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Economy Notable News Top Issues

Study: NM’s Renewable Energy Mandate Stifles Job Creation and Growth: Economist predicts 3,500 potential jobs eliminated

ALBUQUERQUE — Today, the Rio Grande Foundation released a new study authored by its president Paul Gessing based on research provided by energy expert Dr. Timothy Considine of the University of Wyoming.

The study which analyzed the impact of New Mexico’s Renewable Portfolio Standard (RPS) finds that the law will decrease New Mexico’s economic growth by $444 million and cost the economy 3,500 jobs by 2020.

The study, “New Mexico’s Renewable Portfolio Standard: An Evaluation of its Impact on the State Economy,” details the impact of RPS on electricity prices, job creation, and economic output through 2040. The study serves as a reminder that despite modest benefits of RPS, state lawmakers cannot ignore the economic implications for their constituents.

Renewable Portfolio Standards (RPS) exist in 29 states and the District of Columbia, requiring that a percentage of electricity be generated by wind, solar, and other forms of renewable energy in order to reduce greenhouse gas emissions.

The study accounts for not only the costs of the law but also the benefits. This year, for example, Dr. Considine finds that New Mexico’s RPS reduces carbon dioxide emissions by more than 4 million tons, infuses $178 million into the state economy, and is responsible for 2,500 new jobs. Those benefits, however, are dramatically-outweighed by its costs.

Additional findings for the Land of Enchantment:

  • By 2020, RPS policies will increase New Mexico electricity costs by almost $206 million annually.
  • The study finds that electricity prices will jump by 7 percent that year alone.

Said Rio Grande Foundation president Paul Gessing.“New Mexico’s economy faces serious challenges. While so-called ‘renewables’ may be part of the solution, mandating them under state law does much more harm than good.”

To view Gessing’s brief, click Here. To read Considine’s entire study, click HERE. To schedule an interview, contact Rio Grande Foundation at 505-264-6090 or info@riograndefoundation.org.

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Economy Energy and Environment Oil & Gas Top Issues

Restricting oil imports a dangerous proposal for U.S.

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The price of oil impacts New Mexico’s economy in a big way. Oil prices that once hovered at $110 per barrel dropped as low as $27 earlier this year, and now hover around $50. That’s lower than we’ve grown accustomed to, but it is hardly a crisis – and certainly doesn’t appear to be an early-1980s-style bust.

Lower prices have hurt New Mexico producers, but consumers nationwide have benefited from lower prices at the pump.

Unfortunately, at a time of increased skepticism of free trade, a small group of oil and gas producers here in New Mexico is calling for government-enforced limits on oil imports. A forum calling for quotas was held on June 14 in Farmington at the San Juan College School of Energy. Several leaders in the industry, including Daniel Fine, associate director of the New Mexico Center for Energy Policy at New Mexico Institute of Mining and Technology, are supportive.

But restricting oil imports is a very dangerous proposal for many reasons, both economic and political.

It is worth noting that the cause of falling oil and gas prices is the result of supply and demand forces. The boom in fracking led to massive growth in domestic production, which ultimately drove prices down. However, fracking is only profitable at $65-$70 a barrel, so prices lower than that are a challenge for many New Mexico producers. That’s the free market at work.

Despite hostility toward trade from the likes of Donald Trump, Hillary Clinton, and Bernie Sanders, the free exchange of goods and services benefits us all. This is true whether you are “trading” a few dollars for a latte at your corner coffee shop or whether oil is being imported (or exported) to where it can be sold for the most money.

We’ve just been through this battle, on the issue of the federal government’s crude-export ban, which Congress repealed earlier this year. The policy was instituted in the 1970s in the wake of government-induced shortages caused by price controls. Back then, elected officials simply couldn’t foresee a future in which the U.S. had ample enough supplies to export crude oil.

Quotas today would be a similarly shortsighted policy. An industry that so often faces government regulation – and opposition to its very existence – is setting itself up for future problems by running to the political class for protection from market forces.

In a Clinton presidency, there is little chance of quotas. Trump, who is unfamiliar with the oil-and-gas industry and is skeptical of free trade, might be sympathetic. He might also target oil-producing Middle Eastern countries and Mexico. But a system of quotas will do so at the expense of the American economy and some of our greatest allies.

According to the Energy Information Administration, the U.S. gets 40 percent of our imported oil from Canada. Politically troubled Venezuela is responsible for another 9 percent, and just 16 percent of imported oil comes from the entire Persian Gulf including Saudi Arabia. Another 8 percent comes from Mexico.

Canada is our largest trading partner and Mexico is 3rd (China is 2nd). Trade goes both ways. If the federal government imposes tariffs or quotas on imports, the impacted country is sure to do the same. This will hurt American exporters directly. But, should the quotas be “successful” in raising the price of oil, it will hurt domestic consumers at the pump as well. The industries that consume oil and natural gas (think trucking and airlines, for starters) will also suffer, and their customers will face higher costs.

The oil patch is experiencing a painful adjustment. But government protectionism is not the solution. Such policies will harm the economy and our ability to lead on global trade issues. The downturn in oil and gas is just another reason for New Mexico’s leaders to reform the state’s long-struggling economy. Turning, yet again, to Washington is not the solution.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Categories
Constitution and Criminal Justice Top Issues

Clarify law to put focus on real criminals

Last year, New Mexico became a national leader in controlling abuses of civil-asset forfeiture. Let’s keep our momentum against overcriminalization going — and adopt a default mens rea standard.

Under the common law, a crime takes place when a mens rea (guilty mind) commits an actus reus (guilty act). As described by one legal scholar, “Historically, our substantive criminal law is based upon a theory of punishing the vicious will. It postulates a free agent confronted with a choice between doing right and doing wrong and choosing freely to do wrong.”

University of New Mexico School of Law Professor Leo M. Romero put it more succinctly when he wrote that “moral blameworthiness is a deeply rooted precondition to the imposition of penal sanctions.”

But as government grew and the regulatory state expanded, the nature of crime changed. Actions understood to be inherently wrong, such as theft and murder, began to be outnumbered by offenses said to be committed against “public welfare.”

Reformers at the state level have come to embrace a default mens rea provision as a tool to protect citizens from inappropriate prosecution. In 2014, Ohio’s legislature passed, and Governor John Kasich signed, a bill that made a significant clarification: “When the section language defining an element of an offense that is related to knowledge or intent or to which mens rea could fairly be applied neither specifies culpability nor plainly indicates a purpose to impose strict liability, recklessness is sufficient culpability to commit the offense the element of the offense is established only if a person acts recklessly.”

More recently, Michigan’s legislators and governed enacted a similar reform, which enjoyed support from the National Federation of Independent Business, the U.S. Justice Action Network, the ACLU of Michigan, the Criminal Defense Association of Michigan, and the Mackinac Center, a free-market think tank.

The need here is real. New Mexico has one of the worst violent-crime rates in the nation. In the state’s largest metro region, the Albuquerque Journal has reported, a “cadre of hard-core violent criminals has become a common theme,” with “brazen armed robberies to carjackings to the cold-blooded shooting of police officers.” It’s clear, particularly in an era of constrained budgets, that New Mexico needs to make the best use of its law-enforcement resources. A default mens rea law, similar to the ones passed in Ohio and Michigan, is one tool to foster such prioritization.

In 2013, the state’s high court took a small step toward mens rea reform, when it ruled that violators of restraining orders must act “knowingly” in order to be charged. (Thus, an unintentional encounter in a public place could not be prosecuted.) But many opportunities remain for “crimes” to occur absent criminal intent in New Mexico.

For example, it is illegal to hunt and fish in the state, except “as permitted by regulations adopted by the state game commission or as otherwise allowed by law.” The New Mexico Department of Game and Fish’s rule book for fishing is 52 pages long. The rule book for hunting upland and big game is 144 pages long.

In addition, under state law, the Board of Regents of New Mexico State University establishes regulations for fuelwood. In 2014, the board decreed that it must be “advertised, offered for sale, and sold only by the cord or fractional part of a cord, except it may be sold by weight if the seller declares the price per unit of weight and the equivalent price per cord.” Thus, sales of fuelwood in “unspecified quantities, such as ‘load’ or a ‘truck load,” which commonly occur throughout New Mexico, are prohibited.

New Mexico needs a default mens rea standard, in order to codify what one scholar called “the classic liberal idea that moral culpability is, and criminal liability should be, based on a conscious choice to do wrong.” In addition to protecting its citizenry from unwarranted prosecution of ignorance and/or mistakes, the reform would offer clarity — and promote efficiency — in New Mexico law enforcement.

D. Dowd Muska is research director of New Mexico’s Rio Grande Foundation, 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

Categories
Economy Film Subsidies Tax and Budget Top Issues

Correcting the Record on Gary Johnson’s Fiscal Legacy

The following article by RGF president Paul Gessing was written in response to an article that appeared a few days ago (linked below) which attacked former New Mexico Gov. Gary Johnson’s fiscal record in New Mexico. As the free market think tank working in New Mexico, we at the Rio Grande Foundation felt it was worth clearing the air and explaining the pluses (and minuses) of Gary’s time as New Mexico’s top executive.

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Economy Energy and Environment Open Government Top Issues

Rio Grande Foundation joins dozens of free market groups to defend Competitive Enterprise Institute in New York Times

No matter what your views on climate change, whether you think it is a clear and present danger caused by man, man-made but not a crisis, or simply not happening or caused by humans at all, we should all agree that the ability to discuss and debate the issue is fundamental to being an American and must be defended at all costs. Unfortunately, New Mexico’s attorney general, Hector Balderas, has joined with more than a dozen attorneys general from around the nation in an effort to stifle free speech and debate on climate change.

Today, the Rio Grande Foundation joined the Washington-based Competitive Enterprise Institute (CEI) by signing on to a full-page advertisement in The New York Times highlighting abusive efforts by New York Attorney General Eric Schneiderman, U.S. Virgin Islands Attorney General Claude Walker, and a coalition of other “AGs United for Clean Power” to silence the speech of more than 100 businesses, nonprofits, and private individuals who question the AGs’ positions on climate change.

CEI has found itself squarely in the cross hairs of the AGs including aggressive subpoena’s and other efforts to undermine the non-profit organization.

View the ad as a full color PDF here. Full text of the ad is below.

ABUSE OF POWER

All Americans have the right to support causes they believe in.

The right to speak out is among the most fundamental principles of American democracy. It should never be taken away.

Yet, around the country, a group of state attorneys general have launched a misguided effort to silence the views and voices of those who disagree with them.

Recently, New York Attorney General Eric Schneiderman, U.S. Virgin Islands Attorney General Claude Walker, and a coalition of other “AGs United for Clean Power” announced an investigation of more than 100 businesses, nonprofits, and private individuals who question their positions on climate change.

This abuse of power is unacceptable. It is unlawful. And it is un-American.

Regardless of one’s views on climate change, every American should reject the use of government power to harass or silence those who hold differing opinions. This intimidation campaign sets a dangerous precedent and threatens the rights of anyone who disagrees with the government’s position—whether it’s vaccines, GMOs, or any other politically charged issue. Law enforcement officials should never use their powers to silence participants in political debates.

We are standing up for every American’s First Amendment right to speak freely. We hope you will join us. This is a critical battle, and it will determine whether our society encourages spirited debate or tolerates only government-approved opinions.

 

Categories
Tax and Budget Top Issues Videos

The Liberty Movement and New Mexico

Recently, Rio Grande Foundation president Paul Gessing sat down with Fred Martino of KRWG-TV in Las Cruces. Unlike most television appearances, Gessing was not being called upon to debate a liberal on issues of limited government in New Mexico. Rather, in this interview, Gessing and Connor Gordon of Young Americans For Liberty at New Mexico State University discussed the battle for liberty in New Mexico.

Connor is a smart young guy and defies his generation’s unfortunate embrace of left-wing liberal policies. He is ahead of where Gessing was when he was a college student. Anyway, the interview provides an opportunity for both to go into their understanding of the state of liberty in New Mexico and what needs to be done to improve it.

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Economy Local Government Top Issues Videos

RGF’s Gessing weighs in on de la Cruz Cannes “Economic Development” trip: Eye on New Mexico

On this week’s “Eye on New Mexico” on Channel 4, KKOB, Chris Ramirez talked to Commissioner de la Cruz and Marcos Gonzales of the Bernalillo County Economic Development Department about economic development and the Commissioner’s trip to France. My interview starts at the 4 minute mark and de la Cruz defends the $20K spent on the trip after that.

So far, the Commissioner admits that no specific projects have resulted from the trip. I’m sure we’ll be notified if that changes.

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Economy Top Issues

The Right to Work Advantage

Yesterday the Foundation released “Where the Good Jobs Are: A New Look at Right to Work and Employment Growth.” Our paper found further confirmation that businesses and entrepreneurs prefer to expand in, relocate to, and set up shop in right-to-work states, where employees cannot be compelled to surrender a portion of their pay to unions. Even more, the RTW advantage applies to middle- and high-compensation jobs — i.e., there is no “race to the bottom.”

One of the paper’s most interesting findings is that firms based in non-RTW states are shifting their assets and facilities to RTW states. In total, 92 percent of the jobs to be generated by border-crossing investments went from non-RTW to RTW:

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The story was similar for foreign direct investment. Businesses based abroad preferred labor freedom, with 83 percent of their job growth to take place in RTW states:

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Is it time for New Mexico, reeling from rising unemployment and a falling labor-participation rate, to go RTW?

Categories
Economy Film Subsidies RailRunner Spaceport Tax and Budget Taxes Top Issues

State Has Many Opportunities to Reduce Spending

Journal columnist Winthrop Quigley seems to believe that what New Mexico’s struggling economy needs right now is higher taxes. We at the Rio Grande Foundation couldn’t disagree more and believe raising taxes would have further deleterious effects on our economy.

Disagreements aside, we do share agreement with Quigley that New Mexico’s tax structure must be reformed. The gross receipts tax is uniquely harmful to the growth and development of small businesses. It also encourages businesses to lobby the Legislature to lobby for exemptions or outright subsidies before locating here. The Legislature must act to reform this harmful tax structure.

It is a myth that New Mexico is a low-tax state. According to the Federation of Tax Administrators, our tax burden as a percent of personal income is ninth-heaviest in the nation. This is far heavier than the tax burdens of our more economically successful neighbors : Arizona ranks 39, Colorado 45, Oklahoma 37, Texas 44 and Utah 31.

Now for the (substantial) disagreements.

Quigley argues that New Mexico public employee salaries are lower than those in neighboring states. Salaries are just part of the compensation for any worker, especially government employees.

According to Key Policy data from 2013, New Mexico state and local workers make 20 percent more than their private-sector counterparts once pensions and benefits are included.

This is the 12th-highest compensation ratio in the country and far higher than in neighboring states. It also is a very good argument for serious reform of New Mexico’s government pension system.

Chart 2 New Mexico State and Local Government Compensation as a Percent of the Private Sector Rank 2013.jpg

More importantly, public employees should be paid based on what the market will bear. New Mexico’s unemployment rate is higher than that of its neighbors. The pay of government workers should reflect local market conditions.

Perhaps more importantly, New Mexico’s government workforce is bloated. Again according to Key Policy data, New Mexico has the second-most government employees relative to private-sector workers.

Chart 1 New Mexico State and Local Government Employees per 100 Private Sector Employees Rank 2013.jpg

When the number of government workers is compared to the population they serve and educators are removed from the equation, New Mexico falls to 10th-highest (according to Governing Magazine), but still far in excess of our neighbors.

As to specific ideas, we concur with Journal readers who have pointed to the RailRunner and Spaceport as likely cuts. Obviously, those aren’t enough. The next fattest target is higher education.

According to data from State Higher Education officers, New Mexico spent the fifth-most on higher education among U.S. states in 2011, the most recent year for which data are available.

The LFC has done some excellent work on the proliferation of branch campuses (number 25 at last count). It is time to reduce their numbers significantly, especially with overall enrollment declining.

Another area of significant savings is the politically popular, but economically dubious film subsidy program.

Similar programs have been panned by economists from across the political spectrum. A 2014 analysis done at the request of New Mexico’s Legislature found that the film program generated 43 cents in tax revenue for every state tax dollar spent.

Simply put, despite all the rosy press releases, New Mexico’s film program is a money-loser for New Mexico.

Lest one be misled to believe that only “liberal” government programs must be on the chopping block, New Mexico’s Local Economic Development Act program should be cut. Earlier this year, the LFC reported that “the state does not receive sufficient reporting from businesses using LEDA funds to properly evaluate” the program.

One company just received $325,000 from LEDA for the “creation” of just 14 new jobs. With those 14 employees paying income taxes on their $45,000-$50,000 salaries to New Mexico at 5 percent annually, it will take a decade for the state to recoup its “investment.”

And that assumes that the expansion would not have happened without state money.

Cutting the budget is no fun. We need to grow our economy, but our tax code is one of several reasons our economy hasn’t kept up with our neighbors’. Raising taxes will only further damage New Mexico.

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Economy Top Issues

Marching Forward to a RTW Future

The Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development‘s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development‘s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

In March, of 16,740 projected jobs, 14,475 — 86.5 percent — were slated for right-to-work (RTW) states:

Eighteen domestic companies based in non-RTW states announced investments in RTW states. Just one announcement went the other way.

RTW prevailed in foreign direct investment, too. Fifteen projects are headed to RTW states, with zero to occur in non-RTW states.

Marquee RTW wins included a “global operations center” for California-based PayPal in North Carolina (400 jobs), the decision by Orbital ATK to expand its factory that builds “cutting-edge satellites for a variety of customers both domestic and international” in Arizona (155 jobs), and Amazon’s choice of Kansas for a “state-of-the-art fulfillment center” (1,000 jobs).

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases from additional sources.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Intrastate relocations were not counted, interstate relocations were.