Tax and Budget

Beer Industry Shows Economic Reforms Can Work

They say that the definition of insanity is doing the same thing over and over again and expecting a different result. This link is to a spreadsheet illustrating political control of New Mexico's Legislature over the past 80+ years (since 1931). In summary, Democrats have controlled the House and Senate for a combined total of 160 years between the two bodies with Republicans having controlled one body or the other for a total of 6 years.

Clearly, given New Mexico's economic and education outcomes, liberal, big-government policies have failed. But what works? In a new opinion piece, Rio Grande Foundation president Paul Gessing discusses how reduced taxation on micro-breweries has led to a boom in micro-breweries in New Mexico:

It often seems that New Mexico’s economy is haunted by the ghost of Lew Wallace. Wallace, who also wrote Ben Hur, was territorial governor of New Mexico in the late 1800s. Wallace was apparently confounded by our State and was quoted as saying, “All calculations based on our experiences elsewhere fail in New Mexico.”

In dealing with New Mexico policymakers and the business community, Wallace’s attitude towards successful initiatives in the other 49 states seems to permeate discussions. Sure, they say, “Right to work states are generating jobs faster than forced-unionism states, but that doesn’t mean it will work here.”

Local, National, Global: Paul Gessing interview on the NM economy

I recently sat down with Jamai Haquani of the Albuquerque-area public access show Local, National, Global to discuss New Mexico's struggling economy and what can be done about it. See part 1 of the interview below:

part 2:

part 3:

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

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.

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

(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.

Unfair subsidies to businesses won’t help New Mexico’s economy recover

There is no question that New Mexico faces significant economic challenges. Our overreliance on Washington's largesse combined with business-unfriendly tax and regulatory structures have finally caught up with us. This has led to New Mexico bleeding jobs and people to other states, particularly our economically freer neighbors.

This has led to desperation among some quarters. Democrat Sens. Tim Keller and Jacob Candelaria seem to have even proposed a special legislative session for the sole purpose of offering subsidies and incentives to the Tesla car company. The hope is to attract a proposed battery factory to the state despite no concrete indicators from Tesla as to where they wish to locate said factory or what their criterion are.

Unfortunately, these Democrat legislators are not the only ones willing to engage in bad economic policies for a short-term political benefit in the form of "jobs." The Doña Ana County Commission recently voted 5-0 to grant an industrial revenue bond (IRB) to a Turkish wire company to encourage the company to come to Santa Teresa. While this financing mechanism is somewhat complicated as a means of giving special advantages to recipients, the basic effect of an IRB is that it exempts the recipient, for up to 30 years, from property taxes on land, buildings, the useful life of equipment purchased with bond proceeds and an exemption from applicable gross receipts taxes on the purchase of project equipment.

FreedomWorks President and CEO’s Remarks at Rio Grande Foundation luncheon

The Rio Grande Foundation hosted a luncheon on May 13, 2014 with Matt Kibbe, President and CEO of the grassroots/Tea Party group FreedomWorks. Kibbe is the author of "Don't Hurt People and Don't Take Their Stuff" and he discussed the book and its message at the event.

FreedomWorks President Matt Kibbe Discusses "Don't Hurt People and Don't Take Their Stuff" from Paul Gessing on Vimeo.

Reform ideas: Ballot access, remote testimony, voter tax approval


New Mexico’s state legislature has been controlled by Democrats since 1953, but there are some reasons to think that Republicans could take it over in 2014. While the Rio Grande Foundation is a non-partisan organization willing to work with anyone who shares our ideas, even on a single issue, we have prepared a report on long-overdue reforms that a Republican-led state legislature could have an advantage in enacting. (Democrats are encouraged to read it too!) Not only are these reforms good ideas in their own right, but we believe they are also appealing to the electorate.

They’re both good policy and good politics and given the poor economic performance during the ongoing economic “recovery,” New Mexico needs some good public policy reforms.

First, there’s ballot access reform. Political competition is a good thing, and it’s hard to imagine that the benefits of increased competition stop with the second party. Current New Mexico ballot access law imposes much steeper signature collection requirements on third-party candidates than on Democrats and Republicans. At a minimum, equalizing the signature requirements would provide for a fairer and more truly representative electoral process. Ideally the Legislature could scrap the signature requirement entirely and let voters see the whole menu before making a choice. Voters will like this.

Talking Tesla on KNAT TV

Paul Gessing of the Rio Grande Foundation recently appeared on KNAT TV to discuss the prospects of the electric car company Tesla locating its "gigafactory" in New Mexico. Interview time is about 15 minutes. Check it out below:

Talking Tesla and the potential for the electric car company's "gigafactory" in New Mexico from Paul Gessing on Vimeo.

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