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How does New Mexico stack up with big red and blue states?

Our friend Vance Ginn, Chief Economist at the Texas Public Policy Institute, recently compared his state of Texas and another prominent “red” state (Florida) with the biggest “blue” states of California and New York on a range of basic economic statistics.

You can see the data below which is loosely based on Ginn’s analysis linked above. The data are interesting to say the least.

New Mexico is definitely a “BLUE” state. It suffers from terrible workforce participation and unemployment rates and government consumes an outsized portion of our economy (even when compared with “blue” states).

Notably, New Mexico is also even less attractive as a moving destination than either big “blue” state. Ironically, New Mexico is the least “unequal” state as measured by the Top 10% income share and even New Mexico’s poverty rate isn’t “that” bad (compared with the other states) when the Census Bureau includes living costs and government benefits.

Notably, as it is heavily-reliant on oil and gas production and revenues, New Mexico’s economy is much more resource-driven than any of the other states studied.

Economic Freedom of North America (2021)
US Census Percent Population Growth 2010-2020
State Business Tax Climate (2021)
State Economic Outlook Rankings (2021)
State & Local Spending % GDP 2021 
State & Local Tax Burden % of income 2020
Avg. Unemployment Rate 2016-2020
Avg. Labor Force Participation 2016-2020
Avg. Top 10% income share (2000-2018)
Supplemental Poverty Measure (2017-2019)
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Lujan Grisham’s GRT cut fails to address issues

The following appeared in Las Cruces Sun-News on Sunday, November 28, 2021.

For many years the Rio Grande Foundation has pushed the Legislature to take steps to address fundamental problems with the State’s gross receipts tax. We’ve regularly labeled it New Mexico’s “original sin” of economic policy due to the tremendous harm it does to New Mexico’s economy.

And, while we support ANY effort to lower tax burdens on New Mexicans, the Gov.’s plan for a small .25 percentage point reduction in the State’s GRT burden hardly makes up for recent increases. With a $2 billion budget surplus looming this January and the Senate Finance Committee Chair saying the Legislature has “more money than they know what to do with,” it is time to really reform the GRT, not provide an election year sop to struggling businesses and families.

Currently, the City of Las Cruces GRT is 8.3125%. Back in 2010 that rate was “just” 7.0%. The Gov.’s reduction, if implemented, won’t even get the rate back to 8.0%. Las Cruces is not alone. GRT rates have risen dramatically over the last 20 years due to a combination of state and local policies.

But the most important problem with the GRT is its unfair treatment of small businesses. Accountants, bookkeepers, even medical professionals, and attorneys (and many others) all must charge this tax on top of the cost of their services. Alternatively, service providers located in other states do not have to charge the GRT. This makes New Mexico especially unattractive as a location for small businesses. And it is those small businesses that grow into tomorrow’s big businesses which can employee hundreds or even thousands of workers and boost state and local economies.

With the Legislature expected to convene in January with up to $2 billion in surplus revenues generated primarily from oil and gas, now is the time to focus on fundamental reform. According to the Gov. this tax cut will reduce revenues by $145 million annually. That’s a tiny fraction of the surplus. At a bare minimum proper GRT reform needs to eliminate the taxation of these business services. It will be easier to make the change when there is plenty of revenue available.

The GRT and much-needed reforms to it are not a partisan issue. Republican Jason Harper has introduced reform legislation in recent years with former Senate Finance Committee Chair, Democrat John Arthur Smith. More recently, powerful House Appropriations Committee Chair Democrat Rep. Patty Lundstrom told attendees of the New Mexico Oil and Gas Association (NMOGA) conference in October that “tax pyramiding” needed to be addressed by the Legislature in the upcoming session.

While taxing services is the fundamental problem with the GRT, there are others. Specifically, while the tax was originally conceived as being applied at VERY low rates and broadly, the political process has led to the current, sorry state of high rate, exemption-filled tax structure.

Special interests line up in Santa Fe to lobby for exemptions and deductions for their business or industry and the Legislature is more than happy to offer those exemptions. And, whether you support taxing groceries or not, the process of eliminating that tax has directly contributed to the massive rise in GRT rates in recent years.

In addition to addressing taxes on business inputs and services, the Legislature needs to put a stop to the special exemptions while also constraining the future ability of local governments to raise rates.

A tiny tax cut passed as we head into an election year with a massive budget service may or may not be good politics, but it certainly isn’t enough to address the fundamental problems with New Mexico’s GRT.

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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Opinion piece: Economic Freedom Takes a Hit in New Mexico

Anya Kamenetz | KRWG

The following appeared at KRWG on November 17, 2021.

Nearly any business owner in New Mexico will tell you that Michelle Lujan Grisham and her policies have been unfriendly to business. Setting aside the COVID lockdowns, since she took office in 2019, we’ve seen multiple tax hikes, numerous new regulations, and numerous policies that make it more costly and difficult to hire workers.

These policies aren’t just “anti-business,” taken as a whole they undermine economic freedom. A new study provides hard data that quantifies and highlights the negative impact of policies of Lujan Grisham and the Legislature (at least in 2019).

For starters, it is worth defining the term. Economic freedom is broadly speaking the ability to engage in voluntary economic transactions without unduly being hindered by government policies. This includes low, fair taxation, reasonable rules and regulations, and a limited government spending.

Not surprisingly, policies of economic freedom are strongly correlated with greater economic prosperity. In fact, according to the 2021 edition of the report, the freest 25% of states have personal incomes that are 7.5% higher than the national average while the 25% of least free states have personal incomes that are 1% less than the national average.

New Mexico has long lagged its neighbors and most of the nation in economic freedom having consistently been in the lowest quartile for years. Thus, it is not surprising that New Mexico is among the most impoverished states in the nation.

But, when Gov. Susana Martinez took office in 2011, New Mexico ranked 46th in economic freedom. Despite her having to deal with a hostile Legislature, that number improved to 42nd by the last year of her administration mostly due to her fiscal restraint.

But, when Lujan Grisham took over in 2019 along with a liberal Legislature the State saw a massive uptick in government spending, several tax hikes, new regulations, and numerous other policies that make New Mexico less economically-free. On the other hand, New Mexico’s neighbors are all among the most economically-free states in the nation. Texas, with no personal income tax and a pro-freedom labor laws like “Right to Work” ranks 4th overall.

While we don’t have the data on how economic freedom has fared in New Mexico in 2020 and 2021, we know that in general Gov. Lujan Grisham and the Legislature seem to look to California as their model. Alas, the State is one of the few ranked worse than New Mexico on economic freedom at 49th. Only New York performs worse.

The fact is that the policies passed in 2019 that caused New Mexico to slide in economic freedom have only been reinforced by others that further undermine economic freedom in 2020 and 2021.

With a $2 billion surplus, Gov. Lujan Grisham has proposed a miniscule reduction in the gross receipts tax (while leaving the grotesque pyramiding and loopholes intact). But, we can expect that an overwhelming majority of that surplus will go to even more government spending that will do nothing to actually improve New Mexico’s serious poverty challenges or overall economic outcomes.

It is time for New Mexico politicians (and voters) to prioritize economic freedom in turning our State around.

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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New Mexico falls further behind in latest economic freedom report

According to the 2021 edition of the Economic Freedom Index of North America report from the free market Canadian think tank Fraser Institute, New Mexico, in calendar year 2019 (the first year of the Lujan Grisham Administration), slid from 42nd (in last year’s report which used data from the final year of the Martinez Adm.) down to 46th.

While New Mexico has long lagged its neighbors and most of the nation in economic freedom, the 2019 legislative session saw a massive uptick in government spending, tax hikes, newly-imposed regulations, and numerous other policies that make New Mexico less business-friendly. All of New Mexico’s neighbors are among the most economically-free states in the nation.

Not surprisingly, most economically-free half of jurisdictions have higher incomes than do the least economically-free jurisdictions like New Mexico. It is not surprising that New Mexico is among the most impoverished states in the nation.

New Hampshire, Tennessee, Florida, and Texas, were among the MOST economically-free states in the latest report (full rankings below) while California and New York were among the few states that trailed New Mexico. Click on the image below for the FULL report:

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RGF discusses NM’s slow unemployment recovery w/ KRQE Channel 13

Throughout the COVID 19 situation New Mexico’s economy has generally lagged behind the rest of the nation. A new report from Wallethub shines some light on the latest data which places New Mexico 48th in terms of its recovery since the start of COVID. Things are not improving much as we dropped to 49th week-to-week.

Here is the story from KRQE. Charts are directly from Wallethub.

Source: WalletHub
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RGF offers thoughts on United’s future stadium ambitions

While RGF is pleased by Albuquerque voters’ overwhelming rejection of the proposal to build a taxpayer-financed soccer stadium near downtown, we recognized all along that the Team was not going to give up their quest for a new stadium.

Channel 7 KOAT laid out some ideas including potential stadium locations on tribal lands. RGF expects that, given the massive surpluses available to the Legislature and Gov. Lujan Grisham, we could see significant state dollars used to fund a stadium even if Albuquerque voters have rejected the concept.

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A good night for reform-minded leadership nationwide/in New Mexico

If you’d like to listen to Rio Grande Foundation president Paul Gessing discuss the 2021 election results (and numerous other issues later on), check out his recent interview with Jim Williams of KLYT 88.3FM on ABQ Connect. Paul is a regular guest on Jim’s show, but he has regular guests on a variety of local issues of interest.

In terms of local election results, it was obviously disappointing to see Mayor Keller who has done such a poor job managing public safety and the homelessness problem win so handily in Albuquerque. But, the taxpayer-financed United Stadium supported by Keller (and opposed by the Rio Grande Foundation) lost 2-1.

In terms of City Council, the West Side saw the ouster of two incumbents in favor of former Councilor Dan Lewis and newcomer Louis Sanchez.

Two other races are heading to a runoff with the requisite early voting and an “election day” of December 7. Those races include conservative leaning candidates Lori Robertson (District 7 in the mid-northeast heights) and Rene Grout (District 9 in the northeast/southeast heights).

APS school board also saw seats shift from union-backed candidates to more reform-minded candidates including Courtney Jackson, Crystal Tapia-Romero, and Danielle Gonzales .

Unfortunately the reform wave did not reach Las Cruces city council and the Foundation’s own Patrick Brenner lost in his bid for school board in Rio Rancho.

Nationally-speaking, Virginia’s governor’s race was won by Republican Glenn Youngkin in large part because of his pro-education reform, anti-CRT stances.

In New Jersey in what could have been an unprecedented upset, the Republican fell just-short.

Overall, it was a good night for conservatives and those that believe parents, not the unions and bureaucrats should control education.

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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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Education Notable News Open Government Top Issues

PED secretary needs to show us the data

The following opinion piece appeared in the Las Cruces Sun News on Sunday, October 24, 2021.

Kurt Steinhaus has been on the job for just a month or so, but he has already put forth policies and ideas regarding New Mexico’s education system that leave us scratching our heads.

We all want our children to do better in school so that they are prepared to be productive workers and informed citizens. That is not an easy task and it is made even more difficult by the pandemic and the government’s reaction to it.

The first question is why PED has chosen not to release standardized testing data that it has from March of 2020 prior to the pandemic. Yes, only 10% of students took the test, but there is still useful information to be gleaned from the 10% that took it. That’s especially true since there will be no data available at all for 2021. We know New Mexico students began the pandemic behind their peers in other states, but New Mexico families and our education leaders deserve to have at least some insights into where things stood right before the pandemic.

More bizarre are comments Steinhaus made in early October at a Legislative Education Study Committee. When asked what New Mexico would need to do to “make New Mexico teacher salaries competitive” he claimed the state would “have to double teacher salaries.”

That is quite simply false. According to the latest data from the National Education Association, New Mexico’s average teacher pay is $54,256 annually (ranked 32nd in the nation). The highest paid teachers on average are found in New York where they make $87,069. Doubling New Mexico teacher salaries would not “make them competitive.” It would make them by far the highest paid in the nation (at nearly $110,000) in a state that has much lower taxes and living costs than does New York and others with high salaries.

Setting aside whether increasing teacher pay is warranted or effective at increasing student performance, there is simply no data backing up the idea that New Mexico should double teacher pay. Perhaps Steinhaus is not familiar with what New Mexico teachers make or past efforts to recruit and offer enhanced pay to high performing teachers.

And then there are the state’s revised social studies standards which clearly were “in progress” during (prior Secretary) Ryan Stewart’s time at PED but were recently released under Steinhaus. Whether you can call the new, much more prescriptive standards “critical race theory” or not is open to question, but there are concerning elements to be found in the new standards.

Throughout the new curriculum there is a focus not simply on geography, human development and historical facts and events and their relevance for us today. If adopted, the curriculum will intently focus on differences, rather than the similarities among various racial and ethnic groups. Talk of inequity (unequal outcome for different groups) will replace equality under the law. The general trend in the new standards is away from presenting the facts and asking students to come to their own conclusions to instead hammering approved beliefs on everything from gun control and “destruction and occupation” of the Americas by the Spaniards into students.

There is currently a public comment period on these standards going on through Nov. 12. Please look at them and submit your own comments today.

Secretary Steinhaus does not have an easy job and we understand that. But, our schools need a focused, data-driven approach to improve student outcomes. If paying teachers more will improve outcomes, let’s see the data. And rather than teaching watered-down CRT, let’s focus on teaching basic historical events and not spinning them to make America look like a hive of inequality and injustice.

Paul J. 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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OAK NM in ABQ Journal: Educate yourself and vote on school board, bond, mill levy

The following was written by OAK NM’s Edwin Aybar Lopez. It appeared in the Albuquerque Journal on October 10, 2021.

This fall, voters in the Albuquerque Public Schools service area have some important issues to consider when they vote. For starters, it has been well-documented that in each of the four seats up for election this fall, none of the incumbents will appear on the ballot. In other words, the APS school board is in for some significant changes, no matter what the results are.

What that change looks like will be up to the voters.

My organization, OAKNM, sent surveys to all candidates for school board in APS and numerous other larger school districts across the state to ask for candidates’ views on big issues facing school boards. In Albuquerque, these included everything from splitting APS into multiple districts to masking kids and the role of charter schools.

Whether candidates completed these and other surveys or not, there are two clear sets of candidates: those who support and receive support from the unions and those who don’t. Typically, union support has been the deciding factor in local school board races, but, with this election occurring at the same time as the Albuquerque mayoral and City Council elections – not to mention the United soccer stadium vote – everyone expects higher turnout than seen in the past.

As an education reformer, this makes me happy. Given everything our kids have gone through over the past 18 months, our education system, already ranked at the bottom, failed our children completely. Of course, we don’t know just how badly because the state’s standardized test for 2020 and 2021 was administered to only a fraction of the student population, or not at all. Estimates vary, but we’ve seen figures for lost time ranging from a few weeks to more than a year.

Do you believe the situation was handled well? Do you think it was appropriate for unions to play an outsized role in reopening, masking and even vaccination policies during the pandemic? Are you concerned that the Sheryl Williams Stapleton scandal is only the tip of the iceberg? If so, you need to vote in this election and get yourself educated on the issues facing the district.

In addition to the school board races, APS has quietly placed (a $200 million general obligation bond and) a property tax question on ballots. The question on the ballot asks for a tax levy of $3.838 per $1,000 of net taxable value on residential property and $4.344 on non-residential. The question(s are) with billions of stimulus money flowing into New Mexico schools, students fleeing APS in droves and the Legislature sitting on “more money than they know what to do with,” per the Senate Finance Committee chairman, why is APS asking for (more)?

Here in Albuquerque and across New Mexico, education reform is on the ballot. Voters need to get educated about the candidates and issues that will, at long last, pull our state out of last place. Get out to vote and take a friend or relative with you.

Opportunity for All Kids New Mexico, www.oaknm.org, is an organization dedicated to reforming New Mexico’s education system.