The good news is that Fox Business Channel (unlike many news outlets) actually gave a platform to critics of New Mexico’s film subsidy program to discuss the program’s financial shortcomings.
The bad news is that like nearly all media outlets they badly misunderstand the financial implications of New Mexico’s incredibly-generous film subsidy program. Check out the story below which includes a brief clip of RGF president Paul Gessing discussing Hollywood film subsidies. Along with the Youtube story is a page from a 2019 Legislative Finance Committee report on the cost of Hollywood subsidies which provides details on the direct subsidies (not additional LEDA funds which are yet another subsidy).
The U.S. Census Bureau recently released population data showing how the population of America and its 50 states had shifted between 2010 and 2020. As has been the case for decades, Midwestern “Rust Belt” states overall lost representation, while fast-growing states in the Southwest gained seats (Texas added two and Colorado one). For the first time ever, California actually lost a congressional seat.
Yet overlooked by the national media in all of this was what can only be described as the impending creation of a population “donut hole” in the otherwise fast-growing Southwest — that is, my home state of New Mexico.
While Utah and Arizona didn’t add congressional seats as New Mexico’s other neighbors Colorado and Texas did, both states saw double-digit population growth for the decade. New Mexico’s population, on the other hand, grew at just 2.8 percent over that period. That puts the state on par with Vermont and just ahead of Maine, at 2.6 percent.
When neighboring Utah grows at 18.4 percent and Texas grows by 15.9 percent — and your own state’s population barely increases — there must be a problem. Hint: It’s not the weather. A variety of factors have been driving Americans to move from the Northeast to the Southwest, including the search of better weather. But New Mexico’s is unparalleled. It is sunnier than Florida and doesn’t have the oppressive 120-degree summer heat of Phoenix. And it really is a “dry” heat without the muggy humidity of Texas.
As if New Mexico’s minuscule 2.8 percent population growth was not pathetic enough, the details are even more troubling. Over the decade, New Mexico, a state with just over 2 million people, gained 103,506 people over the age of 65. Clearly, the state’s weather, inexpensive housing, and unique cultural offerings are attractive to a certain segment of retirees.
But over the same period, New Mexico lost 71,142 people 64 and younger, including 51,382 residents aged 24 and younger. This kind of population stagnation simply isn’t supposed to happen in the booming American Southwest. It is New Mexico’s slowest growth since statehood in 1912; and, to make matters worse yet, analysts believe that New Mexico could lose overall population when this data is collected again ten years from now.
Could New Mexico, with an ethnically diverse, rapidly aging, slow growing population, in some way serve as an early proxy for the nation as a whole? The United States population still grew by 7.4 percent over the last decade. How, then, did a state located right in the middle of the fastest-growing region of the country perform so poorly? More important, what can be done about it?
First, to begin to appreciate the extent of New Mexico’s problems, we must understand its lack of economic freedom. According to the Fraser Institute’s annual “Economic Freedom of North America” report, New Mexico is in the bottom quartile of U.S. states when it comes to the ability of its residents to keep their hard-earned money and face reasonable economic regulations.
All of New Mexico’s fast-growing neighbors are ranked higher. To be sure, this is notable but unsurprising: High levels of economic freedom are strongly associated with increased population growth.
New Mexico’s path to becoming the “sick man of the American Southwest” is complicated. Unlike California, another state with great weather and physical beauty, but terrible public policies, New Mexico has never been the “it” place to be. For its many flaws, California remains the country’s largest state in population, with dozens of the world’s most-recognizable companies headquartered there.
New Mexico has chosen a different path. Not only do we have no Fortune 500 companies headquartered here, but the state possesses only a few publicly traded corporate headquarters. Instead, since the end of World War II, New Mexico’s economy has been based on a combination of massive federal spending and a robust oil and gas industry.
Whereas California has numerous tech companies and their well-off employees to pay the state’s ever-increasing tax burdens, New Mexico remains among the poorest states in the nation. Of course, it shouldn’t be, but like California, bad public policy holds the land of enchantment back.
By any measuring stick, New Mexico is heavily dependent on federal spending. (According to WalletHub, it is more so than any other state.) Outside of Washington’s largesse, oil is New Mexico’s other major industry. Indeed, New Mexico is the third-biggest-oil-producing state in the nation. Depending on the year, it accounts for between 30 and 40 percent of the state’s budget.
One might expect that having two national nuclear labs — along with their highly educated and well-paid employees — would be a ticket to economic prosperity. Add, too, the billions of dollars in annual tax payments and the jobs and economic activity they bring, and it would seem to most outsiders that New Mexico should be the richest state in the region.
But it turns out that having sound, free-market public policies trumps massive federal “investment” and natural-resource wealth. New Mexico’s lack of economic freedom is a direct result of the state’s political leadership not wanting to do the hard work of adopting the free-market policies that would make New Mexico competitive with its neighbors.
It doesn’t have to be this way. With its excellent weather and numerous outdoor and cultural activities, New Mexico remains well-positioned for growth in the years ahead. The state’s fate ultimately lies with the voters who have to decide to elect politicians to the legislature and governor’s mansion who are prepared to enact the free-market policies on which growth depends.
The same is true for New Mexico as it is for California and various other states. Until a concerted effort is made to make the state more attractive as a relocation destination for businesses, it will continue on the same unhappy trajectory. Shedding ourselves of our unseemly title will require dramatic leadership changes. The only outstanding question is whether we’re willing to make it.
PAUL GESSING is president of New Mexico’s Rio Grande Foundation
Nancy Pelosi’s majority in the House of Representatives continues to shrink. The recent swearing-in of Republican Julia Letlow of Louisiana has taken the House Democrats’ majority down to 218–212. This means that Pelosi has a mere two-vote governing majority with which to push the Biden administration’s big-government agenda.
The GOP will soon have another chance to reduce Pelosi’s margin for error when voters in New Mexico’s first congressional district (which includes Albuquerque and its environs) go to the polls to elect a replacement for Biden’s newly minted secretary of the Interior, Deb Haaland, a Democrat. Early voting begins today, while Election Day itself is June 1.
The district is classified by many in the national media as a “blue” district that should safely remain in Democratic hands, and as recently as November 2020, Haaland defeated Republican challenger Michelle Garcia Holmes by an overwhelming 58–42 percent margin. The seat was previously held by New Mexico’s current Democratic governor Michelle Lujan Grisham, and before that, now–senator Martin Heinrich, also a Democrat.
But Republicans have faced challenges in candidate recruitment in recent years in this congressional district. The last time they had a truly top-notch challenger was in 2010, when Jon Barela lost just 52–48 to Martin Heinrich, and in 2009 Heather Wilson, a Republican, held the seat, having done so for a decade. With this race being the sole topic of a special election and so much at stake in Washington, this could be a much more interesting contest than outsiders expect.
The candidates to replace Haaland could not be more different. While there is a serious independent contender and the Libertarians technically have major-party status, the Republican and Democrat contenders are state legislators with long histories of voting on important policy issues. Republican senator Mark Moores has been in the New Mexico Senate since 2013. In addition to his prior experience as a staffer for various Republican officeholders Moores played offensive line for the University of New Mexico Lobos.
Melanie Stansbury, on the other hand, was unknown in the state until she ran for the New Mexico house in 2018. Her prior political experience was in the Obama administration’s Office of Management and Budget.
The legislative track records of these two candidates are also drastically different. For starters, Stansbury strongly believes that New Mexicans should have their tax burdens increased rather dramatically.
In 2019, she voted for HB 6, which subsequently became law. Among other provisions, the bill increased taxes on auto sales, imposed taxes on Internet purchases, and increased New Mexico’s personal income tax. Ironically, this tax hike took New Mexico’s top personal income-tax rate from 4.9 percent (set by former Democratic governor Bill Richardson and the Democrat-controlled legislature) and brought it up to 5.9 percent. Moores voted against the tax hike, but it was subsequently signed into law by Governor Lujan Grisham, despite the state having a surplus in excess of $1 billion at the time.
In their most recent legislative session, the New Mexico legislature was back to raising taxes, and Stansbury was more than happy to go along. Despite the COVID-19 pandemic and a state unemployment rate that remains among the worst in the nation, the combined forces of New Mexico’s resurgent oil and gas industry and the massive economic stimuli out of Washington again put the New Mexico budget comfortably in surplus territory.
Nonetheless, Stansbury and other Democrats in New Mexico’s legislature voted for and passed numerous tax hikes. HB 122, which failed after House approval, was subsequently folded into SB 317 and ultimately signed into law. Stansbury voted for the bills both times. The bills increase a tax imposed by the state on health-insurance premiums from 1 percent to 3.75 percent — a tax increase of 275 percent. Moores voted against the tax hike.
As if that were not enough to illustrate the stark difference between these candidates, Stansbury joined her Democratic colleagues in the New Mexico House to push even more egregious tax legislation in the form of HB 291. This bill which passed the House with Stansbury’s support would have again increased New Mexico’s personal income tax, this time to 6.5 percent, but (more problematically) would have revised the state’s personal income-tax structure to make the higher tax rates kick in at much lower income levels than under current law.
On top of this, the proposal Stansbury endorsed would have allowed property-tax assessments to increase by up to 10 percent annually if the property was not occupied by the owner. The current cap in New Mexico limits annual increases to the already-substantial rate of 3 percent per year. The measure was intended to target Texans with second homes in New Mexico, but it would have applied to apartment and condo dwellers as well.
Fortunately for New Mexicans, cooler heads prevailed in the (also Democrat-controlled) Senate Finance Committee, which eliminated the tax hikes from HB 291 before the bill passed into law.
These are just the tax hikes endorsed by Stansbury in her three short years in the New Mexico legislature. During her time in office, she has voted to ban local governments from enacting “Right to Work” laws on the local level, and she voted for New Mexico to abandon the Electoral College, saying instead that it should dedicate its five electoral votes to whatever candidate won the popular vote. The latter would have dramatically diminished what influence small-population New Mexico has in presidential races for no benefit aside from her ideology.
Stansbury is a true big-government radical. Her advocacy of big government in the New Mexico legislature places her to the left of Nancy Pelosi. At a time when every race matters in a closely divided U.S. House, conservatives cannot ignore this special election in a “blue” but winnable district.
New Mexico cities big and small are required to provide various public records. Unfortunately the process of requesting many of those records is onerous. That’s where the Rio Grande Foundation comes in.
We have requested, received, and published public payroll records for most of New Mexico’s major cities. You can find that information here.
If there were an overall theme for New Mexico’s current political situation it would be the ongoing attempts by Democrats to placate their environmentalist base which opposes traditional energy sources while at the same time keeping energy dollars flowing into the State’s coffers.
The Biden Administration’s moratorium on oil and gas permitting is the most notable example of this conflict. Gov. Lujan Grisham has publicly spoken out about it, but Attorney General Balderas has refused to join a lawsuit challenging the policy that was recently filed by a dozen states. None of those states have as much to lose as does New Mexico, but our elected leaders are unlikely to challenge a President of their own party.
The internal conflict was on full display in the recently-completed legislative session as well. Thankfully, the most radical bill on energy which would have banned “fracking,” (an oil and gas drilling process without which New Mexico’s oil and gas industry would be immediately decimated) failed without gaining traction.
Making it much further in the process only to fail unexpectedly was Sen. Mimi Stewart’s “clean fuel standard” SB 11. In 2019 Gov. Lujan Grisham made national headlines stating that New Mexico was going to increase vehicle mileage in New Mexico to 52 MPG by model year 2022.
SB 11 would have instead forced motorists to use “alternative” fuels with the goal of reducing carbon emissions while passing off the hard work of actually developing the technology onto the private sector. Presumably blame for higher fuel costs would have been shifted as well. The bill faltered after passing the Senate.
Anti-energy bills that did make their way into law included SB 8 which allows local governments to enact more restrictive air quality regulations than are imposed by the federal government. It is unlikely that conservative counties where much of the Industry is located (and people are far more supportive of the Industry than liberal Albuquerque or Santa Fe) will enact such regulations, but this is about politics, not policy.
Speaking of politics, SB 112 which also made its way into law creates a “sustainable economy task force.” The task force’s stated goal is “diversifying New Mexico’s economy while reducing reliance on traditional energy sources.” Of course, New Mexico Democrats have controlled the Legislature for decades and with total Democrat control under Lujan Grisham, they have had ample time to enact the public policies necessary to “diversify” New Mexico’s economy.
Unfortunately, Santa Fe has repeatedly failed to reform the gross receipts tax, eliminate Social Security taxes, reduce onerous regulations, and expand educational choice (to improve workforce preparedness). In recent legislative sessions we’ve instead seen tax hikes passed at times of big budget surpluses. During both the 2019 (HB 6) and 2021 (SB 317) sessions tax hikes were adopted. Such cash grabs do nothing to diversify New Mexico’s economy. At best they diversify government revenues. In addition to tax hikes, policies like minimum wage hikes, paid sick leave mandates, and ongoing COVID restrictions imposed by the Executive only hinder economic growth and diversification.
Finally, this session, while the Legislature continued its piecemeal attacks on energy, after a decade of attempts they passed an amendment to increase distributions from the Land Grand Permanent Fund (the fund is generated by oil and gas). HJR 1 not only increased distributions by 1% but added an additional .25% to that amount for a total increase of 1.25%.
Continued existence of the fund happens only if the oil and gas industry thrives, so Democrats’ plan to take more money out while less money is put in seem problematic at best.
Rather than killing off energy first, New Mexico’s elected leaders should focus on diversifying the economy. When we are no longer among the very poorest states in the nation the Legislature can address ways to make the New Mexico less dependent on oil and gas.
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 appeared in the Las Cruces Sun News on Sunday, March 28, 2021. UPDATE: Originally the article stated there was a production moratorium on federal lands. There is “only” a moratorium on new permits.
New Mexico is in one of the most unusual economic times in its history. Profound forces have impacted our State over the last year in unforeseen ways.
The Gov. and COVID shut down much of our State for much of the past year. COVID is declining, but New Mexico remains among the most locked-down states in the nation;
Oil and gas prices plummeted last April due to the pandemic and an international price war, but have come roaring back and produced $300 million in “new” money and a budget surplus;
Democrats in Washington recently passed a $1.9 trillion dollar “stimulus” that will dump an astounding $9 billion on New Mexico State and local governments. Meanwhile the Administration’s moratorium on oil and gas permits on federal lands will cost our State more than $700 million over the next few years according to Gov. Lujan Grisham;
While New Mexico governments are awash in money, businesses are struggling to recover. The State’s unemployment rate is 8.7 percent, 4th-worst in the nation.
To say we are living through unpredictable times would be an understatement. Oil and gas have always been volatile but are now more unpredictable than ever. This reflects broader economic uncertainty, but with the Biden Administration targeting the Industry, the Legislature must diversify our economy (this does not mean simply new sources of government revenue).
The unprecedented stream of federal spending flowing into our state is currently augmented by a flow of people. Housing markets are tight in most of our cities as Americans from big, expensive, states like California embrace remote work or simply move to states like New Mexico where they can spread out and buy a house for a lot less money.
Current trends are favorable, but long-term economic prosperity requires enacting policies that make the State more attractive as a business destination. The 2021 Legislature had a few successes but ultimately failed to enact policies that will bring long-term prosperity to New Mexico.
Despite a big budget surplus, the Legislature raised taxes on health insurance (SB 317). They imposed a new sick leave mandate on businesses, including small ones (HB 20). And, passage of HB 4, the misnamed “Civil Rights Act” will impose massive new legal costs on New Mexico governments without actually improving policing or protecting civil rights.
There were bright spots. HB 255 reformed New Mexico’s liquor licensing to make it easier for bars and restaurants long-term. HB 177 passed which allows New Mexicans to start micro-businesses by making non-perishable food items in their homes for sale.
But the gross receipts tax and its taxation of busines inputs and services remains a stumbling block for businesses. New Mexico also remains among a relatively small group of states that tax Social Security. No significant tax cuts or reforms were adopted. Also, no widespread reform of burdensome regulations (like the State’s “prevailing wage” law that artificially increases costs on public works) projects was enacted.
Some will argue that (after a decade of trying) tapping the Permanent fund to boost various education programs will help improve our workforce, but the track record of governments (including New Mexico’s) spending more money to boost education outcomes is spotty at best. Empowering parents and families with the resources needed to choose the educational option that is right for them (especially after a year of Zoom education), is more likely to succeed and at a fraction of the cost, but legislation to that effect was quickly defeated this session.
Microchip manufacturer Intel just announced that it is investing $20 billion in neighboring Arizona to build two new facilities. Such “economic diversification” is exactly what we need and what the Gov. and Legislature claim to want. Until the Legislature gets serious about reforming our economy we’ll continue riding the wave of luck, boom and bust in the oil patch, and Washington debt.
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 article written by the Rio Grande Foundation’s Patrick Brenner appeared in the Santa Fe New Mexican on March 10, 2021. It also appeared in several other New Mexico based outlets.
Contractor-operated prisons, or so-called private prisons, have been vilified among progressives, even though their success in preparing inmates for productive engagement after their incarceration should be lauded by all social and political ideologies as part of the solution to social justice reform.
House Bill 40, which would eliminate all privately managed correctional facilities in New Mexico, has been making its way through the Legislature this session.
Last month, President Joe Biden signed an executive order to end new contracts between the Department of Justice and contractor-run corrections facilities, which almost exclusively house foreign citizens convicted of federal crimes. Contractor-run correctional facilities perform a valuable service. They help control overcrowding in publicly run prisons while providing more and better rehabilitation opportunities. Typically, inmates are safer, as rates of assault were lower at contractor-run facilities than rates in publicly managed prisons.
Opened in 1998, the Lea County Correctional Facility in Hobbs is a contractor-managed facility operated by GEO Group on a former World War II training base. As with all correctional facilities in the United States, it is managed in compliance with standards set by the American Correctional Association. The facility was most recently reaccredited in 2015 with a perfect score.
The facility provides inmates with training, work programming, recreation and educational opportunities. GEO’s in-custody and post-release “continuum of care” programming, developed by experts in criminal justice, substance abuse, psychology and other areas, keeps residents engaged for positive change and is critical for them to be successful once they serve their sentence and to avoid reoffending.
A study from the Rand Corporation found inmates who participated in correctional education programs were 43 percent less likely to recidivate than inmates who did not. And, often, state budget cuts hit prison programming first, while private contractors have flexibility and can invest their own resources to continue to do what is best for those in their care.
While visiting another GEO Group-managed facility in New Mexico, I met residents and staff who spoke highly of their experiences with the programming offered. Many residents have struggled with substance abuse challenges and require acute counseling and rehabilitation programming to help overcome their addiction. According to the Sage Neuroscience Center, all of the top 10 causes of death in New Mexico can be at least partially attributed to drug and alcohol abuse.
Program residents must complete the Residential Drug Abuse Program as part of their sentence. With new executive orders underway and the threat of HB 40, these programs could be shut down, potentially forcing these individuals into a jailhouse general population where they would not be able to get the services they need to survive and thrive after they serve their sentence. Revoking important substance abuse programs would destine many of these people to the damning cycle of ongoing drug and alcohol abuse, harming not only themselves but also their families and local communities.
In short, all contractor-operated facilities follow the same protocols policies and procedures as publicly run facilities under the New Mexico Corrections Department. Furthermore, the contractors have strict oversight of their operations that include on-site monitors, something the government facilities and the state lack.
Most importantly, as our nation shifts its corrections paradigm to highlight judicial reforms and inmate reentry, we should leverage all of the successful tools at our disposal to provide inmates with the care, attention and training they need inside facility walls — whether contractor run or publicly run — in order to be well-functioning members of society when they rejoin the public.
Continuing to wage war on contractor-run prisons doesn’t solve any problems or help inmates. If a program works, it shouldn’t matter who is managing it. By working together, we can rethink our prison system for the benefit of everyone.
On Wednesday Feb. 24, the Paul Gessing of the Rio Grande Foundation and Kevin Hassett of the National Review Institute discussed the impact of the Biden Administration’s energy policies on New Mexico. You can watch the discussion which lasts about an hour below:
In New Mexico, when politicians talk about “diversifying the economy,” they usually mean “finding new taxes in order to spend more money.”
That’s partially because we have so many state and local government workers (let alone federal employees and contractors). Even a global pandemic can’t stop New Mexico from growing as the map below from The Washington Post shows.
While most other states saw reductions (often major) in state government employment, New Mexico’s already-bloated government workforce grew by 4%. That is tied for the fastest growth in the nation.
It has now become an article of faith on the left in New Mexico that Gov. Bill Richardson’s 2003 tax cuts were a failure.Several tax hike bills including (at least) two that would raise New Mexico’s personal income tax rate have been introduced this session including:
SB 56: Sen. Bill O’Neill’s bill to increase New Mexico’s top personal income tax rate to 8.2% (the bill was heard in Senate Tax on Thursday);
SB 89: Sen. Bill Tallman’s bill to increase New Mexico’s top personal income tax rate to 6.5%;
You MAY recall that the Richardson cuts took New Mexico’s top income tax rate from 8.2% down to 4.9% over 5 years where it was until 2019. The cuts ALSO cut capital gains tax rates in half. These were REAL tax cuts and they passed the Democrat-controlled House without a single dissenting vote and passed the Senate by a margin of 39 to 2 and were signed into law on Valentine’s Day, 2003.
Richardson and Were Richardson’s tax cuts REALLY a failure? No. In fact, none other than the liberal “fact checking” site PolitiFact said that Richardson’s job creation claims (made in advance of his 2008 reelection campaign) were “mostly true.”
Statistics from the Bureau of Labor Statistics indicate that New Mexico gained 75,800 jobs from December 2002 to July 2007, which is slightly lower than Richardson’s claim.
As our friends at FactCheck.org note in this article , Richardson has consistently cited the higher number, even when the actual number was lower.
For our ruling, however, we’ll rely on the current 75,800 and call it mostly true.
PolitiFact further quoted none other than NMSU economist (one of NM’s top economic gurus) Jim Peach approvingly.
Peach said Richardson’s tax incentives and income tax cuts have created a favorable atmosphere for business that is a stark change from the state’s mentality in the mid-1970s, when state officials refused to provide help to a promising young company named Microsoft.
The climate here has changed considerably since then, Peach said. Bill Richardson has been a big part of that. He’s not the whole story, but he’s been a big part of it.
The fact is that if Richardson were governor today he would be too conservative for New Mexico’s Democratic Party on both guns and taxes.
