Rio Grande Foundation
Paul Gessing was recently in Las Cruces and sat down with Fred Martino of KRWG TV to discuss some of the issues that Rio Grande Foundation is working on and some of the issues facing our State in the 2017 legislative session.
The interview is about 15 minutes and can be found here:
The following piece appeared in the Albuquerque Journal on Wednesday, December 14, 2016.
A political earthquake happened in November. While most of the nation went right (Republicans control 69 of the nation’s 99 legislative bodies), New Mexico’s House, which had been under Republican control for the first time since the 1950s, flipped back to Democrat control.
While Democrats lost liberal Majority Leader Michael Sanchez, the new legislative leadership is, if anything, more liberal than past leaders. With Republican Susana Martinez in the governor’s mansion for two more years, compromise would seem hard to come by.
However, stalemate is not an option. There need to be some positive economic reforms in New Mexico.
The trick will be to find common ground. Democrats may try to achieve their goals through the constitutional amendment process, but those take time to be approved by voters. This 60-day legislative session is an opportunity to put forth innovative bipartisan reforms that can improve the economy.
One idea that might have some bipartisan legs is occupational licensing reform.
While conservatives going back to Milton Friedman have had serious concerns about the constant growth of licensing, President Obama’s administration issued a report “Occupational Licensing: A Framework for Policymakers” which decried the negative impact of too many licensing requirements and how those requirements disproportionately impact low-income workers.
It would seem that removing some licensing requirements or at least revamping the licensing process to make jobs more accessible to more people might be an area of bipartisan agreement with positive outcomes for jobs and economic growth.
Licensing reform should also be undertaken for those with criminal records. It can be difficult or impossible for people who have been involved in the criminal justice system to obtain required licensing under New Mexico law. We know that New Mexico has a serious crime problem, why let licensing laws stand in the way of those who have paid their debt to society and wish to find productive work?
One licensing-related issue that has already generated bipartisan support in New Mexico’s Legislature is the embrace of mid-level dental providers known as “dental therapists.” Particularly in rural areas of our state, dental care can be hard to come by. Dental therapists are licensed providers between dentists and hygienists. They can do basic procedures like fillings thus allowing dentists to focus their attention on more complicated procedures.
Minnesota is one of an increasing number of states that have embraced dental therapy. I had an opportunity to visit the state earlier this year and found dentists, dental therapists and patients all excited to share the positive impacts of this slight licensing reform.
The last issue to consider is, rather than simply raising taxes, which I’m confident is on the agenda for many Democrats, we need to have a deeper discussion about tax reform.
The gross receipts tax is both regressive (something Democrats claim they care about) and a jobs killer. Without a thriving oil and gas sector, it also isn’t generating the revenue that New Mexico has grown accustomed to. A recent Legislative Finance Committee noted a 30 percent drop-off in revenues from October 2015 to October 2016.
If New Mexico is going to get out of its current economic rut, squeezing that proverbial “blood from the turnip” by raising taxes isn’t the answer.
The next two years are going to be a real challenge for this state. The “easy” economic reforms like “right to work” are off the table due to shifting political winds. Stalemate between the legislature and governor is not an option. Hopefully some positive agreement can be reached for the sake of New Mexico.
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
December 14, 2016
For Immediate Release
TORONTO/ALBUQUERQUE—New Hampshire has the highest level of economic freedom among all U.S. states for the second year in a row, while New Mexico is tied for 46th place, finds a new report released today by the Fraser Institute and the Rio Grande Foundation, both independent, non-partisan public policy think-tanks.
The Live Free or Die state scored 8.3 out of 10 in this year’s report, which measures government spending, taxation and labor market restrictions using data from 2014, the most recent year of available data.
Among the four largest states, Florida was 2nd and Texas tied for 3rd. For the second year in a row New York was 50th and California was 49th.
“Americans have been voting with their feet against the ‘big government’ approach of New York and California. Florida and Texas have experienced more than two-and-a-half times faster population growth in recent years, and they’re among the freest states in the country,” said Dean Stansel, economics professor at Southern Methodist University and co-author of this year’s Economic Freedom of North America 2016.
Rounding out the top five are South Dakota (tied for 3rd) and Tennessee. Alaska, New Mexico and Hawaii rounded out the bottom five least free states. North Carolina vaulted up the rankings from 25th to 13th after a large income tax cut.
The report also has an all-government ranking system, which adds federal government policy and includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces.
Since 2004, the average score for U.S. states has fallen from 8.26 to 7.70 out of 10 in 2014, driven largely by changes at the federal level.
In the most-free states, the average per capita income in 2014 was 4.7 per cent above the national average compared to roughly 3.3 per cent below the national average in the least-free states.
“The link between economic freedom and prosperity is clear—people who live in states that support low taxation, limited government and flexible labor markets have higher living standards and greater economic opportunity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.
The Economic Freedom of North America report, also co-authored by José Torra, is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.
The full report can be found here. A map illustrating the various levels of economic freedom via color coding can be seen below:
The op-ed below appeared in the Farmington Daily Times on December 11th.
New Mexico’s economy has fewer jobs today than it did in early 2008. As employment grows nationally, it’s shrinking in the Land of Enchantment. Our jobless rate is now the highest in the contiguous states. Incomes are stagnant, the food-stamp rolls have risen for 29 months in a row, and Millennials continue to flee for abundant opportunities elsewhere.
Sounds like a spectacularly bad time to raise taxes, doesn’t it?
Not to New Mexico’s Big Government lobby.
When the legislature convenes for a 60-day session next month, the state’s liberal establishment will be pushing to raise taxes on everything from gasoline to personal income, alcohol to corporate profits, electronic cigarettes to capital gains. Only “revenue enhancement,” the narrative holds, can solve New Mexico’s persistent budget deficits.
The left’s campaign for tax hikes is founded on rate cuts adopted by Governor Susana Martinez, a Republican, and her predecessor, Democrat Bill Richardson. In 2007, Forbes praised the latter as a “tax cutter” who “whacked New Mexico’s top income-tax rate by 40 percent and capital gains by 50 percent.” In 2013, as part of a legislative package that she claimed would be “good for New Mexico’s economy,” the former signed a phased-in reduction of the top corporate-tax rate, from 7.6 percent to 5.9 percent.
Bill Jordan, of the ultra-liberal New Mexico Voices for Children, believes the state’s in a fiscal crisis “because we cut taxes in the hopes that it would bring wealthy people and profitable corporations to New Mexico, which would create jobs. We lost that bet.” But Jordan, and his ideological allies, have incomplete memories. Taking a broader view, it becomes quite clear that while some taxes have been cut during the Richardson-Martinez era, others have been hiked.
The gross receipts tax (GRT) is the dominant revenue-raising mechanism at both the state, county, and municipal levels of government. The state’s GRT has risen by just 2.5 percent since 2003, when Richardson was inaugurated. But during the same period, local governments have engaged in an orgy of GRT-hiking. In Albuquerque, the levy’s burden has risen by 25.8 percent. In Santa Fe, the increase has been 24.3 percent. But among major municipalities, none can top Las Cruces, which has seen its GRT rise by 27.9 percent. Other cities and towns with big hikes include Alamogordo (26.7 percent), Clovis (26.5 percent), Farmington (25.8 percent), and Silver City (23.1 percent).
The tax-corporations-more crowd should remember that the GRT is a kind of “super sales tax.” It doesn’t solely impact transactions involving final consumption. Business that sell to businesses are affected, too, causing “pyramiding,” which the Tax Foundation describes as taxes piling “on top of one another as [a] good or service moves through production.” It’s likely that many of the enterprises that benefitted from Governor Martinez’s pursuit of lower corporate taxes would gladly make the trade for lower GRT rates. And as economist and former state revenue official Thomas Clifford put it, “The likelihood is high that most of the ultimate burden of [GRT pyramiding] is borne by New Mexico households, a hidden tax with regressive implications.”
The levy placed on property is another issue that New Mexico’s tax-hikers would like to ignore. The statewide mill rate has risen by 21.1 percent since 2003. In many communities, property-tax bills have gotten far more expensive. For example, the inflation-adjusted revenue Las Cruces extracted from its total tax levy rose by 128 percent between 2003 and 2015 — a boost far in excess of population growth.
It’s certainly true that by themselves, lower individual and corporate taxes have not generated much job- and wealth-creation in New Mexico. But conveniently neglecting the substantial increases in GRT rates and property taxes does not produce a healthy debate over the state’s dire fiscal condition.
Look at all the taxes that individuals, families, and business pay in New Mexico, and it’s clear that the relief adopted under the present and former governor has proven largely illusory. Add that harsh reality to a state economy that’s arguably the worst in the nation, and the case for hiking taxes during the 2017 legislative session vanishes.
D. Dowd Muska (dmuska@riograndefoundation.org) is research director of the Rio Grande Foundation, 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.
New Mexico’s Legislative Finance Committee recently issued a report that, to the casual observer, might make indicated that the state bureaucracy in the Land of Enchantment has been “cut to the bone” due to recent budget issues.
It may be true as the LFC says that the ranks of state employees have shrunk to the lowest level in almost a decade. What is definitely true is that more cuts are ahead due to the dire budget situation and the weak rebound in oil and gas prices. According to the LFC report, the number of state employees has declined 3.4 percent since this time last year and 12 percent over the last eight years.
In the comments section of an article written by Andrew Oxford in the Santa Fe New Mexican which noted that we at the Rio Grande Foundation believe New Mexico government needs to shrink further, Rep. Christine Trujillo (former teachers’ union head) stated that my organization “wants to follow Grover Norquist’s desire to shrink all government down to a size where I can drag it into the bathroom and drown it in a bathtub.”
Metaphorical drownings aside, it is indeed our view that New Mexico’s government can and should shrink significantly. Fortunately, when New Mexico’s bureaucracy is compared to those of other states, particularly our neighbors, it is clear our State has plenty of room to cut.
According to data from Governing Magazine, New Mexico has the 8th-highest ratio of state government workers relative to its population nationwide. The real size of New Mexico’s bureaucracy becomes clear when you compare our levels of state employment with the levels found in neighboring states.
According to the same report, New Mexico has 128 state employees per 10 thousand people. Texas, on the other hand has 65 and Arizona and Colorado each have 63 state workers per 10 thousand people. Utah has the highest ratio of state employees among New Mexico’s neighbors with 95 per 10 thousand people.
In other words, New Mexico’s bureaucracy may be a bit smaller than it has been, but our state employment per capita is much higher than it is in neighboring states. Policymakers should continue to shrink State government.
But this “right-sizing” can’t be achieved by just leaving existing positions unfilled. Rather, it must be done by thoroughly reevaluating all areas of New Mexico government and eliminating unnecessary institutions, agencies, commissions, and programs.
This is not meant as a criticism of those government workers. In fact, when positions are left unfilled, work loads do get heavier for those remaining. But it is high time to rethink the way New Mexico government operates.
As a starting point, past LFC reports have found that New Mexico has too many institutes of higher education and too many branch campuses. Those sites and schools could be consolidated in ways that improve student outcomes and cut costs at the same time.
Another report (this one from the Census Bureau) finds that New Mexico’s K-12 administrative spending as a percentage of per-pupil spending is severely out-of-whack with levels found in other states. New Mexico was at 15 percent while the 2nd-highest state was North Dakota at “just” 9.4 percent.
The ongoing budget crisis should be seen as an opportunity to improve efficiency in some areas and eliminate or reduce government’s role in others.
I’m not sure at what size New Mexico government would be small enough to drown in Grover Norquist’s proverbial bathtub, but I know we’re not even close. State government in New Mexico remains bigger than it is in most other states.
Worse, absent a miracle turnaround in oil and gas prices or dramatic economic policy reforms resulting in strong private sector growth, we can’t afford the government we have. If serious changes aren’t made, red ink, not a bathtub, will be the cause of New Mexico’s demise.
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
The Clinton vs. Trump morass seems to have sucked all of the oxygen out of the 2016 election. New Mexico is not identified as a “swing state” worthy of too much time and attention from either major candidate, so in a sense we are lucky enough to have a (relative) reprieve from the pounding drumbeat of presidential campaign ads that are running in other stats.
While we are not a “swing” state, the reality is that New Mexicans are voting on some very important candidates and issues this fall. In fact, I’d argue that in New Mexico there are no more important votes to be cast than the ones for your state representative and senator.
It is no secret that New Mexico’s economy is in bad shape. The combination of over-dependence on oil and gas and an under-developed private sector has left New Mexico with the 2nd-highest unemployment rate in the nation, high poverty rates, and few growth prospects.
Weeks ago, Gov. Martinez was forced to call the Legislature in for an acrimonious special session to discuss ways to cut hundreds-of-millions of dollars from the budget. While crime-related bills were added to the agenda, New Mexico’s myriad social and educational problems are worsened by both poverty and the lack of economic opportunities available in many corners of our State.
So, to summarize, the most important elections this year are for the Legislature (followed closely by New Mexico’s Supreme Court) and the most important issues are economic. Turning our moribund economy around is the critical starting point to solving any of New Mexico’s problems.
Notably, New Mexico is surrounded by states that are more economically-free, pro-business, and have stronger economies. Those are the policies that can help New Mexico prosper, but it starts with the Legislature embracing them.
Specifically, New Mexico voters should consider candidate stances on issues like:
With the states about evenly split in terms of being “right to work” or not, from January 2015 through September 2016 (21 months), the jobs *total* was 305,566. “Right to work” states got 239,124 or 78.3 percent of those jobs.
Under New Mexico law, “public works” projects pay inflated wages set by political, not economic considerations. Reforms have been introduced in the Legislature only to be killed by those who care about campaign contributions more than having well-maintained schools, bridges, and roads.
These are just a few of the literally dozens of proven economic reforms that need to be addressed by the Legislature in order to unlock New Mexico’s economic potential. Before you vote, find out what candidates in your area have to say about them.
As early voting continues and we head towards Election Day, we can’t get caught up in the drama and anger over the presidential race. We have a rare opportunity to chart a new course for New Mexico by electing legislative candidates that support economic reforms. Focus your time and attention on those all-important races.
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
Every eight years, University of New Mexico Hospital (UNMH) must ask Bernalillo County voters to renew the Hospital’s Mill Levy. Bernalillo County imposes a mill levy for the Hospital at a rate approximating 6.400 on both residential and non-residential property in the County. This money is used to fund Hospital operations. Initially, $95 million will be collected annually although the exact number will fluctuate based on property values and economic conditions in the County. The trend <em>should </em>be upwards, however.
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<li>As of June 2016, UNMH served <strong>6,812</strong> uninsured county residents. If that trajectory holds through December that would mean the Hospital will serve 13,624 uninsured patients in 2016.</li>
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In 2013, UNMH served <strong>approximately 27,000 county residents. </strong>UNMH is now serving less than half the uninsured county residents as they did in 2013.
New Mexicans are paying the bills for both the ObamaCare Medicaid expansion that is reducing those “uncompensated care” rates, but UNMH wants to continue taking hundreds of dollars from both commercial and residential property owners throughout Bernalillo County <strong><span style=”text-decoration: underline;”>for another eight years!</span></strong>
As the Rio Grande Foundation’s Paul Gessing argues <a href=”https://www.riograndefoundation.org/downloads/rgf_unmh_mill_levy.pdf”>in a new issue brief</a>, voters should consider sending UNMH “back to the drawing board” for a smaller mill levy that reflects the falling costs of uncompensated care. The image below illustrates how the current UNMH mill levy impacts at least one property owner’s tax bill.
The Rio Grande Foundation strongly believes in government transparency, especially when it comes to your tax dollars. All government payroll information is considered a public record accessible to the public. Unfortunately, not all government entities publish this information on their own (some like Bernalillo County do). Please see payrolls for New Mexico counties below. Unfortunately, not all comply.
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That’s the conclusion of research our organization has conducted on the public revenue and resources dedicated to fighting substance abuse and mental disorders in the Land of Enchantment.
Certainly the crisis is severe. Alcohol-related deaths are rampant. The drug-overdose rate remains among the highest in the country. More citizens here have mental illnesses than the national average, and the prevalence of suicide is greater here than in all but three states.
But what’s more depressing than the reality of the behavioral-health epidemic is state government’s inconsistent and failure-ridden attempts to address the problem.
In 2002, “Behavioral Health Needs and Gaps in New Mexico,” an investigation commissioned by the Legislature, concluded that there was “no identifiable behavioral health system leader with responsibility or authority across the behavioral healthcare systems in the state.” In addition, the “benefit packages of the various behavioral health systems within New Mexico” were “not organized to maximize available resources or to provide incentives to providing care that has been proven to be effective (evidence-based or promising clinical practices).”
In response to the report, legislators and then-Gov. Bill Richardson created the New Mexico Behavioral Health Purchasing Collaborative, overseen by the Human Services Department, to bring leadership, focus, and accountability to the state’s public system of behavioral healthcare. But reports by the Legislative Finance Committee have repeatedly found that the collaborative hasn’t performed nearly as well as its creators hoped.
Even worse, radical policy shifts — including “carving out,” then “carving in” behavioral-health services for Medicaid recipients, and the brutal, partisan fight over Gov. Susana Martinez’s 2013 suspension of Medicaid payments to nonprofit providers due to suspicions of fraud — have taken a heavy toll.
No one can change the mismanagement and chaos of the past. The goal now is to move forward with sound principles and policies. A good place to start is with the flawed assumption that the only thing wrong with New Mexico’s behavioral-healthcare system is a lack of revenue.
Our examination found that states with high-performing systems do not necessarily spend more on substance abuse and mental illness. The key is to use what funding is available in the most effective ways possible. In 2014, legislative researchers found that the state spent just “11 percent of its … funding on proven and effective (behavioral-healthcare) programs for adults, even though past studies have recommended greater spending on these services.”
An expansion of mental-health courts would be a wise investment. Diverting an offender with behavioral issues from jail is an early intervention measure proven to be effective. Columbia University’s Paul S. Appelbaum wrote that most recent research shows that participation “is associated with reduced rates of rearrest and reincarceration compared with ordinary handling by the courts and correctional system.” Mental health courts exist in the Albuquerque-Santa Fe region, but not elsewhere in the state. Otero County is exploring a court of its own, and others should follow.
For those with a chronic condition who refuse help despite multiple arrests and/or hospitalizations, a stronger approach is need. Assisted outpatient treatment is a court-ordered plan that can include medication, tests, therapy, training or counseling. In the words of the Treatment Advocacy Center’s Brian Stettin, that type of treatment “leads to reduction of hospitalization and criminal acts,” and reduces the number of “people … getting treated in jails or prison for mental illness.”
New Mexico adopted AOT earlier this year, but was one of the last states to do so. However controversial the process remains, it’s now incumbent upon local governments and the courts to use the tool to help behavioral-health sufferers and taxpayers alike.
Finally, New Mexico’s behavioral-health workforce is inadequate — a harsh reality exacerbated by the governor’s decision to expand Medicaid under Obamacare. For fiscal and economic reasons, there is little chance for a quick turnaround. But training public employees in mental health first aid, and expanding the state’s system of peer support, can help compensate for an insufficient number of professional caregivers.
Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, 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.
Sometimes it seems that New Mexico’s economic-development cheerleaders live in an alternate reality. We all want New Mexico to be prosperous and wealthy, but anyone who believes that the state’s economy is doing well these days is simply not paying attention.
Gary Tonjes of Albuquerque Economic Development, writing in the Albuquerque Journal, touted New Mexico’s “business-friendly” environment, including corporate-welfare programs like LEDA and JTIP and their role in attracting business. He says that the Facebook win “sends a message to other employers that this is a great place for business.”
Unfortunately, the reality is far different:
And let’s not forget that New Mexico is facing massive budget deficits. Even if we wanted to spend more money to bring in more businesses, we don’t have the money available to do it.
It is easy to sympathize with Tonjes and New Mexico’s economic development cheerleaders. It must be a real challenge to compete with our more economically free neighbors. It is frustrating to see them growing while we remain stagnant and impoverished. But to say that throwing massive subsidies at one company and getting them to come here “vindicates” anything is just silly.
New Mexico has a long way to go to develop a private sector. Our leaders should be explaining what that means and educating the public, not encouraging complacency.