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Solutions for New Mexico’s medical provider shortage: part 2 of the two part series

New Mexico has a shortage of medical providers across most practice areas (as discussed in Part 1 of this series). So, as the 2023 legislative session gets rolling, what can be done about it?

The Rio Grande Foundation has looked high and low throughout New Mexico laws impacting medical providers and has produced a series of recommendations laid out in an extensive policy paper.

1) While forward looking in nature, HB 75 passed in 2021 and was revised later on that same year makes New Mexico’s medical malpractice much more plaintiff and attorney friendly through the increase in damage award caps is  causing a great deal of concern among providers even though it will not be implemented until 2024;

2) Stop taxing medical providers via gross receipts tax. The State is one of the few states in the entire nation that levies the equivalent of a “sales” tax on certain medical services. In New Mexico’s largest city, Albuquerque, the rate of taxation is currently 7.75 percent. Rates tend to be even higher in outlying areas of New Mexico. This could be part of a broad reform or more targeted.

3) Reduce Medicaid dependency.  According to the American Hospital Association, Medicaid underpaid hospitals by $24.8 billion in 2020. For Medicaid, hospitals received payment of only 88 cents for every dollar spent by hospitals caring for Medicaid patients in 2020. In 2020, 62 percent of hospitals received Medicaid payments less than cost.

4) Expand scope of practice/telemedicine.

There are several additional ideas outlined in the report along with more detailed discussion of the ideas listed above. All of it can be found here.

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Published opinion piece: Use surplus strategically to solve long-term problems

The following appeared in the Santa Fe New Mexican on December 24, 2022 and in numerous other news sources.

As the State’s Permian oil production boom continues in New Mexico the budget surpluses available to legislators each session grow as well. The latest announced budget surplus is $3.6 billion which is a positively mind-blowing 43 percent. This surplus is on top of already dramatic spending growth of 30 percent during the first four years of the Lujan Grisham Administration.

More spending growth this year is to be expected, but the capacity for government to continue expanding after years of rapid growth is somewhat limited by the ability of government to manage existing resources available to it. This is not surprising since New Mexico’s state and local government is already among the very largest in the nation.

But I’m not here to rail about the size of New Mexico government (at least not this time). Rather, I’m here to remind legislators of both parties that such massive surpluses present rare opportunities to lead our State to a better future.

Gov. Lujan Grisham has already proposed rebates of $750 or $1,500 for New Mexicans depending on marital status. Rebates are a bi-partisan idea, one supported in the recent campaign by her Republican opponent Mark Ronchetti, though details differed. To be clear the Rio Grande Foundation does not oppose tax rebates if they are not an excuse to (yet again) punt on long-overdue tax reform. Returning a portion of the budget surplus is not going to move New Mexico’s economy forward and diversify it in the same way as long-overdue tax reform would.

The same can be said for an idea that often garners bipartisan support in Santa Fe: that is bolstering various permanent and “rainy day” funds. Quite honestly, New Mexico has numerous big problems facing it. There is no better time to address these problems than right now. If policymakers use the surplus to diversify and improve the State’s economy in ways that will make it more competitive with its neighbors, the well-being of future New Mexicans won’t be so contingent on the vagaries of oil and gas.

New Mexico’s litany of current economic challenges includes:

  • A low workforce participation rate that has historically lagged behind our neighbors and remains well below pre-pandemic levels and has even dropped in recent months;
  • Poverty rates that are among the very highest in the nation;
  • A medical provider shortage that, while driven in part by regulations is worsened by gross receipts taxation of medical practitioners including Medicaid services;
  • Lack of economic diversity in a state that relies heavily on oil and gas for money and government (federal, state, and local) for employment opportunities;
  • Water and other infrastructure issues.

These problems (and more) can at least partially be solved by using New Mexico’s financial largesse wisely. New Mexico policymakers have long focused on government-driven approaches to these problems. State and local government spends a very high percentage of the economy.

Majority Democrats have an opportunity to not only pump more funding into their priorities, but they could show that they are pro-business and interested in using oil and gas revenues to diversify the State economy for a time when the oil and gas industry isn’t as bullish.

Republicans, rather than leaving the bold ideas to Democrats, should offer their own serious reform ideas and bills in the upcoming session. Ideally, the minority GOP could influence Democrats toward a more pro-growth agenda. Worst case, in two years they can point to their detailed policy ideas and use them to challenge Democrats for failing to take advantage of this unique opportunity.

Regardless of your political affiliation or beliefs we all must realize that 43 percent budget surpluses don’t come around often. We can’t solve all of New Mexico’s problems even with this massive surplus, but with strategic moves like those outlined here we can certainly move the needle.

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

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Legislature blessed with $3.6 billion in “new” money in upcoming session

According to the latest news reports New Mexico has a mind-blowing $3.6 billion budget surplus available to it when the Legislature convenes in January. This is, of course, derived largely from a production-driven boom in New Mexico’s oil and gas industry. Between now and January we and others will have plenty of time to discuss potential uses for the money. For now we’d like to simply help people grapple with the sheer size of this surplus.

  1. The budget surplus alone is a mind-blowing 43% of the current $8.4 billion budget which is in itself a 30% bigger budget than when Susana Martinez left office.
  2. The budget surplus alone is virtually the same size as the FY23 (current year) K-12 budget ($3.8 billion) which is a 41% increase over 5 years.
  3. The budget surplus is more than 7X the State’s “public safety” budget and 3.5X the entire higher education budget.
  4. The State could ELIMINATE the entire gross receipts tax ($3.047 billion) for FY 2024 and still have nearly $600 million left over.
  5. The State could ELIMINATE ALL personal and corporate income taxes ($2.107 billion for FY 2024 and still have $1.5 billion left over.

What WILL happen is anybody’s guess. With New Mexico’s continued economic struggles there are plenty of opportunities for the type of pro-growth tax reform the State sorely needs.

As a quick reminder, New Mexico’s state and local spending is already tops in the nation according to the website US Government Spending:

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Several questions for NM’s Blue Majority (and one for the Red Minority)

The following article appeared in Las Cruces Sun-News on November 27, 2022.

This Election Day a majority of New Mexico voters seemingly ignored the State’s manifest failures of governance. Instead, voters prioritized abortion rights while penalizing anyone who could plausibly be painted as “election deniers.”

Thus, New Mexico, one of America’s “bluest” states for decades, became even more Democrat dominant. Democrats now control every office of significance in State government as well as all five seats in Congress.

Whether the results are a sign of satisfaction with the status quo or just animus towards Republicans, the fact is that New Mexico’s governing Democrats faces serious challenges. Here are some that need to be addressed in the next few months:

  1. PNM (the State’s largest utility) has repeatedly expressed concerns about having enough electricity during the summer of 2022. The San Juan Generating Station coal plant was allowed to continue operating for an additional three months during this past summer due to fears of blackouts and brownouts. That will not be an option next summer. In fact, there has been little improvement in New Mexico’s electricity supply situation since then. What will the Gov., her new PRC, and the Legislature do to keep the lights on for New Mexicans? Waiting until the heat of next summer is not an option. Decisions need to be made right away.
  2. Speaking of the PRC, the Gov. now has a chance to mold New Mexico’s powerful regulatory body into something of her choosing. Will she prioritize geographical and ideological diversity or make the body a rubber stamp for her California-style policies? And, will they push through the Avangrid/PNM merger (rejected by the elected PRC but supported by the Gov.) as one of their first acts?
  3. New Mexico is one of just 11 states still in a COVID 19 emergency. It has been in a an “emergency” since March of 2020 (more than 2.5 years at this point). Will the new Legislature demand a “seat at the table” or continue to allow the Gov. to keep control until she sees fit? What does this mean for “democracy?”
  4. Voters approved Amendment 1 which taps into New Mexico’s permanent fund to boost education spending. With an expected $2.5 billion surplus, education spending is likely to rise even further. The State’s recent NAEP scores placed New Mexico at the very bottom across all four grade levels and subjects tested. Will New Mexico simply continue increasing education spending or will needed reforms be enacted?
  5. Speaking of that budget surplus, the Gov. and Legislature undertook a series of tax cuts in the 2022 session in anticipation of the election. Can New Mexico taxpayers expect further tax relief? If so, will those tax cuts be superficial, or will they address the State’s knotty economic challenges like “pyramiding” of the gross receipts tax?

Most of these questions are for New Mexico’s (even more) ascendent Democrat majority, but there is one question for the GOP: what can be done to boost voter turnout (and overall political engagement) in New Mexico’s most conservative areas? Overall voter turnout was 52 percent. In liberal Santa Fe County that number was over 63 percent. But, in conservative bastions like Lea, Eddy, Chaves, San Juan, Otero, Curry, and Roosevelt counties, turnout lagged the statewide average, sometimes by double-digit margins.

Many conservatives feel like their vote doesn’t make a difference either due to the State’s “blue” status or allegations of election fraud. Either way, New Mexico’s GOP must figure out how to engage its base through grassroots activism to become relevant.

No matter which side of the aisle you’re on, New Mexicans of all political stripes face more questions than answers.

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

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RGF talks to KOAT Channel 7: City Taxpayers have spent $1 million on field transformations

The Rio Grande Foundation worked hard to make sure that City taxpayers didn’t have to foot the cost of a soccer-only stadium for the New Mexico United soccer team.

But, as KOAT Channel 7 notes in a recent story in which RGF’s president was interviewed, local taxpayers are STILL on the hook for expenses associated with the soccer team. In this case according to recent data requested by KOAT taxpayers have spent $960,000 since the United started playing games.

Is this better than building a brand new stadium? Yes. Has City Council ever voted on this? No. It would seem that at the very least our elected officials should be voting on this. Americans and New Mexicans are often asked to subsidize sports franchises, but that doesn’t make it right.

 

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New Mexico remains among “Least Free” US states in latest Index of Economic Freedom

The 2022 edition of the Canada-based Fraser Institute’s Economic Freedom of North America 2022 is out and for yet another year New Mexico remains at the very bottom among US states in terms of economic freedom. Economic freedom is the ability of individuals to make their own economic decisions
about what to buy, where to work and whether to start a business.

Unsurprisingly, New Mexico performed particularly poorly in:

  • Government spending as a percent of personal income (49th);
  • Sales tax revenue as a percent of personal income (48th); and
  • Government employees as a percent of overall employees (49th).

New Mexico DID get high marks for having relatively low property taxes (7th).

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and co-author of this year’s report, which measures government spending, taxation and labor market restrictions using data from 2020, the latest year of available comparable data. Florida was the top performing state in the index followed by New Hampshire. Rounding out the top five freest states are South Dakota (3rd), Texas and Tennessee (tied for 4th ).

The very worst performing states were New York at 50th followed by California.

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RGF talks to KOAT 7 about $18 million being wasted on empty state office buildings

According to a new report from the Legislative Finance Committee the State of New Mexico is wasting $18 million a year on unused office space. The LFC report found telework and 21% of staff vacancies are accounting for unused offices.

Telework COULD be a cost-saving measure in some circumstances, but the State needs to produce coherent rules for government employees and whether those jobs are able to be done remotely or not. Sadly, the Lujan Grisham Administration has not managed to do this 2.5 years after COVID began and created the push for remote work. Watch the story here.

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RGF’s Gessing talks constitutional amendments w/ KOAT Channel 7

RGF’s president Paul Gessing sat down with KOAT Channel 7 to discuss two of the constitutional amendments that will be on New Mexicans’ ballots when they vote this fall.

Constitutional Amendment 1 would tap into New Mexico’s Land Grant Permanent Fund. Gessing’s appearance is toward the end of the clip.

A separate KOAT segment addressed Amendment 2 which would allow the Legislature to spend taxpayer dollars on infrastructure projects that would expressly benefit private interests.  Here is our detailed assessment of Amendment 2.

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

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.

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Analysis: the Ronchetti rebate plan

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:

  1. 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);
  2. 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;
  3. 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.