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A new day means new tax cuts for ABQ City Council

A slightly shortened version of this opinion piece was published in the Albuquerque Journal on March 20, 2022. A chart illustrating Albuquerque’s spending is found below the text.

Elections have consequences. After four years of “progressive” leadership by Mayor Keller and a left leaning city council, the election of November 2020 saw a more center-right Council. While much attention was given to the fact that Tim Keller was reelected by a wide margin despite the City’s spiraling crime problem, Albuquerque voters didn’t actually vote for the status quo.

Now, we are starting to see a shift toward a more moderate approach to the issues from City Council. Better legislative proposals are in the pipeline, but with a 5-4 majority and a hostile mayor, getting these ideas past the finish line will be a challenge requiring grassroots support.

A starting point is reducing gross receipts taxes. Back in 2018, shortly after taking office, Mayor Keller and the new “progressive” council majority raised the (regressive) GRT by 3/8th of a cent. This was a major tax increase considering that the City’s overall GRT “take” before the tax hike was 2.375%. That made Keller’s tax hike a nearly 9% increase in Albuquerque’s rate.

And, not surprisingly, that tax increased led to rapid spending growth in the City’s budget. Even when the annual budget freeze in the 2021 budget due to COVID 19 is included, the City’s budget is up 27 percent under Mayor Keller.

Unfortunately, when the City Council met recently to discuss Councilor Lewis’ plan to cut just 1/8th of a cent off the GRT (not the full amount added in 2018), Keller’s Chief Financial Officer Sanjay Bhakta claimed “this is the worst time possible” to cut taxes.

Considering that, among numerous other wasteful spending programs, the City has just undertaken a $3 million plan to make City buses “free” to riders (that’s on top of millions in annual transit subsidies), it would seem the City could do something to help residents who continue to be pummeled by rising inflation. Unfortunately, it seems that Mayor Keller and his Administration remain opposed to this reasonable tax reduction.

There are other exciting efforts underway to move Albuquerque in a more pro-freedom direction. The big question is whether Keller will stand in the way of everything or if he’ll choose his battles. For example, Councilor Bassan has proposed ending the City’s plastic bag ban which recently passed City Council.

The unnecessary and environmentally irrelevant ban on plastic bags makes daily life more difficult for thousands of Albuquerque residents. Those bags are often reused and can be recycled. They are hardly the environmental problem their opponents claim. According to Our World in Data, the entire continent of North America generates less than 1 percent of the “mismanaged plastic” on the planet.

If Keller and City Council really want to address the City’s serious litter problem, the legions of transients begging on street corners, camping throughout town, and leaving trash behind wherever they go would be a better place to start.

While a number of other important issues are being discussed at City Council that, if adopted, will move our City in a positive direction, no effort highlights the ideological shift better than the effort to restore market forces in public construction projects. Immediately after the 2020 election, a bill was rammed through Council by liberals and the trade unions to mandate that public construction projects use union labor.

Estimates are that such unfair laws called “Project Labor Agreements” boost taxpayer costs by 14 percent. A bill is now working its way through the current Council to repeal that law and instead allow all workers and contractors regardless of union membership to bid for city construction projects.

Albuquerque is a great and beautiful city, but its management has left a lot to be desired in recent years. The current City Council is standing up to big government and special interests. They deserve your support.

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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2022 Freedom Index Results Published

The Rio Grande Foundation uses its “Freedom Index” vote tracking site to  hold New Mexico legislators accountable for their stances on individual freedom and personal liberty. We have rated all bills that impact individual freedom that received floor votes for the 2022 session and thus the current Index results are “final.”

Every bill receiving a score is rated on a scale from -8 through +8 depending on its overall impact on YOUR personal freedom. In the 2022 session the most impactful vote (-8) was on SB 14, the Clean Fuel Standard. A full analysis of that bill can be found here.

The BEST bill voted on this session was HB 163, that is the bill which includes several tax cuts (RGF analysis of that bill here). It received a +4 rating in the Index.

Rep. Stefani Lord (R) who represents parts of the East Mountains of Albuquerque scored a 45 which was the highest rating of the session.

Rep. Randall Pettigrew (R) who represents Lea County scored a 43 which was good for the 2nd-highest rating of the session.

Sen. Craig Brandt (R) who represents Rio Rancho scored 33 which was the highest rating for any senator (the Senate and House vote on different bills and the House typically takes more votes and thus has higher and lower scores).

Sen. Antoinette Sedillo-Lopez (D) who represents parts of Albuquerque scored -66 which was the lowest rating for any member of the Legislature.

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RGF opinion piece: Session could have been a lot worse

The following appeared in several newspapers in the wake of New Mexico’s 2022 legislative session including the Carlsbad Current-Argus on February 23, 2022.

The 2022 30-day legislative session could have been much worse. It is no secret that we at the Rio Grande Foundation have disagreed with most of Michelle Lujan Grisham’s major efforts as Governor. She surprised many of us in her State of the State speech when she proposed elimination of the Social Security tax in New Mexico.

After three years of ruling as a hard left “progressive,” the Governor’s change of tune heading into the 2022 session was notable. Is her move solely due to her impending reelection? We’ll never know, but it is a welcome shift.

The most notable good legislation that passed this session was the tax cuts (HB 163). Unfortunately, the Social Security tax was not completely eliminated, but it will no longer apply to a vast majority of taxpayers. As a bonus, military pensioners received a break on their pensions for at least the next 5 years.

The State gross receipts tax rate will be cut under the tax reform package (barring a drop in state revenues) and a small child tax credit was added. Finally, the Legislature acknowledged that gross receipts tax pyramiding on business-to-business service inputs is a problem, but they only addressed the issue for manufacturers.

These tax cuts, if fully enacted, will reduce tax revenues by $400 million or so annually, are dwarfed by the massive increase in government spending. Spending rose by $1 billion this year alone.

All of this is thanks (mostly) to the booming oil and gas industry which shows no sign of slowing down, but money being printed up in Washington also played a role. Of course, while the Gov. will tout the raises for government employees in general and teachers specifically, with the current rate of inflation, those raises won’t be as helpful to families’ bottom lines.

Numerous bad bills were considered during the session that (thankfully) died. Most notable among these was SB 14 the “Clean Fuel Standard.” While rising gas prices have contributed to the State’s budget surplus, for average New Mexicans high gas prices are just another sign of inflation. Given those high prices it was a shock that Lujan Grisham made it her mission to pass this legislation, which would have increased gas prices at the pump by 35 cents/gallon.

The bill became even more confusing when, in the waning days of the session, an amendment was added to keep the San Juan Generating Station coal fired plant in Farmington open through next summer. PNM which owns the plant is nervous that it won’t have enough electricity to keep the lights on when the plant closes in June to comply with Lujan Grisham’s 2019 “green new deal” legislation.

Thankfully, with only hours to go in the session, SB 14 died on a tie vote in the House.

Another bill that, thankfully, died was the so-called “election reform” bill. Starting out, this bill was SB 8 and it had straight party voting, a “permanent” absentee voter list, allowing 16 and 17 year olds to vote, and, most outrageously, a provision allowing mailed ballots to be collected as late as the Friday after the Election Day.

Through a series of amendments and changes the election reform bill became SB 144. It was still problematic due to the unnecessary loosening of voting rules, but it died on the Senate floor as time expired.

Plenty of bills never received a floor vote. The Democrat-dominated Legislature (again) failed to restore a seat at the table for itself in emergencies. On the positive side of things, Las Cruces Sen. Bill Soules’ absurd SB 204 which would have appropriated $1 billion as part of a down payment on a high-speed train from the border with Mexico to Colorado, went nowhere as well.

This session could have been a lot worse. But, a moderately-successful 30-day session with November’s elections staring the Gov. in the face does not an ideological shift make.

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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Where New Mexico is getting most of its money

Gov. Lujan Grisham has proposed a 13.5 percent increase this year. While ALL states have received massive bailouts in the form of printed money from Washington, New Mexico’s financial windfall is largely generated by the oil and (to a lesser extent) gas industry.

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Best bills of New Mexico Legislature…so far

Despite there being A LOT of bad bills in the 2022 session even with only 30 days to consider them, there ARE some good bills. Here are some of the BEST bills introduced so far. We’ll also “handicap” the likelihood that each bill will pass:

HB 40/HJR 3: Reps. Greg Nibert (R), Daymon Ely (D), Randall T. Pettigrew (R), Stefani Lord (R), and Rachel A. Black (R). This bill/amendment would place limits on the Governor (whoever that may be) and give the Legislature a “seat at the table” in future emergencies. Unfortunately, while similar bills were introduced in the 2021 session which lasted 60 days and a recent special session, this worthwhile bill which has bipartisan sponsorship has a LOW chance of passage.

HB 48/HB 49/SB 108 These bills introduced by Reps. Gail Armstrong (R), Cathrynn N. Brown (R), Randall T. Pettigrew (R) , Candie G. Sweetser (D), Rebecca Dow (R), and Sen. Padilla (D) would end taxation of Social Security under New Mexico’s personal income tax. This issue has been around for a few years, but Gov. Lujan Grisham has said that she supports eliminating the tax. We don’t know EXACTLY what she means (like if she’ll raise other taxes to do it), but these bills DO NOT offset the tax with new taxes. MODERATE chance of passage.

HB 76/SB 85  Reps. Phelps Anderson (I),  Harry Garcia (D)
T. Ryan Lane (R), Joy Garratt (D), Jane E. Powdrell-Culbert (R), and Sen. Harold Pope (D) would give a $30,000 exemption for military pensions. This bill is a worthy follow-up to the Social Security discussion, especially with New Mexico’s large number of ex-military. But, it is unlikely to happen this year. 

HB 91: Reps. Rebecca Dow (R),  Luis M. Terrazas (R),  James G. Townsend (R),  Candy Spence Ezzell, (R), and  Randall T. Pettigrew would prohibit the teaching of Critical Race Theory in New Mexico schools. It is unlikely to pass this year.

HJR 11: Reps. James G. Townsend (R), Ryan Lane (R), Larry Scott (R), Rod Montoya, (R), and Stefani Lord (R) would amend New Mexico’s constitution to specifically allow school funding to flow to families to choose the education option that makes sense for them which may include private schools or home school. Zero Chance of Passage until the unions no longer control New Mexico’s Legislature and Gov.

SB 5: Sen. Bobby Gonzalez (D), reduces the Gross Receipts Tax rate imposed by the State of New Mexico from 5.125% to 4.875 percent. This WAS a top priority of the Gov. prior to the session, but when she asked the Legislature to eliminate the Social Security tax in her State of the State address she seemed to shift emphasis away from reducing GRT rates. We still believe this has a High Chance of Passage.

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Here are some early contenders for worst bills of the 2022 Legislature

As of the day before the 2022 Legislature kicks off, here are some of the worst bills introduced in the session (so far). You can see the updated list of bills introduced in the session here as of January 17, 2022. More will be added. Given the large number of bills likely to be introduced, I’ll also offer a brief thought on how likely they are to pass:

HB 6, Reps. Nathan Small (D) Brian Egolf (D), Kristina Ortez (D), Sens. Siah Correa Hemphill (D), Mimi Stewart (D). Sets legislative framework for “net-zero” CO2 emissions in State of New Mexico. Likelihood of passage: High as Gov. MLG has said she wants to make New Mexico “net-zero.”

HB 11, Reps. Debra Sariñana (D) and Meredith Dixon (D). Creates a tax credit of up to $5,000 and 40% of the cost of “energy storage” systems. Likelihood of passage: High This yet another part of the push toward unreliable forms of electricity that will demand massive and costly battery storage.

HB 14, Reps. Christine Chandler (D) and Debra M. Sariñana (D). Allows local governments to issue Industrial Revenue Bonds (IRB) and gross receipts tax deductions for “energy storage” systems. Likelihood of passage: High(see above).

HB 33, Rep. Joanne Ferrary (D). Imposes massive (regressive) tax hike on tobacco consumers at a time of massive budget surpluses. Likelihood of passage: Moderate (it will hard for legislators to explain a tax hike at a time of record budget surpluses).

HB 34, Rep. Joanne Ferrary (D). Expands and extends an already-generous solar panel tax credit that disproportionately benefits wealthy New Mexicans. Likelihood of passage: High (furthers “green” agenda and benefits well-connected, wealthy solar customers and companies).

HB 71, Rep. Matthew McQueen (D) and Jason C. Harper (R). Allows taxes on residential property to rise by up to 10% ANNUALLY (as opposed to 3% currently). Likelihood of passage: Moderate (Property taxes are notoriously unpopular and it is hard to see the Legislature passing a big tax hike in an election year, even with a GOP co-sponsor).

HB 75, Rep. Sponsor Patricia Roybal Caballero (D). Sets up a state-run bank in New Mexico. New Mexico already has a robust network of banks and credit unions, the last thing it needs is a government-run and taxpayer-financed bank. Likelihood of passage: Moderate this is a concept likely to be seen as too far beyond the pale even for many Democrats.

HB 78 and HB 132 Rep. Patricial Roybal Caballero (D) is on HB 78 while HB 132 is more likely to pass and sponsored by Rep. Susan K. Herrera, Speaker Brian Egolf, Reps. Joy Garratt (D), Phelps Anderson (I) and Daymon Ely (D). Both bills create artificial limits on interest rates charged by certain lenders in New Mexico that will limit credit availability to those with poor or no credit. Likelihood of passage: High (HB 132) as this concept has numerous groups supporting and high-interest loans are misunderstood and by legislators, the media, and the population at large.

HB 126, Reps. Tara L. Lujan (D) and Pamelya Herndon (D), Creates all manner of “diversity” requirements for state government employees, creates a “Chief Diversity Officer” as well as “diversity” and “inclusion” liaisons in State government, requires an annual report on whether the State is achieving its diversity and inclusion goals. Is New Mexico State government not “woke” enough? This legislation is for you. Likelihood of passage: Moderate.

HJR 2 / SJR2 Reps. Joanne J. Ferrary (D), Tara L. Lujan (D), Gail Chasey (D), Sens. Antoinette Sedillo Lopez, (D), Harold Pope (D). Purports to provide the people of New Mexico with vaguely-defined “environmental rights” includng the right to a “clean and healthy environment and the “right to protction of the environment.” The vague provisions contained in this amendment will simply result in more expensive lawsuits and unnecessary regulations. This is a Constitutional amendment and extremely vaguely worded which might scare away supporters.  Likelihood of passage: Moderate.

SB 8, Sens. Peter Wirth (D),   Katy M. Duhigg (D), Harold Pope (D) Carrie Hamblen (D), and  Rep. Javier Martínez (D) would “reform” voting in New Mexico by allowing 16 and 17 year olds to vote, creating a permanent absentee voter list, and permitting people without an official state ID to register to vote online by using their full Social Security number. Likelihood of passage: High

SB 21, Sen. Bill Tallman (D), Provides a tax subsidy for electric vehicles which tend to be driven by wealthy New Mexicans and is thus “regressive.” If there is one policy area where New Mexico’s Legislature loves to pour subsidies it would be for supposed “green” initiatives. Likelihood of passage: High

SB 99, Sen. Leo Jaramillo (D), Creates a new “State Transit Fund” to further funnel money from state taxpayers to failed transit projects. This is a new idea this session, but with so much money floating around there is always reason to be concerned about new wasteful spending. Likelihood of passage: Moderate

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Santa Fe New Mexican op-ed: An energy crisis looms in New Mexico

The following appeared in the Santa Fe New Mexican on October 24, 2021.

Western Europe is facing an energy crisis this winter. Prices have skyrocketed. Natural gas is 400 percent higher than the start of 2021 while coal is up over 300 percent.

As if high prices weren’t enough of a problem, 40 percent of the natural gas that Europe uses comes from Vladamir Putin’s Russia, an unreliable supplier to say the least.

New Mexicans should take heed. Thankfully, despite the Biden Administration’s permitting ban on federal lands (since invalidated by a judge), New Mexico has steady supplies of oil and natural gas.

Those supplies help protect us from wild price swings and supply disruptions like those that could cause massive economic pain and human suffering in Europe this winter.

While we’ll be fine this winter, New Mexico’s largest utility is facing serious challenges finding enough electricity by next summer.

Due to the Energy Transition Act of 2019 which forms the cornerstone of Gov. Michelle Lujan Grisham’s “Green New Deal” agenda, the San Juan Generating Station is slated to be permanently shut down next June during the hottest part of next summer.

PNM executives have stated clearly that the hunt for “renewable” power to replace San Juan Generating Station is not going well. Even in the best of circumstances “renewables” like solar and wind are inconsistent and require backup like batteries, but the pandemic has hit supply chains hard and projects are being delayed.

Unless Gov. Lujan Grisham acts quickly to keep San Juan Generating Station open, the plant will be taken offline as scheduled this summer and blackouts and brownouts could be the result. If you don’t believe me, Tom Fallgren, PNM’s vice president of generation told the Public Regulation Commission recently, in discussing the possibility of brownouts and blackouts said, “Am I concerned? Yes. Do I lose sleep over it? Yes. Can we solve it? Yes.”

He further noted that PNM practices for scenarios, such as brownouts, have detailed procedures to handle them and prioritize power for places such as hospitals.

Finally, Fallgren noted, “We are looking at any and all options. … And we continue to beat the bushes, so to say, for other opportunities as well.” Are you feeling reassured? I’m not. Interestingly enough, PNM continues to reject new natural gas-powered resources in New Mexico as replacement supply.

Even if we escape serious power outages this summer, the issue is not going away. In fact, it will only get worse. In 2023 and 2024, PNM is abandoning its leases for power from Palo Verde (a nuclear power plant in Arizona), and by the end of 2024, PNM will no longer receive power from the Four Corners plant, yet another coal-fired plant here in New Mexico.

Ironically, as has been discussed in PRC hearings, the Navajo Tribe wants to take over Four Corners plant (saving jobs and tax revenues) while environmentalists are pushing hard to shut it down completely. Regardless of what happens next summer or over the next few years, these are policy-driven decisions made by Lujan Grisham and Democrats in the Legislature. They could have massive implications for New Mexico families.

Already, with the price of everything already going up, New Mexicans’ electric bills rose 5 percent just last year. Those rate hikes will continue to escalate for years into the future regardless of whether PNM or Avangrid is in charge. Wasn’t the Energy Transition Act supposed to hold the line on price increases?

New Mexicans and their elected officials must be aware of the very real problems facing them as June of 2022 approaches. It is not too late to prevent this crisis.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, a tax-exempt organization dedicated to promoting prosperity and individual responsibility.

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Joe Biden Is Worse Than Jimmy Carter

This article appeared at National Review Institute’s Capital Matters on September 23, 2021.

Don’t conflate Carter and Biden on Policy

By Paul J. Gessing

Amid the ongoing debacle in Afghanistan, some on the right have started making comparisons between the presidency of Jimmy Carter and that of Joe Biden. The parallels between the Iranian hostage crisis and the disaster in Afghanistan are limited, but it is notable that  the hostage crisis was the unforeseeable consequence of a series of events that the U.S. was in not in any real position to control (which is not to claim that Carter handled the events leading up to the fall of the Shah particularly well, on the contrary).  By contrast, what is now unfolding in Afghanistan is the direct and all too predictable consequence of a specific decision that — down to its disastrous timing — was ultimately Biden’s to take.

Another seeming parallel between Carter and Biden is the problem of inflation. Of course, inflation was a major issue throughout the Carter administration as well as during the Nixon and Ford years, with rates bouncing around wildly through much of the decade. But Biden’s inflation problem, like the Afghanistan debacle, is likely to end up resting  mostly on Biden’s own shoulders if his spending plans go through, with the rate having jumped from 1.4 percent in January when he took office to 5.39 percent in June.

To be fair, at least some of the inflation that we have seen so far can be put down to both the supply chain disruptions that have followed the pandemic and measures introduced, generally with a high degree of bipartisan support, during both the Trump and Biden presidencies, to help offset the impact some of the pandemic’s effects . The Fed, too, has played its part.

Persistent inflation could be avoided, but between the passage of the $1.9 trillion American Recovery Plan and the pending $1.1 trillion “bipartisan infrastructure” bill and the Democrats’ planned $3.5 trillion spending bill,  it is hard to be optimistic. The only question is whether Congress will oblige.

Carter, on the other hand, nominated Paul Volcker to chair the Federal Reserve. While there are disagreements as to why he did this, there is not too much dispute that he knew that Volcker would take a tough line on inflation, which he quickly proceeded to do. Biden remains oddly indifferent to the risk of inflation.  Hopefully, Congressional Republicans and Democratic moderates such as Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) will thwart Biden’s spending ambitions.

As if the scales were already not tilted in Carter’s favor relative to Biden’s (at least to date), the starkest differences between the two can be found in the area of economic regulation. On this transformative issue not only was Carter much better than Biden, but he may be one of the most notable deregulatory presidents in modern history. He’s almost certainly the most unexpected.

As president, Carter led the way in deregulating America’s airlines and  interstate trucking, as well as freight railroadsand even beer brewing. Each of these reforms has stood the test of time, resulting in cheaper transportation, more industry competition, and better living standards for millions of Americans.

While Americans often complain about cramped quarters on airlines, the actual preferences of most ticket purchasers continues to be for inexpensive, “no frills” options. Meanwhile, just last year over 1,000 supporters of the 1980 Staggers Act, which deregulated much of the railroad sector, signed a letter reaffirming their support for the policies outlined in that bill. As noted in that letter, since the act’s passage,  “[r]ail traffic has doubled, rail productivity has more than doubled, rail rates are down more than 40 percent, and recent years have been the safest on record.”

In other words, deregulation worked, and it has been working to our benefit for decades since.

Lest you think you haven’t benefitted adequately from more efficient transportation, Carter also signed legislation that legalized craft brewing, something that  helped pave the way  to the numerous innovations in beer brewing that have pleased millions of Americans, from hop-heads to those who prefer fruit and chocolate-infused flavors and everything in between.

And how is Joe Biden’s record by comparison? He hasn’t touched brewers (yet), but he is already attempting to re-regulate freight railroads. A July executive order on “providing competitiveness in the American economy” encouraged the Surface Transportation Board (STB) — the federal agency that oversees economic regulations for private freight railroads like Norfolk Southern and Union Pacific — to consider imposing “forced access” more regularly.

This means that privately owned and maintained railroads could be forced to turn over traffic to competing railroads at potentially below-market rates – a clear violation of private property rights and free market enterprise as we know it. The order is akin to net neutrality for railroads. Railroads already voluntarily allow access to their competition in order to improve service across the industry, but the last thing Americans or freight railroads need is for Uncle Sam to get back into the business of heavily regulating railroads.

To date, the Biden administration has done virtually nothing to deregulate the economy. On  the contrary, aside from its  spending spree, what passes for “accomplishments” in the Biden administration largely involve undoing deregulatory executive actions on the part of the Trump administration on the environment, or imposing entirely new, onerous regulations  such as the ban on new oil and gas permits on federal lands, which has now run into trouble in the courts

These points may not convince many conservatives that Jimmy Carter was a good president (and to be clear, I don’t think he was, myself) , but perhaps they will convince some that Carter had significant and lasting accomplishments to show for his  four  years in office. Given his track record to date, Joe Biden is beginning to make  Jimmy Carter look pretty good. That may not say that much about Carter, but it says a lot about Biden.

 

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Comprehensive energy approach vital to NM future

The following was written by RGF Board member Steve Dodson. It appeared in the Albuquerque Journal on September 19, 2021.

New Mexico lawmakers must put politics to the side and embrace an all-of-the-above approach to sustainable energy if our state is to recover from the pandemic and advance our shared goal of combatting climate change.

A federal judge recently ruled in an ongoing lawsuit that the Biden administration must, for now, rescind its pause on oil and gas leasing on federal lands after more than a dozen states sued, citing that they had met the threshold for proving that the ban would result in significant community harm and economic loss. This comes on the heels of former New Mexico congresswoman and current Secretary of the Interior Deb Haaland’s testimony before the House Natural Resources Committee where she made clear there is no “plan right now” to enact a permanent ban on oil and gas leasing on federal lands.

This is all welcome news for New Mexicans and speaks to the need for honest conversations around the role oil and gas must continue to play in New Mexico’s future.

Our state has long been reliant upon the jobs and funding provided by oil and gas operations for critical public outlays like education, health care and infrastructure. Federal lands currently compose nearly 35% of our state’s total area – a permanent leasing ban would immediately threaten the welfare and future of our state while offering no direct alternatives to replace lost public funding and jobs.

Serving on the board of the Rio Grande Foundation, I am proud to work toward bringing meaningful reform to New Mexico. After one of the most devastating periods in history, marked by financial hardship and tremendous loss, it is vital – now more than ever – that energy policy decisions are balanced and take into consideration the vital economic benefits the industry provides to New Mexicans in every corner of the state.

The tax revenues derived from oil and gas operations are essential to N.M.’s economy, bankrolling schools, hospitals, roads and other infrastructure without hurting the pockets of N.M.’s taxpayers. The state’s Land Grant Permanent Fund, also known as the Permanent School Fund, is financed directly by oil and gas operations and is one of the largest such funds in the United States. It annually provides over three-quarters of a billion dollars to New Mexico’s public schools, universities and other related beneficiaries – in 2021 it is estimated the fund will produce roughly $836.5 million in benefits.

Furthermore, New Mexico’s … unemployment rate of 7.9% is tied for the highest in the entire country according to the Bureau of Labor Statistics. The oil and gas industry supports 134,000 jobs and contributes over $16 billion to our state’s economy annually. If this leasing ban were ever to be made permanent, it could result in (the loss of) over 60,000 jobs and nearly $1.1 billion in public funding.

Finally, the oil and gas industry is crucial to our national energy transition and continuing to meet consumer demand without increasing energy prices. Instead of focusing on demonizing oil and gas producers, our officials should be working hand in hand with them to incentivize innovative solutions like Carbon Capture and Storage (CCS) that can reduce carbon emissions without destroying jobs and revenues.

Although the recent court ruling and Haaland’s comments suggest the current leasing pause will come to an end, nothing is for certain. As some of our state’s lawmakers continue to try to appeal to partisan groups in Washington rather than their own constituents, it is important for all of us to remind them a balanced approach is necessary for New Mexico’s energy and economic future.

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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Oil and gas both a blessing and curse for New Mexico

The following appeared on Sep. 16, 2021 at KRWG.

 

 

 

The news that New Mexico’s oil and gas industry has again generated record-breaking revenues for the State was welcomed by policymakers and interest groups alike. But the disconnect between the State budget picture and the economic situation for average New Mexicans could not be starker. And this is one of the “problems” associated with the state’s dependence on oil and gas.

Don’t get me wrong: we at the Rio Grande Foundation fully support the oil and gas industries. The so-called “progressive” Democrats in the Legislature who signed a letter to the Biden Administration earlier this year in support of the Administration’s illegal moratorium on new permits on federal lands definitely believe oil is a curse. We believe that New Mexicans are the recipients of a fabulous gift and that there is no reason for us to be among the poorest states in the nation as is currently the case.

New Mexico is “cursed” by bad politicians, not by its bountiful resources. But those resources all too often prop up bad decisions made by our political leaders. Until voters hold them accountable, New Mexico, blessed as it is by nature, will continue to founder.

Our poverty contrasts with our resource wealth in the same way as the new revenue picture contrasts with the state’s outsized unemployment rate. At 7.6 percent, New Mexico has the 2nd-highest jobless rate in the nation. It is not entirely surprising that our workforce participation rate which measures the percentage of people actually engaged in gainful work, also lags badly.

New Mexico’s poverty rate is high (3rd-worst in the nation) and according to the US Census Bureau the state badly lagged its region in population growth over the past decade. We were named the number one “economically-failing” state another recent report and the “progressive” Voices for Children’s own report ranks us a dismal 49th.

It’s not a lack of money or government spending. Government in New Mexico is already bigger than it is in our neighboring states by quite a bit and our faster-growing neighbors spend much of their money on state/local government than we do. It is anathema to New Mexico’s “progressives,” but it is time to return a healthy chunk of this surplus to the private sector.

The low-hanging fruit and an absolute “must” for the 2022 legislative session is reform of our state’s onerous, business-killing, and regressive Gross Receipts Tax (GRT). This regressive tax directly and unnecessarily impedes the growth of small businesses in our state. Reforming the GRT to eliminate taxes on business inputs is a must this session. It can be done with relatively minimal revenue reductions, but, reducing high GRT rates would be a welcome move.

Social security tax reform has also been discussed in recent years. The tax brings in approximately $85 million annually. Eliminating it would make New Mexico a more attractive destination for retirees.

Finally, while it is a bit of a stretch for such a left-leaning body, New Mexico could do a lot to make itself more attractive as a business destination by simply doing away with its corporate income tax. The tax generates about $130 million annually or about 1/10th of next year’s surplus. This is eminently “do-able” and when combined with long-overdue GRT reform would go a long way to getting New Mexico’s economy moving again.

New Mexico’s Democrat-controlled legislature has a once-in-a-generation opportunity to use this windfall to diversify New Mexico’s economy. If they fail, voters must hold them accountable.

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