Errors of Enchantment Blog Postings

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Why is New Mexico not realizing its potential?
Updated: 2 hours 37 min ago

RGF president Paul Gessing’s recent discussion of oil and gas and New Mexico’s economy

Tue, 2014-08-19 13:26

I recently sat down with Wally Drangmeister of the New Mexico Oil and Gas Association to discuss New Mexico’s economy and how it depends on the oil and gas industry as well as potential ways to use the industry as a bridge to a more prosperous economy. The show originally aired on the Energy New Mexico Hour which airs on Sunday mornings from 10 to 11am.

Take a listen here.

New Mexico’s private sector has been weak for years

Tue, 2014-08-19 11:14

Check out the chart below (pdf here):

It illustrates changes in private sector GDP growth over three different time periods (the last 17, 4, and 2 years). As seen in the chart, New Mexico’s private sector growth has been consistently weak over the various time periods hovering from 45th to 35th place among US states.

Certainly, there are various ways to interpret this. One is that while New Mexico’s overall economy remains stuck in the rudder in recent years, the private sector is performing reasonably-well given recent history. The current economic malaise in New Mexico seems to be as a result of changes in federal spending.

Also, it is worth noting that by and large, New Mexico’s neighbors outperform the Land of Enchantment over each of the time frames discussed. This is not a surprise given New Mexico’s poor rankings on all manner of economic freedom indices.

For example, none of New Mexico’s adjacent neighbors under-perform New Mexico in any given time period although nearby Nevada and Arizona perform somewhat poorly when the after-effects of the housing crisis are included (as in the last four years).

HT: Matt Mayer

Tax hikes on the agenda at Albuquerque City Council tonight

Mon, 2014-08-18 14:46

The liberals on Albuquerque’s City Council may flex their muscles at tonight’s Albuquerque City Council meeting.

Two bills (P-14-5 and O-14-14) would increase the gross receipts tax by 1/8 of one percent to fund “essential services.”

The intent is to fund (a) mental health services and (b) capital improvements. No specifics are offered.

As I wrote several months ago when the mental health tax hike was first proposed, New Mexico’s per person spending on mental health is middle-of-the-pack among states. There is very little evidence as to the need for this tax hike or that enacting it will result in improved services.

Regarding the capital spending proposal, Albuquerque has robbed the Capital fund to spend more on operations and pay. The way to correct that problem is to balance the books. Use Capital money only for capital improvements. Taxpayers should NOT pay now for “something” and find out what the real needs are without leaping to the “increase tax” solution. Furthermore, Albuquerque should reconsider management of its golf courses and the zoo (to name just two things) which could result in cost savings.

Right-to-work law and lower taxes will help more than subsidies

Mon, 2014-08-18 12:14

It’s official. Tesla has broken ground at its new “gigafactory” near Reno, Nevada. While New Mexico appears to have missed out on Tesla and its expected 6,500 jobs, some legislators, when asked, seem willing to spend as much as 500 million tax dollars to lure the company to the state.

While details are by no means firm, it appears that Tesla is looking for an infusion of $500 million, not tax breaks of $500 million. The difference between the two is that tax breaks don’t actually “cost” the state/taxpayers anything because Tesla would have to locate in New Mexico for any tax revenue to result from its activities. When it comes to outright spending of New Mexicans’ tax dollars, those are dollars that come directly out of the pockets of average New Mexicans and the businesses already located here.

This important nuance explains why we at Rio Grande Foundation oppose payments made to the film industry which, according to a new legislative report, paid out $251 million in incentives to the film industry with $103.6 million in state and local tax dollars generated over the same basic time period. In simple mathematical terms, the state spent $147 million more than it generated from the film industry in recent years. That’s called a “loss” in any other industry. Jobs were created, but the net loss really illustrates the inherent problems with the program.

The same reasoning explains why fiscal conservatives should not support outright spending of $500 million to bring in Tesla. Tax breaks are one thing, but if the company goes under, there are no “clawbacks” that will get $500 million in outright spending back.

Long-term, generous subsidies and tax exemptions are not the answer for New Mexico’s economy. In fact, it is no surprise that the company broke ground in Nevada, which, aside from proximity to the company’s factory, is a state with a right to work law and zero income tax.

Recently, site selection expert John Boyd was interviewed about New Mexico’s chances of attracting Tesla. His comments were enlightening. He said, manufacturing companies look for reasons to scratch off states when considering where to build major facilities — and no right to work law is at the top of the list. Boyd again reiterated the need for right to work stating, “I can’t underscore how critical right to work status is.”

“Right to work” is not “anti-union.” It simply states that union membership must be optional and not a condition of employment. “Right to work” must be at the core of efforts to turn New Mexico around. Taxes are a second area in dire need of reform. As economist Steven Moore has illustrated in study after study, having a zero income tax means both stronger economic growth and faster population growth than the national average and the states with the highest rates on personal income. It all goes back to the adage that if you want more of something, tax it less; if you want less of something, tax it more.

Liberals clearly understand this when taxes were raised in a successful effort to reduce tobacco consumption, but they seem not to believe that workers will choose to go where they can keep more of their hard-earned money.

Despite the state’s challenging economy, New Mexico has made some progress in recent years in gradually reducing taxes on productive activity (Bill Richardson reduced the top income tax rate from 8.2 to 4.9 percent and Susana Martinez has made New Mexico a “single sales factor” state, reduced taxes on manufacturing inputs, and is phasing down New Mexico’s corporate income tax).

Unfortunately, decades of reliance on the federal government and a business-unfriendly gross receipts tax, underperforming educational system, and poor regulatory environment mean that the transition away from government reliance and toward prosperity will require greater cooperation and even bigger reforms.

Paul 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.

NM Catholic Bishops seemingly oppose Pope on food stamps (all while fudging the policy itself)

Fri, 2014-08-15 14:45

The Catholic Church in New Mexico seems to be more consistent in its advocacy for bigger government than it is in truthfully explaining public policies enacted or proposed by the State’s political leadership. Check out this statement on the Martinez Administration’s proposed changes to SNAP/food stamps from the New Mexico Conference of Catholic Bishops. To summarize the Bishops’ statement: they’re opposed in part because New Mexico’s terrible economy isn’t generating enough jobs for people who The Governor’s proposed changes would restore some kind of work requirement or require job training or community service for certain recipients of food stamps. As detailed by Capitol Report New Mexico, these requirements hardly require all food stamp recipients to get a job:

The rule won’t be forcing young mothers to abandon their toddlers. It won’t apply to disabled people who use food stamps, or the elderly.

The only people affected will be able-bodied adults between the ages of 18 and 59. Teenagers 16 and 17 who get SNAP benefits have to prove they’re in school or in a jobs training program.

According to HSD spokesman Matt Kennicott, if you’re a single parent with a child younger than 6, you’re exempt.

If you are receiving unemployment benefits, you’re exempt.

If you’re a college student — even if you’re only in school part-time — you’re exempt. Pregnant women are exempt.

If you have a low-paying job, you don’t have to apply for a better-paying job to keep your benefits.

If you’re a single parent with a kid older than 6, you have to prove you’re looking for a job but you can skip the jobs training and community service requirements.

Set aside the public policy value of having New Mexicans take proactive steps to find work or improve themselves in order to receive government benefits…you know, “Give a man a fish, he’ll eat for a day. Teach a man to fish and he’ll eat for life.”

The Bishops’ statement appears to directly contradict statements from Saint (Pope) John Paul II and a recent statement from Pope Francis (Without Work, Human Dignity is Wounded):

It is necessary to reaffirm that employment is necessary for society, for families and for individuals”, said the Pope. “Its primary value is the good of the human person, as it allows the individual to be fully realised as such, with his or her attitudes and intellectual, creative and manual capacities. Therefore, it follows that work has not only the economic objective of profit, but above all a purpose that regards man and his dignity. And if there is no work, this dignity is wounded! Indeed, the unemployed and underemployed risk being relegated to the margins of society, becoming victims of social exclusion.

 

August Liberty on the Rocks

Fri, 2014-08-15 11:44
Join the Rio Grande Foundation For an Evening of

Discussion and Fellowship at Liberty on the Rocks!

“Liberty on the Rocks” is a no-host happy hour discussion and information-sharing session.

Liberty on the Rocks will be held at Scalo Northern Italian Grill which is located in Nob Hill at 3500 Central Avenue SE in Albuquerque. A private room has been reserved for this event. In August, Liberty on the Rocks will take place on Thursday, August 21st from 6:00 to 7:30PM.

There is no cost for this public event, but attendees are encouraged to have dinner or drinks. Registration is not required but is much appreciated. Click here to register online … it’s fast and it’s free!

Come celebrate liberty with us!

How much would a Congress-person spend if they could spend what they wanted?

Fri, 2014-08-15 09:50

The National Taxpayers Union Foundation has a unique tool that compares the spending agendas of members of Congress. Rather than analyzing votes taken, the “Bill Tally” report examines the cost or savings of each member’s “wish list” as expressed by the net cost/savings of that individual’s bills as introduced, whether they come to a vote or not.

Check out the following chart, specifically the net spending agenda of each member as expressed in millions. Simply put, Udall and Heinrich would like to increase spending by about $10 billion whereas Lujan-Grisham and Lujan have much more ambitious spending goals. Rep. Pearce, on the other hand, is sufficiently ambitious as a spending cutter that his cuts are larger than the spending agendas of his New Mexico colleagues combined.

Click on the image below to expand.

Click here for more from the National Taxpayers Union including the report’s methodology.

New Report “Rich States, Poor States” report: NM 37th

Thu, 2014-08-14 15:08

According to the latest report ranking state economies, New Mexico is the 37th “most likely to succeed.” The report which was put together by ALEC (the organization the left loves to hate) analyzes economic policies on a state-by-state basis so readers can better understand identifies “which states are poised to achieve greater economic prosperity and those that are stuck on the path to a lackluster economy.”

Overall, the results comport nicely with the myriad economic indices which find New Mexico to be less economically-free and less economically-successful than its neighbors.

Submit Your Comments on the EPA’s Power Plant Rule

Wed, 2014-08-13 16:32

There are myriad problems with the Obama Administration’s proposed power plant rule, not the least of which is that Congress is not involved in enactment of such a dramatic policy shift in the first place. A close second is that it will increase electricity prices and cost good-paying (union!) jobs at existing power plants in New Mexico and elsewhere as seen in the following chart:

The best we can ask for is for large numbers of Americans to weigh in against the proposed regulations in the hopes of killing, weakening, or delaying the regulations. That can be done by personalizing and submitting a letter at the following link.

Rio Grande Foundation to Host Bi-Weekly Radio Show on 770 KKOB AM

Wed, 2014-08-13 14:00

(Albuquerque, NM) — New Mexico’s only free market think tank, the Rio Grande Foundation, is hosting an hour-long radio show on 770 KKOB starting this Saturday, August 16, from noon to 1pm. The show will air every two weeks through at least the end of 2014.

The show, entitled “New Mexico Freedom Hour” will focus on economic and education issues here in New Mexico with an eye towards real solutions that have been tried in other states. The format will involve interviews of guests from across the political spectrum and phone calls from the public. The call-in number is: 505-243-3333.

Said Rio Grande Foundation president and primary host, Paul Gessing, “This show offers the listeners a unique forum in which to learn about and discuss the ways in which free markets and limited government can help everyday New Mexicans lead better lives. Show topics will include labor freedom, taxation, education reform, and an economic history of New Mexico to name just a few.”

Is Santa Fe’s “living wage” a disaster or not?

Tue, 2014-08-12 12:11

It is the 10th anniversary of Santa Fe’s so-called “living wage.” The Albuquerque Journal covered the anniversary today and concluded that “results are mixed.”

Fair enough. It is hard to say that raising the minimum wage is a “disaster,” but when such a small portion of workers earn the minimum wage and those happen to be the most marginal, least-productive workers in the economy, it would take a truly outlandish minimum wage hike to be a “disaster.”

But that doesn’t mean that higher minimum wages are harmless or somehow beneficial as we have pointed out regarding younger workers in Santa Fe.

Ironically, while mom-and-pop businesses in Santa Fe are forced to pay $10.66 an hour, their elected officials in Washington with unlimited claims on the United States Treasury pay some of their workers nothing.

It is also sad, per the anecdote at the conclusion of the Journal article, that a young person would pick up and move all the way from North Carolina to work in fast food. Rather than relying on government mandates to increase one’s pay, wouldn’t she be better off studying part time to gain an associates degree in some kind of skilled trade (plumbing, welding, electrician, hair-stylist) where there is a real future rather than using those scarce resources to pick up an move her entire family for another unskilled, low-wage job?

Regardless of minimum wage policies, there are modest disparities in pay levels for even unskilled work, but the long-term impact of a few $$ an hour raise as opposed to a long-term increase in skills and marketability is minimal.

Overall, conservatives shouldn’t blow the impact of increased minimum wages out of proportion in terms of overall economic impact, but that doesn’t make it good policy either.

New Poll shows New Mexicans Overwhelmingly Support Free Association Principles behind Right to Work

Mon, 2014-08-11 10:00

(Albuquerque, NM) – The Rio Grande Foundation is one of 77 organizations in 44 states celebrating “National Employee Freedom Week” which lasts from August 10-16. The week marks an occasion to educate workers on their freedom to join or not join a labor union.

There is no more basic freedom enshrined in the United States Constitution than that of free association. That includes the choice not to be forced to join or pay dues to a union as a precondition of employment. This right is protected under “Right to Work” legislation which has been adopted by 24 states, not including New Mexico.

According to a poll of 500-502 respondents conducted by Google Consumer Surveys, approximately 84.7 percent of New Mexicans answered “Yes” to the question: “Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?”

Said Rio Grande Foundation president Paul Gessing, “These poll results illustrate strong support for the basic tenets of a “Right to Work law in New Mexico. No matter how the legislative races pan out in November, there can be no doubt that an overwhelming majority of New Mexicans support the basic principles of “Right to Work.”

Concluded Gessing, “Where implemented, “Right to Work” laws not only protect basic fairness, but they have a proven track record of spurring economic growth and increased employment when adopted. With New Mexico’s economy struggling profoundly, both parties in Santa Fe must consider ‘Right to Work’ as a core component of plans to reform the economy.”

HHS Audit Finds Security Weaknesses in New Mexico’s Obamacare Exchange

Fri, 2014-08-08 15:13

According to a recent article published by National Review Online, a federal audit has found information-technology security weaknesses at New Mexico’s health-insurance exchange.

According to the report:

The final audit report was completed by June 17, 2014, but because it contains such specific information about vulnerabilities, it is not public, according to a letter sent from the Department of Health and Human Services’ Office of Inspector General (DHHS OIG) to the health exchange.

Needless to say, there are still some very significant issues with ObamaCare in New Mexico and around the nation.

In response to the NRO story, Dr. Deane Waldman who holds positions both on the Health Exchange Board and the Rio Grande Foundation, said:

The NM Health Exchange, in conjunction with federal oversight, was beta-testing, de-bugging if you will, our preliminary system for the individual market.

WE found the security problem and fixed it, before implementing our individual market, unlike healthcare.gov. Further, since we could not finish all the beta-testing in time for the federal deadline, WE chose to put off opening our Individual Market for a year until we completely de-bugged the system and proved (with evidence not promises or magical thinking) that it works, again unlike healthcare.gov.

You might find it interesting that WE take the federal deadline seriously, while they keep deferring them, “moving the goalposts” as it were.

$500 taxpayer investment in Tesla too rich, but perhaps there are alternatives?

Fri, 2014-08-08 10:08

By now most New Mexicans are aware that Tesla has broken ground on its “gigafactory” in Reno. To me, it seems likely that this is where the company intended to build its plant all along. After all, Nevada is a “right to work” state, a zero-income-tax state, and Reno is relatively close in proximity to Tesla’s main factory in Fremont, California.

But, some New Mexicans hold out hope that the company is “still evaluating” potential locations. Further comments from Tesla CEO Elon Musk indicated that $500 million might be enough to get the company to set up shop in a given state. For starters, it is clear from the Albuquerque Journal story that the company is looking for $500 million in tax dollars out of pocket. In other words, I’m sure some tax breaks and perhaps even some regulatory favors are expected, but Tesla is looking for $500 million upfront to assist the company with building its factory.

As I have written previously (point 1), taxing other New Mexicans and existing businesses to pay for a new business, no matter how exciting that business may be, is simply wrong and not good economics. Just like with the film industry, tax breaks are one thing, but outright payments are another.

If Tesla is really still in the market for another “gigafactory” location, I think the Martinez Administration should put Democrats on the spot. Give Tesla the equivalent of a “right to work” carve-out and eliminate personal and corporate income taxes for the company and see what happens. It won’t COST New Mexico taxpayers a dime upfront and it will force Democrats in the Legislature to make a decision on policies that should be considered for all businesses in New Mexico.

Rick Hess charter school talk: “Charters must retain flexibility to innovate”

Wed, 2014-08-06 12:41

American Enterprise Institute Education expert Rick Hess spoke yesterday at Rio Grande Foundation events in Albuquerque and Roswell. His Albuquerque remarks were video-recorded and are available below. The Albuquerque Journal covered Hess’ talk and that article is available here.

Education Expert Rick Hess discusses “Getting Charters Right” from Paul Gessing on Vimeo.

What’s wrong with a food stamp work requirement?

Mon, 2014-08-04 15:49

Those meanies in the Martinez Administration have announced that they are going to reimpose a work requirement on recipients of food stamps. That’s the program that has seen its budget explode in recent years. Growth was particularly pronounced during the recession, but was growing steadily in cost during the economic boom immediately prior to the recession:

Not surprisingly, the usual left-wing proponents of unlimited government spending are opposed to any effort to curtail the free goodies, including Rep. Lujan-Grisham.

But this “work requirement” is hardly the onerous burden the advocates claim. It is only 20 hours and those hours could be spent volunteering in the community. Yes, the classic single mom with kids will always face the issue of babysitting, but perhaps the discussion to have should be over how to reduce the number of single moms out there rather than constantly demanding that taxpayers give them free stuff?

Besides, even if you can’t get a job in New Mexico’s current, poor economy, sitting on your butt at home isn’t going to help you build the skills or network to find a new, paying job. Doing something productive for 20 hours a week in exchange for food stamps is very reasonable.

Tough Choices Needed for New Mexico to Take Off

Thu, 2014-07-31 16:02


Recently, site-selection expert John Boyd was interviewed about New Mexico’s chances for getting the Tesla “gigafactory.” His comments were very enlightening. He said that manufacturing companies seek reasons to eliminate states when considering where to build major facilities, and the lack of a right to work law is at the top of the list. In the interview, Boyd again reiterated the need for right to work stating, “I can’t underscore how critical right to work status is.”

Unfortunately, despite polling data (recently released by Rio Grande Foundation) showing that nearly 85 percent of New Mexicans support such laws, they are controversial. In reality, such laws merely prohibit unions and employers teaming up to force new employees to join a union as a condition of employment.

While most people see voluntary association as an American birthright, many unions see it as a dire threat to their funding and political power. So they kill it every year in its first committee in Santa Fe.

Equally problematic is the “go-along” attitude of so many of New Mexico’s business leaders. With 6,000 Tesla jobs hanging in the balance, the need for our legislature to pass a right-to-work law should have been a centerpiece of the recent “Reinventing Our City” conference on Albuquerque’s economy, but it was hardly mentioned by the business and community leaders who spoke at the meeting. To be fair, Mayor Berry has repeatedly noted the importance of right to work in other venues.
Any serious discussion of how to turn around New Mexico’s economy must focus on big, difficult issues like right to work, serious tax reform and a dramatic rethinking of the way in which we educate our children and prepare them for the competitive 21 st century workforce.

Rather than taking on these difficult but important issues (right to work is actually the simplest and likely the most politically viable short-term reform), New Mexico’s statewide chamber, ACI, has recently focused its attention on government contracting. The Chamber is upset that New Mexico’s in-state contractor preference is inadequate and not adhered to closely enough.
I certainly appreciate that businesses want a fair shot at government contracts, but as state taxpayers we should get the best deal possible regardless of where the business is located. Taxpayers shouldn’t be forced to pay above-market prices for government services and construction.

Businesses also have amazing ways of making themselves appear to be in-state when in fact they are not. Do we really want to hire a team of taxpayer-funded investigators to check up on businesses to make sure they are truly “New Mexican?” Simply put, government contracting reform is not going to have a major impact on New Mexico’s economy one way or the other.

The silver lining about New Mexico’s ongoing weak economic recovery is that more and more people are realizing that our state has depended on Washington’s largesse for way too long. That situation is changing both due to federal budget problems and the retirement of Senators Domenici and Bingaman.

This is the time for solutions and that means facing some tough decisions. As explained by Mr. Boyd, a national expert on business relocation, a right-to-work law is a must for any state that wants to grow its economy. It is time for our business and political leaders to upset the entrenched special interests that have been holding our state back for so long.

The alternative is a future of government dependency and poverty.

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.

New Mexicans’ tax dollars at work: subsidizing “The Bachelor”

Thu, 2014-07-31 15:12

As if the fact that they are getting 30 cents on the dollar as part of New Mexico’s film subsidy program were not bad enough (TV shows receive 30 cents on the dollar as opposed to 25 cents for movies), now New Mexico taxpayers are subsidizing The Bachelor, a television show that can only be described as insipid. The “plot” of the show involves one man choosing from a stable of 25 or so women.

The City of Santa Fe is putting up $100,000 to attract the show while New Mexico’s Tourism Department is putting up $50,000 according to KRQE TV.

I’ve never watched the show and I have no idea whether it is good exposure for the city in which it films, but state taxpayers are already losing more than 50 cents on the dollar for film subsidies. Additional taxpayer subsidies for The Bachelor adds insult to injury regardless of the show’s quality or lack thereof.

Notably, this is not Santa Fe’s first go-round when it comes to doubling up on film subsidies. Santa Fe studios also “doubled-up” its taxpayer subsidies by using $23 million to finance construction in addition to the 25 or 30 cents on the dollar thrown in by the state. In Santa Fe apparently, there is no limit on what taxpayers should pay for films and tv.

For an amusing but slightly off-color take on The Bachelor, check out the following clip from Chelsea Handler:

Site selection expert: New Mexico will lose out to Tesla due to lack of “Right to Work” law

Wed, 2014-07-30 09:22

There’s yet another story about Tesla in today’s Albuquerque Journal. While the headline is mostly about the likelihood that the new giga-factory will be located near Reno, to my mind, the real news came from John Boyd, the principal at his namesake site selection firm (he helps businesses figure out where to locate). Said Boyd of New Mexico’s chances to lure Tesla “manufacturing companies look for reasons to scratch off states when considering where to build major facilities — and no right to work law is at the top of the list.”

Boyd continued saying, “I can’t underscore how critical right to work status is.” In conclusion, Boyd again reiterated the dire need for a right to work law in New Mexico saying, “New Mexico has enormous potential to become a manufacturing hub, especially if it were to adopt right to work legislation.”

We at the Rio Grande Foundation have been talking about the importance of right to work for years with no action by the Democrat-controlled Legislature in Santa Fe. Unfortunately, but not surprisingly, right to work is not on the agenda of some crazy people who apparently are also hired by institutes of higher education who want to do “whatever it takes” to bring Tesla to town. Nor is right to work on the agenda of legislators who want to play politics with the Tesla factory but won’t advocate for right to work.

What do other studies from other states show about film subsidies?

Tue, 2014-07-29 15:20

When it comes to film subsidies in New Mexico, the Rio Grande Foundation is about the only organization that publicly, clearly stands in opposition. Some even wonder if our position is legitimate given that it is such a “minority” viewpoint.

Media must accurately reflect range/ratio of perspectives. Is @DanBoydNM inaccurate or inconvenient? @pgessing @jfleck @MgallagherMike

— Gwyneth Doland (@GwynethDoland) July 23, 2014

Ironically, outside of New Mexico, there is relatively widespread agreement that film subsidies are poor public policy. The following links are just some of the reports generated in recent years in opposition to film subsidies.

University Journal
Rutgers Journal of Law & Policy

Legislative Agency
North Carolina General Assembly

From the left:

Center for Budget and Policy Priorities
Columnist Michael Kinsley
Gerry Bradley, New Mexico Voices for Children
Louisiana Budget Project

Right:
Heartland Institute
Tax Foundation
Mackinac Center (Michigan)