportunities in the job market.

There are many weaknesses in the claim that Medicaid expansion creates jobs for the workers needed to treat newly eligible beneficiaries. While employment in New Mexico’s health-services industry is rising, it is not at all clear that Medicaid expansion is causing the growth. The sector has been adding jobs for many years, and even increased its employment during the Great Recession.

Even if it were the case that Medicaid expansion creates healthcare jobs, in the assessment of Harvard scholars Katherine Baicker and Amitabh Chandra,

(e)mployment in the health care sector should be neither a policy goal nor a metric of success. The key policy goals should be to achieve better health outcomes and increase overall economic productivity, so that we can all live healthier and wealthier lives. Our ability to ensure access to expensive but beneficial treatment is hampered whenever health care policy is evaluated on the basis of jobs. Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.

One penalty of Medicaid expansion that its proponents consistently avoid addressing is the impact it has on those with non-government coverage. Broadening the program imposes “a hidden tax on … people with private insurance. Expanding Medicaid leads hospitals and doctors to shift costs onto patients with private insurance thus making private insurance less affordable and contributing to the vicious cycle of increasing the number of people without insurance.” Prices for insurance premiums are rising—not falling, as Obamacare supporters claimed – and Medicaid expansion is a likely contributor to the cost of private coverage.

In Conclusion

Prior to the enactment of this new health care law, Medicaid provided New Mexico with 70 cents on the dollar with little evidence that it “stimulated” New Mexico’s economy.

Perhaps the worst aspect of Medicaid expansion is that, like so many federal programs, it relied on the promise of “free money” to the states. If any welfare program is worth enacting or expanding, it should be the taxpayers of New Mexico that support paying into a program for the benefit of their friends and neighbors. After all, we all do want better health care outcomes.

A cash-grab based on long-discredited Keynesian “stimulus” theory with little or no health benefits isn’t just unwise, it’s immoral. Think of what else we could do with $1 trillion.

In the short term, New Mexico should work with other states to press the federal government for the flexibility required to fix a badly broken and irresponsibly unsustainable program.

Medicaid desperately needs a sweeping overhaul. Reforms must be consumer-oriented, permitting beneficiaries to obtain private coverage in a competitive marketplace. Time limits similar to those imposed under the creation of the Temporary Assistance to Needy Families program in the 1990s, are also worth consideration.

In the long term, aggressive implementation of proven economic-development strategies will create the prosperity that will enable New Mexicans to obtain private insurance, either through their employers or purchased individually. The way to gauge successful healthcare policy in New Mexico is to track how many people are leaving, not joining, our population of Medicaid enrollees.

Thank you for your time today.

How Federal Spending in New Mexico Grows State/Local Government

Thu, 2015-11-19 08:19

(Albuquerque) – Elected officials of both parties have conspired over several decades to “bring home the bacon” in the form of federal dollars. For example, Senators Domenici and Bingaman served in the United States Senate for decades and were known as effective “porkbarrel” politicians.

New Mexico’s poverty along with its willingness to aggressively pursue federal spending has made the State the 3rd-greatest recipient of federal dollars relative to what it sends to Washington. A report by Key Policy Data recently found that New Mexico receives $1.69 for every dollar it sends to Washington.

More recently, the Republican Gov. Susana Martinez agreed to expand Medicaid under the federal “ObamaCare” program thanks in part to the generous federal match which is currently 100% of the costs of expansion and will remain at 90% from 2020 on. Prior to Medicaid expansion, Medicaid was often touted as “economic development” due to the fact that the federal government covered 70% of the program’s cost in the state.

Also, the Republican Mayor of Albuquerque has been pushing for a plan to put “bus rapid transit” along Central Avenue. That plan is contingent upon the federal government kicking in $80 million of the plan’s expected $100 million cost.

While federal funds are often seen as “free” and an “economic stimulus” by proponents, a new analysis by Dr. Eric Fruits, an adjunct scholar with the Rio Grande Foundation, each additional dollar of federal intergovernmental transfers to New Mexico is associated with $0.99 in additional taxes, charges, and other state and local own source revenue.

This new research further finds that New Mexico experiences a larger ratchet effect than states as a group. In 2012, New Mexico state and local governments received $5.9 billion in federal intergovernmental transfers and spent $13.1 billion raised from state and local sources. A hypothetical 10 percent increase in federal transfers to New Mexico would amount to about $590 million more federal money to the state.

“ How Federal Spending in New Mexico Grows State Government” is linked here and can be downloaded from the Rio Grande Foundation’s website,

New Mexico the Blue State

Wed, 2015-11-18 15:21

There are many ways to analyze the political leanings of the various states and, while New Mexico is “redder” than at any time in its modern political history, it remains in many ways a “blue” state. Check out the following from the FEC which was posted by Chris Cillizza of the Washington Post.

A few things are noteworthy:

From a geographical perspective, Republicans are dominant with Democrats relegated to the coasts. The exceptions being only Minnesota, Illinois, and New Mexico.

Democrats are relegated to heavily “urbanized” states with the exception of Vermont and New Mexico.

Oregon (33rd) and New Mexico (43rd) are the only poorer-than-average “blue” states as ranked by per-capita personal income.

But, despite their higher personal incomes, 1,000 Americans are moving from blue to red states every day. 


The Institute for Justice sues the City of Albuquerque over civil asset forfeiture

Wed, 2015-11-18 11:20

During the 2015 legislative session, the Rio Grande Foundation along with the NM branch of the Drug Policy Alliance, the ACLU, and the Institute for Justice worked successfully to reform New Mexico’s abusive civil asset forfeiture laws. Unfortunately, the City of Albuquerque is ignoring the law. According to the case being brought by the Institute for Justice, “In Albuquerque, police and prosecutors continue to use civil forfeiture and have even announced plans to purchase a new, bigger parking lot to hold all the cars they expect to seize—a parking lot that will be paid for through civil forfeiture.”

We are excited to be able to continue to work with IJ, but wish that Albuquerque’s elected leaders including Mayor Berry and City Council would adhere to the law without threat of a lawsuit.

“Something for nothing” mentality won’t stimulate the economy

Tue, 2015-11-17 16:34

Having been occupied in preparation for testifying before the Health and Human Services Committee on the economic impact of Medicaid expansion, I hadn’t had a chance to comment on another hare-brained “stimulus” scheme proposed by Nick Estes, formerly of NM Voices for Children (and a former debate opponent).

Estes, writing in the Albuquerque Journal on Sunday argued that the “Federal Reserve should create new money and transfer it to the government’s spending account. The government can then spend the money…without new debt.”

This “something for nothing” mentality has always puzzled me. It is quite similar to the reaction to my testimony from the mostly liberal legislators in Santa Fe who were eager to get their hands on the “free” money coming to New Mexico due to Medicaid expansion.

I’m not sure how the government “printing” money is going to generate real prosperity, nor do I understand how expanding an ill-conceived welfare program is going to “stimulate” the economy even if New Mexico is able to temporarily loot the other 49 states.

This “something for nothing” mentality is closely-related to the entitlement mentality so rampant on college campuses these days. But the entitlement mentality didn’t begin on modern college campuses. These emotional children learned to expect something for nothing from their parents and grandparents at least as far back as the advent of Social Security. That program’s first recipient Ida Mae Fuller paid just $25.75 into the system, but received $22,888.92 in benefits.

Faith-Based Medicaid Policy

Mon, 2015-11-16 10:53

You’ll find no better exemplar of the left’s cluelessness on Medicaid than yesterday’s Albuquerque Journal op-ed by State Rep. Deborah Armstrong.

The Albuquerque Democrat asserted that through Medicaid, New Mexico is “fully insuring and providing quality health care for well over one-third of the population.”

Wrong and wrong. Medicaid is not insurance. It is welfare. It is a government program funded by tax dollars, and administered by politicians and bureaucrats. Calling it “insurance” doesn’t make it so. Facts are stubborn things. Whether ones supports or opposes welfare, Medicaid is welfare.

Furthermore, Medicaid does not provide “quality health care.” Compared to the insured, its patients fare worse on a wide range of maladies, from heart disease to cancer, strokes to pneumonia, vascular disease to childhood asthma.

Finally, in the next fiscal year, the state will not “spend $976.9 million to provide Medicaid services.” That’s the funny math of New Mexico budgeting, which counts only revenue generated in the Land of Enchantment toward expenditures. In actuality, Medicaid expenditures will be in the neighborhood of $6 billion.

Tomorrow, Rio Grande Foundation President Paul Gessing will testify in Santa Fe on the economics of Medicaid — the poor-quality care it provides, as well as the fallacy that “the multiplier effect” from expanding the program will aid the state’s economy. Hopefully, Rep. Armstrong will be listening. She has a lot to learn about Medicaid.

NM Supreme Court Textbook Decision Senseless

Fri, 2015-11-13 12:50

As reported in today’s Albuquerque Journal, the New Mexico Supreme Court has ruled that children in private schools should not be allowed to receive textbooks paid for by taxpayers.

Now, we at the Rio Grande Foundation believe that the number of things government should pay for to be quite limited, but it is hard to see how a family’s decision to send their child to a private school should force them to give up any claim to the tax dollars they have forked over to the state to pay for education. It’s not like tax dollars are being used to pay for religious textbooks or something not taught in the traditional schools. Rather, these dollars are benefiting New Mexico children — children of taxpayers — just the same.

The US Supreme Court has already ruled on this issue, approving the use of tax dollars for non-religious materials provided to religious schools in Mitchell v. Helms.

That decision said in part that since the loans were suitable for both religious and public schools, the government was not serving to advance religion.

Accordingly, the government may now provide aid to religious groups as long as such aid advances some legitimate non-religious purpose and is granted in the same manner to non-religious groups.

Not sure what the next steps are but one wonders if this decision shouldn’t be appealed to the Nation’s highest Court. The good news is that our liberal New Mexico Supreme Court has a bit more balance with the addition of its newest justice.

Time to prioritize at Albuquerque City Hall

Thu, 2015-11-12 17:11

 In the wake of two recent shooting tragedies and ongoing negative attention for the city of Albuquerque, Mayor Richard Berry has asked New Mexico’s Legislature to make changes to the pension system in order to allow police to return to the workforce. The Albuquerque Police Department says 135 officers need to be hired to fully flesh out the local police force.

Earlier this year, the mayor proposed spending an additional $4.7 million to comply with the U.S. Department of Justice’s reform demands at APD. We can all agree that public safety is the first and most important role of government. Unfortunately, there are always infinite wants and limited means to provide those, and it seems like local governments and the local citizenry have been unwilling to prioritize. Over the years, this has led to higher taxes and real economic harm.

At the start of the 2000s, Albuquerque’s gross receipts tax (GRT) rate stood at 5.8125 percent. Currently, it’s 7.1875 percent — an increase of 23.7 percent. That rate will further jump to 7.3125 percent when the recently-passed ABQ BioPark tax hike is in place, a nearly 26 percent increase since 2000. All those tax hikes of a “fraction of a penny” have added up over the years to real money.

Today, our city has 17,100 fewer jobs than at its pre-Great Recession employment peak in March 2007. Yes, New Mexico’s economy remains weak, but its largest city is not helping.

Unfortunately, we’re just getting started. For more than a year now, Berry and a majority on city council have been promoting a costly and unnecessary bus rapid transit system along Central Avenue.

Full text of the article is available from Albuquerque Business First.

Another victory for school choice: Louisiana

Wed, 2015-11-11 16:23

When it came to education, it used to be that New Mexicans could “thank God for states like Louisiana and Nevada. Normally it was Mississippi and Alabama, but there were we were towards, but not always at the bottom of educational performance measures. Well, according to the US Department of Education, we are now at the very bottom in terms of graduation.

But other states that have traditionally struggled with educational outcomes are not standing still. They are providing real choices to parents and students. Earlier this year, Nevada enacted the most ambitious school choice program in the nation called Education Savings Accounts.

Louisiana too has traditionally struggled with educational outcomes, but under Gov. Bobby Jindal, the State created a statewide system of school vouchers. The Obama Administration sued Louisiana to allow the federal government to regulate the program, but yesterday the Fifth Circuit U.S. Court of Appeals ruled against Obama Administration’s position.

It would be great if New Mexico’s Senate Democrats would stand up to their friends in the teachers’ unions and embrace school choice as a response to Gov. Martinez’s testing and common core-driven reforms. I’m not holding my breath.