Tax and Budget

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.

Paul Gessing's presentation on government employee pay to NM State Personnel Board: 4/28/14

I was asked to present to the State Personnel Board because we had some concerns about the way they calculate whether government employees in New Mexico are overpaid or underpaid. My remarks follow:

The Personnel Office’s Compensation Report discusses employment issues involving government employees in New Mexico. The general conclusion of the 2013 report was that New Mexico government employees are underpaid when their salaries and benefits are compared to government employees in neighboring states.

The Rio Grande Foundation, New Mexico’s free market think tank, has reported on this issue as well. Our findings are generally contrary to those of the Personnel Office insofar as we found, based on an analysis done by economists David Macpherson of Trinity University and William Even of Miami University. that when workers with similar experience and skills are compared to each other, New Mexico’s government workers are paid about 8 percent more than equivalent workers in the private sector.

What gives and which is the more relevant comparison?

Without analyzing or critiquing the entirety of the Personnel Office report, we believe that comparing state workers across state lines is not a relevant statistic for several reasons:

1) Economic conditions vary dramatically from state to state. As seen in this chart which was taken straight from the Albuquerque Journal, New Mexico’s job market was far weaker over the past year than the job market in neighboring states. We all know that New Mexico’s economy has been far weaker than that of most of its neighbors in recent years. It only makes sense that those working for the state in New Mexico (a relatively weak economy) would not make as much as those in relatively strong surrounding economies.

2) I don’t have data on how much movement there is by government employees from one state bureaucracy to another, but it seems unlikely that there is a great deal of direct competition for talent between Texas and New Mexico. This would certainly be worth studying and having data on;

3) Another thing worth studying is how state government turnover rates actually work and what turnover rates actually mean. Are workers leaving to join the private sector in New Mexico? Are they leaving for private sector jobs in other states? Or are they leaving to work in government in another state? How do pension changes impact turnover and how might New Mexico change its compensation system in ways that might be attractive to workers and taxpayers at the same time?

It might also be worth studying how external economic factors, both federal and state, impact turnover rates and workers’ desire to look for new opportunities.

4) Lastly, we believe that comparing categories of government employees across state lines is very difficult and may not be a relevant tool in comparing overall worker benefits.

In conclusion, it is our belief that the most relevant comparison when it comes to government pay is with similar private sector workers here in New Mexico. When that comparison is made, the packages available to government workers are more generous than those available in the private sector. Such analysis should at least supplement existing analyses.

Conservative Ideas for New Mexico’s Legislators and Candidates to Get Elected and Govern By

When it comes to government in a democracy, it is far easier to play the role of Santa Clause than Uncle Scrooge. In other words, it is easier to say “yes” than it is to say “no” when it comes to spending other peoples’ money and using government regulations to benefit special interest groups. As any parent knows, saying “yes” feels better in the short-run, but saying “no” is often better in the long-run.

“Unfortunately,” says Rio Grande Foundation president Paul Gessing, “New Mexico policymakers have been saying ‘yes’ for too long and needs a healthy helping of ‘no’ when it comes to government spending and regulations. The good news,” says Gessing “is that there are many free market policies that would be good for New Mexico’s economy and education system while also being quite popular with average voters.”

The Rio Grande Foundation has compiled some of the best of these ideas into a list entitled, Common-Sense Ideas for a Conservative Majority in the New Mexico House. This paper is available at our website and it includes specific policy ideas and relevant polling data and arguments that should make these ideas a proverbial “slam-dunk.”

The document should be an invaluable resource as conservatives look to gain control of New Mexico’s House of Representatives for the first time in more than 60 years. Several of the ideas outlined have been introduced as legislation in the past including elimination of 3rd grade social promotion and creation of a system of tax credits for school choice. Ending “worker’s compensation” payments to drunk or drugged workers who injure themselves on the job and taking action to restore federally-controlled lands in New Mexico to state control are also included.

Other ideas involve opening New Mexico government to greater public involvement by eliminating unnecessary signature requirements for New Mexico’s volunteer legislature (or at least making the requirements equitable among the various political parties) and allowing for remote testimony in legislative committees.

Lastly, the Rio Grande Foundation offers several popular and free market reform ideas that have been implemented in other states. Such ideas include amending New Mexico’s Constitution to require voter approval for all tax hikes at the state or local levels, repealing New Mexico’s onerous “prevailing wage” law which increases construction costs for projects like roads and schools by 15 percent or more, and shifting all new government workers out of New Mexico’s failing “defined benefit” pension plan and into user-controlled-and-directed “defined contribution” plans.

Stephen Moore’s presentation on how to turn around both New Mexico’s and the US economies

Stephen Moore was, until recently, an editorial board member of the Wall Street Journal and is now Chief Economist at Heritage Foundation. He spoke to a luncheon sponsored by the Rio Grande Foundation about what needs to be done to turn New Mexico's economy around as well as what can be done to improve the United States economy.

Click here for Moore's slides. Video of Moore's presentation can be found below:

Stephen Moore discusses economic prescriptions for New Mexico and the United States on March 14, 2014 from Paul Gessing on Vimeo.

For even more information, check out the story Capitol Report New Mexico published on the event which included an interview with Moore.

Apples-to-Apples, New Mexico’s Government Employees Already Make More: Gov. Martinez Should Consider Vetoing Wage Hike

(Albuquerque) Prior to the 2014 legislative session, the Legislative Finance Committee called for 1.5 percent pay hikes for all New Mexico government employees. Gov. Martinez proposed more modest pay increases. Rather than seeing pay increases for all state employees, Martinez planned to boost pay for about one-third of public workers. New teachers would have received higher pay.

In a “compromise” plan the likes of which are only found in government, the Legislature-passed- budget includes 3 percent cost-of-living salary increases for state agency workers and teachers.

Judges, district attorneys, state police and motor-transportation officers would receive 8 percent raises while prison guards, juvenile-justice officers, social workers handling child abuse cases and educational assistants in schools would get 6 percent pay increases.

In other words, the Legislature took its own proposed pay hikes and doubled them…or more.

Ironically, these proposed pay hikes come at a time of conflicting evidence over whether New Mexico’s government workers are overpaid or underpaid.

According to a recent report from New Mexico’s Personnel Office, “New Mexico’s average pay for 115 of 151 (government) job classifications trailed the average pay of the nearby states. Some workers’ average pay trailed the average pay in neighboring states by more than 20 percent including plumbers, biologists, engine mechanics, and chemists.”

The Rio Grande Foundation, on the other hand, analyzed data from the federal Bureau of Labor Statistics and Department of Labor to determine the earnings and compensation differences among employees of similar characteristics, skill sets, and occupations within the public and private sectors.

Using a mathematical tool called regression analysis to isolate relevant factors relating to employee pay including education levels, time of services, and more, the Foundation produced a careful analysis of data on both total compensation and benefits. The study finds that with benefits included, public workers in New Mexico make over 8 percent more in total compensation than a similar worker in the private sector.

Said Rio Grande Foundation president Paul Gessing of the differing approaches to government employee pay, “Gov. Martinez would be entirely justified in vetoing these pay hikes which went far beyond her original budget proposal and which unnecessarily increase the compensation disparity between government and private sector workers in New Mexico.”

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