Category: Research

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Legislature Notable News Research Spaceport Top Issues

New Rio Grande Foundation Analysis: Myth vs. Fact on New Mexico Spaceport Budget

Virgin boss Richard Branson (R) and New Mexico Governor Bill Richardson (L) pose with the Virgin Galactic VSS Enterprise spacecraft after it's first public landing during the Spaceport America runway dedication ceremony near Las Cruces, New Mexico on October 22, 2010. The world's first private passenger spaceship will passed another milestone toward its commercial lift-off at it's remote spaceport in the New Mexico desert. Flamboyant British billionaire Richard Branson and New Mexico Governor Bill Richardson hosted a ceremony marking the completion of the main runway at Spaceport America, near the town of Las Cruces where the Virgin Galactic project is based. "The mothership has been finished and flying for a while now," Branson said. "We'll do many, many, many test flights over the next 12 months to maybe 18 months before we actually send people up into space. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)

(Albuquerque, NM) – Immediately prior to the 2020 New Mexico legislative session, the consulting firm Moss Adams released a study claiming that Spaceport America began producing net economic and fiscal benefits for New Mexico as early as 2013.

Danny Seymour, a policy analyst at the Rio Grande Foundation, (the Foundation is a long-time critic of the decision by then-Gov. Bill Richardson to spend hundreds of millions of taxpayer dollars in such a speculative venture) immediately went to work analyzing the study and its findings. But Seymour didn’t stop at merely deconstructing the Moss Adams report.

In his new brief, “Lost in (Sub-Orbital) Space: Financial Reality vs. and Fantasy at New Mexico’s Spaceport Authority” Seymour considers the overall financial impact of the facility as well as what it has spent and what it has brought into the State.

Seymour’s analysis, using publicly-available information in the Moss Adams report and other public documents, shows that the Spaceport America has now cost New Mexico taxpayers in excess of $275 million. This number contrasts with the project’s “original” cost of $225 million, but in the meantime there have been operational expenses as well as significant expansions and improvements made to the facility at taxpayer expense.

In his analysis Seymour contrasts the Moss Adams claims of “break-even” with a broad calculation of how much the facility has attracted to the State. Seymour finds that the facility has brought in just under $55 million to New Mexico that would have otherwise not been spent here. Even this number should not be used to calculate profit and loss as only direct lease payments could really be counted in a profit and loss statement for the Spaceport.

“Ultimately,” notes Seymour, “to be considered economically successful (let alone profitable), New Mexico’s Spaceport must become the home base for Virgin Galactic’s frequent manned commercial launches as the project was originally sold to the people of New Mexico.”

In conclusion noted Seymour, “Major government construction projects like the Spaceport often suffer from the “sunk cost” problem. It is easy to sell elected officials on the idea that the next dollar spent will make the project a success. In reality the Spaceport is a cautionary example of a State government spending taxpayer money on an extremely speculative project for which it had no expertise.”

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Economy Legislature Notable News Research Tax and Budget Taxes Top Issues

Reason Foundation and Rio Grande Foundation Release Analysis of Task Force Plans for PERA Solvency

(Albuquerque) The Rio Grande Foundation applauds Gov. Lujan-Grisham for taking on the tricky, but important issue of pension reform. In collaboration with the Pension Integrity Project at Reason Foundation, a national free market think tank, the groups have released an analysis of the preliminary recommendations of the Governor’s Public Employees Retirement Association (PERA) Pension Solvency Task Force.

The analysis which is available on the Rio Grande Foundation’s website reviews the task force’s proposals—intended to improve PERA’s solvency by eliminating over $6 billion in unfunded liabilities over the next 25 years—from an actuarial and financial perspective and finds them a positive step overall, with room in some areas to enhance solvency even further.

Rio Grande Foundation president Paul Gessing said of the Task Force, “We commend the Gov. for taking on this important issue. With massive budget surpluses available, now is an opportune time to put New Mexico’s PERA and ERB systems on sound financial footing. That said, we believe that the rising costs and financial risks New Mexico taxpayers have experienced over the last two decades are unsustainable, and the Task Force’s recommendations leave some systemic challenges—namely funding policy, actuarial methods and assumptions—unaddressed.”

Gessing went on, saying “Despite the conflict on both sides of the aisle, pension reform can and should be a bi-partisan issue. Successful reforms have been enacted in “blue” Rhode Island, politically-competitive Michigan, and “red” Utah. In fact, our Four Corners neighbors Arizona, Utah, and Colorado have all enacted major bi-partisan pension reforms in recent years. There is no reason for New Mexico not to tackle this important problem head-on while the budget is flush.”

The Reason/Rio Grande Foundation analysis walks through specific proposed solutions to New Mexico’s PERA issues including employee contributions, Cost of Living Adjustments (COLA), the 90 percent earnings cap, negative cash flow, and improving actuarial assumptions. Each of these areas needs to be addressed as part of a successful PERA reform.

Concluded Gessing, this report is part of what will be a team effort by his Foundation and the Pension Integrity Project to provide technical assistance to policymakers, educate stakeholders, and contribute to the ongoing pension reform discussion in New Mexico. We are eager to make sure policymakers of all ideologies and walks of life have an understanding of what can and should be done to fix PERA.

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Economy Education Legislature Notable News Research Top Issues

UNM/NMSU Sports: Reliant on Student Fees, in Need of Re-prioritization/Alignment with University Missions

After initially suggesting a 4 percent tuition increase was needed, The University of New Mexico’s regents recently adopted a 3.1 percent tuition increase for next school year. On the heels of that the Board of Regents just announced that the University would continue subsidizing the athletic department to the tune of $1.2 million annually, a decision that Rio Grande Foundation President Paul Gessing argues is “fiscally inexcusable.”

While tuition rises (despite a big infusion of cash to higher education in 2019), both UNM and NMSU are struggling with falling enrollment. Are major college sports an unaffordable luxury?

In a new policy brief, “NMSU and UNM Sports Entertainment Expenditures Continue to Burden Academic Programs and Students” the Foundation’s education fellows William Patrick Leonard and Tristan Goodwin and organization president Paul Gessing discuss financial issues in the schools’ athletic programs and how those programs unnecessarily burden students.

As the paper notes, there are few among the top tier teams that do not need millions in student fees and university support to balance the books.

While program boosters and hard-core fans hold out hope that more budget support or some marquee recruit will turn a program’s fortunes around, this only rarely happens in basketball and virtually never happens in football (due to the dynamics of the sports themselves.”

Neither NMSU nor UNM have positively responded to the Legislative Finance Committee’s 2010 report questioning football’s role in supporting their mission statements.

Said Rio Grande Foundation president Paul Gessing, “New Mexico’s higher education leadership needs to prioritize how it spends resources. This includes the role of major college sports, especially football at both Division 1 programs.”

UNM’s leadership including Interim Provost Richard Wood say that the University remains “strapped for cash” despite the infusion of funds in the 2019 session. “If it is truly lacking in money, prioritization is a necessity” argues Gessing. “It is time to get creative or start cutting sports.”

 

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Economy Education Local Government Notable News Research Tax and Budget Taxes Top Issues

Comparing APS spending with other regional districts

Whether it is the push to increase education spending at the state level or the plan to raise property taxes to fund more buildings and other capital outlay projects, the push for more spending is based on the misguided belief that the schools simply don’t have enough money.

As the Rio Grande Foundation found when we looked at overall budgets for the largest school districts in the region, the idea that New Mexico’s largest school district is starved for resources relative to higher-performing districts throughout the region is simply false.

Notably, since this data was compiled APS has seen its student population continue to decline and funding has crept higher. Based on the 2018-2019 budget which states the district’s student population is down to 81,755 and total spending is up to $1,350,000,000, per-pupil spending at APS is now $16,513 annually.

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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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Economy Notable News Research Tax and Budget Taxes Top Issues

Economic Freedom up slightly across U.S.; New Mexico moves up to 42nd in North American index

Albuquerque, NM—New Mexico is tied for 42nd among the 50 states in this year’s Economic Freedom of North America report, released today by Rio Grande Foundation conjunction with Canada’s Fraser Institute.

Last year, New Mexico was tied for 47th.

As Rio Grande Foundation president Paul Gessing noted, “New Mexico has seen modest improvement in economic freedom, but has a long way to go to catch up to its freer, more economically-prosperous neighbors before it becomes a destination for jobs and prosperity in the American Southwest.”

This year, Florida has surpassed New Hampshire as having the highest level of economic freedom among all U.S. states. It scored 7.87 out of 10 in this year’s report, which measures government spending, taxation and labor market restrictions using data from 2016, the most recent year of available comparable data.

“The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced and how much is produced. As government imposes restrictions on these choices, there’s less economic freedom and less opportunity for prosperity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

Rounding out the top five freest states are New Hampshire (2nd), Texas (3rd), Tennessee (4th) and South Dakota (5th). For the fourth year in a row, New York was ranked least free (50th), followed by Kentucky (49th), West Virginia (48th), California (47th) and Alaska (46th).

The report also includes an additional all-government ranking, which adds federal government policy to the index and includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces.

From 2004 to 2013, the average score for U.S. states in the all-government index fell from 8.24 to 7.66, but increased slightly to 7.9 out of 10 this year, driven largely by changes at the federal level.

In the most-free states, the average per capita income in 2016 was 7.3 per cent above the national average compared to roughly 10.5 per cent below the national average in the least-free states.

“The evidence is clear—lower levels of economic freedom lead to less prosperity, slower economic growth, less investment and fewer jobs and opportunities,” said Dean Stansel, economics professor at Southern Methodist University and co-author of the report.

The Economic Freedom of North America report, also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad, 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.

New Mexico’s most significant improvement occurred in the area of government spending.

About the Economic Freedom Index

Economic Freedom of North America measures the degree to which the policies and institutions of countries support economic freedom. This year’s publication ranks 92 provincial/state governments in Canada, the United States and Mexico. The report also updates data in earlier reports in instances where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of North America reports, visit www.fraserinstitute.org. And you can ‘Like’ the Economic Freedom Network on Facebook at www.facebook.com/EconomicFreedomNetwork.

CONTACTS:

The Rio Grande Foundation can be reached at:

info@riograndefoundation.org or 505-264-6090

The Rio Grande Foundation is a research institute dedicated to increasing liberty and prosperity for all of New Mexico’s citizens. We do this by informing New Mexicans of the importance of individual freedom, limited government, and economic opportunity.

 

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Economy Education Notable News Research Tax and Budget Top Issues

UNM, higher education in desperate need of reform

Our state’s system of taxpayer-funded higher education is in crisis. A few key facts about postsecondary institutions in the Land of Enchantment, and the University of New Mexico in particular, reveal the depth of the problem:

• New Mexico spends quite a lot on its government colleges and universities. According to the state Higher Education Executive Officers, the “national association of the chief executives of statewide governing, policy, and coordinating boards of postsecondary education,” we spend $9,348 per full-time equivalent enrollment. That sum is far in excess of the national figure of $7,642, despite the state’s low cost of living. On occasion, brave voices have acknowledged the system’s spendthrift ways. In 2016, former UNM President Chaouki Abdallah told the Albuquerque Journal: “Our higher ed spending is more than most other states; the trouble is we don’t spend it wisely and (we) spread it across so many entities.”

• Enrollment at several of the major institutions is dropping. It’s fallinal reported that UNM enrollment dipped “2.9 percent from the fall of 2016 to the fall of 2017 and has dropped a cumulative 9.3 percent since its 2012 peak.”

• New Mexico has a plethora of branch campuses – including five for UNM alone. A 2017 investigation by the Legislative Finance Committee found that, in all, “New Mexicans have approximately 77 physical points of access to higher education throughout the state.”

• UNM, using data from the College and University Professional Association for Human Resources, has documented the need to raise salaries in order to keep compensation competitive. The university’s president has lamented the phenomenon of junior faculty being “often picked off before we can even get them into the tenure process.”

• UNM’s sports programs operate at a deficit, and plans to cut women’s beach volleyball, men’s soccer, and men’s and women’s skiing have generated outrage and opposition from both candidates for governor.

The fact that both candidates for governor expressed opposition to the decision to cut sports at UNM is not surprising. That is the populist opinion. Talking about limits and priorities is never fun, but it’s even tougher with a $1.2 billion state surplus.

Regardless, the issue of athletics is merely a microcosm of UNM’s broader problems: As much as it may try, it simply can’t be everything to everybody. At the very least, branch campuses should be on the cutting block, but not one politician seems interested in taking on that tough reform, because having a branch campus is what passes for “economic development” in too many struggling rural communities across our state.

Cutting back on UNM “sprawl” would free up money to offer faculty more competitive pay. It would also enhance the university’s standing as an institution that attracts top-notch faculty. Again, former UNM president Abdallah had his finger on the pulse of the problem when he noted that while his institution had “spires of excellence, best in the world or top five,” like everything else around this state, the average is bad because you have to make sure everyone is taken care of.

Abdallah’s assessment applies to sports, as well. A bold move to eliminate the costly – both financially and in terms of scholarships – football program would have freed resources within the athletic department to focus on other high-performing sports, such as basketball, which has always had a passionate following. It is difficult to say what overall impact the elimination of the four sports will have or whether it will even “stick.” After all, the easiest solution in New Mexico is always to throw more money at the problem.

A recovering economy, based largely on the oil boom in the Permian Basin, cannot mask the reality that all is not well at the state’s flagship government university and that significant reforms are badly needed at UNM and throughout the higher-ed system. Unfortunately, unless apathy and the status quo are replaced by a realization that meaningful reform is needed before the next economic/fiscal crisis hits, mediocrity – in academics, athletics and return on taxpayers’ dollars – will prevail.

Dowd Muska is research director for the Rio Grande Foundation, 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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Audio Notable News Podcast Research Tipping Point Top Issues

New Mexico’s First Policy/Politics Podcast Think Tank Launches Online Program to Spread Free-Market Message

(Albuquerque, NM) — The Rio Grande Foundation, New Mexico’s free-market think tank, has launched the first podcast focusing exclusively on public-policy and political issues in the Land of Enchantment.

“Tipping Point New Mexico: The Podcast” will soon be available on all major platforms, and is currently accessible through the Foundation’s website.

The podcast will be released twice a week, with each show lasting between 20 and 30 minutes.

“Tipping Point New Mexico: The Podcast” will cover policy and political issues of particular interest to citizens of the Land of Enchantment. It will feature interviews with important thought and business leaders from New Mexico and around the nation.

Episodes will be released every Tuesday and Thursday, and they will be posted on the Foundation’s websites www.riograndefoundation.org and www.errorsofenchantment.com. “Tipping Point New Mexico: The Podcast” will soon be available on major social-media platforms, such as iTunes and Stitcher.

“To our knowledge there is currently no other regular podcast dealing with New Mexico public-policy issues or politics,” said Rio Grande Foundation President Paul Gessing. “We intend to fill the void while also providing timely, well-informed content from the free-market perspective.”

Listeners who have useful information — or an important story to tell New Mexicans — can reach the Foundation at info@riograndefoundation.org. In addition, radio stations, news outlets, and bloggers are welcome to use “Tipping Point New Mexico: The Podcast” content.

The first podcast posted covered New Mexico’s primary elections which were held earlier this month. The second explains what Rio Grande Foundation is and outlines the history of the organization.

“We’d like to thank Path Three Marketing’s Wally Drangmeister for his assistance in getting ‘Tipping Point New Mexico: The Podcast’ up and running,” Gessing said. “His knowledge, experience, and professionalism have been invaluable.”

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Education Notable News Research Tax and Budget Top Issues

How Open Admission” Policies at New Mexico Comprehensive Universities Fail Students & Taxpayers

(Albuquerque, NM) – At some “Comprehensive” universities in New Mexico, particularly: ENMU, Highlands, Northern, and WNMU, all you need to get in is a high school diploma.

In a new Rio Grande Foundation policy brief by William P. Leonard, PhD, “How Open Admission” Policies at New Mexico Comprehensive Universities Fail Students & Taxpayers,” Leonard makes the case against the types of “open enrollment” policies that bring large numbers of ill-equipped students into the higher ed system.

Those “ill-equipped” students usually must take remedial classes even before embarking on their higher academic studies. According to the Legislative Finance Committee (LFC), on average only 17 percent of students who take only one remedial course in college graduate within six years. Matriculants who are not required to take remediation present a 77 percent graduation rate.

As Leonard notes in his brief, no one benefits when students fail to complete their studies in higher education. Students themselves see limited earnings gains despite years and thousands of dollars invested. And, the schools and taxpayers divert resources to serve a group of students that is simply not prepared for additional educational attainment. A 2013 report pegged the total cost of remediation at $22 million.

According to Leonard, the best and most obvious reform is to simply demand that New Mexico’s “Comprehensive” universities impose somewhat more stringent standards that reduce the numbers of students entering the institutions in need of remedial classes.

Additionally, Leonard contemplates the role of New Mexico’s failing K-12 system including the use of “social promotion” that gives many graduates of New Mexico’s K-12 schools the misguided notion that they have actually mastered high school academics.

 

 

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Economy Health Care Research Tax and Budget Taxes Top Issues

New RGF brief: New Mexico has ample opportunities to reduce health care costs, improve quality

Stethoscope on money background of dollars

(Albuquerque, NM) – The Trump Administration failed in its efforts to completely repeal the health care law known as “ObamaCare.” Aside from the individual mandate which was repealed in separate tax reform legislation, the health care law remains relatively intact.

Nonetheless, state-level policymakers still have numerous reform measures that can be adopted to make health care work better. Often, those “levers” are available to state-level policymakers although some policy changes can be expedited and assisted with a more flexible administration in Washington.

A new policy brief by Roger Stark, By Roger Stark, MD, FACS, Adjunct Health Care Policy Analyst at the Rio Grande Foundation outlines in detail some of the ways in which New Mexico’s leaders could positively impact both the State budget and health care outcomes alike. The paper is available here.

While the federal health care law improved access to insurance, particularly in rural communities it can be a challenge to find practitioners, especially specialists. New Mexico has the highest percentage of births to moms on Medicaid, and the Medicaid systems is a large and growing burden on the State of New Mexico’s finances.

A few of Dr. Stark’s specific reform ideas include: Enact tort reform to reduce wasteful medical expenses, Expand and promote the use of association health plans, promoting telemedicine, and reforming scope of practice and professional licensing laws.

Stark will present these and other ideas at a presentation sponsored by the Rio Grande Foundation at the Marriott Pyramid on April 18, 2018 at a luncheon that will take place from 12 to 1pm. Seats are still available and can be reserved by clicking here or calling the Foundation at: 505-264-6090.