Rio Grande Foundation
The Rio Grande Foundation has long opposed New Mexico’s film subsidies, so it was highly gratifying to have our perspective backed up by the Legislative Finance Committee’s report which found the subsidies to be ineffective at fostering economic growth.
KOAT Channel 7 did a story on the issue and gave RGF the best opportunity to explain some of the problems with New Mexico’s generous film subsidies we’ve ever had. Check it out here or below:
The following article appeared in several news outlets including the Las Cruces Sun News on September 28, 2023.
The idea of a “universal basic income” (UBI) has been around a long time. Most supporters are broadly on the left of the political spectrum, but many conservative thought leaders including Charles Murray as well as Reagan officials like James Baker and George Schultz, have also been willing to consider the idea.
The idea behind UBI is simple: replace welfare payments to the poor with cash payments to empower the poor to manage their government benefits. Welfare programs have a bunch of hoops and phase-outs that can often disincentivize going from welfare to work. One problem with UBI (as other conservatives often point out) is that politicians are unwilling to eliminate the welfare programs and pay them out in a cash equivalent.
Sadly, this has proven out. In recent years there have been experiments, supposedly with UBI concepts, but they never actually result in replacement of welfare with cash. Instead, these approaches simply result in more cash. A 2021 Santa Fe program along those lines suffered the same flaw.
Now, Las Cruces has gotten into the mix. A privately funded guaranteed basic income project allocated 330 families $500 per month and ended in January. Results from the experiment haven’t been analyzed yet. Now, another experiment is going to happen. Thanks to $1.7 million dollars of federal American Rescue Plan Act funding, multiple nonprofits in the Las Cruces community will provide $500 monthly payments over 18 months to 150 eligible Las Cruces families.”
Will the results of these experiments mean anything? Sure, most people, especially those with low incomes, will gladly take an extra $500 annually, but unless the UBI is a replacement as opposed to a supplement for existing welfare programs it will be rather meaningless in terms of broader welfare reform implications.
Mayor Ken Miyagishima, a Democrat, appears to be the only voice of reason in Las Cruces. He voted against the program and said, “I hope it doesn’t just turn into, hey, I got this money, this is great. And okay, it ran out, so what am I going to do now?”
The Mayor elaborated, saying, “We don’t have the money…people need to have an understanding of what it takes to run a government.” “It (money) just doesn’t come out of thin air. The reason why we are seeing a lot of inflation is because the country has printed a lot of money and there’s nothing to back it up.”
Miyagishima is right. And, while New Mexico is currently in the midst of an unprecedented oil boom that has brought in staggering amounts of money, politicians in Washington have driven the nation into debt and the situation shows no sign of improving. While the inflation rate has gone down, that inflation is piled on top of last year’s inflation, so prices continue to rise at a staggering pace that is harming New Mexico families.
Rather than piling on more debt to find ways to add more people to already overburdened welfare rolls the Biden Administration and both parties in Congress should cut spending and work to eliminate the scourge of inflation from our economy. That will do more to get people out of poverty than any half-baked “basic income” scheme, especially one funded by taxpayers.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
RGF president Paul Gessing recently sat down with KOAT TV Channel 7 to discuss Bernalillo County Assessor Damian Lara’s interesting approach to property tax assessments. The issue was discussed in more detail in a blog post here.
In addition to Gessing and Lara, the KOAT piece includes Doug Peterson, one of the largest landlords in New Mexico. While everyone wants to see properties maintained and filled with thriving businesses, those seem to be policy and enforcement considerations for the Mayor, City Council, and APD.
The following appeared in the Albuquerque Journal on July 30, 2023.
A recent editorial cartoon highlighted the vastly different approaches towards governance of New Mexico and Texas. The cartoon is of the state border circa 2030 as New Mexicans head to Texas for gas-powered vehicles (due to the recent regulations proposed by Gov. Lujan Grisham) while Texans visit NM for abortions and marijuana.
These are hardly the only differences between the two nowadays as Texas has no income tax or job-killing gross receipts tax, it is a right to work state, and state spending per-person is less than half of what it is in New Mexico. Not coincidentally, Texas is also one of the fastest growing states in the nation while New Mexico’s population is stagnant with young people leaving and being replaced by older people and retirees.
People have been talking about Texas’ economic success for decades, but a recent family vacation gave me the opportunity to see it firsthand. I have flown to several major Texas cities and have driven across the Panhandle more times than I care to recall, but this trip involved flying to Dallas and driving from all the way to Corpus Christi and the Gulf Coast. That’s a trip of over 400 miles including stops in major cities including Austin and San Antonio (in addition to Dallas).
We went deep in the heart of Texas and compared what we saw with our home state of New Mexico. Here’s what we saw.
Texas is booming. It provides a business-friendly environment and a government that does the basics well and at less than half the cost per resident.
While New Mexicans have a long-standing historical resentment of the Lone Star State, but the entrepreneurial, pro capitalist culture and polices clearly have a lot to be said for them. New Mexico can’t and shouldn’t be Texas, but we can also learn some valuable lessons from it.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
RGF president Paul Gessing sat down with KOAT TV to discuss the Mayor’s plans for a new stadium for the NM United Soccer team. The Rio Grande Foundation helped lead the opposition to a ballot measure that would have spent substantial tax dollars on a new stadium.
While not discussed in detail in the article, our primary concern is that City Council has a chance to fully vet and vote on the plan which would use city-owned land at Balloon Fiesta Park. The plan would (unfortunately) spend $13.5 million in State funding but we need to know what, if any, liabilities could be faced by Albuquerque taxpayers. It is also important to understand what the real impacts of the stadium will be on Balloon Fiesta Park’s parking situation and what alternatives could be undertaken with this land.
We discussed the details of the Mayor’s proposed mega-expensive $80 million bike trail here, but had a chance to offer a few thoughts in this story for KOAT TV Channel 7.
In summary, this is yet another “big ticket” taxpayer-financed project foisted upon us when what the City desperately needs is improved public safety and an improved economic climate (not to mention a better education system). A neon tumbleweed structure may be nice, but it is certainly not a core government function regardless of your broader thoughts on bike trails and Albuquerque’s extensive trail network.
Check out the story below:
The following appeared in the Las Cruces Sun News and numerous other newspapers on June 18, 2022.
According to New Mexico’s Tax and Revenue Department rebate checks (or transfers to bank accounts) will be going out at any time during the middle of June. At the Rio Grande Foundation we welcome the $500 or $1,000 (depending on single/married filing status). This is especially true at a time when inflation is rising faster than wages.
But New Mexico is in the midst of an unprecedented boom in its oil and gas industry and, while those checks are nice, they are a pittance relative to the windfall being experienced in State government. Worse, unless the Legislature and Gov. take concrete action and soon to diversify the economy, New Mexico will waste this unique opportunity.
First the numbers: according to the Legislature’s analysts, the one-time “cost” of the rebates is $667 million. You may recall that the Legislature began the 2023 session with a surplus of $3.6 billion and spent $1.2 billion of that.
Though new spending was “just” double the amount of the rebates, the reality is that almost all of the money not spent this year will be put into reserves to be spent in the future. That means that more than 80 percent of this year’s budget surplus will ultimately be spent (unless the Legislature enacts some real tax cuts in the 2024 session).
There are a few major points to be made:
Like all New Mexicans we at the Rio Grande Foundation welcome these rebates. What we are looking for out of Lujan Grisham and the Legislature is some kind of coherent economic strategy (besides simply spending more money). It is time to translate our oil and gas wealth into prosperity for ALL New Mexicans. That requires average New Mexicans to engage with and hold this Legislature and Gov. accountable for their policy decisions.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.
Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.
A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011
For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.
One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.
The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.
New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).
Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.
Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they tend to make poor decisions. And all that brings New Mexico’s politicians to mind.
Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:
There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.
In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.
She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.
In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government. Spending grew by another $1.2 billion in the latest budget thanks to a 14 percent year-over-year increase.
As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
The following opinion piece appeared in Las Cruces Sun News and other papers recently.
In her message in which she explained her veto of large portions of the Legislature-passed tax bill, Gov. Lujan Grisham wrote, “Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole.”
She wrote this while the State of New Mexico sits on a $3.6 billion budget surplus thanks to oil and gas revenues (a boom that shows no signs of slowing down). She also signed a 14 percent budget increase which grew the size of government by $1.2 billion and included everything from increased film subsidies to $10 million for an abortion clinic primarily to serve Texans. Last year’s budget increase was over 13 percent as well.
The “tax reform” effort in Santa Fe got off to a bad start when the House didn’t seriously attempt to reform the unfair and job-killing “pyramiding” of the gross receipts tax. That “original sin” of New Mexico tax policy (reform of which was supported by the Gov.) should have been the Legislature’s top priority. It clearly was not, and it was never included in any version of the bill.
Worse, instead of just cutting taxes, both houses of the Legislature sadly included tax increases in versions of the bill including the final version. Raising taxes is inexcusable with a $3.6 billion budget surplus. Worse still, the tax hikes included anti-economic-growth policies like imposing two new top rates on personal income and increasing both capital gains and corporate income taxes.
Each of these tax hikes would have done great harm to our economy. The Gov. was right to veto them. Gov. Lujan Grisham’s tax policy agenda is hardly above reproach, however. The Legislature initially planned to reduce the GRT by 0.5 percentage points. This should not be mistaken for reform, but it is much better than nothing. Reducing the GRT also fits nicely with “progressive” economic policy goals as the GRT is a classic “regressive” tax meaning that poor pay a higher percentage of their incomes on it.
But, in the waning days of the session as the Gov. expressed concerns about the size of the tax package legislators adjusted the package by phasing-in the gross receipts tax reductions “to make room for” the film subsidies which had been added during the legislative process.
It would be hard to come up with worse tax policy than delaying broad-based tax relief to pile even more generous subsidies on top of those already given to a favored special interest (Hollywood). Adding insult to injury these GRT rate reductions were vetoed by the Gov. while film subsidies were left intact.
The best that can be said for tax package is that New Mexicans will get one-time rebates and medical doctors will no longer be taxed on deductibles and copays.
Watching the many twists and turns of the tax bill in the 2023 session highlighted that New Mexico’s political leadership simply does not understand basic economics. Given their ignorance, it is no wonder New Mexico performs so poorly economically. And it’s not just the Gov.’s vetoes, but the Legislature’s approach which was misguided from the start.
Economically, the 2023 session was a big disappointment. But, unless something dramatic happens, the State will likely again be awash in oil and gas revenues when the 30-day session rolls around next January. Can the Legislature and Gov. come up with a real tax reduction plan that will diversify our economy and move New Mexico out of last place?
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
As usual, Albuquerque Journal cartoonist John Trever summarizes the situation perfectly with his cartoon from Sunday, April 19, 2023.
Here are a few notes about the final tax bill as line-item vetoed by Gov. Lujan Grisham. New Mexico had a $3.6 billion surplus going into the session. The Legislature originally allocated $1.1 billion for “tax cuts.” $1.2 billion of that $3.6 billion was for new spending. That means over $1 billion would have been set aside for the future. The point is that (contrary to MLG’s veto statements about having anxiety over future revenues) plenty of money was available.
To her credit, MLG vetoed all the tax hikes in the bill (corporate, capital gains, alcohol, and tobacco), not just the tax cuts.
Here are the so-called “tax cut” provisions approved by the Gov. in the final bill (we used the 2027 fiscal impact for the tax/spending bills):
So, here are the tallies for what happened to New Mexico’s $3.6 billion surplus:
1) $1.2 billion or 33% was spent (adding in film subsidies and refundable child tax credit as spending;
2) $667 million or 18.5 percent of the surplus was returned in the form of one-time “rebates.”
3) $50 million or 1.4 percent comes in the form of “recurring” tax cuts.