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What’s next for What’s next for New Mexico economy and politics?

The following appeared in the Farmington Daily-Times on April 19.

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We at the Rio Grande Foundation have not been shy in our critiques of the 2019 legislative session. Economic freedom lost big during the session while higher taxes, more government regulations, and bigger government won.

In the long-run such moves will inevitably result in slower economic growth and reduced wealth for New Mexicans. Low economic freedom New Mexico has consistently lagged behind all of its neighbors in terms of population growth and economic prosperity.

Unfortunately, for someone who wishes that politicians and the public immediately saw the impacts of these policies, New Mexico has recently benefited from economic forces that are beyond the Legislature’s control.

As Bloomberg News noted in late 2018, “New Mexico’s economy leads other states in job and wage gains since President Donald Trump’s inauguration in January 2017.” For a variety of reasons, not the least of which is his pro-energy policies including faster permitting for oil and gas leases on federal lands, the Trump Administration has been especially good to New Mexico.

Pro-energy policies won’t do much if there is a glut. When it comes to natural gas, prices remain depressed due to oversupply, but in the oil markets New Mexico has benefitted from both booming production and relatively strong prices.

Oil production in New Mexico has tripled since 2012. That production contributed greatly to the $1 billion surplus that the Legislature was able to spend during 2019. And, while the price per barrel reached a high of $75 a barrel in October 2018 and then dropped to the low $40s by the end of 2018, prices have risen once again and now hover in the $60 range and are likely to rise through the summer.

If production and prices remain at these levels New Mexico government will remain flush with cash. Of course, the fruits of the oil boom will not be evenly distributed throughout New Mexico.

Because of the sheer scope of the Permian Basin’s oil production that region will remain in hyper-drive.

Unfortunately, the opposite is true in the Four Corners where natural gas production is declining due to the age of the basin and depressed prices. Worse, the shutdown of the San Juan Generating Station (and the mine which feeds it) which was ensured by the Legislature this session will result in the elimination of hundreds of jobs and large chunks of the region’s tax revenues over the next few years.

Adjusting to the new economic reality will be made even more difficult for the Four Corners and other parts of rural New Mexico as the minimum wage rate ratchets up from $7.50 an hour to $12.00 over the next few years. Outside of the Permian Basin, much of rural New Mexico is struggling. The minimum wage hike will only make it harder for unskilled workers to find work and for small businesses to stay afloat.

Moving forward it is clear that so-called “progressives” who dominate New Mexico’s major cities (Albuquerque, Las Cruces, and Santa Fe) and whose interests dominated the 2019 session, are out for more. The 30 day session will most certainly include another discussion of tapping the permanent fund for pre-K. Spending will also rise dramatically if oil and gas remain strong, but oil and gas will likely be targeted for additional regulations in ways they were not in 2019.

More profoundly, the next election will see well-funded “progressives” attempting to take out Republicans and moderate Democrats who they see as the only obstacle to total dominance. A handful of Republican senators remain in Albuquerque and Las Cruces. They will definitely be targeted electorally as will many rural Democrats in the Senate.

Booming Permian Basin oil production and stable prices mean New Mexico is fine for now, but a deep and sustained decline in oil prices could cause serious issues for our State. Combine that with the potential for “progressives” achieving total political dominance in 2020 and New Mexico is in unprecedented peril.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.


Economy Legislature Local Government Notable News Top Issues

Worker freedom is dying in NM

After only three months in office, Democrat Gov. Michelle Lujan Grisham recently signed a bill ratcheting back worker freedom and local control in New Mexico.

In March, the state legislature voted against worker freedom by explicitly prohibiting local “right-to-work” ordinances that had been adopted by almost a third of the state’s counties. These ordinances meant unions could not get a worker fired for not paying them.

Most of New Mexico’s neighbors – including Arizona, Utah, Oklahoma and Texas – have had statewide right-to-work laws on the books for years and have experienced far faster economic and population growth than New Mexico.

With no likelihood of state legislative action to pass a statewide “right-to-work” law, 10 of New Mexico’s 33 counties (including six of the top 10 in population) voted from late 2017 to early 2019 to adopt ordinances that prohibited unions from getting a worker fired for not paying them.

Simply put, the zeal with which the governor and Legislature killed local control of worker freedom is noticeably absent on other issues.

The mantra that labor laws should be made at the state level was repeated by unions and their allies in testimony on this “anti-right-to-work” legislation as it moved its way through the committee process. But the reality is that the Legislature regularly refuses to preempt other job-killing local laws and ordinances. For instance, local minimum wage bills have a disastrous effect on job prospects for low-skilled workers, but the Legislature just sits back and watches as they are enacted.

In late 2017, Albuquerque voters narrowly turned down a local ballot initiative that would have required businesses – no matter their size and including nonprofits – to offer paid sick leave to employees. The proposed ordinance would have been among the most aggressive in the entire nation.

Did politicians, who on one hand preach the need for statewide labor laws, say a word about these “local usurpations” of power rightly held by the Legislature? Of course they didn’t. If anything, they cheered them on or were even involved in the campaigns.

The back-and-forth in New Mexico over whether labor policy should be made at the state or local level brings up questions relevant to politicians in almost any state. The U.S. Constitution certainly empowers the states to decide whether to keep power in the state capital or disperse it to counties, cities and other local governments.

New Mexico has the worst of both worlds: a politically motivated hodgepodge of policies based purely on political considerations with no bright lines to guide policymakers. Instead, we get local governments pushing the envelope on policies like minimum wage and sick leave mandates.

Workers across New Mexico deserve worker freedom and the ability to get work experience. But the state Legislature is determined to stand in the way. Lawmakers are preempting counties from giving private employees the freedom to choose whether they will pay a union, while at the same time refusing to enact statewide laws to protect jobs.

In short, the Legislature has its priorities backward.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Vincent Vernuccio is Senior Fellow at Workers for Opportunity, the goal of which is to advance the liberty of employees across the country, ensuring full choice and the protection of their First Amendment rights.