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RGF in National Review Capital Matters: Bill Richardson: Another Clinton-Era Democrat Exits

The following appeared in National Review’s Capital Matters on September 8, 2023.

With the passing of former New Mexico governor Bill Richardson, yet another Democrat of a bygone era departs the scene. Richardson was personally friendly and ideologically simpatico with Bill Clinton, helping the president pass the NAFTA free-trade agreement and then being named U.N. ambassador for the final few years of that administration.

Free trade is (sadly) increasingly unpopular on both sides of the aisle, and in this sense both Richardson and Clinton are creatures of a different era.

However, it is worth examining Richardson’s economic record as governor of New Mexico to better understand his own career and just how far and fast the Democratic Party has moved to the left (both nationally as well as in the Land of Enchantment).

Richardson was governor of New Mexico from 2003 to 2011. He had the good fortune of succeeding Gary Johnson. You see, while New Mexico used to be a purple state on the national stage, its legislature was and has remained a stronghold of big-government Democrats. Johnson, known to many New Mexicans as “Governor No,” was known for his prodigious use of the veto pen. As a libertarian-leaning Republican, he did this, in part, to keep a lid on government spending.

Johnson’s attempts to get tax cuts through the heavily Democratic New Mexico legislature proved fruitless, but when Richardson took over in 2003, he immediately pushed for significant tax reductions. He cut the state’s top income-tax rate from 8.2 percent to 4.9 percent and reduced capital-gains taxes dramatically. He wasn’t just a tax-cutting Democrat. In his era, he was arguably the best tax-cutting governor in the nation. This paid off in strong job-creation numbers and personal-income growth, and New Mexico jumped from the 47th- to the 42nd-ranked state in personal incomes in just a few years. Pro-growth economic policy is no longer an element of Democratic politics.

But Richardson was by no means an avid supply-sider. During an era of strong economic growth nationally and in the relatively impoverished Land of Enchantment, Richardson sadly fell into the trap of putting significant taxpayer resources into big-government boondoggles.

It is worth noting that much of this (good and bad) was leading up to a run for the White House in 2008. As governor of a small, impoverished state with a low national profile, Richardson, who already had federal-government experience, believed that he needed a splashy track record of transforming New Mexico’s economy.

To that end, he created the Rail Runner commuter train, which began operation in 2006 and runs nearly 100 miles, from the south of Albuquerque to the state capital in Santa Fe. It cost more than a mind-blowing $1 billion to build (it needed 20 miles of brand-new track) and requires more than $20 million in annual taxpayer subsidies to operate. Despite running between two of New Mexico’s largest cities, much of the route is sparsely populated. As with so many transit systems in the Covid and post-Covid eras, it continues to lose what little ridership it had.

Another one of Richardson’s taxpayer-funded projects that remains unproven (at best), even after having launched more than a decade ago, is Spaceport America. Billed as the “world’s first purpose-built commercial spaceport,” it has finally seen its first commercial space-tourism flight, via Virgin Galactic. The spaceport, in the harsh desert of southern New Mexico, was built at the behest of Richardson for Virgin Galactic at a cost of $225 million to taxpayers, though add-ons and further investments have driven the cost to around $275 million, and the facility already needs major repairs.

Subsidies for particular companies, including personal-jet manufacturer Eclipse Aviation and solar-panel manufacturer Schott Solar, also failed to ensure long-term economic success. In fact, those companies went out of business long ago, which only proves government’s unfitness for picking winners and losers.

Finally, Richardson laid the groundwork for New Mexico’s costly film subsidies, which have helped the film industry while failing to more broadly develop New Mexico’s economy. The program, as Richardson designed it, led to New Mexico taxpayers reimbursing Hollywood film producers for up to 25 percent of their overall expenses for filming in the state. Richardson is by no means the only politician to have thrown money at Hollywood: Under current Democratic governor Michelle Lujan Grisham, the program has expanded even further, offering producers a subsidy of up to 40 percent of their expenses.

Highlighting his relative moderation, Richardson (gently) reproached Governor Lujan Grisham for her overly zealous and failed Covid lockdown strategy. He also (sagely) urged state legislators and Lujan Grisham to avoid raising taxes in the most recent legislative session. During this session, New Mexico had a $3.6 billion (42 percent) year-over-year budget surplus, yet Democrats in the legislature were seriously considering a number of tax hikes.

Fortunately, they did not go through.

Bill Richardson’s death is a reminder of just how far the Democratic Party has moved to the left on economic policy. His willingness to listen to all sides and try to forge consensus across party lines is sorely missing from today’s politics.

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Opinion piece: Government boondoggles shouldn’t be New Mexico way

This article first appeared in the Las Cruces Sun News on Sunday, July 31, 2022.

New Mexico is always ranked among the “poor” states in the United States. But, as anyone who lives here or has taken stock of New Mexico’s abundant natural and cultural resources can tell you, we have no business being “poor.”

Sadly, much of our poverty is self-inflicted. It is the obvious result of bad public policy. While there are all manner of bad tax and regulatory policies that often wind up being “in the weeds,” one of New Mexico’s fundamental problems is the result of politicians’ misguided belief that the path to success involves more government spending or another big government project.

The Rio Grande Foundation has long had its concerns about two Bill Richardson-era projects of this kind: the Rail Runner and Spaceport America. Starting with the Rail Runner, the latest ridership data just came out and, over the past year the train saw 319,635 riders board the train. The train was fully operational throughout the last 12 months which included a few months of fares having been discounted to $2.50 a day.

One might think that with gas prices these days the Rail Runner would be a cost-effective alternative. Sadly, the train’s current ridership is about 25% of peak years of 2010 and 2011 when more than 1.2 million people boarded the train. Sadder still is the fact that taxpayers continue to pay tens of millions of dollars in debt service on construction of the train and nearly $20 million annually to operate it.

Shockingly, Las Cruces Sen. Bill Soules recently pledged to reintroduce legislation in the 2023 session that would theoretically create “high speed rail” from Denver to Chihuahua. The fact is that population density numbers don’t justify commuter rail between Albuquerque and Santa Fe. Now Soules wants to spend tens of billions on “high speed” passenger service spanning more than 850 miles, three states, and two countries?

Sadly, Spaceport America has proven itself to be another Richardson-era boondoggle that hasn’t lived up to its promise. Spaceport America has been open for business for more than a decade and it has yet to fulfill its mission of hosting commercial space flights.

Last July Richard Branson and a team of Virgin Galactic employees did make it to weightlessness, but the company’s stock has tanked in the meantime and their latest prediction is for flights to begin the first quarter of 2023.

Plans for those manned commercial space flights have been delayed time and again. We’re not holding our breath for flights to begin in earnest early next year.

Worse, Virgin Galactic recently announced plans to build its future fleet of spacecraft in Mesa, Arizona. Sadly, spending hundreds of millions of our tax dollars to provide a spaceport for Virgin Galactic was not enough for them to build ships here.

With massive oil and gas surpluses flowing into the state’s coffers, politicians like Soules will again be looking for new “opportunities” to waste money. But big government spending schemes have repeatedly failed to truly diversify our economy or bring sustainable growth to our state.

Instead, the governor and Legislature would better serve our state by considering why companies with a New Mexico presence (like Virgin Galactic and Intel to name two) continue to choose neighboring Arizona over us.

It might be Arizona’s school choice which has improved educational results and workforce preparedness, not to mention a willingness for families to locate there.

Or, perhaps it is Arizona’s lower taxes which has dropped to 2.5% for nearly all Arizonans under a new tax cut law.

Finally, it could be that Arizona has a “right to work” law which gives private sector workers the right to opt out of membership or the payment of dues and fees in labor unions.

No matter, it is high time for New Mexico to abandon our government-driven model and consider what states like Arizona and others do that has worked so much better.

Paul Gessing is president of New Mexico’s Rio Grande Foundation.

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New Mexico politics summed up in one handy Trever cartoon

To say that we’re fans of Albuquerque Journal editorial cartoonist John Trever may be a bit of an understatement. But the Sunday cartoon (below) is particularly genius because of its multiple meanings about the way New Mexico politics and policies work.

  1. Private success vs. Public sector failure: While we have certainly criticized Bill Richardson’s decision to build a $200+ million Spaceport for Richard Branson, in the bigger picture both Bransons’ and Bezos’ successes are achievements for the private space industry. New Mexico’s schools are overwhelmingly government-run and funded. It would be nice if those who are rightly frustrated by the failures of this system would join us in focusing their efforts on bringing private sector competition and competence to bear on the difficult challenge of improving literacy in NM.
  2. A SECOND interpretation of the cartoon is yet another common theme of New Mexico government. Rather than doing the basics (like education) well, elected officials prefer to pursue expensive, high profile projects that really aren’t appropriate functions of government. The Spaceport is one such example, but Mayor Keller’s plans to build a new soccer stadium (with a starting price tag of at least $65-$70 million just to build, let alone property acquisition and inevitable cost-overruns) is another. Again, crime and public safety are crises demanding resources and attention, but Keller would rather build a stadium instead.
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RGF’s Paul Gessing talks New Mexico politics and policy w/ Mick Rich

The following conversation between RGF president Paul Gessing and Mick Rich (former US Senate candidate and owner of a construction business) aired on local television in Albuquerque, NM recently. It is split into four segments of about 10 minutes apiece.

In the first segment Mick and Paul discuss health care reforms made under ObamaCare, why it has failed, and how Biden plans to move forward with the same government-driven philosophy.

In segment two we discuss the evolution and economics of New Mexico’s film industry and its oil and gas industry.

In the third segment we discuss some of the crime issues at play in the City of Albuquerque.

In this segment we discuss the upcoming 2021 legislative session, the Rail Runner, Spaceport, and five things the Legislature SHOULD do to bring prosperity to our state.

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Rail Runner Ridership continues decline (KOB Channel 4 story)

With renewal of a gross receipts tax on the ballot in several northern New Mexico counties (Los Alamos, Rio Arriba, Santa Fe and Taos) to fund the Rail Runner and related services, the Rio Grande Foundation requested updated annual ridership information.

After years of decline and despite an improving New Mexico economy, ridership on the train again declined dramatically between FY 2017 and FY 2018. In FY 2017 835,561 rode the Rail Runner while that number dropped to 787,116 by FY 2018. That’s a decline of 5.8%.

Since FY 2010 ridership on the Rail Runner has dropped an astonishing 36.55%.

As Rio Grande Foundation president Paul Gessing pointed out, “Mass transit ridership across the country is collapsing. The Rail Runner is no exception. Unfortunately, the train never made sense in the first place and, despite lower unemployment in New Mexico and a recovering economy, the Rail Runner continues to lose popularity. Refinancing the train doesn’t make it any more viable for New Mexico commuters.”

Earlier this year the Rail Runner received $30 million from the federal government to implement “positive train control.” The train receives tens-of-millions of dollars in direct and indirect taxpayer subsidies annually.

 

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Free event: An Evening With Transportation Expert Randal O’Toole

An Evening With Transportation Expert
Randal O’Toole

Click here for registration form.

Like many Americans, Randal O’Toole loves passenger trains, yet he acknowledges that intercity passenger trains and – outside of the New York region – urban rail transit play little role in American life today. The replacement of passenger trains with cars, buses, and airplanes is similar to many other recent technological replacements: word processors replacing typewriters, calculators replacing slide rules, telephones replacing telegraphs, and cell phones replacing land lines.

However, only for passenger trains has the government spent billions of dollars a year attempting to turn back the clock and slow that replacement. O’Toole’s book Romance of the Rails asks why this is so and whether passenger rail has a significant role to play in the future.

Randal O’Toole will be discussing his book and some New Mexico-specific boondoggles like the Rail Runner and Albuquerque Rapid Transit (as well as potential boondoggles) at a reception held at the Rio Grande Foundation offices on Friday, November 9th from 6:00pm to 7:00pm.

Location: “The Liberty Hub” 4301 The 25 Way, Suite B (Americans for Prosperity signage) at Jefferson and I-25 across from Panera.

This is a free event open to the public. Pre-regisrations are appreciated. Light snacks will be available.

Romance of the Rails is the culmination of Randal O’Toole’s lifetime of research and experience as an enthusiast of the rails and as a transportation expert.

American transportation has undergone many technological revolutions: from sailing ships to steamships; canals to railroads; steam to diesel; horse-drawn to electric streetcars; passenger trains and urban rail transit to airplanes and automobiles. The government has allowed and encouraged most of these revolutions, but it spends billions of dollars a year attempting to turn back the clock for rail transit and intercity passenger trains.

To show why, O’Toole provides a detailed history of rail in America leading to the present, when federally subsidized efforts to return to rail’s golden age are doing more harm than good.

O’Toole examines the costly allure of high-speed trains and light rail, demonstrating that passenger rail doesn’t even work well in Europe and Asia, much less here. Far from being backward, America’s railroads are the envy of the world, moving freight efficiently and profitably while leaving passengers to other modes of travel that are faster, less expensive, and more convenient.

The book concludes that the passenger transportation of the future will rely on America’s 4 million miles of roads and on air travel. As Romance of the Rails thoroughly chronicles, Americans love passenger trains, but given the vast resources inexplicably being poured into them, we are being taken for a ride.

About the speaker:

Randal O’Toole is a Cato Institute Senior Fellow working on urban growth, public land, and transportation issues. His analysis of urban land-use and transportation issues, brought together in his 2001 book, The Vanishing Automobile and Other Urban Myths, has influenced decisions in cities across the country. In his book The Best-Laid Plans, O’Toole calls for repealing federal, state, and local planning laws and proposes reforms that can help solve social and environmental problems without heavy-handed government regulation.Romance of the Rails is the culmination of Randal O’Toole’s lifetime of research and experience as an enthusiast of the rails and as a transportation expert.

Click here for registration form.

 

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Gessing talks 2018 New Mexico Legislative session & what to do w/ Spaceport, RailRunner, & other government boondoggles

Rio Grande Foundation president Paul Gessing recently sat down with KRWG’s Fred Martino. We discuss the Spaceport and ongoing issues there and then move on to talking about the 2018 Legislature and why voters should be so skeptical of government infrastructure projects.

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State Has Many Opportunities to Reduce Spending

Journal columnist Winthrop Quigley seems to believe that what New Mexico’s struggling economy needs right now is higher taxes. We at the Rio Grande Foundation couldn’t disagree more and believe raising taxes would have further deleterious effects on our economy.

Disagreements aside, we do share agreement with Quigley that New Mexico’s tax structure must be reformed. The gross receipts tax is uniquely harmful to the growth and development of small businesses. It also encourages businesses to lobby the Legislature to lobby for exemptions or outright subsidies before locating here. The Legislature must act to reform this harmful tax structure.

It is a myth that New Mexico is a low-tax state. According to the Federation of Tax Administrators, our tax burden as a percent of personal income is ninth-heaviest in the nation. This is far heavier than the tax burdens of our more economically successful neighbors : Arizona ranks 39, Colorado 45, Oklahoma 37, Texas 44 and Utah 31.

Now for the (substantial) disagreements.

Quigley argues that New Mexico public employee salaries are lower than those in neighboring states. Salaries are just part of the compensation for any worker, especially government employees.

According to Key Policy data from 2013, New Mexico state and local workers make 20 percent more than their private-sector counterparts once pensions and benefits are included.

This is the 12th-highest compensation ratio in the country and far higher than in neighboring states. It also is a very good argument for serious reform of New Mexico’s government pension system.

Chart 2 New Mexico State and Local Government Compensation as a Percent of the Private Sector Rank 2013.jpg

More importantly, public employees should be paid based on what the market will bear. New Mexico’s unemployment rate is higher than that of its neighbors. The pay of government workers should reflect local market conditions.

Perhaps more importantly, New Mexico’s government workforce is bloated. Again according to Key Policy data, New Mexico has the second-most government employees relative to private-sector workers.

Chart 1 New Mexico State and Local Government Employees per 100 Private Sector Employees Rank 2013.jpg

When the number of government workers is compared to the population they serve and educators are removed from the equation, New Mexico falls to 10th-highest (according to Governing Magazine), but still far in excess of our neighbors.

As to specific ideas, we concur with Journal readers who have pointed to the RailRunner and Spaceport as likely cuts. Obviously, those aren’t enough. The next fattest target is higher education.

According to data from State Higher Education officers, New Mexico spent the fifth-most on higher education among U.S. states in 2011, the most recent year for which data are available.

The LFC has done some excellent work on the proliferation of branch campuses (number 25 at last count). It is time to reduce their numbers significantly, especially with overall enrollment declining.

Another area of significant savings is the politically popular, but economically dubious film subsidy program.

Similar programs have been panned by economists from across the political spectrum. A 2014 analysis done at the request of New Mexico’s Legislature found that the film program generated 43 cents in tax revenue for every state tax dollar spent.

Simply put, despite all the rosy press releases, New Mexico’s film program is a money-loser for New Mexico.

Lest one be misled to believe that only “liberal” government programs must be on the chopping block, New Mexico’s Local Economic Development Act program should be cut. Earlier this year, the LFC reported that “the state does not receive sufficient reporting from businesses using LEDA funds to properly evaluate” the program.

One company just received $325,000 from LEDA for the “creation” of just 14 new jobs. With those 14 employees paying income taxes on their $45,000-$50,000 salaries to New Mexico at 5 percent annually, it will take a decade for the state to recoup its “investment.”

And that assumes that the expansion would not have happened without state money.

Cutting the budget is no fun. We need to grow our economy, but our tax code is one of several reasons our economy hasn’t kept up with our neighbors’. Raising taxes will only further damage New Mexico.

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Paul Gessing’s Appearance on KRWG “Newsmakers”

On this 30 minute interview with Fred Martino of KRWG public television in Las Cruces, Gessing discusses several issues facing New Mexico including the struggling economy, the RailRunner and Spaceport, education reform, federal lands in New Mexico, and criminal justice reform. Check out the video below:

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New Mexico Economy in Search of Leadership

los_alamos_monitor

The year 2012 was a tough one for New Mexico’s economy. Without going through the litany of evidence, our state was the only Western state to be found on United Van Lines’ list of “top-outbound” states. And, while the US as a whole grew by an anemic 2.2% during the year, New Mexico grew by a downright pitiful 0.2%. Texas grew by 4.8%.

As the end of 2013 nears, new data from the Bureau of Labor Statistics indicate that 2013 is not looking to be much better.

According to the report, the state’s labor force participation rate, a measure of how many working-age residents are employed or looking for work, was the fourth-worst in the nation in October. And, between April and October, the state lost 20,382 jobs, or 2.4 percent, and nearly 24,000 labor force participants.

To top it all off, According to CoreLogic, New Mexico was the only state to show a decline in home prices from October 2012 through October 2013.

According to a report from the Mercatus Center at George Mason University, New Mexico is both the most reliant state on federal employment and has become even more so in recent years having lost more private sector jobs between 2007-2012 than all but eight states.

New Mexico has always been a relatively poor state, but it has not faced such a depressing economic outlook relative to the mildly-optimistic national outlook for at least two decades. What is to be done?

The Rio Grande Foundation has done groundbreaking research on New Mexico’s economy and is on record as supporting pro-growth tax reforms that address the massive disincentives for work and business formation in New Mexico’s tax code. We support adoption of a Right to Work law and broader regulatory reforms that would reduce the barriers to economic activity and employment. Lastly, we support dramatically-expanded school choice (Louisiana is a potential model) to improve workforce quality.

I certainly believe that these and other free market policies will move our state in the right direction. Other groups including Voices for Children and Think New Mexico have outlined ideas that they believe will, rightly or wrongly, spur our economy.

We have an election for Governor in 2014 and the New Mexico House is up for election as well. It is my firm belief that the poor state of New Mexico’s economy and what to do about it must be the top agenda item regardless of party affiliation.

Questions for Democrats, including the five who have entered the race for Governor, might include whether costly programs like the Richardson-era RailRunner and Spaceport are helping our hurting the economy. They also might be asked whether more regulations, more welfare, and more special interest subsidies like the one for film are really the answer to our economic woes, and why.

And, I would not let Gov. Martinez off the hook. Her significant economic development initiatives to date have involved attracting Union Pacific to Santa Theresa and a phase-down of New Mexico’s corporate income tax to 5.9% that will be completed by 2018. Obviously, these efforts alone have not done enough to improve our economic competitiveness.

I’d further ask Martinez what specific economic policy changes are needed to turn New Mexico around and why she hasn’t already introduced these reform ideas. Is political opposition from a hostile Legislature a stumbling block to even considering more dramatic reforms?

New Mexico is a beautiful state with a unique culture, but poverty has real, negative consequences for all of us. It is time to have an honest, far-reaching debate on our poor economic performance, our lack of a private sector, and our overreliance on Washington.

Our future depends on it.

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.