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Why is New Mexico not realizing its potential?
Updated: 48 min 24 sec ago

NM’s struggling economy as compared to other states

Mon, 2015-01-19 12:42

New Mexico In-depth recently published a legislative guide It is worth taking a look at it here.

I have a full-length article about government transparency and openness in government as well as a few quotes in the booklet, but Rio Grande Foundation was able to take out a full-page ad illustrating the serious problems facing New Mexico arising from our relative lack of economic freedom. One chart from the ad showing New Mexico’s lagging performance relative to its neighbors can be found below:

The full ad which includes several proposed solutions for the Legislature to consider in the upcoming session is on page 17 of the booklet which was published and inserted into newspapers (not including the Albuquerque Journal) across New Mexico over the weekend .

Kudos to Obama DOJ on Asset Forfeiture Reform

Fri, 2015-01-16 14:47

As the 2015 legislative session approaches, the Rio Grande Foundation has been working on a variety of issues. One that has not been as public (to date) is “civil asset forfeiture” reform. And, while there is work to be done at the state level, it is worth acknowledging an important move by the Obama Administration to reduce the likelihood of forfeiture abuse.

Simply put, “civil asset forfeiture” had become ripe for abuse with police departments seizing the possessions of otherwise innocent people who were not provided due process in the same way as accused criminals. Details on civil asset forfeiture can be found here.

A detailed Washington Post article on the Obama Administration’s move can be found here.

A press release from our friends at the Institute for Justice can be found here.

Here is an article relating to recent comments from the Las Cruces former city attorney that spurred outrage nationwide.

Note: this week on the NM Freedom Hour on 770 KKOB, I’ll be sitting down with an ideologically-diverse panel of experts to discuss asset forfeiture reform including this move by the Obama Administration.

Put the brakes on efforts to increase the gas tax

Fri, 2015-01-16 10:44

With gas prices dropping quickly, there are increasing calls on both sides of the political spectrum for increasing the gas tax. I penned the following article offering a few policy ideas for what policymakers both in Washington and New Mexico ought to do before such a tax hike is considered.

With the precipitous decline in gas prices, there have been increasing calls at both the federal and state level for raising gas taxes. While opposition may seem to be founded on mere anti-tax sentiment, the reality is that there are several reasons not to increase gas taxes on either the state or federal levels.

First and foremost, it is time for Washington to step aside when it comes to most transportation policies. Transportation was largely under state control until the advent of the Interstate Highway System in the late 1950s. This system involved the creation of a massive network of highways designed to exacting specifications as laid out by federal policymakers.

Since the Interstate Highways were developed partially for defense purposes, Washington was involved in funding and implementing it. But the system is built. Now that it is, the focus should be on devolving most transportation programs to the states. This “devolution” concept was proposed in the most recent Congress as the “Transportation Empowerment Act” by Sen. Mike Lee (Utah) and Rep. Tom Graves (Georgia).

Essentially, the Act would eliminate Congressional “pork,” the mandatory diversion of tax revenue from roads to transit, beautification projects, and bike paths, and it would give states greater flexibility in how they fund transportation initiatives within their borders. After all, mass transit may work well in New Jersey or densely-populated parts of California, but are unnecessary in Wyoming or New Mexico.

Devolution would also free states from costly labor regulations known as “Davis-Bacon” which inflate the cost of federal highway projects by an estimated 10 percent.

Raising the federal gas tax would simply lock the current system into place with all of the costly diversions and over-priced labor while costing motorists and our economy at the pump.

Of course, Washington is only one part of the transportation puzzle. New Mexico’s Legislature will also be considering legislation to increase the gas tax. This effort is misguided as well.

For starters, New Mexico policymakers have unnecessarily raised the cost of state-funded public works projects including roads and schools through “Davis-Bacon” prevailing wage laws. Since labor is such a significant component of the cost of construction projects, it is only sensible to pay fair market wages rather than arbitrarily inflating them. Legislation has been introduced by Rep. Nora Espinoza to reform New Mexico’s Davis-Bacon law.

It also makes sense for New Mexico to consider alternatives to gas taxes as a means of funding road construction. With the increased efficiency of gas-powered vehicles and the development of gas-sipping hybrids and even electric vehicles, there can be no doubt that gas taxes don’t go as far as they used to. To the extent that gas taxes are a “user-fee” paid for by those who use the roads, it makes sense for all road users to pay something for the construction and upkeep of New Mexico roads, even if your vehicle of choice is not fueled by gasoline.

This leads directly to the potential for alternative financing methods including so-called “PPPs” or “Public-Private Partnerships.” PPP’s are a means of bringing private investment dollars to public projects which in turn can result in more and better-maintained infrastructure.

To the extent that New Mexico’s transportation infrastructure is in need of additional funding, policymakers should enable entrepreneurs and private capital to help fund these needs.

If, after all these reforms have been implemented and New Mexicans still see infrastructure funding as inadequate, then it may be reasonable to consider raising the gas tax, indexing it to inflation, or both. Fortunately, there are still numerous inefficiencies in the current system that can and should be unlocked.

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

One Year Later, Santa Fe’s Plastic Bag Ban is not working

Wed, 2015-01-14 12:50

Santa Fe’s ban on plastic bags isn’t making the city greener.

Less than a year after formally implemented the ban, the City Council is now looking for a more effective solution. As recent studies have shown, instead of bringing reusable bags on their shopping trips, Santa Fe citizens have simply traded plastic for paper – nullifying the law’s sustainability objectives.

In the months following Santa Fe’s bag ban, the Environmental Services Division surveyed local retailers on its effects. After two months, 97 percent of stores reported that less than one percent of customers were bringing their own reusable bags. Two months later, according to 68 percent of respondents, that number was still below five percent.

Without reusable sacks at the ready or the option of plastic at the checkout, shoppers in Santa Fe are forced to use paper bags for their purchases. But as numerous studies have shown, paper isn’t the best choice for the environment. Plastic bags require 70 percent less energy to manufacture and generate 80 percent less waste.

Even the preferred reusable bags aren’t a perfect option. Most – made from non-recyclable nonwoven polypropylene – are used fewer than eight times before they too end up in the waste stream, where they take up more space than plastic bags. In fact, plastic shopping bags are only a tiny fraction of the country’s solid waste stream – a mere .4 percent.

Of course, no amount of litter is acceptable and any effort to minimize waste is commendable, but we can keep Santa Fe pristine without banning an option that both customers and businesses prefer.

As the report goes on to say, both have begun to feel the negative consequences of the ban. Santa Fe citizens, who previously used their old plastic bags for other reasons, miss the availability of this convenient and durable option. And Santa Fe isn’t alone in this – nine out of ten Americans reuse plastic grocery bags for everything from padding valuables for storage to packing lunches and lining trash bins.

Meanwhile, nearly a quarter of retailers in Santa Fe have already indicated a significant negative impact from providing the more expensive carryout options – options that also leave them more susceptible to shoplifting.

With clear evidence that the plastic bag ban isn’t working as intended, one would think Santa Fe’s City Council would begin considering more viable methods for meeting sustainability goals. Think again.

Despite legal uncertainties, local officials are now reconsidering ways to levy a fee on paper bags in addition to the ban. A 10-cent fee was part of the original ordinance passed last summer, but was dropped after the city attorney expressed concerns of it constituting an illegal tax.

Others have raised similar concerns. According to Texas Attorney General Greg Abbott, fees on single-use bags violate the state’s Solid Waste and Disposal Act. And in California, concerned citizens are working to overturn a statewide ban that promises to line the pockets of grocers and special interest groups at the expense of the environment and hardworking Californians. Under SB 270, funds collected from the paper bag fee won’t go to an environmental or government initiative, but to the grocery store owners themselves.

The same potentially illegal – and certainly, unacceptable – transfer of wealth could occur in Santa Fe if the City Council has its way.

Across the country, 82 percent of Americans believe the types of shopping bags they use should be their choice, not a decision mandated by the government. Instead of meddling in the choice of consumers – and spending thousands in the process – local officials should turn their attention to consumer education and recycling for effective environmental stewardship.

As Santa Fe has experienced firsthand, plastic bag bans aren’t an environmental silver bullet. Amending the ineffective law won’t change that fact. The City Council must consider alternative green initiatives that don’t also harm the local economy.

Who is “price gouging” at the pump now?

Wed, 2015-01-14 10:13

It was only a few short years ago when the economically-misguided (both Republican and Democrat) were engaged in a witch hunt against the issue of “price gouging” at the gas pump. See my comments about then Rep. Heather Wilson. Wilson was by no means the only one. President Obama called an investigation and pundit Bill O’Reilly mocked him for not being tough enough.

Of course, these days no one is talking about “price gouging” at the pump because prices are dropping like a rock. OPEC which has, in the past, been able to reduce supply somewhat in order to drive up prices, has lost its power due to market forces (the US fracking boom).

And, of course, remember Democrats mocking Sarah Palin for saying “Drill Baby Drill?” Thanks not to government policies, but to market forces and new technology, that’s exactly what has been in recent years. The result, dramatically-lower gas prices (despite federal policies). Ingenuity and market forces are amazing. Government regulations and cartel pricing conspiracies, not so much.

Should NM taxpayers embrace $50 million closing fund?

Tue, 2015-01-13 15:34

According to recent news reports including this one from the New Mexico Watchdog, there is broad, bi-partisan support for an expanded $50 million “closing fund” for New Mexico to attract businesses.

Interestingly, the fact that New Mexico’s economy will be among those most harmed by falling gasoline prices is being used by advocates to justify “diversifying” New Mexico’s economy through the use of gas taxes (nearly 1/3rd of which were generated by oil and gas in the first place). Obviously, falling revenues mean that there is less revenue left to be spent on New Mexico’s fast-growing Medicaid program or on an expanded “closing fund.”

As I make clear in the Watchdog piece, we at RGF are free market first and pro-business second. We’re not fans of spending money to bring businesses here. We’d rather do the basics like adopt a “right to work” law and reform regulatory and tax policies in order to attract businesses. Taxing productive citizens and businesses in order to transfer that to attract new businesses is a losing proposition.

Interestingly enough, for Republicans in particular the $50 million closing ideas is fraught with political peril. Liberal Democrats who support the idea could easily cite support for the idea in the future and say that they worked on a bi-partisan basis to grow New Mexico’s economy. Unfortunately, a Republican embrace of the idea absent broader economic reforms will saddle the GOP with responsibility for the economy and free liberals from the “obstructionist” label.

What do site selection professionals really say about “right to work?”

Mon, 2015-01-12 17:26

There has been some controversy over whether site selectors — the professionals who help businesses locate facilities — and their clients value “right too work” laws as a business location benefit.

Back in July as New Mexico was in the running for the Tesla “gigafactory,” one site selection manager spoke out strongly in favor of “right to work” as an economic development tool. John Boyd, the principal at his namesake site selection firm said 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.”

More recently, Dan Mayfield of the Albuquerque Biz First talked to some other site selectors who called “right to work” “old thinking” and “steadily less important as a factor for companies to the point that it hasn’t come up in 10 years.”

What’s the reality? When Michigan went “right to work” in 2013, Site Selection Magazine interviewed several site selection experts on the issue. The following comments, all from professional site selectors relating to a real-world law passing seem to indicate strong support for “right to work” laws among site selectors:

“We believe there will be an enormous impact, especially for medium-tier companies who are poised to grow,” says Jason Hickey, principal of Hickey & Associates in Washington, D.C.

Tracey Hyatt Bosman of BLS & Company in Chicago calls Michigan’s sudden change “a dramatic demonstration of the state’s commitment to the transformation of their business environment. It also will shine a big spotlight on all of the other work they have been doing, including overhauling their corporate tax structure, simplifying regulatory processes and bringing innovative approaches to economic development.”

Bosman echoes other site consultants when she adds, “Some companies simply insist on locating in a right-to-work state. Michigan’s new legislation removes a roadblock and will bring the state’s extremely skilled work force into consideration for more projects.”

It was hard to find anyone in the site selection profession who saw a downside to Michigan’s swift reversal of decades of labor law.

“Where it will have an effect is when there are companies who are looking for locations, Michigan will no longer be eliminated because they are not a right-to-work state,” says Brent Pollina of Pollina Corporate Real Estate in Chicago. “As a result, there should be a significant increase in the number of projects that Michigan receives because they are no longer being eliminated at the early stages of searches.”

The change also sends a strong signal to business and industry, adds Pollina.

The Albuquerque-area business community pitches Right to Work

Wed, 2015-01-07 22:08

Albuquerque Mayor RJ Berry spoke at a January 7, 2015 press conference in support of “right to work.” Pardon the poor camera work and the loud passing fire truck! I believe it is very important and powerful that supporters of “right to work” have such a great ally in the Mayor of New Mexico’s largest city.

Albuquerque Mayor Richard Berry speaks on “right to work’s” importance for New Mexico from Paul Gessing on Vimeo.

Do businesses look at Right to Work to base manufacturing operations? Of course. Boeing had a highly-publicized fight with the Obama Administration over the company’s desire to build a manufacturing plant in Right to Work South Carolina. Check out this interactive map of the airplane make Airbus’s US operations. Out of nine US facilities, their only non-RTW operation is their Washington, DC office. Brazilian jet manufacturer Embraer’s first US manufacturing facility is in “right to work” Florida.

And then there is automobile manufacturing. As seen in the chart below and as noted in Wards Auto, (even before Michigan went “right to work,” more and more of automobile manufacturing is happening in “right to “work states:

This goes hand in hand with the automakers’ growth in non-union manufacturing:

Paying their share

Tue, 2015-01-06 15:46

It is often mis-stated that the “rich” don’t pay their share. When it comes to federal income taxes, as the Tax Foundation’s new chart points out, they most definitely do pay their share (and more).

There is always the rejoinder that other taxes are not so progressive and that payroll taxes are “regressive.” This is true and is yet another reason to reform those broken and heavily-indebted programs from the ground up.

Encourage PRC Commissioners to support for PNM plan

Tue, 2015-01-06 12:55

If you haven’t seen the news reports, the radical anti-modern-society types were out in force yesterday in Santa Fe (it is their home-base after all) protesting against PNM’s proposal to actually keep using coal to generate electricity (read Carla Sonntag’s Albuquerque Journal piece on the issue).

While the PNM plan is not perfect, the radical anti-energy crowd would love nothing more than to completely kill New Mexico’s economy. In other words, like most political compromises, PNM’s plan is better than the alternative. I have submitted comments to the PRC via the following email address:

Dear PRC Commissioners,

As a ratepayer and constituent, I encourage all NM Public Regulation Commissioners to SUPPORT the PNM plan submitted under Case #13-00390-UT.

The plan is not perfect. Unfortunately, it requires PNM to shut down two perfectly good coal-fired units at San Juan Generating Station (SJGS) and retrofit the remaining two units with expensive equipment meant to improve visibility in the Four Corners region.

However, opponents of the PNM plan who are advocating a complete shutdown of the SJGS are out of touch with reality and the need for affordable, reliable electricity in our state.

In conclusion, I hope you support the imperfect PNM plan over the economically-devastating alternatives.

NM on list of top-10 outbound states…again

Mon, 2015-01-05 15:31

The newest edition of the United Van Lines report on the leading outbound and inbound states is out and the news is bad (again) for New Mexico which finds itself among the top-10 “outbound” states for the third year in a row. Check out reports from 2013 and 2012.

See this year’s map below:

Based on historical trends and weather, New Mexico should pretty consistently be on the “inbound” side of things, but public policies seem to push it into the negative time and again.

Interestingly enough, there is a strong correlation in terms of the “right to work” issue: 8 of the 10 leading outbound states are DO NOT have a “right to work” law on the books; and 7 of the 9 leading inbound states are RTW (Washington, DC is listed in the top-10 inbound “states,” but isn’t a state) and given its small size and unique economy, it shouldn’t be considered.

The top inbound states of 2014 were:

South Carolina (RTW)
North Carolina (RTW)
Florida (RTW)
Nevada (RTW)
Texas (RTW)
Oklahoma (RTW)
Idaho (RTW)

The top outbound states for 2014 were:

New Jersey
New York
North Dakota (RTW)
West Virginia
Kansas (RTW)
New Mexico

Let the anti-“right to work” disinformation campaign begin!

Mon, 2015-01-05 12:54

I had a relatively relaxing Holiday season and made sure to enjoy it because I know it is going to be an exciting and intense legislative session. The issue of “right to work” and whether New Mexico should become such a state continues to receive attention, specifically in the Albuquerque Journal where two articles appeared.

The first was an opinion piece by an English professor at CNM. The author repeats the myth that “unions must represent all unit members whether or not they pay dues.” This is demonstrably false. Unions are under no obligation to represent anyone, but it is a useful myth to repeat.

The author also makes the spurious claim that “right to work” laws increase inequality. There is simply no evidence for this statement (and the author rightly fudges the statement without citing any data to back her argument up). Here is a list of states by gini coefficient which measures inequality. There is simply no discernable pattern when it comes to “right to work” and inequality as many of the least unequal (most equal) states have “right to work” and vice-versa.

And then there is Thom Cole’s article from the front page of today’s Albuquerque Journal. Cole seized on my statement that “right to work” would impact unions’ bottom lines. This is an obvious truism as unions and their allies directly benefit from the forced-deduction of union dues which, in many cases are then donated to Democratic Party candidates.

The balance of the article is a platform for Jon Hendry of the AFL-CIO to share all the great things unions supposedly have done for New Mexico workers. Omitted is how union-supported left-wing economic policies are killing New Mexico’s economy and forcing more of our citizens to look for work in “right to work” states like Texas.

Some facts on electricity in NM

Wed, 2014-12-31 15:18

With all of the controversy over PNM’s proposed rate hike, it is important to have a few facts. For starters, regardless of any other policy proposal at the federal or state levels, New Mexico’s renewable portfolio standard is expected to cost utility rate-payers $619 annually by the time it is phased in, in 2020.

According to the US Energy Information Agency (EIA), New Mexico’s commercial and residential customers already pay relatively high rates for their electricity. No bordering state has higher commercial or residential rates than New Mexico. Not surprisingly, New Mexico also has one of the most ambitious RPS’s among its neighbors (it will be interesting to see how rates in Colorado climb to comply with their 30% requirement).

Lastly, as the chart below (also from EIA) shows, New Mexico has seen some rather steep price increases in the past year alone with residential and commercial rates jumping by nearly 10% in a single year.

It is hard to say whether PNM should get all or part of its requested rate hike, but it is clear that government mandates are having a big impact on electricity prices in our state.

Senate leader’s record bodes ill for economic growth

Mon, 2014-12-29 10:14

New Mexico’s Senate majority leader – arguably the most powerful elected Democrat in the State – recently laid out some of his views on the upcoming legislative session. He claimed to support “compromise,” but it is clear that what he really means is that he has no plans to support reforms that will boost New Mexico’s struggling private- sector economy.

Sen. Michael Sanchez’s intransigence is not surprising given that he and his allies have controlled New Mexico’s Legislature for many decades and (likely see the new House Republican majority) as a temporary loosening of control as opposed to a decisive break. That big-government ideology, by the way, has driven New Mexico to the bottom of most good lists and the top of most bad ones.

Sanchez, despite his rhetoric of compromise, has stated firmly that he opposes “right to work.” On the other hand, he supports a new $50 million “closing fund” designed to bring new businesses to our state.

His positions are not surprising for two reasons. Despite both policies ostensibly being “pro-business,” right to work will cost zero tax dollars, reduce the fundraising power of a key special interest group, and has reams of studies showing its effectiveness.

The closing fund, on the other hand, removes $50 million from New Mexico’s productive economy (taxpayers) and delivers it to politicians who have very poor track records of picking winners and losers (See Eclipse Aviation, Spaceport America and Schott Solar for a few examples). Worse, there is nothing more than anecdotal data showing closing funds have a positive economic impact. There are always new businesses that benefit from subsidies, but the negative impact on existing businesses and taxpayers is ignored.

In other words, Sanchez is perfectly comfortable with boosting the closing fund because it fits his ideological bias toward bigger government. It is also the way New Mexico has always “done business.” Of course, that has led us to our current, impoverished status.

I fully expect that Sanchez will play the role of obstructionist, not compromiser, for the foreseeable future. I hope I am wrong. Right to work is one of many important issues that should be given a fair hearing in the Senate regardless of Sanchez’s personal views.

There are literally dozens of solid, free market issues from tax credits for school choice to the elimination of worker’s compensation benefits for employees that show up to a job site drunk or high that also deserve a fair hearing. I am confident all of these will gain greater traction in Santa Fe than in past years.

In other words, Sanchez will have ample opportunity to show his true colors, and we plan to shine a spotlight on his behavior for better or worse.

The newly-ascendant House Republican leadership is not completely reliant on the Senate, however. It can increase transparency and good-government by video recording committee hearings and archiving the footage online. According to the National Conference of State Legislators, 39 states already record and archive committee hearings.

Another idea whose time has come is to accept remote testimony. It is no secret that New Mexico is a large, sparsely-populated state which makes getting to Santa Fe to participate in the political process a special challenge.

Allowing concerned New Mexicans from far away corners of the state like Farmington, Hobbs, Clayton and Las Cruces to testify from a central location like their local community college via nothing more complicated than a Skype connection would seem like a no-brainer. It could also boost interest in government and save the environment at the same time!

We have high hopes for reform in 2015. With stagnant federal spending and rapidly-declining prices in the oil patch, New Mexico needs a strong private sector more than ever. It is time our representatives in Santa Fe, Michael Sanchez included, embrace reform.

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.