Category: Tax and Budget

New Mexico’s self-inflicted doctor shortage

Post author By Paul Gessing
Post date August 29, 2022

There is a life-or-death issue facing New Mexicans. It has been widely reported on in the media and is important to New Mexicans from all walks of life. Voters will have a lot to say about it this November. The issue is our shortage of medical professionals.

If you live in rural New Mexico you have likely faced severe challenges in finding specialists for years, but according to one recent report, 32 of New Mexico’s 33 counties (excepting Los Alamos) face a shortage of primary care physicians. This doesn’t even consider the shortage of specialists which is even more pronounced in certain fields.

Reports have reiterated the fact that (as our population ages and our doctors age as well), our State faces an even greater need for doctors in the years ahead.

Like most challenges facing New Mexico, poor public policy is a problem. The most obvious reform needed is for the Legislature to repeal HB 75, which passed in the 2021 session and was signed by Gov. Lujan Grisham. Implementation of the law was subsequently delayed, but if it is it will make New Mexico an even less attractive place for doctors to work than it already is, worsening our shortage of medical professionals.

Here are a few details:

The Medical Malpractice Act (HB 75) increased the cap on malpractice lawsuits. That means physicians can be sued for a great deal more for punitive (punishment) damages, up to $4 million. That number rises to $6 million in just a few years. To give a comparison, in doctor-friendly Texas, the cap is limited to $250,000).

Because the cap is so high now, many Insurance Companies won’t cover doctors in private practices that do procedures like colonoscopies or other in-office surgeries. In other words, doctors can’t get malpractice insurance to cover them because they are too risky to insurance companies.

As one prominent Democrat doctor wrote in an article written earlier this year, “Our Governor is aware of the issues, but Democrats are often influenced by the Trial Attorneys because they are big contributors to the Democratic Party and, of course, they stand to gain a whole lot of money from such a large increase in the ‘cap.’

Another self-inflicted misstep that has resulted in a loss of medical professionals is Gov. Lujan Grisham’s vaccine mandate on medical professionals. While specific numbers are hard to come by, it is hard to justify such a mandate given that COVID vaccines have not prevented the spread of COVID. In August 2021 media reports quoted Dr. David Scrase as saying 90% of nurses were vaccinated and roughly 3,000 healthcare workers in New Mexico were unvaccinated.

We don’t know exactly how many medical professionals left New Mexico due to the Gov.’s vaccine mandate, but even a few hundred is far too many. And, the Gov.’s vaccine mandate continues to remain in effect along with her public health orders.

Finally, a simple way to attract more doctors is to stop taxing them. Although often hidden from the public, doctors in New Mexico often must pay gross receipts tax on services provided to Medicaid patients and “fee for service” patients.

Lawmakers recently announced the State has a $2.5 billion surplus headed into the 2023 legislative session. Reform of the gross receipts tax, including repeal of this tax on medical services, is a must that can be done with minimal revenue loss.

The U.S. Census Bureau estimates more than 30 percent of New Mexico’s population will be over age 60 by the year 2030, an increase of nearly 50 percent from 2012. All of us need doctors, but as New Mexico ages the need becomes critical. There is no panacea, but these are some of the worst policy obstacles to attracting medical providers to our State.

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

Economy Legislature Notable News Oil & Gas Tax and Budget Taxes Top Issues

Top 5 things New Mexico should do with its largesse (and a few they shouldn’t)

Post author By Paul Gessing
Post date August 18, 2022

New Mexico, fresh off a 15 percent spending increase, has ANOTHER $2.5 billion in “new” money (basically a budget surplus). Who knows what big-spending schemes the Legislature will cook up for the 2023 legislative session? Of course, what happens with that cash depends A LOT on what happens in November.

Here are the top 5 things the Legislature SHOULD do with the money (and a few things to avoid);

1) Address the gross receipts tax and both its “pyramiding” (taxes paid on top of taxes) as well as its taxes on business input services is an ABSOLUTE must. It won’t “cost” much in the grand scheme of things and as analysts told the Legislature recently, it is a big factor holding our state back.

2) AFTER the GRT is reformed, New Mexico should begin phasing down (and out) both personal and corporate income taxes. 9 states currently have NO personal income tax. The corporate income tax only accounts for $200 million or so annually. It is time to diversify our economy and New Mexico can do so by eliminating the corporate income tax.

3) Pay down pension debt while reforming them AND giving workers freedom to invest their OWN retirement funds. Yes, that’s a lot, but New Mexico’s underfunded pensions are in need of not only more funding, but fundamental transformation. Dumping more tax dollars into them is not a particularly good idea, but paired with needed reforms and increased worker control, this is a worthy approach.

4) Infrastructure: repave our roads and bridges, water projects. While New Mexico roads are ranked okay nationally (despite our dangerous drivers) e all know of certain roads that need to be paved/improved across our State. It is time to get this infrastructure in top shape. Same with water. It is time to make every drop count and explore innovative approaches to improving our future water security.

5) Bring/keep more medical professionals. New Mexico needs more medical professionals. While basic reforms to our new, harmful medical malpractice law are essential, improving Medicaid reimbursement (and ending the GRT on medical services as part of a broader GRT reform) are two ways to make New Mexico a more attractive place for medical providers.

Things we don’t need

1) Another year of massive spending growth. New Mexico’s state spending as a percent of GDP is the highest in the USA in FY 2023 (vastly outpacing its neighbors as seen below). Broad new spending increases are not going to improve our State;

2) Socking the money away: this is only deferred spending growth. New Mexico needs to act prudently with this money to address important policy shortcomings NOW.

Education Legislature Notable News Tax and Budget Top Issues

NM needs to make all those education dollars work for kids

Post author By Paul Gessing
Post date July 14, 2022

The following appeared in the Albuquerque Journal on July 14, 2022.

Superintendent Scott Elder recently called this the “hardest year we’ve ever been through” due in largely to the need to reduce the number of staffed positions, including teachers, at Albuquerque Public Schools.

Change is hard, especially for large bureaucracies like New Mexico’s largest school district. But change is necessary at APS. That’s not just the Rio Grande Foundation’s view; it is the conclusion of the Legislative Finance Committee’s recent report on APS, which shows a district awash in money but bleeding students.

Many families, like my own, have left APS. Many families felt betrayed by Gov. Michelle Lujan Grisham’s COVID school closings, which cost students a year of classroom time and a great deal of academic and social progress. The governor’s decision to shutter the schools will have lasting, negative impacts on our children that are only now starting to be accounted for. Many families with the resources to do so left the district or even the state. Many aren’t coming back.

To maximize the beneficial use of the district’s resources, the LFC recommends “right-sizing” the district’s “footprint,” including eliminating teaching and other positions as well as reducing the number of facilities including school buildings to reflect a shrinking student population. This trend began before COVID but has accelerated since.

The LFC’s numerous other recommendations need to be implemented. I do believe the current school board wants to allocate resources in ways that make sense for the district and its 71,000 students.

But the APS Board of Education doesn’t fully control the district’s budget; the Legislature and governor do. And, with money flowing into the state at unprecedented levels, the political incentives in Santa Fe are aligned to pour more money into the system. When money is plentiful, politicians are loath to make difficult and often unpopular decisions to redeploy resources. Sadly, the LFC can write reports, but until politicians in Santa Fe act, things won’t improve.

It is time to put to bed the myth of “underfunded” local schools. With the recent adoption of the district’s $1.93 billion budget divided over 71,000 students, APS will be set to spend a whopping $27,000 per student in fiscal 2023.

In addition to “right-sizing,” APS needs to implement innovative approaches to simultaneously improving educational outcomes. Alas, this governor and Legislature have chosen to keep power and money centralized in Santa Fe rather than fully empowering local leaders or, heaven forbid, parents, to decide what makes the most sense for themselves and their families.

While the local school board has limited power over serious reforms, they can be advocates for charter schools and work to expand that important form of school choice. Expanding intra-district choice is an additional way to expand educational freedom.

But real education reform in New Mexico must come from the top. Republican gubernatorial candidate Mark Ronchetti has stated clearly that he wants to bring school choice to our state by having money follow the students. Poll after poll shows Americans agree with him, a trend that also has accelerated since COVID. Parents and families should be able to use their education funds to pursue options that work for them, not the bureaucrats in Santa Fe.

Change won’t happen overnight. As a starting point we need a governor who will stand up to those who want to keep the failed status quo and just spend more money. Even a reform-minded governor can’t do it alone as real school choice needs buy-in from the Legislature. So, right-sizing and reforming APS – including but by no means limited to school choice – will requires cooperation and buy-in from many different groups of elected officials. We have a lot of work to do for our children, but now is the time to begin.

Economy Legislature Notable News Tax and Budget Taxes Top Issues

Analysis: the Ronchetti rebate plan

Post author By Paul Gessing
Post date July 13, 2022

New Mexico’s race for governor is, by all accounts, going to be extremely close. Generally-speaking the two candidates have VERY different visions for New Mexico, but on one thing their policies have a bit of overlap: rebating money from New Mexico’s booming oil and gas industry.

While having previously raised taxes despite record revenues, incumbent Gov. MLG called a special session of the Legislature to pass rebates of up to $1,500 for “New Mexicans.” The quotes are due to the fact that there is a pot of money specifically set aside in the Gov.’s rebate package for those who didn’t file tax returns which could include illegal immigrants.

Ronchetti’s plan is different from MLG’s in a few big ways: it would be only for New Mexicans (although details are unclear as to enforcement), it would potentially bigger with families with children benefitting the most providing up to $2,000 to a family of four (including children), and it would be a regular annual occurrence as long as revenues hold up.

Here are our takeaways on the Ronchetti plan:

Putting money back in New Mexicans’ pockets is far superior to further increasing the size of New Mexico’s already bloated state government (and that includes the various permanent funds);
Reforming New Mexico’s broken and anti-business gross receipts tax and THEN working to reduce or eliminate the income tax must be the top reform priorities, but there is nothing wrong with doing all of them;
One challenge with rebates is that they don’t necessarily reward work. New Mexico still faces a huge gap in terms of its workforce participation rates. Government checks can negatively impact efforts to get more people to work.

Education Legislature Notable News Open Government Research Tax and Budget Top Issues

Albuquerque Public Schools’ new budget pushes per-pupil spending above $27,000

Post author By Paul Gessing
Post date June 22, 2022

The Rio Grande Foundation has been tracking per-pupil spending at Albuquerque Public Schools for several years. We use the simple mathematical technique of dividing the total annual budget by the number of students in the district, a number which has declined dramatically in recent years.

Most APS budgets are here while the 2023 data comes from the following Albuquerque Journal article. There was no APS budget in FY 2021 so we attempted to calculate based on recent trends.

On a PER PUPIL basis, APS spends 64% MORE in FY 2023 than it did in FY 2019.

Local Government Notable News Tax and Budget Taxes Top Issues Videos

Rio Grande Foundation hits KOAT TV to discuss City Council grant to Planned Parenthood

Post author By Paul Gessing
Post date June 15, 2022

Rio Grande Foundation president Paul Gessing recently sat down with KOAT Channel 7 to discuss the recent “no-strings-attached” made by Albuquerque’s City Council to Planned Parenthood.” Whatever one’s views on abortion, it is hugely problematic that City Council has “donated” $250,000 to an activist political organization that actively involves itself in political campaigns.

Story linked above.

Economy Energy and Environment Local Government Notable News Tax and Budget Top Issues

RGF calls out “fee” hikes at CABQ, elsewhere

Post author By Paul Gessing
Post date June 13, 2022

We all know prices are skyrocketing as inflation takes hold of the United States economy. We also know that the State of New Mexico and City of Albuquerque have massively increased spending in their latest budgets (well beyond the rate of inflation).

Unfortunately, that doesn’t mean that government, especially the City, is interested in keeping overall costs and fees down for those paying the bills. RGF’s Paul Gessing spoke to KOAT Channel 7 to discuss the increased costs on your water, trash, and power bills.

Economy Legislature Notable News Tax and Budget Taxes Top Issues

Opinion piece: Don’t waste New Mexico’s opportunity — get rid of income tax

Post author By Paul Gessing
Post date April 25, 2022

The following opinion piece ran in the Santa Fe New Mexican on April 22nd, 2022. The piece also ran in other newspapers throughout the state.

New Mexico is in a unique economic situation. Despite having the highest unemployment rate in the nation for all of 2022, our incredibly strong oil and gas industry, buoyed by high prices and rapid production growth, have given politicians in Santa Fe “more money than they know what to do with.” So, in the recent 30-day session, we saw spending grow by more than $1 billion and some significant tax cuts. Then, in a special session, rebates to be paid out to taxpayers and non-taxpayers alike.

The impetus to return money generated by the oil and gas industry to New Mexicans is welcome, but there are serious questions about the legality and logistics of handing out checks to those who don’t pay taxes to the state. Furthermore, asking the Tax and Revenue Department to hand out cash “only” to those who deserve it is an unenviable and impossible task that also seems to violate the state’s anti-donation clause.

But, after three years of Gov. Michelle Lujan Grisham and the Democrats raising taxes, it is hard to complain about getting money back.

Of course, this is an election year, and by all accounts, Democrats, including Lujan Grisham, face a challenging political environment. Rising inflation is never popular. And, as COVID-19 concerns wane and voters consider Lujan Grisham’s record in fighting it as balanced against economic concerns and their children’s educations and mental health, her record appears wanting.

A recent report from the National Bureau of Economic Research found that only New York and New Jersey performed worse than New Mexico did during the coronavirus pandemic. Considering that New Mexico’s economy remains weaker than our neighbors, that our kids missed more school and faced big declines in reading and math, and that none of this caused New Mexico to have particularly good COVID-19 outcomes in terms of lost lives, only lends credence to the report.

In the absence of a strong track record on these core issues, the governor clearly plans to use handing money generated by oil and gas for her political benefit. That may aid her reelection chances, but nothing she and the Legislature have done to date will improve New Mexico’s overall economy which remains challenged.

The fundamental economic problem New Mexico faces is its unattractive business climate. Addressing the gross receipts tax and its “pyramiding” and taxation of services as business inputs has been discussed for years now, but it is time to seriously consider bolder economic reforms like reducing or even phasing out New Mexico’s personal income tax.

Indeed, the personal income tax is expected to generate just over $2 billion in fiscal year 2023. That’s a lot of money, but New Mexico is in a financial position to reduce income tax rates over time. Combined with business-friendly gross receipts tax reform, modest budgetary restraint (annual spending simply can’t grow by 15 percent) and a focus on truly diversifying New Mexico’s economy could allow New Mexico to become income-tax-free.

Nine states already lack an income tax. Most New Mexicans know that Texas with its prodigious oil supplies does not tax personal incomes, but most other states lacking income taxes have nothing like our oil and gas revenues. Florida has no income tax. Same with Tennessee and South Dakota. New Hampshire has both no income tax and lacks a sales tax. None of them has significant oil revenues.

New Mexico has suffered economic and social mismanagement over the last few years. Record oil and gas revenues are helpful, but as New Mexicans contemplate the coming elections, it should be more apparent than ever that more spending has not and cannot solve the state’s social ills. It is time for genuinely bold solutions.

New Mexicans simply can’t allow this oil and gas-fueled opportunity to pass.

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.

Economy Energy and Environment Local Government Notable News Tax and Budget Taxes Top Issues

A new day means new tax cuts for ABQ City Council

Post author By Paul Gessing
Post date March 20, 2022

A slightly shortened version of this opinion piece was published in the Albuquerque Journal on March 20, 2022. A chart illustrating Albuquerque’s spending is found below the text.

Elections have consequences. After four years of “progressive” leadership by Mayor Keller and a left leaning city council, the election of November 2020 saw a more center-right Council. While much attention was given to the fact that Tim Keller was reelected by a wide margin despite the City’s spiraling crime problem, Albuquerque voters didn’t actually vote for the status quo.

Now, we are starting to see a shift toward a more moderate approach to the issues from City Council. Better legislative proposals are in the pipeline, but with a 5-4 majority and a hostile mayor, getting these ideas past the finish line will be a challenge requiring grassroots support.

A starting point is reducing gross receipts taxes. Back in 2018, shortly after taking office, Mayor Keller and the new “progressive” council majority raised the (regressive) GRT by 3/8^th of a cent. This was a major tax increase considering that the City’s overall GRT “take” before the tax hike was 2.375%. That made Keller’s tax hike a nearly 9% increase in Albuquerque’s rate.

And, not surprisingly, that tax increased led to rapid spending growth in the City’s budget. Even when the annual budget freeze in the 2021 budget due to COVID 19 is included, the City’s budget is up 27 percent under Mayor Keller.

Unfortunately, when the City Council met recently to discuss Councilor Lewis’ plan to cut just 1/8^th of a cent off the GRT (not the full amount added in 2018), Keller’s Chief Financial Officer Sanjay Bhakta claimed “this is the worst time possible” to cut taxes.

Considering that, among numerous other wasteful spending programs, the City has just undertaken a $3 million plan to make City buses “free” to riders (that’s on top of millions in annual transit subsidies), it would seem the City could do something to help residents who continue to be pummeled by rising inflation. Unfortunately, it seems that Mayor Keller and his Administration remain opposed to this reasonable tax reduction.

There are other exciting efforts underway to move Albuquerque in a more pro-freedom direction. The big question is whether Keller will stand in the way of everything or if he’ll choose his battles. For example, Councilor Bassan has proposed ending the City’s plastic bag ban which recently passed City Council.

The unnecessary and environmentally irrelevant ban on plastic bags makes daily life more difficult for thousands of Albuquerque residents. Those bags are often reused and can be recycled. They are hardly the environmental problem their opponents claim. According to Our World in Data, the entire continent of North America generates less than 1 percent of the “mismanaged plastic” on the planet.

If Keller and City Council really want to address the City’s serious litter problem, the legions of transients begging on street corners, camping throughout town, and leaving trash behind wherever they go would be a better place to start.

While a number of other important issues are being discussed at City Council that, if adopted, will move our City in a positive direction, no effort highlights the ideological shift better than the effort to restore market forces in public construction projects. Immediately after the 2020 election, a bill was rammed through Council by liberals and the trade unions to mandate that public construction projects use union labor.

Estimates are that such unfair laws called “Project Labor Agreements” boost taxpayer costs by 14 percent. A bill is now working its way through the current Council to repeal that law and instead allow all workers and contractors regardless of union membership to bid for city construction projects.

Albuquerque is a great and beautiful city, but its management has left a lot to be desired in recent years. The current City Council is standing up to big government and special interests. They deserve your support.

Economy Education Energy and Environment Legislature Notable News Oil & Gas Open Government Tax and Budget Taxes Top Issues Transportation

2022 Freedom Index Results Published

Post author By Paul Gessing
Post date March 1, 2022

The Rio Grande Foundation uses its “Freedom Index” vote tracking site to hold New Mexico legislators accountable for their stances on individual freedom and personal liberty. We have rated all bills that impact individual freedom that received floor votes for the 2022 session and thus the current Index results are “final.”

Every bill receiving a score is rated on a scale from -8 through +8 depending on its overall impact on YOUR personal freedom. In the 2022 session the most impactful vote (-8) was on SB 14, the Clean Fuel Standard. A full analysis of that bill can be found here.

The BEST bill voted on this session was HB 163, that is the bill which includes several tax cuts (RGF analysis of that bill here). It received a +4 rating in the Index.

Rep. Stefani Lord (R) who represents parts of the East Mountains of Albuquerque scored a 45 which was the highest rating of the session.

Rep. Randall Pettigrew (R) who represents Lea County scored a 43 which was good for the 2nd-highest rating of the session.

Sen. Craig Brandt (R) who represents Rio Rancho scored 33 which was the highest rating for any senator (the Senate and House vote on different bills and the House typically takes more votes and thus has higher and lower scores).

Sen. Antoinette Sedillo-Lopez (D) who represents parts of Albuquerque scored -66 which was the lowest rating for any member of the Legislature.