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Economy Energy and Environment Notable News Oil & Gas Top Issues

RGF submits public comments in support of gulf oil/gas leasing

When it comes to issues surrounding oil and gas, the Rio Grande Foundation supports the industry. This is NOT because of the billions it provides our State every year or even the thousands of jobs it creates. We support the industry because we support human flourishing and energy allows humanity to flourish.

So, we support policies that allow energy development throughout the nation and even the world, including drilling in the Gulf of Mexico. The Bureau of Ocean Energy Management (BOEM), under the Department of Interior, is currently collecting comments on a proposed lease sale (environmental groups are opposed to any new sales).

Click here for details and if you’d like to comment, please do (no later than October 6, 2022). Rio Grande Foundation’s comments can be found below (they are also available on BOEM’s website: l8n-a2s4-dvbe.

The following comments are on behalf of the Rio Grande Foundation, a public policy research organization based in Albuquerque, NM and working to make New Mexico more economically prosperous.

The Bureau of Ocean Energy Management (BOEM) recently released plans for offshore energy development for the next five years. Currently, BOEM’s plan only includes 10 lease sales over a 5-year period in the Gulf of Mexico and does NOT guarantee those sales will take place.

BOEM does not have an active leasing plan for the Gulf of Mexico and will be unable to hold any lease sales until the new plan is finalized. This will leave a multi-year gap in lease sales in the Gulf. The proposed plan needs to be finalized ASAP to help protect consumers and businesses from high energy prices!

The Gulf of Mexico produces 15% of our nation’s energy. The Rio Grande Foundation supports BOEM’s planned lease sale specifically and encourages opening the Gulf to ensure energy prices stay affordable for consumers.

New Mexico is the nation’s 2nd-biggest oil producing state. Nearly half of that oil is produced on federally managed land. So, while a New Mexican might be expected to oppose drilling in the Gulf in hopes of making New Mexico’s product more valuable, the reality is that we truly ARE all in this together. The federal government needs to expand, not contract, the ability of energy producers to bring oil and gas to Americans and potentially Western European nations as well who are dealing with shortages driven by Russia’s invasion.

Here are a few facts:

  • In FY2021, revenues totaled $4.1 Billion from OCS oil and gas activities.
  • If drilling in the Gulf is stopped, western states like New Mexico are likely to see a decline in lease sales on federal lands located within the state in the future; negatively impacting our state’s budget and infrastructure funding.
  • Oil produced in the Gulf of Mexico is some of the least carbon intensive oil produce anywhere in the world and will play a key role in reducing global carbon emissions.
  • The Gulf of Mexico funds conservation efforts across the country, including our national parks.
  • Producing American oil and gas in the Gulf of Mexico helps protect consumers from instability in global markets.
  • If drilling in the Gulf is stopped, western states like New Mexico are likely to see a decline in lease sales on federal lands located within the state in the future; negatively impacting our state’s budget and infrastructure funding.

Energy abundance is critical to our way of life. The Gulf of Mexico is a big part of America’s energy picture. I urge you to approve this plan.

 

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Economy Education Legislature Notable News Top Issues

Lujan Grisham touts abortion; what about economy, education?

The following appeared in the Las Cruces Sun News on Sunday, September 25, 2022 (and in several other papers).

With just a few weeks before early voting, what issues will motivate how New Mexicans vote? According to one recent poll the top issue this fall is inflation/the economy (at 59%). Crime was right behind at 58% followed by immigration and health care. Abortion was down the list at just 29%.

Surprisingly, the poll (done by KOB-TV) fails to even ask about education. In a state that consistently ranks at the very bottom in the nation on numerous (and bipartisan) education reports, serious education reforms should be at least on the radar. This is especially true as education is an inherently state issue (unlike immigration or inflation).

But, if you follow Gov. Lujan Grisham’s campaign’s public messaging you might believe abortion is the only important issue facing New Mexicans. Because we believe the New Mexico economy and education system are two critically important issues, the Rio Grande Foundation looked carefully at both candidates’ websites for details on their plans.

Lujan Grisham’s campaign website is: michellefornewmexico.com. There she touts policies she and the Democrat Legislature have enacted. And, she does have some significant economic policy accomplishments. These include a slight gross receipts tax reduction as well as Social Security and military pension tax reductions passed earlier this year.

In terms of education policy, she focuses her attention on various new programs, teacher raises, and generally spending more money. But recently released state test scores were abysmal. The “moon shot” simply hasn’t moved the needle, and what data we have indicate that New Mexico students suffered greatly during the year of lost in-person learning of the pandemic. New Mexico was one of the states that lost the most classroom time thanks to Lujan Grisham’s COVID policies.

More importantly, the governor offers no specific policies moving forward in either area. How, for example, will she use the $2.5 billion budget surplus the state is expected to have when the Legislature convenes next January? With state spending having already risen by 30% under this governor and voters likely to provide permanent fund dollars to pre-K, is the governor planning to push for long-overdue gross receipts tax reform, more spending, or something else entirely?

We know New Mexico still faces significant economic challenges. The state lost thousands of businesses thanks to the pandemic lockdowns and there are fewer employed New Mexicans today than before the pandemic. New Mexico also remains among the most impoverished states in the union and one that is heavily dependent on the volatile oil and gas industry.

Mark Ronchetti, on the other hand, has released detailed and thorough plans (available at markronchetti.com) explaining exactly what he would like to do on both the economy and education. At the Rio Grande Foundation we agree with him on eliminating “pyramiding” of the gross receipts tax and providing stipends for low-income families to help students catch up to COVID learning loss. He plans to reduce income taxes for middle- and low-income New Mexicans. He also wants to emphasize school leadership and vocational learning along with apprenticeships. He has very detailed plans that are worth considering. We’d do some things differently, but it stands in stark comparison to Lujan Grisham’s non-plan.

We are less than a month away from the start of early voting. Hopefully by then voters will have more information on what Gov. Lujan Grisham plans to do in a second term so they can compare that plan to what Mark Ronchetti has already put forth.

Abortion is an important issue to many people, but the economy and our struggling education system impact us all and on a daily basis. They form the basis of what state policymaking is all about and will be the most important issues discussed in the upcoming 60-day session. Voters need to be able to make an informed decision.

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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Economy Education Issues Notable News Top Issues

New Mexico outpaces nation on welfare recipients (and it’s not even close)

Sometimes statistics on New Mexico just blow you away. A report from World Population Review highlights states based on welfare recipients per population for 2022. The surprising thing isn’t that New Mexico is at the top of the list. What’s amazing is how big it’s lead is relative to states.

In fact, based on the data below New Mexico’s rate of welfare receipt is 23% higher than the next highest state. Rarely do such massive differences exist when comparing the 50 states, let alone on a critical issue like welfare.

If there is one statistic that highlights the difficulty Republicans face in gaining traction here in New Mexico, this might be it. With such an outsized proportion of the population receiving government handouts, who wants limited government?

As the report notes, the United States has six major welfare programs: Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Programs (SNAP), Supplemental Security Income, Earned Income Tax Credit, Housing Assistance, and Medicaid. These six welfare programs are not to be confused with the four entitlement programs: Social Security, Medicare, unemployment insurance, and worker’s compensation.

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Economy Legislature Notable News RGF Events Top Issues

Op-ed: State must encourage people to work

The following appeared in the New Mexican on August 20, 2022.

One of the most important yet underreported issues in New Mexico is our state’s poor workforce participation rate.

Currently, New Mexico has plenty of jobs, yet too many New Mexicans remain outside the workforce. Workforce participation in New Mexico first dipped during the global recession of 2008-09, but it took another big dip during the coronavirus pandemic and unlike most of our neighboring states, it has not recovered.

Our governor’s strict COVID-19 lockdowns played a role in pushing New Mexico’s workforce participation rate downward. In January 2020, the workforce participation rate in New Mexico was 58.7 percent. That rate dropped to just 54.4 percent by April. Just over two years later, the workforce participation rate still sits nearly 2 percent below where it was before the pandemic at 56.9 percent.

According to one report, “The Department [of Workforce Solutions] has experienced an increase in the number of unemployed who are receiving benefits without following through on their job searching requirements.” The department was flooded with new accounts and hasn’t been able to properly enforce these requirements.

In addition to the overwhelming number of recipients, the additional funds meant to alleviate damage caused by the pandemic have created a reverse incentive for reluctant workers.

While many policymakers are focused on the fallout from the pandemic, our research shows this problem is decades in the making. Since 1999, the workforce participation rate has steadily been decreasing by an average of 0.37 percent per year. The decline for men has been more profound, declining at 0.44 percent per year.

To explore these trends further, I looked at each sex by age range and found the most alarming change in men ages 20 to 24. In this age range, the workforce participation was 87.3 percent in 1999. That has steadily decreased to just 74.8 percent in 2019. For women in the same age range, the workforce participation rate in 1999 was 67.6 percent and rose to 73.7 percent in 2019. All other age ranges had a slight decline over the same period for both sexes.

One factor that appears to be contributing to the rapid decline in workforce participation rate in New Mexico could be the increase in single-parent households. In the year 2000, the percentage of children in single-parent households was 33 percent. That rate has steadily increased at a rate of 0.45 percent per year to 44 percent in 2019. New Mexico’s single-parent household rate has been growing at a faster rate than the national average. There is a strong correlation between increasing single-parent households and dropping workforce participation rates from 2000 to 2019.

There is no single policy solution for our abysmal workforce participation rate. Reforms to state and federal welfare programs that currently incentivize single-parenthood and idleness would help. Workforce Solutions must, at minimum, properly enforce job-search requirements. Setting a time horizon on entitlements New Mexicans are receiving by phasing out benefits over the course of one to two years (unless there is a specific inability to work) is another worthwhile policy. Reducing dependence on entitlement programs should be a top priority for policymakers.

Also, the Legislature, working through the department, should consider a campaign that seeks to encourage young men to get to work and encourages parents, primarily fathers, to be present in their children’s lives.

Many of New Mexico’s biggest problems — drug use, violence, family breakdown and poor educational performance — are directly related to a growing cultural acceptance of idleness and a nonparticipation in society. Encouraging New Mexicans, especially young men, to get into the workforce is a necessary and significant step toward improving our state in a broad array of metrics. It is time to use innovative approaches to get New Mexicans back to work.

Brendyn Toersbijns is a policy analyst with 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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Economy Legislature Notable News Oil & Gas Tax and Budget Taxes Top Issues

Top 5 things New Mexico should do with its largesse (and a few they shouldn’t)

New Mexico, fresh off a 15 percent spending increase, has ANOTHER $2.5 billion in “new” money (basically a budget surplus). Who knows what big-spending schemes the Legislature will cook up for the 2023 legislative session? Of course, what happens with that cash depends A LOT on what happens in November.

Here are the top 5 things the Legislature SHOULD do with the money (and a few things to avoid);

1) Address the gross receipts tax and both its “pyramiding” (taxes paid on top of taxes) as well as its taxes on business input services is an ABSOLUTE must. It won’t “cost” much in the grand scheme of things and as analysts told the Legislature recently, it is a big factor holding our state back.

2) AFTER the GRT is reformed, New Mexico should begin phasing down (and out) both personal and corporate income taxes. 9 states currently have NO personal income tax.  The corporate income tax only accounts for $200 million or so annually. It is time to diversify our economy and New Mexico can do so by eliminating the corporate income tax.

3) Pay down pension debt while reforming them AND giving workers freedom to invest their OWN retirement funds. Yes, that’s a lot, but New Mexico’s underfunded pensions are in need of not only more funding, but fundamental transformation. Dumping more tax dollars into them is not a particularly good idea, but paired with needed reforms and increased worker control, this is a worthy approach.

4) Infrastructure: repave our roads and bridges, water projects. While New Mexico roads are ranked okay nationally (despite our dangerous drivers) e all know of certain roads that need to be paved/improved across our State. It is time to get this infrastructure in top shape. Same with water. It is time to make every drop count and explore innovative approaches to improving our future water security.

5) Bring/keep more medical professionals. New Mexico needs more medical professionals. While basic reforms to our new, harmful medical malpractice law are essential, improving Medicaid reimbursement (and ending the GRT on medical services as part of a broader GRT reform) are two ways to make New Mexico a more attractive place for medical providers.

Things we don’t need

1) Another year of massive spending growth. New Mexico’s state spending as a percent of GDP is the highest in the USA in FY 2023 (vastly outpacing its neighbors as seen below). Broad new spending increases are not going to improve our State;

2) Socking the money away: this is only deferred spending growth. New Mexico needs to act prudently with this money to address important policy shortcomings NOW.

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Economy Legislature Notable News RailRunner Spaceport Top Issues Transportation

Opinion piece: Government boondoggles shouldn’t be New Mexico way

This article first appeared in the Las Cruces Sun News on Sunday, July 31, 2022.

New Mexico is always ranked among the “poor” states in the United States. But, as anyone who lives here or has taken stock of New Mexico’s abundant natural and cultural resources can tell you, we have no business being “poor.”

Sadly, much of our poverty is self-inflicted. It is the obvious result of bad public policy. While there are all manner of bad tax and regulatory policies that often wind up being “in the weeds,” one of New Mexico’s fundamental problems is the result of politicians’ misguided belief that the path to success involves more government spending or another big government project.

The Rio Grande Foundation has long had its concerns about two Bill Richardson-era projects of this kind: the Rail Runner and Spaceport America. Starting with the Rail Runner, the latest ridership data just came out and, over the past year the train saw 319,635 riders board the train. The train was fully operational throughout the last 12 months which included a few months of fares having been discounted to $2.50 a day.

One might think that with gas prices these days the Rail Runner would be a cost-effective alternative. Sadly, the train’s current ridership is about 25% of peak years of 2010 and 2011 when more than 1.2 million people boarded the train. Sadder still is the fact that taxpayers continue to pay tens of millions of dollars in debt service on construction of the train and nearly $20 million annually to operate it.

Shockingly, Las Cruces Sen. Bill Soules recently pledged to reintroduce legislation in the 2023 session that would theoretically create “high speed rail” from Denver to Chihuahua. The fact is that population density numbers don’t justify commuter rail between Albuquerque and Santa Fe. Now Soules wants to spend tens of billions on “high speed” passenger service spanning more than 850 miles, three states, and two countries?

Sadly, Spaceport America has proven itself to be another Richardson-era boondoggle that hasn’t lived up to its promise. Spaceport America has been open for business for more than a decade and it has yet to fulfill its mission of hosting commercial space flights.

Last July Richard Branson and a team of Virgin Galactic employees did make it to weightlessness, but the company’s stock has tanked in the meantime and their latest prediction is for flights to begin the first quarter of 2023.

Plans for those manned commercial space flights have been delayed time and again. We’re not holding our breath for flights to begin in earnest early next year.

Worse, Virgin Galactic recently announced plans to build its future fleet of spacecraft in Mesa, Arizona. Sadly, spending hundreds of millions of our tax dollars to provide a spaceport for Virgin Galactic was not enough for them to build ships here.

With massive oil and gas surpluses flowing into the state’s coffers, politicians like Soules will again be looking for new “opportunities” to waste money. But big government spending schemes have repeatedly failed to truly diversify our economy or bring sustainable growth to our state.

Instead, the governor and Legislature would better serve our state by considering why companies with a New Mexico presence (like Virgin Galactic and Intel to name two) continue to choose neighboring Arizona over us.

It might be Arizona’s school choice which has improved educational results and workforce preparedness, not to mention a willingness for families to locate there.

Or, perhaps it is Arizona’s lower taxes which has dropped to 2.5% for nearly all Arizonans under a new tax cut law.

Finally, it could be that Arizona has a “right to work” law which gives private sector workers the right to opt out of membership or the payment of dues and fees in labor unions.

No matter, it is high time for New Mexico to abandon our government-driven model and consider what states like Arizona and others do that has worked so much better.

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

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Economy Education Legislature Notable News Top Issues

Talking New Mexico economy in Clovis

RGF president Paul Gessing traveled to Clovis, NM recently to discuss the State’s economy and education systems and what can be done to improve them. You can see the slides from the powerpoint presentation here and if you are part of a civic group that would like to hear a similar message, please don’t hesitate to reach out to info@riograndefoundation.org to schedule something.

Paul’s remarks were well covered by the Eastern New Mexico News.

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Economy Legislature Notable News Tax and Budget Taxes Top Issues

Analysis: the Ronchetti rebate plan

New Mexico’s race for governor is, by all accounts, going to be extremely close.   Generally-speaking the two candidates have VERY different visions for New Mexico, but on one thing their policies have a bit of overlap: rebating money from New Mexico’s booming oil and gas industry.

While having previously raised taxes despite record revenues, incumbent Gov. MLG called a special session of the Legislature to pass rebates of up to $1,500 for “New Mexicans.” The quotes are due to the fact that there is a pot of money specifically set aside in the Gov.’s rebate package for those who didn’t file tax returns which could include illegal immigrants.

Ronchetti’s plan is different from MLG’s in a few big ways: it would be only for New Mexicans (although details are unclear as to enforcement), it would potentially bigger with families with children benefitting the most providing up to $2,000 to a family of four (including children), and it would be a regular annual occurrence as long as revenues hold up.

Here are our takeaways on the Ronchetti plan:

  1. Putting money back in New Mexicans’ pockets is far superior to further increasing the size of New Mexico’s already bloated state government (and that includes the various permanent funds);
  2. Reforming New Mexico’s broken and anti-business gross receipts tax and THEN working to reduce or eliminate the income tax must be the top reform priorities, but there is nothing wrong with doing all of them;
  3. One challenge with rebates is that they don’t necessarily reward work. New Mexico still faces a huge gap in terms of its workforce participation rates. Government checks can negatively impact efforts to get more people to work.
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Economy Energy and Environment Local Government Notable News Tax and Budget Top Issues

RGF calls out “fee” hikes at CABQ, elsewhere

We all know prices are skyrocketing as inflation takes hold of the United States economy. We also know that the State of New Mexico and City of Albuquerque have massively increased spending in their latest budgets (well beyond the rate of inflation).

Unfortunately, that doesn’t mean that government, especially the City, is interested in keeping overall costs and fees down for those paying the bills. RGF’s Paul Gessing spoke to KOAT Channel 7 to discuss the increased costs on your water, trash, and power bills.

 

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Economy Energy and Environment Notable News Top Issues

RGF in National Review Capital Matters: Are Electric-Vehicle Mandates Coming to Your State?

The following appeared in National Review’s Capital Matters on May 26, 2022.

New Mexico just became the 15th state to follow California’s lead in adopting “Clean Car Standards.”

Under New Mexico’s new automobile standards, roughly 7 percent of new cars sold in the state must be zero-emission in 2025. In the latest report available (3rd quarter of 2021) zero-emission vehicles amounted to just 2.29 percent of new vehicle sales in New Mexico. So, to comply with the new rule, sales of zero-emission vehicles will need to more than triple from Q3 of 2021 to 2025.

While the number of states adopting these standards is limited to mostly the West Coast and Northeast so far, anytime a Democrat is elected governor, this kind of policy could be on the table for adoption. That’s because, despite the impact that adopting such policies will have on everything from the automotive to the agricultural sectors, states often don’t need to push these policies through their legislatures for approval.

In New Mexico’s case, Governor Michelle Lujan Grisham these standards through an unelected Environmental Improvement Board. California’s own in states with Democratic governors, this kind of policy could be coming your way if it hasn’t already been put in place.

The real kicker is that by subjecting itself to California’s political whims, New Mexico (and other states adopting these standards) could be forced to adopt even more aggressive “Clean Car” standards soon. California governor Gavin Newsom has issued an executive order that, if adopted by California’s Air Board, would end the sale of gasoline-powered cars in California by 2035. The board’s decision on final adoption of that rule could come in California as early as this August.

Under California’s proposed rule, 35 percent of new cars, SUVs, and small pickups sold in California (and thus other states following their policies) must be zero-emission starting with 2026 models. That number will increase yearly, reaching 51 percent of all new car sales in 2028, 68 percent in 2030, and 100 percent in 2035.

Tripling sales of electric vehicles (EVs) in two years in New Mexico means dealerships will cross-subsidize EVs by raising prices on gasoline vehicles or they will look to the state to further subsidize sales of EVs. This could make gasoline vehicles purchased in states following California more expensive, leading to more car buyers looking out of state. That would result in lost jobs, and tax revenues leaving those states. That situation will get far worse if California adopts the even more aggressive rules now under consideration.

There is nothing inherently wrong with EVs, but there are numerous public-policy implications in their mass deployment, especially if the tool is to simply mandate their sale at the state level.

Additional issues with the widespread and aggressive adoption of EVs include the need for more mining. Will environmentalists who ostensibly support EVs support the mining of everything from copper to rare-earth minerals to go along with their deployment on a large scale?

Who pays to maintain the roads? It is a relatively simple task to apply a charge to the use of EVs for road maintenance, but politically speaking, owners of EVs are currently favored. Will politicians have the courage to apply fees to electric-vehicle users to pay for the roads?

Few advocates of free markets such as  myself oppose the deployment of EVs. But it should be an organic process driven by market forces, not government mandates and subsidies where the burdens fall on those who cannot afford or have no use for EVs.

Worse, the process of joining California on EVs is being done in the dark, absent the say-so of our democratically elected representatives.

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