Rio Grande Foundation
The Rio Grande Foundation recently analyzed workforce participation data for New Mexico and its neighboring states. Separate data from New Mexico’s Legislative Finance Committee was also discussed in the post.
This attracted the attention of KOAT Channel 7 which did an excellent report on RGF’s data and analysis including discussing the data with a UNM economist who added his cogent thoughts. Check out the KOAT report here.
The following appeared in the Roswell Daily-Record on May 21, 2023.
The 2023 New Mexico legislative session was generally disappointing for New Mexicans who wish to see much-needed K-12 education reform. However, it was not a total loss. In fact, one bill did pass that could help thousands of New Mexico families pay for educational options that work best for them. Without a single “no” vote during the 2023 session, HB 342 will soon be the “law of the land.”
The bipartisan bill was sponsored in the House by Republican Minority Leader Ryan Lane and by Democrat Majority Leader Peter Wirth in the Senate. It was signed into law by Gov. Lujan Grisham, also a Democrat. HB 342 aligns New Mexico law with federal law as updated during the Trump Administration and recent legislation under the Secure 2.0 Act.
Over the years Congress has expanded the use of 529 plans to pay for kindergarten through 12th grade tuition and included student loan repayment and apprenticeship program expenses. And in 2023, Congress added a provision to allow rollovers of unused 529 plan funds into a Roth IRA for the beneficiary.
Starting on June 16 when this new law takes effect, New Mexico families will be able to deduct any contributions to their New Mexico sponsored 529 account that will be used to pay for up to $10,000 annually (per-child) on tuition expenses at an elementary or secondary public or private school (making them “qualified” expenses under New Mexico law).
Originally created to help families save for college, 529 plans have been helping families do that for years and will continue to do so into the future. For New Mexico residents, features include the fact that 100 percent of contributions to New Mexico’s plans are deductible from state taxable income in the year contributions were made to the account. If the account owner is a resident of New Mexico, then earnings and withdrawals from their 529 account are also exempt from state taxation.
New Mexico’s educational woes have been well-documented in numerous analyses. Families who are considering 529 plans or if they already have such a plan and want to know more about the latest changes can find out more at The Education Plan website https://theeducationplan.com. The Education Plan is New Mexico’s state-sponsored 529 education savings plan.
The website is informative and Rio Grande Foundation has undertaken its own efforts underway to educate New Mexicans, but it is up to families to either find this information for themselves or talk to a financial advisor.
If you have a child for whom the existing K-12 system is not working and you are considering the financial challenges of paying for school (in addition to the taxes you already pay to fund the schools), you should strongly consider looking at using a 529 plan.
This is especially true since the original purpose of 529 plans may not be as critical as in the past. That’s because many college costs in New Mexico are now covered thanks to the State’s “Opportunity Scholarship” program for “free” college. While nothing is truly free, the prospect of college being heavily subsidized by New Mexico taxpayers may change the financial equation for some New Mexico families who no longer need to prioritize saving for college and instead can use their 529 plan for K-12 tuition at a non-public school.
The Rio Grande Foundation has long been a proponent of increasing the educational options available to New Mexicans. While much work is to be done to improve educational options for families, we are pleased that New Mexico’s Legislature is allowing families to maximize the benefits of 529 plans for K-12 students. It is critical for parents of school-aged children to educate themselves on the benefits of these plans.
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
Join the Rio Grande Foundation for a luncheon featuring speaker Judge Glock, Senior Fellow at the Cicero Institute, a nonpartisan public policy organization with deep experience in government, legislation and the law, technology, and entrepreneurship.
June 14, 2023
11:45AM – 1:00PM
Seasons Rotisserie & Grill
2031 Mountain Rd NW, Albuquerque, NM 87104
$50/plate before June 1
$55/plate on/after June 1
A pre-set menu with a vegetarian option will be available.
About Judge Glock:
Judge Glock is a Senior Fellow at the Cicero Institute. He was formerly a visiting professor at the Department of Economics at West Virginia University. He received his Ph.D. in History with a focus on economic history from Rutgers University. Judge’s academic writing has been featured in the Business History Review, Review of Banking and Financial Law, Journal of American History, and Tax Notes, and his public writing has been featured in City Journal, Politico, the New York Times, and the Wall Street Journal. Judge focuses his research on the areas of budgetary reform, housing, and homelessness.
Cancellation policy:
The Rio Grande Foundation will honor cancellation requests until June 7 at 12:00PM MT, 2023, minus a 15% transaction fee.
There are many people who we work with and who support liberty in New Mexico who too often go without being recognized. Sadly, the Rio Grande Foundation recently lost three such people who all helped the cause of liberty in their own ways:
Frank Bird was a board member and supporter of the Rio Grande Foundation. He was a former New Mexico legislator and had a long career with IBM as well.
Colin Hunter was an attorney who represented the Rio Grande Foundation in various legal cases over the years.
Joe Loisel was a Retired Army Col. Joe Loisel. Joe was very active in various military auxiliary groups and was a supporter of the Rio Grande Foundation.
The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.
Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.
A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011
For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.
One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.
The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.
New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).
Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.
Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they tend to make poor decisions. And all that brings New Mexico’s politicians to mind.
Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:
There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.
In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.
She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.
In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government. Spending grew by another $1.2 billion in the latest budget thanks to a 14 percent year-over-year increase.
As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.
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
The following opinion piece appeared in Las Cruces Sun News and other papers recently.
In her message in which she explained her veto of large portions of the Legislature-passed tax bill, Gov. Lujan Grisham wrote, “Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole.”
She wrote this while the State of New Mexico sits on a $3.6 billion budget surplus thanks to oil and gas revenues (a boom that shows no signs of slowing down). She also signed a 14 percent budget increase which grew the size of government by $1.2 billion and included everything from increased film subsidies to $10 million for an abortion clinic primarily to serve Texans. Last year’s budget increase was over 13 percent as well.
The “tax reform” effort in Santa Fe got off to a bad start when the House didn’t seriously attempt to reform the unfair and job-killing “pyramiding” of the gross receipts tax. That “original sin” of New Mexico tax policy (reform of which was supported by the Gov.) should have been the Legislature’s top priority. It clearly was not, and it was never included in any version of the bill.
Worse, instead of just cutting taxes, both houses of the Legislature sadly included tax increases in versions of the bill including the final version. Raising taxes is inexcusable with a $3.6 billion budget surplus. Worse still, the tax hikes included anti-economic-growth policies like imposing two new top rates on personal income and increasing both capital gains and corporate income taxes.
Each of these tax hikes would have done great harm to our economy. The Gov. was right to veto them. Gov. Lujan Grisham’s tax policy agenda is hardly above reproach, however. The Legislature initially planned to reduce the GRT by 0.5 percentage points. This should not be mistaken for reform, but it is much better than nothing. Reducing the GRT also fits nicely with “progressive” economic policy goals as the GRT is a classic “regressive” tax meaning that poor pay a higher percentage of their incomes on it.
But, in the waning days of the session as the Gov. expressed concerns about the size of the tax package legislators adjusted the package by phasing-in the gross receipts tax reductions “to make room for” the film subsidies which had been added during the legislative process.
It would be hard to come up with worse tax policy than delaying broad-based tax relief to pile even more generous subsidies on top of those already given to a favored special interest (Hollywood). Adding insult to injury these GRT rate reductions were vetoed by the Gov. while film subsidies were left intact.
The best that can be said for tax package is that New Mexicans will get one-time rebates and medical doctors will no longer be taxed on deductibles and copays.
Watching the many twists and turns of the tax bill in the 2023 session highlighted that New Mexico’s political leadership simply does not understand basic economics. Given their ignorance, it is no wonder New Mexico performs so poorly economically. And it’s not just the Gov.’s vetoes, but the Legislature’s approach which was misguided from the start.
Economically, the 2023 session was a big disappointment. But, unless something dramatic happens, the State will likely again be awash in oil and gas revenues when the 30-day session rolls around next January. Can the Legislature and Gov. come up with a real tax reduction plan that will diversify our economy and move New Mexico out of last place?
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
Rio Grande Foundation president Paul Gessing sat down with TJ Wilham of KOAT Channel 7 recently to discuss the lack of progress in getting the City out from under the Department of Justice consent decree and the high cost of paying independent monitor James Ginger.
The following appeared in the Santa Fe New Mexican on
In a small but significant victory for free speech during the recent legislative session, Senate Bill 42, a measure that would have made New Mexico’s already-hostile privacy laws for nonprofit causes even worse, was miraculously killed on the House floor. The bill already had been adopted by the Senate, so this was truly a last-ditch effort.
Current laws relating to forcing nonprofits to disclose their donors are already being challenged by the Rio Grande Foundation in court. That original law (adopted in 2019) dramatically expanded New Mexico’s campaign finance laws to cover nonprofit groups that merely mention lawmakers in their communications near an election. As a result, many organizations that have long had a voice in state policy debates would have been forced to publicly expose their supporters’ names and home addresses to the harsh light of public scrutiny.
That’s a major violation of personal privacy and a threat to free speech. Americans who have their identities, locations and support for social causes exposed can suffer harassment and retaliation for their beliefs. Privacy-conscious citizens may send their donations elsewhere instead of supporting New Mexico-based causes. Many nonprofits will self-censor to protect their supporters.
The result may be a win for some politicians since many critics of their ideas and voting records will be silenced. But it’s a loss for nonprofits, New Mexicans who support them and free speech throughout the state.
The Supreme Court has consistently struck down laws that chill the speech of nonprofit advocacy groups by publicly exposing their members and supporters. It has upheld laws that require candidates, political parties and other groups formed to elect or defeat candidates to disclose their contributors, but New Mexico’s law reaches far beyond elections and imperils speech about public policy. That’s where it runs into trouble with the Constitution.
SB 42 was like the current law but on steroids. It would have made it explicit that donors who support nonprofits for any purpose, not just a political purpose, must be exposed. That requirement would have created disclosure reports filled with junk. For most nonprofits, commenting on ongoing debates in the Legislature is only a small part of what they do. Their general donors may not know about or even agree with the messages they are publicly listed as funding.
For this reason, SB 42 could have been found unconstitutional even if New Mexico’s current law survives in the courts.
In the age of cancel culture, New Mexico is moving in the wrong direction. People deserve more control over their personal information, not less. They deserve more protection from being targeted and attacked for their beliefs, not to be thrown to the wolves.
In poll after poll, Americans admit they are afraid to speak openly about their views on issues as basic as their preferred presidential candidate. Plastering citizens’ donation records to nonprofits on the internet will not create accountability. It will enshrine cancel culture into New Mexico law.
Despite an ongoing legal battle, the New Mexico Legislature has only paused its ongoing efforts to put privacy and free speech at risk. SB 42 was another overreach and another lawsuit waiting to happen. Thankfully it was narrowly killed, but we’ll undoubtedly face similar threats to free speech next year.
Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity.
When Russia invaded Ukraine over a year ago energy prices leaped higher. Since then there has been continued argument between advocates on both sides as to what kinds of policies should be put in place in the wake of this crisis.
RGF president Paul Gessing was asked to debate the issue in a short series of articles by Divided We Fall. Needless to say, we at the Rio Grande Foundation emphasized the critical need for free market approaches and traditional energy sources while his opponent pushed in the opposite direction. Read the short series of articles here.
The following appeared in the Albuquerque Journal on Sunday, March 26, 2023.
With $3.6 billion at its disposal, the New Mexico Legislature had the chance of the century – possibly the last century – to enact sweeping reforms of the state’s tax structure. The idea, seemingly as professed publicly by those from across the political spectrum, is to diversify the state economy to be less reliant on the vagaries of oil and gas prices.
Unfortunately, even with a positively mind-blowing 42% single-year budget surplus on top of robust spending growth in recent years and a large state and local government structure to begin with, the New Mexico Legislature abjectly failed to address our state’s problematic tax structure.
That means that New Mexico’s job-killing taxation of business service inputs will continue. And, while the gross receipts rate reduction is welcome, it is simply not a game-changer. In fact, GRT rates will remain higher in Albuquerque and most other cities than they were when Bill Richardson left office at the end of 2010.
Worse is the fact the bill contains numerous tax increases, and even more were considered. Shockingly, the original House version of the bill included major personal income tax hikes. When Richardson left office and throughout the Martinez era, New Mexico’s top income tax rate was 4.9%.
That top rate was increased to 5.9% for married couples making more than $315,000 in 2019 during Lujan Grisham’s first year in office. As originally formulated by the House, the bill would have added two new income tax rates of 6.5% and 6.9%. The 6.5% rate would have kicked in at the relatively low level of $200,000 for married couples.
This provision was amended out, but the inclusion of an income tax increase in the first place reflects the Democrat-controlled Legislature’s broader failure to grasp the opportunity at hand. As the final bill was crafted provisions to raise the capital gains and corporate income taxes were retained in the legislation. So-called “sin” taxes on alcohol and cigars were included as well.
If the goal is to diversify the New Mexico economy, you can’t do much worse than to raise capital gains and corporate income taxes. Perhaps the only thing worse is raising these taxes while the Legislature boosts spending by 14% and has a $3.6 billion surplus at its disposal.
While the tax hikes may be the worst part of the bill for businesses, the fact is that numerous other provisions of the legislation are deeply problematic. Subsidies for electric vehicles and charging stations are included. If these technologies are truly the wave of the future, why spend tax dollars on them? The same can be said for subsidies for energy storage systems.
As if those unnecessary subsidies aren’t bad enough, the Senate added massive film subsidies to the legislation. The current $110 million cap on annual film subsidies would be nearly doubled to $210 million. Worse, with another 5% subsidy boost for projects outside of Albuquerque and Santa Fe. Conceivably, some films could attain reimbursement of 40% of their taxable expenses.
Overall, New Mexico politicians are on the verge of squandering a unique chance to use a $3.6 billion surplus to diversify and improve the economy. Sadly, the Legislature has failed. Gov. Lujan Grisham will have a chance to wield her line-item veto pen. Hopefully, she, too, sees the problems inherent in enacting economically harmful tax hikes while also attempting to diversify the economy.
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.