Author: Paul Gessing

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Economy Energy and Environment Public Comments and Testimony

Rio Grande Foundation Comments on Economically-Damaging “Venting and Flaring” Rule: Please Join Us and Submit Yours!

If you haven’t heard the news, the Federal Bureau of Land Management (BLM) recently held a well-attended public hearing in Farmington on the issue of “venting and flaring” of methane from natural gas wells. Droves of Four Corners residents came out in opposition to the costly new regulations being considered by the Obama Administration.

This is a huge issue for Farmington, NM, in particular, as the city saw the biggest jump in unemployment last year among 387 US cities. The San Juan basin is a major producer of natural gas and, while “venting and flaring” are not optimal for the industry, the amount of “venting and flaring” in recent years has declined.

The BLM is currently accepting comments and will do so until April 8, 2016. The Rio Grande Foundation has submitted the following comments and encourages you to submit comments (click here to do so) (or at the email or mailing address below) in opposition to the proposed “venting and flaring” rule.

February 17, 2016

U.S. Department of the Interior, Director (630)
Bureau of Land Management
Mail Stop 2134 LM
1849 C St. NW.,
Washington, DC 20240

OIRA_Submission@omb.eop.gov.
Attention: OMB Control Number 1004-AE14

To Whom it May Concern:

I am the president of a free market policy research organization called the Rio Grande Foundation. We are based in Albuquerque. Our research focuses on New Mexico’s economy which is uniquely-challenged among US states. Our unemployment rate has been the highest in the nation for two months running. Our poverty levels are among the highest in the nation. As a state, New Mexico is the third-most dependent on the oil and natural gas industries as a percentage of our budget.

Given that the Bureau of Land Management controls 13.5 million of New Mexico’s surface acreage, approximately 2 million fewer acres than are occupied by the State of West Virginia, federal regulations have a tremendous impact on New Mexico’s economy.

On a statewide basis:

 There are 54,457 operating oil and gas wells in New Mexico
 The oil and gas industry employs 69,000 people in New Mexico;
 The average salary is $71,500 compared to the overall state average salary of $39,660
 56% of the oil and 63% of the natural gas is produced from Federal (BLM leases)
 In fiscal year 2014 the industry provided $2.1 billion of the state of New Mexico’s $6 billion general fund revenues (35%)

I should also note that while my organization is based in Albuquerque, we study the entire New Mexico economy. A recent report from the US Department of Labor labeled the Farmington area as suffering “extreme economic duress,” noting that it had the largest increase in its unemployment rate among 387 metropolitan areas nationwide in 2015 .

The northwestern New Mexico city saw its unemployment rate rise 2.1 percentage points last year, to 7.3 percent. The last thing New Mexico’s Four Corners area needs is a new set of costly federal regulations that negatively impact the region’s economy.

Methane Emissions are the object of the proposed regulations

 Venting and flaring of large amounts of methane represents lost profits to industry. While it is sometimes unavoidable, there are efforts already under way within industry to curtail the amount of emissions.

 Methane is both a product and by-product of oil and natural gas production. Onshore oil and natural gas operators are becoming more efficient at capturing methane emissions, and at reducing methane emissions from production activities. The national trend of methane reduction is supported by GHG reporting data, and it holds true despite a historic increase in oil and gas production over the past several years.

 Without regulations overall greenhouse gas emission in the San Juan Basin have decreased from 10.7 million metric tons in 2007 to 7.3 million metric tons in 2014.

 Vented methane emission in the San Juan are down due to cost effective and efficient practices including:

o Better operating practices that are decreasing the number and duration of venting events.
o Reduced pneumatic device emissions by reclassifying, removing, replacing and retrofitting high-bleed pneumatic devices.

Good Regulations vs. Bad Regulations

 Good regulation practices:

o Single and appropriate entity responsible for regulation;
o Effective in meeting public policy goals: environmental, health and safety;
o Based on science;
o Cost effective: the overall benefit of regulation is greater than the cost.

 The proposed venting and flaring rule is bad regulation for the following reasons:

o Redundant and contradictory with other federal regulations and state regulations;
o Requires extensive capital and operating expenses with little or no additional benefits;
o Not based on science and in fact, locks in operating and technology solutions that have been shown to be inferior;
o Cost prohibitive especially in era of low community prices will force existing wells to be plugged with the loss of future production, jobs, taxes and other revenues.

 What are weaknesses in the BLM’s approach?

o The BLM has attempted to understand economic impacts of these rules in isolation and has overestimated the benefits and underestimated the costs;
o We believe the cumulative economic impacts of the proposed changes should be considered in total across all their proposed rules;
o As proposed, these changes are significant and will have major impacts on investments in new and existing projects on federal and Indian lands, with the potential for job losses, premature well closures and significantly lower federal and tribal revenues;
o The BLM should conduct a more thorough economic impact analysis rules in isolation and has overestimated the benefits and underestimated the costs should be considered in total across all their proposed rules.

I am very concerned with the proposed BLM rule because as currently drafted it will lead to wells being prematurely plugged and devastating loss of jobs and needed economic activity in the Four Corners region and New Mexico as a whole.

Categories
Economy Top Issues

Challenging School Construction as “Economic Development”

Last week, the Albuquerque Journal’s Business section contained an article touting the “job creation” impact of school construction on the local economy.

Of course taxing the citizens and/or oil and gas production do “create jobs” in construction, but as an economic development tool it represents nothing more than shifting money from one pocket to the other. We’re not even pilfering tax dollars from other states as that other “economic development” program Medicaid does.

Here is my article, published in today’s Business Journal explaining that school construction is not going to contribute to overall economic growth:

Sadly, the recent article about school construction providing the bulk of Albuquerque-area construction activity is just another indicator of New Mexico’s abject lack of a private sector (outside of the now-struggling oil and gas industries).

Legislators had a few small successes in Santa Fe with the passage of ride-sharing and worker’s compensation reforms, but they failed to deregulate New Mexico’s economy in any meaningful way. Another traditionally-poor state, West Virginia, raced ahead with passage of a “Right to Work” bill and repeal of “prevailing wage” laws that arbitrarily raise construction prices on public works projects like roads and schools.

The Associated Builders and Contractors, a free market construction trade association, recently rated New Mexico an astonishing 51st nationwide in terms of construction-oriented state policies. That’s behind even the District of Columbia. New Mexico’s lack of a “Right to Work” law and the existence of arbitrary construction pricing in the form of “prevailing wage” were major factors in our performance.

Every industry in our State relies on construction. With 10,000 people showing up to interview for 290 jobs at a newly-opened Cheesecake Factory, it is clear that our economy is in dire straits. Government spending simply can’t save us.

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Economy Top Issues

A Valentine to the Right to Work

The Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development’s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development’s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

In February, of 9,591 projected jobs, 7,276 — 75.9 percent — were slated for right-to-work (RTW) states:

zzz_feb_rtw

Fifteen domestic companies based in non-RTW states announced investments in RTW states. Just one announcement went the other way.

RTW prevailed in foreign direct investment (FDI), too. Nine projects are headed to RTW states, with seven to occur in non-RTW states.

Marquee RTW wins included a manufacturing facility for Rhode Island-based Textron Specialized Vehicles in Georgia (400 jobs), the decision by New York-based NBCUniversal Telemundo Enterprises to build its new headquarters in Florida (150 jobs), and Swiss-Canadian startup GF Linamar’s pick of North Carolina to make “light-weight powertrain, driveline and structural components” (350 jobs).

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases from additional sources.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Intrastate relocations were not counted, interstate relocations were.

Categories
Economy

NM’s SNAP Rules Are a Step Toward Dignity, Responsibility

abq_journal

The following op-ed ran in the Albuquerque Journal on March 6th.

Taxpayer compassion is reaching its limits.

U.S. Rep. Robert Aderholt (R-Ala.) has sponsored HR 4540, a bill that permits states to drug-test beneficiaries of the Supplemental Nutrition Assistance Program (SNAP), better known as food stamps.

“If a welfare recipient has the money to buy drugs, then they have the money to buy food,” Aderholt said. “The federal government should not be enabling people to fund their drug addiction at taxpayer expense.”

Maine’s governor is asking Washington to allow his state to waive the rules that allow the purchase of candy and soft drinks with SNAP benefits.

“Multiple Red Bulls in one purchase, Rock Star energy drinks, 1-pound bag of Reese’s Peanut Butter Cups and 3 gallons of Hershey’s Ice Cream in one purchase,” an official with Maine’s Department of Health and Human Services testified at a hearing last year. “We have all seen these types of purchases occur — and it’s unacceptable.”

Here in New Mexico, Ty Vicenti, president of the Jicarilla Apache Nation, claims that “the New Mexico Human Services Department implemented a harsh federal penalty in most of the state that limits unemployed adults without children to just three months of SNAP benefits in three years unless they do 80 hours of unpaid work activity each month.”

Wrong and wrong.

The Martinez administration’s “harsh federal penalty,” as the SNAP website explains, “has been part of the law since 1996.” Welfare reform was sponsored by U.S. Rep. John Kasich, now a candidate for the Republican presidential nomination, and signed by Bill Clinton, a Democrat.

As for “unpaid work activity,” the able-bodied adults without dependents being asked to step up can be either employed, in job training or perform community service. The requirement does not apply to those who are pregnant, disabled, addicted to drugs, under 18 or over 50.

Unreasonable? Cruel? Onerous? Hardly.

In 2009, at the height of the Great Recession, New Mexico and many other states asked D.C. for permission to grant unrestricted SNAP benefits to the able-bodied. According to a Human Services Department spokesman, the request “was only temporary and was never intended to stay indefinitely.” On Jan. 1, limits were restored.

New Mexico is hardly alone in returning to standard SNAP practice. According to the Pew Research Center, only California, Louisiana, Nevada, Michigan, Illinois, South Carolina and Rhode Island have yet to lift requirements for able-bodied adults without dependents. Forty-three states now require work/training/community service, either entirely within their borders or in certain regions.

As the press secretary for Wisconsin’s governor put it, “We aren’t making it harder to get benefits — we are making it easier to get a job.”

In New Mexico, that goal is imperative. The labor-force participation rate in our state is disturbingly low and welfare has become a way of life for far too many of our neighbors.

Dependency is rampant, in part because New Mexico’s taxpayers are more than generous to the state’s low-income community. Medicaid, housing subsidies, Temporary Assistance for Needy Families, energy assistance, food stamps and other welfare programs have stitched together a sturdy safety net. A 2013 Cato Institute analysis found that the “hourly wage equivalent” for major welfare programs was $13.41 — within striking distance of the state’s median hourly wage.

No one would argue that New Mexico’s economy is strong. But that’s no reason to continue incentivizing SNAP benefits for the able-bodied. As the Foundation for Government Accountability explained: “Fewer than three percent of all non-disabled, full-time, year-round workers are in poverty, compared to nearly a third of non-workers.”

With revenue shortfalls mounting at the state and federal levels, welfare programs are facing increased scrutiny. More requirements, rules and eligibility limits are likely in the future.

Asking able-bodied New Mexicans to work, or prepare to work, in order to obtain food stamps is neither mean-spirited nor unworkable. It’s a step toward individual dignity, economic development and fiscal responsibility.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Categories
Open Government Top Issues

Sunshine Week focus must be on government transparency

Sunshine Week has technically come and gone, but in order to accommodate Spring Break at NMSU, this year’s celebration is being held this Wednesday, March 23rd, at 5:30 p.m. on the 3rd floor of the Zuhl Library.

Panelists include Senator Joseph Cervantes, City Councilor Gill Sorg, Viki Harrison from Common Cause, Dr. Daniel Chand from the NMSU Government Department, and myself. As is typically the case, I expect that my views and those of the Rio Grande Foundation will be in the minority, so I want to share them here and encourage people in Southern New Mexico to turn out for the event.Sunshine Week is a national initiative to promote a dialogue about the importance of open government and freedom of information. You will find few bigger supporters of government transparency than us at the Rio Grande Foundation. My organization has done significant work on the creation of New Mexico’s Sunshine Portal as well as requesting and posting public information from local governments and school districts online. Lastly, we’ve pushed for video recording of legislative floor proceedings and committee hearings.

Significant progress has been made in each of these areas. There is still plenty to be done to improve government transparency in New Mexico including, but not limited to: placing local public payrolls, vendor, and union contracts, and thorough economic analyses of tax and economic incentives, online.

Unfortunately, the topic of this year’s Sunshine Week panel revolves around “outside” money in local elections. Campaign finance reform and government transparency are two different and largely unrelated issues.

The discussion was spurred by GOAL WestPAC’s efforts in the Las Cruces municipal elections, which involved some tactics that generated controversy. Say what you will about GOAL, as a PAC, their donors’ information is public under the law. That’s how we know that much of the money spent in the campaign came from residents of Southern New Mexico who reside outside of Las Cruces.

So, let’s first dispense with the idea that this spending was somehow lacking in transparency. It was abundantly transparent. If that is not the issue, then what is? Ultimately it would seem that efforts will be undertaken to constrain political involvement based on geographic boundaries.

It would also seem that environmental groups, pro/anti abortion groups, and unions should all be able to engage in municipal legislative efforts and campaigns regardless of where they are headquartered or where their funders live.

Efforts to eliminate or constrain outside involvement in elections are futile and will ultimately prove to be unconstitutional. The First Amendment protects freedom of speech, period. There is no geographical loophole. The left should stop attacking the First Amendment when it comes to political speech.

That’s not me speaking, that’s the head of the ACLU. In the wake of the controversial Citizens United opinion from the U.S. Supreme Court, Laura Murphy, director of the organization’s Washington, D.C. office, argued that “’Fixing’ Citizens United Will Break the Constitution.”

A constitutional amendment — specifically an amendment limiting the right to political speech — would fundamentally “break” the Constitution and endanger civil rights and civil liberties for generations. Murphy also noted that, “Individuals have always been allowed to spend their own money on political speech. Further, Citizens United has nothing to do with direct contributions to candidates, which are still totally verboten for corporations and unions and strictly limited for individuals.”

In other words, it is time to stop complaining about money in politics and to recognize that Americans who wish to engage in political speech are expressly protected by the Constitution to do so. If you want to counteract someone with whom you have a strong disagreement, the solution is more speech, not speech constraints or a curtailment of those speech rights.

And, while money is often touted as being the deciding factor in elections, the reality is that money can only get a candidate or issue so far. Jeb Bush easily won the PAC fundraising race and yet it didn’t get him anywhere near the presidency. Meg Whitman, Linda McMahon, and Steve Forbes are just a few of the many other candidates to have won the fundraising battle but to have lost the election.

Government should be transparent. PAC giving is transparent. Efforts to limit political giving based on geography are transparently unconstitutional.

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.

Categories
Economy Energy and Environment Uncategorized

Robert Zubrin’s Presentation “Merchants of Despair”

Author and scientist Robert Zubrin discusses his book “Merchants of Despair” which connects the modern environmental movement all the way back to the eugenics movement of the early 20th Century. His presentation is available below and his slides are here.

Categories
Economy Top Issues

Grow Economy, don’t Mandate Sick Leave

The aftermath of the 2016 Legislative session is still being discussed and parsed, but the liberal New Mexico Voices for Children think tank is already clamoring for the next expansion of New Mexico government. The issue this time is paid sick leave. Naturally Voices, which views every societal “nail” in need of a government “hammer,” has a government-driven solution.

New Mexico private sector workers are, according to a new report, offered sick leave at a lower rate than similar workers in any other state. To be honest, we at the Rio Grande Foundation share the concerns expressed by Voices on this. We’d like to see more workers paid better and offered employee benefits.

The difference lies in our proposed solutions to the problem.

We view the issue through the lens of recent news reports that an astonishing 10,000 people applied for 290 job openings at the new Cheesecake Factory in Albuquerque. Obviously, there is an over-supply of relatively low-skilled labor in both Albuquerque and New Mexico as a whole. This is a market reality driven by New Mexico’s historical over-reliance on federal dollars and extractive industries.

Voices wants to simply impose a new regulation demanding that businesses offer workers no less than one week of paid sick leave (their report does not differentiate between full and part-time workers). Their own data claim that this will cost New Mexico businesses $240 million annually.

What they don’t seem to understand is that businesses — especially mom-and-pop restaurants and other small businesses — aren’t just going to take this $240 million out of their bottom-lines. Often, they don’t have profits to speak of. So they will lay off the very workers that this proposal is supposed to help. And if part-time workers are included in the proposal, that means part-time workers just starting out in the work force will be the hardest hit.

The real problem with Voices’ proposal is not its unintended consequences, but rather its the lack of vision inherent in it and so many other similar proposals — like the misnamed “Fair Workweek Act” — which was proposed in the Albuquerque City Council in 2015.

Voices sees the economy as a fixed pie. If you take away from labor, you give more to capital, and vice-versa. We at the Rio Grande Foundation see innovation and productivity as beneficial to everyone.

What Albuquerque and the state of New Mexico desperately need is not more government regulation: it’s more and better jobs of all kinds. It is no surprise that New Hampshire, the most economically-free state in the nation (lacking both a sales and an income tax) has the most generous sick leave policies according to the Voices report.

Unfortunately, when businesses or entrepreneurs look at our state they see onerous and often arbitrary regulations, they see a gross receipts tax that makes doing business here more costly than other states. They see a workforce and school system that are not up to preparing workers for the modern economy and they see high crime rates. Lastly, they see a population — especially in the Rio Grande corridor — that tends to be both suspicious of outsiders and highly sensitive to land use and economic development proposals.

These problems are not unique to New Mexico, but New Mexico is unique in possessing all of them in spades. Addressing some or all of these issues in ways that make New Mexico more attractive to business would grow our economy and make it more likely that workers receive competitive wages and benefits.

For many years, New Mexico has enacted policies that make our state less attractive than many of our neighbors for private sector development. Another new regulation isn’t going to change that. Instead, it is time to move in the opposite direction towards economic freedom and competitiveness. This will make jobs more plentiful leading to higher pay and more competitive benefits for New Mexico workers.

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.”

Categories
Economy Tax and Budget

States, Not Cities and Counties, Are Paramount

COMMENTARY: “States may, if its citizens choose, serve as a laboratory.” Justice Louis Brandeis in New State Ice Co. v. Liebmann

When it comes to economic policy issues, the states are supposed to be the dominant actors. This is the view laid out by Justice Brandeis. It flows seamlessly from the United States Constitution’s design which emphasizes “federalism.”

But this isn’t another article about how Washington is overstepping its bounds. Rather, it is about how New Mexico’s Legislature might want to keep closer tabs on policymaking activities of local governments.

Local governments derive their powers from the states within which they are located. In some states they are given broad latitude. In others, like Virginia, their power is strictly limited. Virginia’s minimum wage and other employment-related policies are set by the Legislature.

For simplicity’s sake, this is a good thing, regardless of your views on the minimum wage.

While my organization does not support raising the minimum wage on economic grounds, that has not stopped New Mexico and more than half of all U.S. states from raising their minimum wages above the federally-mandated level of $7.25. New Mexico’s rate is currently at $7.50.

The $7.50-an-hour rate is straightforward, but as things currently stand, the cities of Albuquerque, Las Cruces, and Santa Fe have their own wage rates. Separate rates are mandated by the counties of Bernalillo, Doña Ana, and Santa Fe. It’s not just the complexity of varying wage rates and jurisdictions; there are additional, complex rules over how tipped wage rates are calculated depending on the provision of certain benefits like employer-sponsored health insurance.

Complying with myriad tax rates and formulas can be a nightmare for any business, especially small ones. Seemingly well-intended efforts to raise wage rates are creating tremendous complexity and compliance burdens for the very small businesses that we need to create jobs and dig New Mexico’s out of the current economic malaise.

Statewide preemption

That growing complexity is a big reason that groups like ACI and the New Mexico Restaurant Association have gotten behind a “statewide preemption bill.” The bill has been followed in the 2016 session by Rep. Harper in the House and Sen. Moores.

The idea that state legislatures, not a mixture of cities and counties, nor far-off bureaucracies in Washington, D.C., should regulate New Mexico’s economy is self-evident. In fact, Brandeis, quoting further from his “laboratories of the states” argument said that the idea was to, “try novel social and economic experiments without risk to the rest of the country.”

So, if California wants to adopt a $10.50 or even $15.00 per hour minimum wage, let them. If Texas would like to not impose legal wage floors at all, ideally that should be their prerogative. Of course, as things currently stand, the federal rate of $7.25 is the baseline for every state.

I believe that under such a system people and jobs will continue to move from heavily-regulated, high-minimum-wage states like California to less-regulated states like Texas, but I might be wrong. I’d love to give states the leeway to duke it out. Localities, not so much. It’s messy and convoluted with multiple jurisdictions at play. Local borders are unclear to all but the best-informed.

Lest supporters of high minimum wages think this is just an effort to kill minimum wages entirely, local minimum wage hikes give legislators a “pass.” After all, an Albuquerque legislator nowadays can say, “Why should the state raise the state minimum wage when Albuquerque has done it?”

The leading opponents of “preemption” might be rural legislators. They see “big cities” even here in New Mexico as a world apart from themselves and their more conservative constituents. Nevertheless, preemption makes sense. New Mexico’s cities and the businesses located there are engines for New Mexico’s entire economy. We are ultimately in this together.

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.

Categories
Uncategorized

RGF President Paul Gessing Discusses The Impact of Medicaid Expansion on KNAT TV-23

Watch “Joy in Our Town” with host, Ebony Romero, and guest, Paul Gessing, President of the Rio Grande Foundation, as they talk specifically about the MEDICAID expansion in New Mexico.

Posted by KNAT – TV 23 on Tuesday, January 19, 2016

Categories
Economy Open Government Tax and Budget Videos

Eye On New Mexico: Talking About The Issues Facing The New Legislative Session for New Mexico

See the entire program below: