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RGF in National Review Capital Matters: Bill Richardson: Another Clinton-Era Democrat Exits

The following appeared in National Review’s Capital Matters on September 8, 2023.

With the passing of former New Mexico governor Bill Richardson, yet another Democrat of a bygone era departs the scene. Richardson was personally friendly and ideologically simpatico with Bill Clinton, helping the president pass the NAFTA free-trade agreement and then being named U.N. ambassador for the final few years of that administration.

Free trade is (sadly) increasingly unpopular on both sides of the aisle, and in this sense both Richardson and Clinton are creatures of a different era.

However, it is worth examining Richardson’s economic record as governor of New Mexico to better understand his own career and just how far and fast the Democratic Party has moved to the left (both nationally as well as in the Land of Enchantment).

Richardson was governor of New Mexico from 2003 to 2011. He had the good fortune of succeeding Gary Johnson. You see, while New Mexico used to be a purple state on the national stage, its legislature was and has remained a stronghold of big-government Democrats. Johnson, known to many New Mexicans as “Governor No,” was known for his prodigious use of the veto pen. As a libertarian-leaning Republican, he did this, in part, to keep a lid on government spending.

Johnson’s attempts to get tax cuts through the heavily Democratic New Mexico legislature proved fruitless, but when Richardson took over in 2003, he immediately pushed for significant tax reductions. He cut the state’s top income-tax rate from 8.2 percent to 4.9 percent and reduced capital-gains taxes dramatically. He wasn’t just a tax-cutting Democrat. In his era, he was arguably the best tax-cutting governor in the nation. This paid off in strong job-creation numbers and personal-income growth, and New Mexico jumped from the 47th- to the 42nd-ranked state in personal incomes in just a few years. Pro-growth economic policy is no longer an element of Democratic politics.

But Richardson was by no means an avid supply-sider. During an era of strong economic growth nationally and in the relatively impoverished Land of Enchantment, Richardson sadly fell into the trap of putting significant taxpayer resources into big-government boondoggles.

It is worth noting that much of this (good and bad) was leading up to a run for the White House in 2008. As governor of a small, impoverished state with a low national profile, Richardson, who already had federal-government experience, believed that he needed a splashy track record of transforming New Mexico’s economy.

To that end, he created the Rail Runner commuter train, which began operation in 2006 and runs nearly 100 miles, from the south of Albuquerque to the state capital in Santa Fe. It cost more than a mind-blowing $1 billion to build (it needed 20 miles of brand-new track) and requires more than $20 million in annual taxpayer subsidies to operate. Despite running between two of New Mexico’s largest cities, much of the route is sparsely populated. As with so many transit systems in the Covid and post-Covid eras, it continues to lose what little ridership it had.

Another one of Richardson’s taxpayer-funded projects that remains unproven (at best), even after having launched more than a decade ago, is Spaceport America. Billed as the “world’s first purpose-built commercial spaceport,” it has finally seen its first commercial space-tourism flight, via Virgin Galactic. The spaceport, in the harsh desert of southern New Mexico, was built at the behest of Richardson for Virgin Galactic at a cost of $225 million to taxpayers, though add-ons and further investments have driven the cost to around $275 million, and the facility already needs major repairs.

Subsidies for particular companies, including personal-jet manufacturer Eclipse Aviation and solar-panel manufacturer Schott Solar, also failed to ensure long-term economic success. In fact, those companies went out of business long ago, which only proves government’s unfitness for picking winners and losers.

Finally, Richardson laid the groundwork for New Mexico’s costly film subsidies, which have helped the film industry while failing to more broadly develop New Mexico’s economy. The program, as Richardson designed it, led to New Mexico taxpayers reimbursing Hollywood film producers for up to 25 percent of their overall expenses for filming in the state. Richardson is by no means the only politician to have thrown money at Hollywood: Under current Democratic governor Michelle Lujan Grisham, the program has expanded even further, offering producers a subsidy of up to 40 percent of their expenses.

Highlighting his relative moderation, Richardson (gently) reproached Governor Lujan Grisham for her overly zealous and failed Covid lockdown strategy. He also (sagely) urged state legislators and Lujan Grisham to avoid raising taxes in the most recent legislative session. During this session, New Mexico had a $3.6 billion (42 percent) year-over-year budget surplus, yet Democrats in the legislature were seriously considering a number of tax hikes.

Fortunately, they did not go through.

Bill Richardson’s death is a reminder of just how far the Democratic Party has moved to the left on economic policy. His willingness to listen to all sides and try to forge consensus across party lines is sorely missing from today’s politics.

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Economy Energy and Environment Notable News Oil & Gas Top Issues Transportation

Numerous specific issues with electric vehicles and especially government mandating them

MLG’s plan to push an electric vehicle mandate through the Environmental Improvement Board is kicking into gear. The Board is expected to begin deliberation on ramping up New Mexico’s EV mandate to 43% by 2027 and 82% by 2032 on November 15.

This is a DEEPLY flawed policy that Rio Grande Foundation will be working hard to stop. Here is a fairly comprehensive list of the many reasons why EV mandates are harmful:

Ultimately, EV’s may or may not be a good replacement technology for the internal combustion engine. But, government through mandates and extensive subsidies should not be the final arbiter of this choice. That should fall to consumers. Sadly, Gov. Lujan Grisham has joined the EV bandwagon at the expense of personal freedom.

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RGF discusses Bernalillo County property tax issue w/ KOAT Channel 7

RGF president Paul Gessing recently sat down with KOAT TV Channel 7 to discuss Bernalillo County Assessor Damian Lara’s interesting approach to property tax assessments. The issue was discussed in more detail in a blog post here. 

In addition to Gessing and Lara, the KOAT piece includes Doug Peterson, one of the largest landlords in New Mexico. While everyone wants to see properties maintained and filled with thriving businesses, those seem to be policy and enforcement considerations for the Mayor, City Council, and APD.

 

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New Mexico could learn a lot from Texas about governance

The following appeared in the Albuquerque Journal on July 30, 2023.

A recent editorial cartoon highlighted the vastly different approaches towards governance of New Mexico and Texas. The cartoon is of the state border circa 2030 as New Mexicans head to Texas for gas-powered vehicles (due to the recent regulations proposed by Gov. Lujan Grisham) while Texans visit NM for abortions and marijuana.

These are hardly the only differences between the two nowadays as Texas has no income tax or job-killing gross receipts tax, it is a right to work state, and state spending per-person is less than half of what it is in New Mexico. Not coincidentally, Texas is also one of the fastest growing states in the nation while New Mexico’s population is stagnant with young people leaving and being replaced by older people and retirees.

People have been talking about Texas’ economic success for decades, but a recent family vacation gave me the opportunity to see it firsthand. I have flown to several major Texas cities and have driven across the Panhandle more times than I care to recall, but this trip involved flying to Dallas and driving from all the way to Corpus Christi and the Gulf Coast. That’s a trip of over 400 miles including stops in major cities including Austin and San Antonio (in addition to Dallas).

We went deep in the heart of Texas and compared what we saw with our home state of New Mexico. Here’s what we saw.

  • It seems like all the roads in Texas are under construction. Yes, this is a hassle for visitors and commuters alike, but it also highlights the fact that more people and businesses require more infrastructure. Aside from the road construction, the interchanges are often complicated with extremely high overpasses. Finally, just the sheer amount of construction equipment involved highlights the size and scale of these projects. Construction projects are definitely bigger in Texas.
  • Setting aside roads and bridges, businesses are flocking to Texas as well. The Tesla plant outside Austin is the largest manufacturing space in the United States by floor area. Even in and around small towns construction was under way on significant buildings and cranes often dotted the skyline.
  • Texas rest areas are incredible. One might think that with New Mexico having two of the nation’s most important east/west highways (I-40 and I-10) running through it (and a booming budget), would invest the tiny level of resources needed to make rest areas a place people want to stop and feel safe and comfortable doing so. This is especially true given the lack of road-side amenities available on many of our highways. Sadly, New Mexico’s rest areas are meager and often in a state of disrepair. Texas has playgrounds and historical/local interest information available for those who need a potty break or just want to stretch their legs.

Texas is booming. It provides a business-friendly environment and a government that does the basics well and at less than half the cost per resident.

While New Mexicans have a long-standing historical resentment of the Lone Star State, but the entrepreneurial, pro capitalist culture and polices clearly have a lot to be said for them. New Mexico can’t and shouldn’t be Texas, but we can also learn some valuable lessons from it.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is 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

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RGF weighs in on Mayor Keller’s latest plans for United Stadium on KOAT TV

RGF president Paul Gessing sat down with KOAT TV to discuss the Mayor’s plans for a new stadium for the NM United Soccer team. The Rio Grande Foundation helped lead the opposition to a ballot measure that would have spent substantial tax dollars on a new stadium.

While not discussed in detail in the article, our primary concern is that City Council has a chance to fully vet and vote on the plan which would use city-owned land at Balloon Fiesta Park. The plan would (unfortunately) spend $13.5 million in State funding but we need to know what, if any, liabilities could be faced by Albuquerque taxpayers. It is also important to understand what the real impacts of the stadium will be on Balloon Fiesta Park’s parking situation and what alternatives could be undertaken with this land.

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RGF leads major coalition effort highlighting problems with Railway Safety Act

The Rio Grande Foundation, alongside the Washington-based Competitive Enterprise Institute have led a coalition letter (available here) of state-based and national free market organizations and leaders in expressing serious concerns about provisions contained in the “Railway Safety Act,” (S. 576) which is now moving through Congress.

Among the numerous issues with the bill is its arbitrary 2 person crew mandate;

A massive new regulatory burden (imposed absent any cost-benefit analysis) on movement of hazardous materials;

Enshrinement of mandates for trackside detectors and other technologies that locks  a single technology into law. When government does this the public suffers as industry lacks the flexibility or incentive to pursue next-generation technologies.

Among the more than three dozen signatories of the letter are:

Hon. Kenneth “Ken” Cuccinelli II
Former VA Attorney General, Former Acting Deputy Secretary of Homeland Security

Steve Forbes
Chairman and Editor-in-Chief Forbes Media

David R. Henderson
Research Fellow
Hoover Institution, Stanford University

 

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Opinion piece: Don’t get too excited about those rebates

The following appeared in the Las Cruces Sun News and numerous other newspapers on June 18, 2022.

According to New Mexico’s Tax and Revenue Department rebate checks (or transfers to bank accounts) will be going out at any time during the middle of June. At the Rio Grande Foundation we welcome the $500 or $1,000 (depending on single/married filing status). This is especially true at a time when inflation is rising faster than wages.

But New Mexico is in the midst of an unprecedented boom in its oil and gas industry and, while those checks are nice, they are a pittance relative to the windfall being experienced in State government. Worse, unless the Legislature and Gov. take concrete action and soon to diversify the economy, New Mexico will waste this unique opportunity.

First the numbers: according to the Legislature’s analysts, the one-time “cost” of the rebates is $667 million. You may recall that the Legislature began the 2023 session with a surplus of $3.6 billion and spent $1.2 billion of that.

Though new spending was “just” double the amount of the rebates, the reality is that almost all of the money not spent this year will be put into reserves to be spent in the future. That means that more than 80 percent of this year’s budget surplus will ultimately be spent (unless the Legislature enacts some real tax cuts in the 2024 session).

There are a few major points to be made:

  • During her reelection campaign Gov. Lujan Grisham decried Mark Ronchetti’s rebate proposal as a “fiscally irresponsible socialist scheme” and said it would eliminate funding for the state budget. What changed?
  • It is widely acknowledged that New Mexico needs to diversify its economy, but neither more spending nor one-time rebates will do that. When will Lujan Grisham and Democrats in the Legislature get serious about making New Mexico less dependent on oil and gas?
  • While RGF applauds genuine efforts to diversify the economy, oil and gas revenues show no sign of slowing down. That’s because New Mexico is in a production-driven boom, not a price-driven boom. So, rather than allowing a scarcity mentality to drive tax cut and tax reform decisions, policymakers should understand that strong revenues are here for the foreseeable future and should be used to get New Mexico out of its unnecessarily impoverished state.

Like all New Mexicans we at the Rio Grande Foundation welcome these rebates. What we are looking for out of Lujan Grisham and the Legislature is some kind of coherent economic strategy (besides simply spending more money). It is time to translate our oil and gas wealth into prosperity for ALL New Mexicans. That requires average New Mexicans to engage with and hold this Legislature and Gov. accountable for their policy decisions.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is 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

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Homeless policy presentation and podcast by Judge Glock

Judge Glock, Director of Research at the Manhattan Institute, is an expert on homeless policy in the United States. On June 14 he gave a presentation in Albuquerque and also sat down with Bob Clark of KKOB radio.

His detailed slides can be found here: Homeless Presentation. 

His conversation w/ Bob Clark is below:

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KOAT-TV covers RGF workforce participation rate analysis

The Rio Grande Foundation recently analyzed workforce participation data for New Mexico and its neighboring states. Separate data from New Mexico’s Legislative Finance Committee was also discussed in the post.

This attracted the attention of KOAT Channel 7 which did an excellent report on RGF’s data and analysis including discussing the data with a UNM economist who added his cogent thoughts. Check out the KOAT report here.

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National Review Capital Matters opinion piece: New Mexico Wins the Lottery

The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.

Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.

A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011

For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.

One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.

The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.

New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).

Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.

Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they  tend to make poor decisions. And all that brings New Mexico’s politicians to mind.

Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:

  • Two additional tax brackets of 6.5 and 6.9 percent . New Mexico’s current top rate is 5.9 percent (already increased from the 4.9 percent rate charged during Bill Richardson’s days as governor) would have been further augmented by even higher rates with the 6.5 percent kicking in at $200,000 for married filers;
  • Tax hikes on capital gains and corporate income;
  • Higher taxes on tobacco and alcohol;
  • Subsidies for electric-vehicle buyers, charging stations, and additional handouts for the already-heavily-subsidized film industry.

There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.

In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.

She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.

In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government.  Spending grew by another $1.2 billion in the latest budget  thanks to a 14 percent year-over-year increase.

As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is 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