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Education Legislature Notable News RailRunner Spaceport Top Issues

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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Economy Energy and Environment Film Subsidies Health Care Legislature Local Government Notable News Oil & Gas Open Government RailRunner Top Issues Videos

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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Economy Local Government Notable News RailRunner Research Tax and Budget Taxes Top Issues Transportation Videos

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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Notable News RailRunner RGF Events Top Issues Transportation

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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ART Economy Notable News Oil & Gas RailRunner Spaceport Tax and Budget Taxes Top Issues Transportation Videos

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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Economy Film Subsidies RailRunner Spaceport Tax and Budget Taxes Top Issues

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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Economy Education RailRunner Tax and Budget Transportation Videos

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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Economy Film Subsidies RailRunner

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.

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Economy RailRunner Transportation

Passenger Rail Not Worth Big Subsidies it Requires

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The tremendous costs of the Rail Runner were outlined in grave detail recently in the Journal. Annual costs are currently about $50 million between operations and payments on the original infrastructure. A portion of these costs are currently being shifted to the federal taxpayer, but there is nothing “sustainable” about the Rail Runner’s long-term finances.

New Mexico taxpayers will face significant additional financial burdens if the Legislature and Governor decide to spend taxpayer dollars to keep both the Rail Runner and federally-owned Amtrak trains heading down the tracks here in New Mexico.

Worse, what Washington gives us in the form of operating subsidies, it can also take away. New federal regulations costing up to $30 million are being imposed by Washington on the entire railroad industry, including the Rail Runner. Those costs which were completely unexpected will be borne directly by New Mexico taxpayers above and beyond the current operating subsidies which themselves come to nearly $20 per passenger, per trip.

And then there is Amtrak. The federally-owned passenger network receives over a billion dollars annually in taxpayer subsidies. Now, it is asking for up to $200 million – a significant portion of which the passenger rail network is hoping will come from New Mexico taxpayers – in order to improve tracks through New Mexico that are owned by the BNSF railroad. Outside of the Northeast, Amtrak doesn’t own the tracks it runs on; rather it demands use of tracks owned by private-sector freight railroads.

Rail advocates will undoubtedly tout the supposed benefits of having Amtrak service in our state, but the reality is that Amtrak is barely a drop in the bucket when it comes to our transportation network. How often, dear reader, do you pick visiting friends and family up from the train station?

Neither the Rio Grande Foundation, nor other free market transportation analysts who criticize publicly-owned and managed projects like the Rail Runner and Amtrak, hate trains.

Advocates often charge that roads are subsidized, so there is nothing wrong with subsidizing trains. The scale of subsidies is totally different. Roads are subsidized at .5 cents per passenger mile while transit receives 61 cents per passenger mile nationally. Roads may not pay for themselves completely, but they receive few subsidies compared to costly projects like the Rail Runner and Amtrak.

It is not that trains can’t make money. BNSF made over $20 billion in profits during 2012 with little in the way of government subsidies. Nonetheless, I would be outraged if BNSF or any other railroad operator came to the New Mexico Legislature asking for taxpayer dollars to pad their bottom line. There’s no reason not to hold Amtrak and the Rail Runner to a similar standard.

In tough economic times with slow revenue growth, we should not divert limited taxpayer dollars from schools, needed tax reforms, and other economic development priories to fund economically superfluous passenger rail systems. How much money is the Legislature going to throw at Amtrak and the Rail Runner before saying “enough?”

To the best extent possible, all modes of transportation, including roads, should compete on an even playing field free of taxpayer subsidies. Freight rail does this successfully throughout American and has so for years while passenger rail has not.

I don’t envy Governor Martinez or legislators and the tough decisions they face when it comes to pouring more money into these systems to keep them going or cutting them off and letting them fail completely.

If there is a silver lining to all this it is that, hopefully, the next time someone starts selling massively-expensive dreams of a transformed transportation network, voters and elected officials will remember that government-led “transformations” come with steep price tags.

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.

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Economy RailRunner Spaceport Tax and Budget Transportation

The Spaceport and RailRunner: When Do We Stop Digging?

rgf_media_carlsbad_current-argus

How long do you keep spending money on something before you quit and cut your losses? New Mexico’s Legislature will soon face some difficult decisions as to how much taxpayer money to spend on two high profile, Richardson-era projects, the Rail Runner and the Spaceport.

Let’s start with the RailRunner. The train already costs taxpayers nearly $50 million a year in payments on the initial infrastructure and operations. That doesn’t include two balloon payments of $230 million (made in addition to operations costs) which will come due next decade.

Now, due to a new federal regulation, New Mexico taxpayer could be on the hook for another $30 million to implement a federally-required safety system for the Rail Runner. It is worth pointing out that the federal regulation behind this requirement is a huge waste. Even Cass Sunstein who was President Obama’s administrator of the Office of Information and Regulatory Affairs has stated during testimony in the US House that the new “Positive Train Control” regulation produced benefits that are lower than its costs.”

The fact that this regulation is an absurd waste of money is of little consolation to New Mexico taxpayers who will nonetheless be forced to pay this $30 million in addition to the ongoing costs for infrastructure and operations.

A second project that just keeps getting pricier is New Mexico’s Spaceport. Taxpayers initially spent $210 million to construct the facility in hopes of bringing a new, private space industry to the state. Unfortunately, the launch schedule of the facility’s main tenant, Virgin Galactic, has repeatedly been delayed. These delays along with costly additions to the facility have led to a nearly abject lack of positive economic activity generated by the facility and have instead caused the Spaceport to suck up even greater amounts of taxpayer money above-and-beyond the original cost.

In 2012, taxpayers spent an unexpected $7 million to extend a runway at the Spaceport that was allegedly too short for spacecraft to launch. Now, as delays continue and Virgin Galactic continues to push back expected launch dates, the Spaceport will be requesting another $6.8 million to pave the road to the facility from the South. The 23-mile road is currently an unimproved dirt road maintained by Doña Ana County. The northern road, which connects to the Spaceport via Truth or Consequences, is paved.

Lastly, in terms of the Spaceport, taxpayers are on the hook for yet another $5 to $6 million required for management and operations for each year that Virgin Galactic delays commercial flights from the southern New Mexico spaceport.

Obviously, as New Mexico’s economy continues to struggle and tax revenue growth remains slow, the Legislature faces some difficult decisions on these two projects. Are there any limits as to how much taxpayers should be expected to pay to support these facilities before we decide to abandon them or take drastic steps to cut costs? If so, when is enough, enough?

What priorities are we giving up in order to attract a manned, private space industry that has yet to take flight and a train that can never come close to breaking even at a total cost of over $1 billion (before accounting for this new federal regulation)?

While it is easy to dismiss the additional money as just another cost of these publicly-beneficial projects, from a budgetary perspective, a dollar spent on spaceports and trains is a dollar diverted from schools, tax reform, and other economic development priories.

Regardless of how the Legislature decides to move forward regarding these two projects, I hope that policymakers in Santa Fe understand realize that the embracing the basics of government is tough enough.

The painful lessons here are that hitching one’s star to “the next big thing” or spending massive amounts of taxpayer money in an effort to change transportation patterns may prove a costly gamble.

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.