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

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.

New RGF Study: How Federal Spending in New Mexico Grows State/Local Government

(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,

Time to prioritize at Albuquerque City Hall

 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.

Talking asset forfeiture, bus rapid transit, & the NM economy on Morning Brew

Recently, Paul Gessing sat down with Dan Mayfield of the Morning Brew to discuss several issues the Foundation is working on. Specifically, we talked about an event the Foundation put on relating to civil asset forfeiture. And, while that event has come and gone, several of the issues discussed remain relevant and topical in advance of the 2016 legislative session.

NM Could gain jobs with a right to work law

New Mexico doesn’t have a jobs problem. It has a jobs crisis.

Nationally, unemployment is falling, but in the Land of Enchantment, it’s rising. Only West Virginia has a higher jobless rate.

Even worse, labor participation for prime-age workers in our state has collapsed. The Pew Research Center recently found that between 2007 and 2015, New Mexico’s employment-to-population ratio for 25-to-54-year-olds plunged by the sharpest rate in the nation.

There are many tools state policymakers can use to restore vibrant job growth, but perhaps no reform offers more promise than passage of a right-to-work law. By ending the compulsory payment of dues to union bosses, New Mexico would send a clear signal that it’s open for business.

Says who? Site-selection experts. They consistently report a significant portion of their clients prefer RTW states.

No more Santa Fe Studios subsidies

The following appeared in the Santa Fe New Mexican on Sunday, November 1, 2015.

When is $10 million in taxpayer money simply not enough? In the case of the people who already got a sweetheart deal to build Santa Fe Studios, when you can ask for $22 million more.

There is likely no other business in the State of New Mexico that has received as many subsidies as Santa Fe Studios. That hasn’t stopped the Studios have applied for $22 million in industrial revenue bonds to Santa Fe County.

Already, the State has provided $10 million in economic development grants. The County has provided a generous $6.5 million bank loan.

It’s not as if film studios in New Mexico require subsidies. Albuquerque Studios was built without direct taxpayer subsidy. One would think that if Santa Fe Studios’ business was good enough to require expansion, the owners could pay for it themselves like any other business. Unfortunately, once you realize that you can stick you hands into taxpayers’ pockets, the temptation to do so again is hard to resist.

And then there is the lack of transparency. In October of 2013, there was a dustup between another think tank, Think New Mexico, and the Studios over how many films had actually been produced at the Studios. Without a doubt, Think New Mexico was justified in questioning Santa Fe Studios which has given few details on how the tax money they have received has been used.

Right to Work: Still Right for New Mexico: New Research Confirms Labor Reform’s Value in Economic Development

(Albuquerque) – A new analysis finds that right-to-work (RTW) states excel at creating quality jobs, and if New Mexico’s policymakers want the state to escape its severe economic woes, repealing compulsory unionism is essential.

“Where the (Good) Jobs Are: A New Look at Right to Work and Employment Growth,” authored by Rio Grande Foundation Research Director Dowd Muska, finds that RTW states far outpace their compulsory-union competitors in creating middle- and high-wage employment.

Muska’s research examined job-creation announcements posted on the website of the publication Area Development between January 1, 2015 and June 30, 2015. Positions were in manufacturing, finance, IT, biotech, research & development, business services, and logistics.

“These are the kinds of jobs that would make New Mexico a more prosperous state,” Muska said. “And they’re the kinds of jobs that politicians’ current economic-development strategies are not producing.”

Of the 92,923 jobs examined in the study, 79.2 percent were slated to be created in RTW states – a sum, not surprisingly, far in excess of the 46.8 percent of private-sector jobs found in RTW states. Both domestic and foreign firms prefer RTW states, and companies that relocate their facilities from one type of state to another overwhelmingly prefer to move to locations where labor freedom is respected.

Right-to-work laws, which were first adopted in the 1940s, free employees from paying compulsory dues to union coffers. Site-selection experts quoted in “Where the (Good) Jobs Are” argue that RTW is a requirement for many businesses looking to site, expand, or relocate their operations. The Rio Grande Foundation’s new research confirms their claim.

“Our organization has long argued that RTW is right for New Mexico,” said Rio Grande Foundation President Paul Gessing. “This new research offers more evidence of a trend that’s been underway for many decades: Right-to-work states outperform compulsory-union states.”

While a RTW bill passed New Mexico’s House of Representatives earlier this year, and Governor Susana Martinez pledged to sign the bill, the legislation did not receive a vote in the state’s Senate. RTW supporters are sure to press for the law in future sessions.

“Where the (Good) Jobs Are” is linked here and can be downloaded from the Rio Grande Foundation’s website,

Yet another reason to yell "cut" on New Mexico film subsidies

The results of yet another report on New Mexico’s film subsidy program were recently released. This study was commissioned by the New Mexico Film Office and conducted by the Canadian accounting firm MNP. It included payroll data, industry interviews, and financial reports filed with the Film Office.

The report further casts doubt on the idea that New Mexico’s generous film subsidy program will ever lead to a permanent, sustainable film industry presence in the Land of Enchantment.

According to the report, “total statewide spending on goods and services by … film and television productions declined from 2011 through 2014, with $118.7 million being spent in the 2011 budget year and $82.8 million being spent in 2014.” In addition, direct employment fell between the 2010 and 2014 fiscal years.

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