Category: Legislature

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2023 New Mexico legislative session recap

Going into the 2023 legislative session, we at the Rio Grande Foundation had three goals.

1)    Use the state’s massive $3.6 billion surplus to reform the “pyramiding” and business service taxation inherent in New Mexico’s gross receipts tax;

2)    Push for SOME kind of serious education reform to improve upon New Mexico’s abysmal 52nd position in the National Assessment of Educational Progress (NAEP).

3)    Restore “democracy” by placing some kind of limit on this and future governors’ emergency powers.

Sadly, none of these ideas were taken up and thus the session must be considered a failure.

Additional goals included pushing the Legislature to address the impending electricity shortage which could hit New Mexico as soon as this summer, addressing the medical provider shortage, and helping to push back against bad bills.

The “omnibus” tax reform (HB 547) DID include a gross receipts tax reduction that will be both phased in and contingent on robust revenues. Sadly, it utterly failed to address business services taxation. It also included electric vehicle and energy storage subsidies, film subsidies, higher corporate and capital gains taxes, and taxes go up for drinkers (5 cents per drink), cigar smokers, corporations.

Perhaps Gov. Lujan Grisham will veto all or part of the bill? There is simply no reason for tax hikes with a massive surplus available.

Spending went up dramatically. At the start of the session the Legislature and Gov. largely agreed on a big-spending budget increase of 12% to $9.4 billion. When the dust settled in Santa Fe, the Legislature passed a $9.6 billion budget with an increase of 14% in a single year.  NM government is already bloated and has grown quickly in recent years. New Mexico continues to waste money.

4)    The best single bill of the session was SB 523 which passed late in the session as Gov. Lujan Grisham seemingly put the screws to Democrats reluctant to reconsider a 2021 law that was favorable to the trial attorney industry. Doctors and patients alike are breathing a sigh of relief, but that doesn’t mean New Mexico won’t face a doctors shortage moving forward.

5)    Voting bill HB4 included automatic registration at government offices like the MVD, mandatory drop boxes, felons voting before their time is completely served and a permanent absentee voting list. The bill will have negative impacts on the integrity of our voting process.

Thankfully, a number of bad ideas died in the session.

6)    A new paid leave scheme was put forth under SB 11 which would have resulted in tax increases borne by employees and employers alike. It fortunately died after passing the Senate.

7) Most big environmental schemes failed: SB 520 net zero, HB 426 clean fuel standard, and the “green amendment” HJR 4 all died ;

8) Bills to ban plastic bags statewide died;

9) HB 25 and HB 28 which would have increased New Mexico’s minimum wage both failed.

How did your legislators vote on these and other issues? Check out the Foundation’s Freedom Index here.

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Economy Legislature Notable News Top Issues

RGF opinion piece: Interest rate cap study warning to NM

The following appeared in the Quay County Sun on March 15, 2023.

Elected officials who use the power of government to “help” people often fail to account for the possible unintended consequences of their actions. Even the noblest of intentions can unintentionally hurt those it’s meant to aid.

Such is the case with New Mexico’s new law imposing a price control on the interest rate that lenders are allowed to charge on a short-term loan. Proponents claim it will make a “real difference” for people, but the only difference it’ll make is in the ability for people to access credit.

On Jan. 1, H.B. 132 “Interest Rates for Certain Loans” became law and immediately prohibited lenders from imposing an annual percentage rate (APR) that exceeds 36%.

When the bill was before the Legislature in the 2022 budget session, the Rio Grande Foundation led a coalition letter highlighting the potential consequences it would have on lower-income borrowers across New Mexico. We noted that other states with a price ceiling on interest rates offer a cautionary case study on the perils of such a policy. These cautions went ignored.

Now, a new research study examining Illinois’ 36% “all-in” annual interest rate cap on consumer loans confirms what we predicted: caps restrict access to loans and harms consumers with lower incomes and credit scores.

Professors at Mississippi College and Mississippi State University, in partnership with the Federal Reserve, found that a hard 36% cap significantly decreased the availability of small-dollar credit in Illinois and worsened the self-reported financial well-being of many consumers.

Their data confirm that following the cap loans overall decreased by 8% but are down a whopping 44% among subprime borrowers. That means people who are most vulnerable to unexpected expenses in life find themselves unable to access the credit they need.

That’s because from a lender perspective, the math simply makes it impossible to provide short-term small-dollar loans to subprime borrowers under a 36% rate cap. Unlike those with means, “high risk” Illinoisians found they could not borrow the money they needed, and 40% of individuals noted “their overall financial well-being had declined” in the aftermath of the cap.

As lead author of the study reviewing Illinois’ rate cap, Thomas Miller noted in front of the Senate Banking Committee in 2021, “An interest rate cap does not make loans less expensive; it makes loans less available.”

Miller’s research confirms that H.B 132 will have a severe impact on short-term lending here and harm working class New Mexicans as the law goes into effect.

It’s an unfortunate truth that more than one-third of Americans are unable to cover an unforeseen expense of $400, a fact that is exacerbated by this period of price inflation. In these events, Americans can turn to small dollar credit products to help them handle issues as they arise, like medical expenses or car repairs.

Government-imposed price controls rarely accomplish their goals. Whether levied debit card fees, gasoline, or prescription drugs, or in this case, interest rates, setting price controls at below-market rates leads to shortages, inefficiencies, and an increase to black market activities.

More people will look toward the unregulated underground market to get the products they need.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, which promotes limited government, economic freedom and individual responsibility. Contact him at: pgessing@riograndefoundation.org

 

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Economy Legislature Notable News Tax and Budget Taxes Top Issues

Tax bill — the final analysis Part 1 (Gross Receipts Tax)

The 60 day legislative session is in the books. Fans of public policy that would result in increased economic growth, an improved education system, affordable, reliable electricity, and rule of law were sorely disappointed by the 2023 session (if they had any expectations to begin with). But, we at Rio Grande Foundation had low expectations coming into the session. Even with those low expectations we were pretty disappointed by the lack of legislative focus on improving New Mexico’s business climate or prospects for economic growth.

You can read through the complicated legislative history of the tax omnibus HB 547 here.

We hoped for fundamental reform of the gross receipts tax “pyramiding,” but we knew that even this would be an uphill battle despite the State having a $3.6 billion surplus. Indeed, no actual plan was ever put forth among the numerous “omnibus ” tax bills to address the pyramiding issue, so we can assume that the Democrat-led Legislature never made that a priority.

Here is our take on what happened in the FINAL bill (we have commented on the several previous iterations). Our comments are (broadly) in order of the overall importance of the policies considered:

Lack of pyramiding reform, but GRT rates reduced 0.5 percentage points. Sadly, instead of taking effect next year the tax reduction will take effect over FOUR years. If that’s not bad enough if GRT revenue in any fiscal year after 2025 and before 2030 is less than 95 percent of GRT revenue from the previous fiscal year, the rate would snap back to 4.75 percent. New Mexico is in the midst of an unprecedented boom in oil and gas and SHOULD see continued growth, but there is no need for these “triggers,” especially when, as Rep. Christine Chandler noted, “delaying the full implementation of the GRT rate reductions for four years was necessary in order to pay for the film tax credits.”

It is hard to conceive of a more economically-misguided approach than to put broad-based tax relief on hold in order to throw more money at an already heavily-subsidized film industry. Under the new law SOME film projects will be reimbursed for a mind-blowing 40 percent of their overall spend.

The ONLY glimmer of real GRT reform is that at the last second a provision was inserted into the bill to eliminate taxation of deductibles and co-pays for medical care. This is something we have advocated for for many years. It represents some positive movement in the effort to address the doctor shortage.

More to come on the rest of the bill in the next few days.

 

 

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Legislature Notable News Taxes Top Issues

House-passed tax bill is MUCH better, remains a missed opportunity

The omnibus tax bill (HB 547) passed over the weekend. It is no longer the disaster it was when introduced. In fact, it has moved from “-8” to “+1” in our Freedom Index vote tracking.  Because of its complexity and numerous pluses and minuses, it is a very difficult bill to rate and for members to vote on. Hopefully the bill is improved in the Senate, but as it stands it remains a missed opportunity.

The good:

  1. The bill cuts gross receipts tax rates significantly;
  2. It reduces personal income tax rates at lower income levels (which earners at all levels will benefit from somewhat);
  3. Social security tax cuts from 2022 are indexed to inflation;
  4. Military pension tax reduction is extended for another 5 years;
  5. Motor vehicle excise taxes would be directed to roads and more alcohol taxes would be allocated to alcohol treatment.,

The bad:

  1. The unprecedented $3.6 billion surplus SHOULD have been an opportunity to end New Mexico’s tax pyramiding on business services.This was not done.  Until it is New Mexico’s economy will continue to suffer.
  2. Numerous subsidies are tucked in the bill for EV’s, charging stations, and energy storage projects.
  3. Corporate income taxes are increased slightly (by removing a lower 4.8% rate on small corporations and taxing them all at 5.9%;
  4. Capital gains taxes are increased due to a less generous exemption;
  5. Alcohol taxes and taxes on cigars are increased.

Overall, the bill remains a mess of conflicting economic priorities. The only coherent strategy is that it attempts to remove taxes from those with lower incomes.

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Health Care Legislature Notable News Top Issues

National opinion piece: Medicaid Expansion: A Discouraging Message from New Mexico

The following appeared in National Review’s Capital Matters on March 2, 2023:

In December, New Mexico’s Legislative Finance Committee (an internal think tank for the state legislature) published a report on the state’s Medicaid program. Whether by design or accident, the report happened to coincide with the tenth anniversary of New Mexico’s Medicaid expansion. Then-governor Susana Martinez, a Republican, decided to accept the “Obamacare” expansion dollars which, at the time, were 100 percent federally funded.

The report is full of useful information about the impact of Medicaid expansion on New Mexico that likely applies to all states. In fact, the report by this internal government agency to our now-bright-blue state government gave critics of Medicaid expansion plenty of ammunition.

Today, only eleven states (including large ones such as Florida and Texas)have steadfastly refused to expand Medicaid under Obamacare. And in light of New Mexico’s experience as detailed in this new report, the decision made by those eleven states looks better today than it ever has.

In New Mexico, the LFC Medicaid study’s authors used “secret shoppers” to attempt to make appointments with primary-care physicians throughout the state. Shockingly, only 15 percent of them were able to make an appointment with a primary-care doctor.

This is just one of many data points that echo the point made by Obamacare critics over a decade ago, who said early and often that health care is not the same thing as “coverage.” But policy-makers did not heed those warnings, and since Medicaid was expanded, the number of recipients in New Mexico has exploded while the number of providers has declined rather dramatically. The LFC report, for example, revealed that 47 percent of New Mexico’s population is on Medicaid, which places the state at the very top of the list in terms of the percentage of its population receiving benefits.

The high number of Medicaid recipients is both a cause and an effect of New Mexico’s ongoing medical-provider shortage. While large numbers of newly “covered” recipients of the program may lead to problems in accessing timely care, the underlying issue is Medicaid’s abysmal reimbursement rates for doctors. Nationally in 2020, hospitals received just 88 cents for every dollar spent caring for Medicaid patients. Specifics vary by state and provider type, but there is no question that having a larger Medicaid population results in more “cost-shifting” from other programs and customers to cover Medicaid recipients. Put another way, costs increase for other patients in order to compensate for the Medicaid shortfall.

But the consequences of New Mexico’s overwrought Medicaid program don’t stop there. Sadly, with such a massive portion of the population on benefit, it is hardly a surprise that the number of people willing to enter the workforce is quite low.

According to the Bureau of Labor Statistics, New Mexico’s workforce-participation rate in December of 2022 was just 53.5 percent. That is higher than just one state (Mississippi) and trails the U.S. as a whole, which has a workforce-participation rate over 60 percent.

At a time of exceedingly low unemployment and a tight job market nationwide (for all skill levels), Medicaid is one of many “welfare” programs that appear to keep people out of the job market.

In the meantime, the program has also caused state spending to spiral out of control. Estimated to stand at $10.5 billion next year (a 56 percent increase since just fiscal year 2019), the amount spent on Medicaid alone will be greater than New Mexico’s entire general-fund budget ($9.4 billion) next year. Simply put, this is unsustainable, both in terms of the program’s growth, but also in terms of the federal government’s financial contribution to New Mexico and other states with massive Medicaid rolls.

So, what are we getting for all this spending? The Legislature’s Medicaid report did not even consider a detailed discussion of health-care outcomes and the impact (or lack thereof) of Medicaid expansion. The report did note, however, that “the state continues to face poor health outcomes overall.” And, even more interestingly, while providing routine medical care for the poor was a stated goal of advocates for expansion, the LFC notes that an increase in “emergency room visits for non-urgent reasons” is “potentially leading to worse outcomes.”

The bottom line is that a decade on, despite massive federal and state spending growth on Medicaid, the LFC’s latest report does not point to significant positive health care outcomes from Medicaid expansion for New Mexico’s population at large. But this should not come as a surprise. A widely discussed 2013 study out of Oregon involving a large, randomized control group “showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years.”

Well, there you have it. The largest and most expensive expansion of the American welfare state in the last 50 years seems to have resulted in bigger government and more dependency in New Mexico and across the nation. However, here in the state with the highest percentage of people on Medicaid, evidence of improved health outcomes remains elusive.

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Education Legislature Notable News Top Issues

Opinion piece: 2023 Legislature Punts on Education reform

The following appeared at KRWG and in numerous other media outlets.

In October of last year, results for the Nation’s Report Card (NAEP) placed New Mexico dead-last in education among all states, the District of Columbia, and DoD schools. The test covered reading for 4th and 8th graders and math for the same age groups. New Mexico was last across all categories. These results should have been a wakeup call for Gov. Lujan Grisham and the Legislature.

Bold solutions are needed and there’s no time like a 60-day session to enact big reforms. Unfortunately, as the legislative session hurtles onward, neither serious education reform nor prevention of future mistakes like those made during the COVID pandemic are likely to come to pass.

As a parent, I know first-hand that the Gov.’s COVID 19 lockdowns and chaos had a major, negative impact on young people. Kept out of their classrooms for over a year, often in rural areas with poor broadband service and working parents, it is no surprise that New Mexico students suffered more during the Pandemic than those living in wealthier “blue” states. Locking kids out of school is now widely seen as a mistake that had no noticeable impact on the spread of COVID.

Sadly, efforts to give the Legislature a seat at the table in future emergencies, HB 80 and HJR 3 (one was a bill, the other an amendment), both failed on party lines in the House Judiciary Committee. They would have simply required the Legislature to approve declared emergencies lasting longer than 90 days, but that was too much for the majority Democrats.

Having the Legislature debate and vote on whether to lock kids out of their schools for over a year shouldn’t be a partisan issue.

COVID is hardly the only reason for New Mexico schools’ poor performance. The system has always been near the very bottom in producing student outcomes. Sadly, aside from continuing to spend more and more money, the Legislature and Gov. remain unwilling to shake up the system in ways that would improve outcomes.

My organization has long pushed for “money to follow the student.” The best single bill attempting to do that was Sen. Craig Brandt’s SB 109 which would have set up a system of “education savings accounts” similar to the one adopted last year in Arizona. The bill was killed on partisan lines in its first committee (Senate Education).

Though necessary, school choice remains a dirty word among New Mexico’s education establishment. But choice isn’t the only way to improve education results. Just ask the folks in Mississippi where simple reforms to how reading is taught have resulted in massive learning gains, especially in 4th grade reading.

What did Mississippi do to achieve success? It pushed teachers to teach reading through phonics, it invested resources into teaching teachers how to teach phonics effectively, and it made sure that students understood the subject material before passing them on to the next grade (they ended social promotion).

If that sounds familiar, it’s because Mississippi’s initiative broadly reflects the reform efforts of former Gov. Susana Martinez. Sadly, union-backed Democrats in the Legislature prevented those efforts from being codified into law. Her reforms were immediately undone by Gov. Lujan Grisham.

But, as the New York Times notes, Mississippi went from 49th on 4th grade reading in 2013 to 29th in 2019. Mississippi further increased its already substantial lead on New Mexico in the first post-COVID NAEP test in 2022. Notably, Mississippi spends about $10,000 per student while New Mexico spends $15,000.

New Mexico’s children (and its employers) desperately need a high-performing education system. Unfortunately, without the Legislature and Gov. embracing bold reforms that upset the status quo, improvement is unlikely to occur anytime soon.

Doing the same thing and expecting a different result is a worthy definition of insanity. It also appears to describe New Mexico’s education policy.

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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Legislature Notable News Top Issues

New Mexico’s increasingly partisan Legislature

The Rio Grande Foundation tracks and rates legislation in New Mexico and has done so since 2014 (find our Freedom Index archive here). Bills are given scores as bad as -8 and as good as +8 and when those bills move to the floor for votes, the points with a “yes” or “no” vote are attributed to all of the legislators in both parties.

Currently just a few floor votes have been tallied, but that number is starting to grow along with the numbers associated with each legislator. We strongly encourage citizens and anyone interested in what is happening in New Mexico to check out our Freedom Index and use it.

A side benefit of our software provider BillTrack50 is some interesting “data nuggets.” For example, the chart below shows whether bills enacted by the Legislature and Gov. were sponsored by Democrats, Republicans, or both parties. Understanding that a Republican, Susana Martinez was Gov. from 2010 through 2018, Democrats remained quite influential in passing bills throughout that time.

Since Lujan-Grisham and the Democrats took over all three branches of New Mexico government in 2019, the number of GOP-sponsored bills passing began to shrink dramatically. Just one GOP-sponsored bill passed in 2022.

You can find out more interesting nuggets for yourself here.

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Economy Health Care Legislature Notable News Tax and Budget Taxes Top Issues

Solutions for New Mexico’s medical provider shortage: part 2 of the two part series

New Mexico has a shortage of medical providers across most practice areas (as discussed in Part 1 of this series). So, as the 2023 legislative session gets rolling, what can be done about it?

The Rio Grande Foundation has looked high and low throughout New Mexico laws impacting medical providers and has produced a series of recommendations laid out in an extensive policy paper.

1) While forward looking in nature, HB 75 passed in 2021 and was revised later on that same year makes New Mexico’s medical malpractice much more plaintiff and attorney friendly through the increase in damage award caps is  causing a great deal of concern among providers even though it will not be implemented until 2024;

2) Stop taxing medical providers via gross receipts tax. The State is one of the few states in the entire nation that levies the equivalent of a “sales” tax on certain medical services. In New Mexico’s largest city, Albuquerque, the rate of taxation is currently 7.75 percent. Rates tend to be even higher in outlying areas of New Mexico. This could be part of a broad reform or more targeted.

3) Reduce Medicaid dependency.  According to the American Hospital Association, Medicaid underpaid hospitals by $24.8 billion in 2020. For Medicaid, hospitals received payment of only 88 cents for every dollar spent by hospitals caring for Medicaid patients in 2020. In 2020, 62 percent of hospitals received Medicaid payments less than cost.

4) Expand scope of practice/telemedicine.

There are several additional ideas outlined in the report along with more detailed discussion of the ideas listed above. All of it can be found here.

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Health Care Legislature Notable News Top Issues

Release: RGF digs into medical provider shortage in Part 1 of two part series

In a new policy brief which explores the shortage of medical providers in the State of New Mexico, the Rio Grande Foundation digs into an analysis of which areas of medical practice face the most acute shortages and compares New Mexico counties, New Mexico with its neighbors, and also looks at geographical trends regarding the availability of medical providers nationwide.

Forming part one of a two part series on the topic, the document titled, “The Existence and Extent of a Medical Provider Shortage in New Mexico” is an attempt to gain a foothold when it comes to the statistics behind the medical provider shortage.

Among the findings:

  1. New Mexico is not alone in the Southwest in having a relative shortage of medical professionals. Compared to the Northeast and Midwest, there is already a shortage of healthcare workers in states in the South and West. Interestingly, the region where doctors are paid the least in nation is the Southwest, where many older adults who require healthcare services choose to retire.
  2. Physicians in the north central part of the nation average pay of $319,000 per year. In the southeast, however, physician salaries are more than $40,000 a year less, running at around $277,000 a year. New Mexico’s average physician salary was even less, ranking third from the bottom of lowest-earning states with an average annual physician compensation rate of $261,000.

  3. Our research does indicate that New Mexico has a serious shortage of health care workers in a variety of medical fields. These especially include primary care physicians, surgeons, registered nurses, OB-GYN’s, pharmacists and EMT’s. Fortunately, the state currently appears to have an adequate number of physician assistants, dentists, and nurse practitioners.

In a follow-up report Rio Grande Foundation will provide specific ideas on how policymakers, especially those here in New Mexico, can address the State’s medical provider shortage.

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Economy Legislature Notable News Open Government Tax and Budget Top Issues Videos

MLG delays bringing state employees back to the office: RGF comments on KOAT Channel 7

In the wake of an LFC report stating that New Mexico taxpayers are spending $18 million annually on unused office space, Gov. Lujan Grisham (after the election) decided to require that all state employees return to their offices by the star of 2023.

According to news reports, however, the Gov. has rescinded that requirement. Employees will be required to return NEXT month at the start of February. This is another case of poor leadership from the Gov. COVID (and remote work) has been going on for nearly 3 years now. The Gov. and her team should have figured out who needs to be in the office 5 days a week and who doesn’t (and how to manage them effectively) by now.

Could some state buildings be shuttered and sold off? Should the locations of gov’t buildings be shifted to reduce commute times? How can we make sure remote employees are actually doing their work?

These aren’t easy questions, but they should have been answered long ago. RGF’s Paul Gessing appeared in a story on KOAT Channel 7 to discuss the issue. You can find his segment here and below and the first portion here.