With the Foundation preparing for the 2020 legislative session, we haven’t been as focused on local policy issues like the proposed Route 66 Visitors Center on the Western edge of Albuquerque.
Thankfully, the Albuquerque Journal’s editorial board has been looking out for the taxpayers on this latest big-government scheme from the local political classes led by County Commissioner Steven Michael Quezada and City Councilor Klarissa Peña.
Here is the editorial in which the Journal makes several salient points about the proposed $12.2 million project (all tax dollars) which will require tens of thousands of tax dollars every year in operating subsidies.
In true New Mexico fashion, the proposed facility would use taxpayer dollars to compete against private sector (unsubsidized) providers in providing a taproom, banquet center, and showing movies.
If the City and County want to see more business perhaps they should do a better job of addressing crime, taxes, and permitting problems that make our area relatively hostile to business. Maybe they could just bulldoze the ART project as a bonus!!!
The Rio Grande Foundation spent a day in the Roundhouse this week discussing pension reform with New Mexico policymakers. But, when you get in the halls of the Roundhouse you find out about a number of issues and where things stand. Here’s what we’re hearing on a few of the big issues we’re looking at this session:
It is looking like a real uphill battle for Social Security tax reduction/elimination. Gov. Lujan Grisham didn’t include it in her budget and there just doesn’t seem to be much momentum among the Democrats for returning money to the taxpayers.
“Free” college will be an opportunity for the somewhat more conservative Senate Democrats to exert some influence. Will they give in to the Gov.’s plans to offer this new “entitlement” or will they demand the money be used more wisely or not be spent at all? The Governor’s plan started out at $35 million, but according to the LFC the cost of the plan will be $49 million (an increase of 40%) and the session is just getting started.
On this week’s interview podcast Paul talks to New Mexico Rep. Larry Scott. Scott lives in Hobbs and represents Lea County in the Legislature. He is also in the oil and gas industry. In the first part of the show Paul and Larry discuss the 2020 New Mexico legislative session and what might happen in terms of both good and bad economic policies.
And, since Larry has a front row seat for the oil boom in the Permian Basin, Paul and Larry discuss the boom, it’s impact on the region, and its impact on New Mexico as a whole. Will the boom continue? Is the Legislature’s spending unsustainable? Where are things heading for the future of New Mexico’s most important industry?
In any New Mexico legislative session you THINK you know what to expect during the session based on the agenda laid out by the Gov. But then you actually get into the session and you realize that any number of bills, often under the radar, could have a major, usually negative, impact if adopted.
The first candidate for this “honor” in 2020 is Sen. Mimi Stewart’s SB 110 which would totally revamp the operations of government employee unions in New Mexico. Stewart is best known as a shill for what we at the Foundation often describe as the “Education Blob.” The “blob” is basically the status quo in K-12 education, but with more money.
SB 110 would give government unions a great deal more power in New Mexico if adopted. Here are a few of the big changes in the bill:
1. Elimination of local labor boards
2. Union certification on a single employee vote in favor – meaning those of you without unions could easily have one in the future
3. Card check eliminating union elections
4. Allows the State Labor Board expanded authority on imposing damages/relief
5. Arbitrators’ ability to require re-appropriation of funds in impasse arbitrations
6. Offers employees just a 10-day window period for an employee to request to stop dues deductions
7. Requires public employers to release to the union employees’ home addresses, personal emails, and home/cell numbers
8. Union ability to meet with employees on work time including probationary employees
9. Unions have the right to use government facilities whenever they choose
10. Allows unions to engage in perpetual bargaining
While the Rio Grande Foundation will be working on a lot of issues in the 2020 Legislature that are at odds with Gov. Lujan Grisham and majority Democrats, one potential area for free market conservatives and Democrats to come to an agreement is on pension reform.
To her credit, Gov. Lujan Grisham has put PERA reform on the agenda during the 2020 session. SB 72 introduced by Sen. Munoz is the reform legislation, but our analysis of the legislation which was done by the experts at Reason Foundation can be found here.
While the reforms are not perfect, they are far better than inaction. The Rio Grande Foundation has also produced an “explainer” video on the pension reform issue that can be found below:
In economic policy terms New Mexico’s 2019 Session was a disaster. Massive expansion of film subsidies, new mandates on electricity generation, a higher minimum wage mandate, tax hikes, and 12 percent spending growth were the lowlights.
Of course, with fast-growing oil production and a strong national economy, New Mexico’s economy remains strong and surplus revenue will again be available when the Legislature convenes in January.
At the Rio Grande Foundation, we see numerous opportunities for bipartisan reform, but 2020 could also result in another spending binge that does nothing to address the systemic policy problems facing our State.
The most obvious opportunity is gross receipts tax reform. This must involve lowering rates and elimination of taxes of services provided by contractors and other business inputs. These taxes can be avoided by purchasing services (like bookkeeping and web hosting) from out-of-state providers in order to avoid the GRT which is applied at rates above 7.5% in most New Mexico communities.
Sadly, in 2019 the Legislature eagerly imposed GRT on several businesses, consumers, and industries. These included non-profit managers of Los Alamos National Lab, non-profit hospitals, and purchases made over the Internet.
But, the GRT remained unchanged in any systemic way. Rates remain high and the problem of taxing business inputs and “pyramiding” remains unchanged. With a billion dollar surplus available and both Gov. Lujan Grisham and Speaker Egolf making noise about tax reform, now is the time to act. And, while details may vary, the general model outlined in bipartisan legislation introduced by Rep. Jason Harper (R) and Sen. John Arthur-Smith (D) remains the logical framework for reform.
Another bipartisan reform opportunity should include public employee pensions (specifically PERA and ERB). Gov. Lujan Grisham should be applauded for naming a task force to take a serious look at PERA which covers public workers NOT employed in the education system (and thus covered by ERB). Given its weaker financial position and importance to public education budgets, ERB deserves a similar look.
Both systems are seriously underfunded, a situation which must be addressed. Also, both need to be updated to better serve the 21st Century work force. Colorado and other states have successfully done this. New public employees in New Mexico should be offered more portable benefit options outside of the traditional pension system, which rewards longevity as opposed to those who may want to “give back” for a few years and then move on to other career goals as younger workers wish to do these days. Both types of employees should have retirement options that work for them.
Finally, there is the issue of occupational licensure reform. Bipartisan legislation (SB 385) made its way to the Governor’s desk in 2019 only to be vetoed. We hope to make another push to address the unnecessary obstacles licensing often puts in the way of willing workers and willing customers/employers.
While there is potential common ground for economic reform in 2020, there are numerous serious issues, particularly with the Gov’s proposal for “free” college. Here are two:
While the oil boom as perked up the State economy in recent years, job opportunities are still more diverse, plentiful, and generally better-paying in neighboring states. Absent economic reforms (see GRT discussion above) how can we be sure that “free” college will actually benefit New Mexico’s economy?
New Mexico’s biggest education challenge is the performance of its K-12 system. Absent much more ambitious reforms than those currently being discussed to raise student outcomes “free” college won’t do much good.
While this oil boom is driven by production as opposed to prices, all good things eventually come to an end. What happens when oil prices or production decline due to environmental concerns, the global economy, technological advances, or some other unforeseen change?
This 30 day session will go a long way to determining New Mexico’s economic future.
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
As the 2020 New Mexico Legislature kicks off, it is a good time to ponder the State’s long history of partisan Democrat control. As the chart below shows (going back to 1931) New Mexico’s levers of power have overwhelmingly been controlled by Democrats for the last 90 years. In fact, 2/3rds of the past 90 years have seen complete control of the House, Senate, and Governor’s Mansion by Democrats.
When it comes to the depth of that partisan control, Democrats have generally had large majorities, but, in what perhaps might be the only significant sign of hope for the State’s beleaguered GOP, the partisan makeup of the Senate remains relatively balanced whereas the 2018 election saw dramatic gains back to historic levels for Democrats in the House.
In the wake of 2019’s disastrous legislative session, 2020’s 30-day session has the potential to be a return to sanity. But, as this KOAT Channel 7 story notes, Gov. Lujan Grisham has outlined an ambitious agenda. The Foundation was given an opportunity to respond to various aspects of the Gov.’s program for the news story.
There are some elements of agreement (like pension reform), but overall the Foundation has big concerns about the amount of spending she is proposing as well as the prospects for “free college” and using marijuana legalization as a cash cow. Check out the full story by clicking here or the picture below: