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.
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.
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.
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);
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.
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.
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.
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.
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.
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 3/8th 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 1/8th 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.
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 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.”
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.
The following appeared in several newspapers in the wake of New Mexico’s 2022 legislative session including the Carlsbad Current-Argus on February 23, 2022.
The 2022 30-day legislative session could have been much worse. It is no secret that we at the Rio Grande Foundation have disagreed with most of Michelle Lujan Grisham’s major efforts as Governor. She surprised many of us in her State of the State speech when she proposed elimination of the Social Security tax in New Mexico.
After three years of ruling as a hard left “progressive,” the Governor’s change of tune heading into the 2022 session was notable. Is her move solely due to her impending reelection? We’ll never know, but it is a welcome shift.
The most notable good legislation that passed this session was the tax cuts (HB 163). Unfortunately, the Social Security tax was not completely eliminated, but it will no longer apply to a vast majority of taxpayers. As a bonus, military pensioners received a break on their pensions for at least the next 5 years.
The State gross receipts tax rate will be cut under the tax reform package (barring a drop in state revenues) and a small child tax credit was added. Finally, the Legislature acknowledged that gross receipts tax pyramiding on business-to-business service inputs is a problem, but they only addressed the issue for manufacturers.
These tax cuts, if fully enacted, will reduce tax revenues by $400 million or so annually, are dwarfed by the massive increase in government spending. Spending rose by $1 billion this year alone.
All of this is thanks (mostly) to the booming oil and gas industry which shows no sign of slowing down, but money being printed up in Washington also played a role. Of course, while the Gov. will tout the raises for government employees in general and teachers specifically, with the current rate of inflation, those raises won’t be as helpful to families’ bottom lines.
Numerous bad bills were considered during the session that (thankfully) died. Most notable among these was SB 14 the “Clean Fuel Standard.” While rising gas prices have contributed to the State’s budget surplus, for average New Mexicans high gas prices are just another sign of inflation. Given those high prices it was a shock that Lujan Grisham made it her mission to pass this legislation, which would have increased gas prices at the pump by 35 cents/gallon.
The bill became even more confusing when, in the waning days of the session, an amendment was added to keep the San Juan Generating Station coal fired plant in Farmington open through next summer. PNM which owns the plant is nervous that it won’t have enough electricity to keep the lights on when the plant closes in June to comply with Lujan Grisham’s 2019 “green new deal” legislation.
Thankfully, with only hours to go in the session, SB 14 died on a tie vote in the House.
Another bill that, thankfully, died was the so-called “election reform” bill. Starting out, this bill was SB 8 and it had straight party voting, a “permanent” absentee voter list, allowing 16 and 17 year olds to vote, and, most outrageously, a provision allowing mailed ballots to be collected as late as the Friday after the Election Day.
Through a series of amendments and changes the election reform bill became SB 144. It was still problematic due to the unnecessary loosening of voting rules, but it died on the Senate floor as time expired.
Plenty of bills never received a floor vote. The Democrat-dominated Legislature (again) failed to restore a seat at the table for itself in emergencies. On the positive side of things, Las Cruces Sen. Bill Soules’ absurd SB 204 which would have appropriated $1 billion as part of a down payment on a high-speed train from the border with Mexico to Colorado, went nowhere as well.
This session could have been a lot worse. But, a moderately-successful 30-day session with November’s elections staring the Gov. in the face does not an ideological shift make.
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
In the wake of Gov. Lujan Grisham’s State of the State address, Republican House Minority Leader State Rep. Jim Townsend, said that during the speech he thought the governor “almost became a Republican.” He’s not wrong.
After three full years and legislative sessions (not to mention multiple special sessions and the constant invocation of her “emergency” powers) of governing as a hard left “progressive,” the Gov. seems to be tacking to the center in advance of her reelection bid this fall. This may be both good policy as well as good politics.
Specifically, in her State of the State address Lujan Grisham announced that she wants New Mexico to stop taxing Social Security. New Mexico is one of just 13 states in the nation to do this and bi-partisan efforts have been made in recent years to eliminate or vastly reduce the tax.
Her support for repeal is welcome, but many “progressives” in her own party seem skeptical. As of this writing one Social Security tax repeal failed on a tie vote in the House Labor Committee. Only one Democrat and three Republicans endorsed the idea. So, Social Security tax repeal is by no means a “done deal.”
This is true even though the state has plenty of money, as evidenced by the Gov.’s ambitious budget which contains a 13.5% spending increase over last year. The $80 million or so in “lost” revenue from ending the tax is a drop in the bucket when compared with the flood of new revenues. This is a flood that seems likely to continue with high oil prices and record production in the Permian Basin. So, New Mexico has plenty of money to cut taxes. In fact, the Gov. and Legislature should be looking for ways to use this flood of new money to both cut and reform taxes in ways that help diversify the economy.
While the decision to eliminate the Social Security tax is welcome, this is not the first time the Gov. has had a large surplus (or budget increase) available. In her first year in office (2019) the budget grew by 11 percent while increasing several taxes including taxes on car sales and hospitals. Bipartisan Social Security tax elimination bills have repeatedly been proposed since then. It certainly seems like the Gov.’s decision has a heavy dose of election year politics. There’s nothing wrong with that, but it is worth noting.
To her credit, the Gov. seems inclined to eliminate the Social Security tax without raising other taxes as one bill introduced this session would do. With the kind of money available, it is hard to justify raising taxes to make up for the small loss of revenue. Worse, a “revenue neutral” bill, introduced by Sen. Bill Tallman, would increase regressive tobacco taxes to make up for “lost” revenue.
Eliminating Social Security taxation should be a straight tax cut for the benefit of New Mexico seniors and those who might consider moving to New Mexico but see our State as “unwelcoming” for retirees due to our tax policies.
This legislative session is indeed an opportunity for the Legislature to “be bold” by enacting transformative policy changes. Reforming the broken gross receipts tax to eliminate taxation of services remains the very best way to do that. However, eliminating an unnecessary tax that makes New Mexico unattractive as a retirement destination is a worthwhile goal and we are hoping for the best and stand ready to support proponents of Social Security tax repeal this session.
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
