Susana’s Score is Stellar — But There’s More to the Story

It’s a little ironic that Governor Susana Martinez has been named the top performer on the Cato Institute’s “Fiscal Policy Report Card on America’s Governors 2018” at the same time that the Mercatus Center has put the Land of Enchantment near rock-bottom in its “Ranking the States by Fiscal Condition, 2018 Edition,” and Truth in Accounting has observed that the state’s “true financial condition is unknown,” because New Mexico’s “financial statements received a disclaimer of opinion.”

First, the good news. Cato’s researchers noted that the governor

scored well on previous Cato reports, and she receives the highest score on this report. Martinez has a reputation for vetoing wasteful spending, and she has kept New Mexico’s general fund budget flat in recent years. On taxes, Martinez has pursued reforms to make New Mexico more competitive, including cutting the state’s corporate tax rate. In recent years, stagnant tax revenues from the oil industry have made balancing the state budget a challenge, but Martinez has held firm against tax increases proposed by the legislature. In 2017, she vetoed bills that would have increased taxes by $350 million a year.

Looking beyond the term of a single governor, though, yields a far different perspective. The Mercatus Center ranks New Mexico “45th among the US states for fiscal health.” It’s 49th on the sub-metric of “trust fund solvency,” which “measures how much debt a state has,” and last in the nation for “service-level solvency,” which “measures how high taxes, revenues, and spending are when compared to state personal income.” (The Land of Enchantment fares somewhat better on possessing “a hedge against large long-term liabilities” and its ability to “cover its fiscal year spending using current revenues.”)

New Mexico earned a “D” in Truth in Accounting’s latest “comprehensive analysis of the fiscal health of all 50 states based on fiscal year 2017 comprehensive annual financial reports.” In addition to billions of dollars in unfunded pension and healthcare benefits, the “state’s financial statements are … unreliable because they are consistently published late, taking an average of 350 days to issue since 2009.”

Susana Martinez bears some blame for New Mexico’s long-term fiscal peril, and one wonders why in eight years, she wasn’t able to get her Department of Finance and Administration to issue CAFRs on time. But far more opprobrium is warranted for the legislature, which for decades has been wildly irresponsible with taxpayers’ money. Spendthrift “education” policies (from preschool to Ph.D.), ineffective and unaccountable corporate-welfare programs, lavish compensation for “public” employees — these and other bipartisan missteps, boondoggles, and incumbent-protection schemes have put the state on an unsustainable fiscal path. A reckoning is coming, and it won’t be pretty.

Who Could Oppose an Ethics Commission?

To New Mexico’s left-leaning advocates for “good government,” it’s all so easy.

More laws. Tighter regulations. “Public” financing of candidates. Paid, full-time legislators.

Implement Ralph Nader’s preferred policy architecture for politics and elections, we are told, and corruption will fade, citizen activism will expand, voter turnout will balloon, and “public service” will again be — and be considered — a noble calling.

So it’s hardly surprising that on Election Day 2018, the usual suspects want voters to approve Constitutional Amendment 2, and thus create “an independent State Ethics Commission with jurisdiction to investigate, adjudicate and issue advisory opinions concerning civil violations of laws governing ethics, standards of conduct and reporting requirements as provided by law.” The League of Women Voters of New Mexico, Common Cause New Mexico, Bob Perls, liberal columnists — the couch-fainters want a “government that works for everyone,” and with that crowd, intentions are always more important than facts.

One fact voters might want to consider can be found in the “Arguments Against” portion of the Office of the Secretary of State’s 2018 GENERAL ELECTION VOTER GUIDE:

Under existing law, multiple state agencies already have oversight over ethics matters affecting their respective branches of government. These include the State Personnel Office, the secretary of state, the attorney general, the Interim Legislative Ethics Committee and designated house and senate ethics committees.

Throw in the Office of the State Auditor and the Office of the United States Attorney for the District of New Mexico, and it’s quite clear that one more governmental entity involved in rooting out/prosecuting ethical violations isn’t necessary.

Then there’s the research. In 2013, two scholars from the University of Missouri conducted “the first systematic statistical evaluation of the effects of state ethics commissions on public corruption among state and local officials.” Their results didn’t offer any intellectual ammo for Constitutional Amendment 2’s backers:

* “Overall, we found no strong or consistent support for the common claims made by political actors that state ethics commissions are important policy tools for reducing political corruption.”

* “[T]he raw correlations and point estimates that we present indicate that state ethics commissions have only very weak, and possibly perverse, effects on public corruption.”

* “[I]t is reasonable to conclude that there is no support for claims that state ethics commissions, including bipartisan and nonpartisan commissions, serve to reduce political corruption.”

Ouch. It’s also worth noting that some of the sleaziest states in the union — e.g., New Jersey, Mississippi, Illinois, Louisiana, Alaska, New York — have ethics commissions. (The Pelican State’s goes back to 1964.) The six states that lack such bodies (in addition to New Mexico, the list is comprised of Arizona, North Dakota, South Dakota, Idaho, and Wyoming) are all over the map on the issue of corruption.

And just because a bureaucracy has the word “ethics” in its name, does that make it unquestionably fair and impartial? Veteran journalist Jon Margolis recently criticized the Vermont State Ethics Commission for being “politically played” by a far-left group looking to hurt the incumbent (Republican) governor’s reelection chances. Last month, the Institute for Justice sued the Oklahoma Ethics Commission for blocking the public-interest law firm from distributing Bottleneckers: Gaming the Government for Power and Private Profit — “a $15 book” — to state legislators.

No one would argue that New Mexico is America’s ground zero for honest pols, hard-working bureaucrats, and honorable government contractors. But voter skepticism is entirely reasonable when it comes to the “need” for yet another bureaucracy tasked with policing the “public good.” The best solution for secrecy, selfishness, and shadiness at the state and local levels in the Land of Enchantment remains less government, not more.

‘Progressive’ Policies, Regressive Results

Las Cruces’s liberals sure are consistent. They press forward with their agenda of unlimited government, regardless of results.

The latest figures indicating that the City of the Crosses is the Sick Man of New Mexico arrive via the left-leaning Brookings Institution, which has released a look at “variation in the size of the middle class” in the nation’s 382 metropolitan statistical areas.

Researcher Alan Berube analyzed urbanized America’s middle class — defined as “the middle three quintiles of the national income distribution” — adjusted for the Bureau of Economic Analysis’s regional price parities and average household size.

The 15 top and 15 bottom metros are depicted in the table above. Notably, 10 of the stars are found in right-to-work states — and 10 of the laggards are in compulsory-unionism states.

Closer to home, when it comes to broadening the middle class, New Mexico’s MSAs do a rather poor job. None lands near the top, nationally. At 65.1 percent, Farmington’s middle class enjoys the largest share, followed by households in Santa Fe (63.0 percent) and Albuquerque (62.2 percent). Las Cruces is fourth among the four, with just 56.9 percent found in the middle class. That puts it within striking distance of America’s rock bottom.

But wait, it gets worse. Las Cruces has the nation’s third-highest portion of households in the low-income category. Farmington’s not too far behind (28th), with Albuquerque (81st) and Santa Fe (244th) faring somewhat better:

An “economy that works for everyone”? Clearly, Big Government policies in New Mexico generally — and Las Cruces specifically — are not getting the job done.

Telecommuting Torpedoes Transit, in America and New Mexico

In 2012, a wise man asked, “If a transportation phenomenon cuts gasoline consumption and allays traffic congestion, but isn’t the result of ‘green’ mandates, does it really exist?”

Apparently not, at least in the world of “environmentalists,” because you’ll search the websites of the leading eco-alarmist groups in vain for any mention of the fact that telecommuting has surpassed government-run trains and buses as a way to “travel” to work.

In 2017, folks who do the bulk of their job in their PJs comprised 5.2 percent of workers, while “transit” claimed just a 5.0 percent share of the commuting market. Furthermore, transportation scholar Wendell Cox documented that “working at home leads transit in work access in 43 of the nation’s 53 major metropolitan areas.” (That’s big — one would expect that bus lines and commuter rail and subways would continue to dominate in large, high-density urbanized regions.)

Governing unpacked the data a bit:

As one might expect, self-employed individuals are the mostly likely to work from their homes, with about 24 percent doing so last year. But they’re not driving the expansion of telecommuting. … [T]here are fewer self-employed teleworkers who own unincorporated businesses than a decade ago, partially because the self-employed make up a smaller share (5.9 percent) of the overall workforce.

Instead, it’s employees of private companies who are pushing up telework numbers. According to the latest estimates, 4.3 percent of all private wage and salary workers usually worked from home last year, up from 2.7 percent a decade prior.

We’ll wait to see the statewide data for New Mexico, but last year, telecommuting in both Albuquerque and Las Cruces (no figures were released for Farmington and Santa Fe) was 5.7 percent, above the national average:

That’s good news for fuel consumption, air quality, and traffic congestion. But it’s a disaster for “environmental” agitators and lobbying organizations. They’re too busy scaremongering over methane “pollution” and attacking this year’s list of dastardly “Fossil Fools” to notice progress. Guess direct-mail campaigns, press conferences, and protests are more effective using fears, not facts.

Tax Dollars for Tinseltown Toadying in Las Cruces

The City of the Crosses has an inferiority complex.

New Mexico’s generous — and as an economic-development tool, deeply ineffective — freebies for Hollywood are skipping Las Cruces. That’s why the city’s pols, educrats, and media figures have pressed, for years, to build film-and-television-related infrastructure in their region.

Film Las Cruces, originally the Regional Film Development Advisory Committee, signed a memorandum of understanding with city councilors in November 2015. Local government committed to “work collaboratively to promote and develop film and entertainment arts industries in Dona [sic] Ana County,” aiming at “the development of film and entertainment arts assets including a film office, film liaison staff, production infrastructure, trained film and entertainment arts production workforce, and educational training.” Initial cost to taxpayers: $95,000 per year, for three years.

At the time, no one stopped to ponder why the city was hitching its wagon to a nonprofit entity that had yet to obtain tax-exempt approval from the IRS — a source tells Errors of Enchantment that the group didn’t even file for 501(c)(3) status until earlier this year. With State Sen. Jeff Steinborn, a Las Cruces Democrat, serving as the group’s president, pesky questions about propriety didn’t get in the way. (Neither did concerns about Steinborn’s complete lack of experience in the private sector, much less the film-and-television industry.)

Next up for the city’s La La Land lapdogs was a studio. Two years ago, the local daily whined that a “proposed film site for southern New Mexico has gone from Corralitos Ranch to the Las Cruces Convention Center to a number of sites currently under consideration, including the former Coca Cola bottling plant on South Valley Drive, all since funding was first appropriated by the Legislature in 2014.” The process continued to drag along, until February, when Film Las Cruces announced that it was “opening a new film studio for film production and workforce training.” Dubbed “Las Cruces Studios,” and located at the aforementioned bottling plant, the facility — operated in partnership with Doña Ana Community College — can “accommodate all sizes of film productions from major motion pictures and television series, to independent and student films and commercials.”

But at 74,000 square feet, Las Cruces Studios is hardly cavernous. It won’t make Las Cruces an industry “player” in the way that Albuquerque and Santa Fe are. So the dream is to spend millions of dollars — in Steinborn-secured state “capital outlay,” and perhaps a portion of the city’s tax on lodging — on a bigger facility, possibly located at the Las Cruces Convention Center.

Meanwhile, there are other ways to entice productions. At a “work session” earlier this month, the city’s Economic Development Department outlined a new incentivization scheme:

The city would pay 10 percent of “qualified expenses” to film production companies that spend at least $100,000 in Las Cruces. The program, if approved, would make Las Cruces the first city in the state to offer such an incentive to filmmakers.

To be eligible for the incentive, film producers would have to enter into an agreement with the city and agree to provide certain services designed to help develop the film industry in Las Cruces.

It could, for example, agree to allow the city to disclose that the filming was occurring in the city and include the city in promotions for the film. It could provide an educational forum for the local film community. It could agree to hire a minimum of 10 local residents, not including background actors.

The program would provide even greater incentives for television series and other episodic productions because they would typically film for longer periods. They could earn an additional $10,000 per episode if they produced at least five episodes in Las Cruces.

Rather than accept the blindingly obvious failure of Hollywood subsidies to build a viable entertainment industry in New Mexico, Las Cruces’s “public servants” are doubling down — eagerly dedicating ever-larger amounts of tax revenue to a job-creation chimera. It’s an inexcusably dunderheaded attempt to revive the metro area with arguably the worst economy in the state.

One thing you can never say, Las Crucesians — that you haven’t been told.

Feldman Needs a Fact-Checker

Over the weekend, Dede Feldman, a “former member of the New Mexico Senate who served for 16 years and was the sponsor of many state campaign finance laws,” penned a column attacking Gary Johnson for announcing his senatorial candidacy at an event sponsored by Elect Liberty, a Salt Lake City-based independent-expenditure political entity.

Predictably, Feldman charged that Johnson was able to appear at a Super PAC shindig because Citizens United v. FEC, a 2010 U.S. Supreme Court decision, “opened the door not just for unlimited, and in many cases undisclosed, campaign donations, but for a vague interpretation of campaign finance laws that created more loopholes than any enforcement agency could track.”

Technically, Feldman is incorect. While Citizens United set the precedent, Super PACs, such as Elect Liberty, were created by SpeechNow.org v. FEC, a unanimous decision by the D.C. Circuit Court of Appeals.

But let’s not quibble over details. Feldman admitted that “everything Johnson is currently doing is legal,” but lamented that prior to Citizens United, “there were safeguards in place that both required transparency and limited the ability of corporate interests to influence elections.”

Some of us don’t see the First Amendment as a “loophole” that requires “safeguards.” As the Institute for Free Speech explained:

Though campaign ads are often derided as a nuisance, political spending can have positive effects for democracy. Studies have found that higher campaign spending increases voter participation in state legislative elections, and “that exposure to campaign advertising produces citizens who are more interested in the election, have more to say about the candidates, are more familiar with who is running, and ultimately, are more likely to vote.” These effects suggest that super PAC spending can improve democracy by increasing Americans’ engagement in the political process.

Through the creation of super PACs, SpeechNow made it easier for Americans with common beliefs to join together and share information and opinions about candidates. This has led to an increase in speech about elections that produces voters who are more motivated and better informed.

As for “corporate interests,” contrary to liberal talking points, for-profit entities are hardly monolithic in their priorities. (Does ExxonMobil have the same legislative agenda as Tesla?) And Feldman conveniently overlooked the most deep-pocketed player in advocacy and elections: Big Labor. The National Institute for Labor Relations Research found that in the 2016 election cycle, $1.3 billion was spent “directly from union treasuries (filled with forced dues and fees) … on politics”:

Obsessed with controlling Americans’ (voluntary) political speech, Feldman and her band of ill-informed, virtue-signaling “reformers” have long waged war on citizens’ rights to pool their resources in order to amplify their influence. Misguided McCainiacs should heed the wisdom of John Samples, director of the Cato Institute’s Center for Representative Government:

Beneath all the pious talk about equality, fairness, and the integrity of the process lies this unpleasant truth: those who write campaign finance laws seek primarily to repress and harass those who would challenge their power. Sometimes they do it to preserve the power of their party and almost always they do it to sustain the power of incumbents.

Summer Ends With Another Win for the Right to Work

Since January 2015, the Rio Grande Foundation has tracked 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 August, of 18,301 projected jobs, 15,076 — 82.4 percent — were slated for right-to-work (RTW) states:

As for the sub-metrics we track:

* Sixteen domestic companies based in non-RTW states announced investments in RTW states. None went the other way.

* RTW prevailed in foreign direct investment, too. Nineteen projects are headed to RTW states, with three to occur in non-RTW states.

* One relocation will be made, from RTW to non-RTW: VF Corporation, “a global apparel and footwear” manufacturer, will move its headquarters from North Carolina to Colorado.

Marquee RTW investments in August included:

* Cognizant “opened its newest U.S. regional technology and service delivery center” in Texas, hiring 1,100 to “provide a variety of services for … Dallas-area clients in various industries, including insurance, healthcare and retail”

* Cognizant also cut the ribbon on another “U.S. regional technology and service delivery center,” creating employment opportunities for 500 “full-time, highly-skilled technology and business professionals” in Arizona

* Poland-based Press Glass, “the largest independent flat glass processing operation in Europe,” picked Virginia to invest $43.55 million in a “manufacturing operation” (212 jobs)

* Corning Inc., based in New York, chose North Carolina for “a cable manufacturing facility for its Optical Communications business segment,” with plans to “create approximately 110 jobs over the next five years”

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.

* Non-border-crossing relocations were not counted, border-crossing relocations were.

A ‘Cluster’ Bomb for Data Centers in New Mexico

Zero.

That’s the number of data centers that have been built in New Mexico since Facebook picked Los Lunas to host “one of the cornerstones of our global infrastructure.”

The tech behemoth made its announcement on September 14, 2016, and it was no surprise that state and local government delivered a dump truck’s worth of “incentives” to the company’s front door. In exchange for a promise of a few dozen permanent jobs, New Mexico’s taxpayers were committed to “$30 billion in industrial revenue bonds that provide a 30-year property tax break, $10 million Local Economic Development Act funding, up to $1.6 million in gross receipts tax reimbursement annually and access to the $3 million Job Incentive Training Program.” (In 2017, Facebook decided to double the size of its facility, and told the Albuquerque Journal that more “than 100 employees could be employed at the two buildings once they are opened.” (Emphasis added.)

Two years ago, Governor Martinez “talked about the long term goal of building a data center cluster and bringing more high tech companies to New Mexico,” and predicted that once Facebook’s infrastructure was in place, Silicon Valley will “be able to say, ‘Let’s go to this location. Let’s make this a technology center that is going to be top-notch.'”

A few months later, Gary Tonjes, the reliably clueless president of Albuquerque Economic Development, claimed that on September 14, “We received emails and calls throughout the day from businesses and site selection consultants, and several of those are now a little bit more than casual engagements. The general message was, ‘If Facebook is going there, we want to be there, too.’ It’s really going to be significant.”

National “experts” fell for the hype, too. Nine months after Facebook made its pick, Michael Rareshide, an executive with Site Selection Group, labeled Albuquerque “a sleeper poised for growth” in the data-center world. He touted the region’s “low risk profile and other attractive factors,” including a “low cost of infrastructure.”

Well, it’s been two years, and … zilch.

As “public investments,” giveaways to data centers are close to worthless. Never mind the fundamental unfairness of pledging taxpayer dollars to deep-pocketed tech firms. (Facebook has a current market cap of $470 billion, and in 2017, its revenue was $40 billion, with net income of nearly $16 billion.) As job-creators, the facilities don’t deliver. And the future, as The New York Times reported before the Los Lunas announcement, is bleak:

Local people, along with many economists and officials, often think these data centers are a key to an industrial revival. But the reality is less impressive. … [C]ompanies come to places like Boydton [Virginia] for basics like land, water and electricity. Even with low local wages, people are a high-cost item. As small as the staffs at these mammoth facilities are, companies say, perhaps a third of the company jobs will eventually be filled by robots.

That’s not to say that taxpayers and elected officials should oppose data centers in their communities, of course. The principles of property rights and voluntary exchange aside, the buildings support the construction industry, have minimal impact on traffic congestion, procure goods and services from local providers, and don’t impose much of a burden on law enforcement. What they don’t do is spark “high-tech clusters” and lots of jobs. It’s one more reason to oppose their subsidization.

Rest assured, the “business” press in New Mexico won’t hold pols and bureaucrats accountable for the promises they made two years ago. As for “economic development,” as a fad-driven phenomenon, it’s moved on to other things. (“Cybersecurity” is very hip these days.) Corporate-welfarism means never having to say you’re sorry.

Making the Essentials More Expensive

In “Government and the Cost of Living: Income-Based vs. Cost-Based Approaches to Alleviating Poverty,” a new paper from the Cato Institute, Ryan Bourne explores an anti-poverty policy strategy focused on cutting the poor’s bills — not broadening and expanding welfare programs.

Bourne contrasts “income-based” strategies with “reforming existing government policies that raise the prices of basic goods and services and thereby hurt the poor through higher living costs.”

As the chart above reveals, people “in the bottom 20 percent of the income distribution tend to spend a much higher proportion than the rest of the population on ‘essential’ goods and services.” The opportunities for savings are substantial, because Bourne’s list of costly interventions is extensive: “land-use planning and zoning regulations,” sugar subsidies and protectionism, D.C.’s milk mess, the Renewable Fuel Standard, CAFE mandates, dealership-franchise laws, import tariffs on apparel, and occupational licensing. All deserve serious reform, if not full repeal.

Errors of Enchantment can’t think of a better way to make “essential” goods — and services — cheaper in New Mexico than tackling the perpetually rising rates of the gross receipts tax. Last month, Farmington became the latest community to hike its GRT, from 7.6250 percent to 8.2500 percent. (On July 1, Albuquerque’s GRT rose from 7.5000 percent to 7.8750 percent.)

The chart below depicts the growing GRT burden in the state’s seven largest municipalities, which contain 45.8 percent of New Mexico’s population. Rio Rancho saw the slightest rise, and Farmington — as of January 1, 2019 — the greatest.

Whether it’s the good or service itself, or the inputs required to produce the good or service, New Mexico’s GRT makes the state’s poor poorer. But don’t hold your breath waiting for leftists in the Land of Enchantment to lobby to weaken the levy’s sting.

New Mexico, the Solid and Stable Hydrocarbon-Producer

Gordon has reminded us that Divine Providence played a cruel trick of climate and geology by putting so much petroleum and natural gas in the Gulf of Mexico.

It’s the one-year anniversary of Hurricane Harvey, and Tropical Storm Gordon — fortunately, a cyclone that packed far less of a wallop — is fading away. According to the American Petroleum Institute, the industry’s “experiences last year help guide readiness this year,” with safety topping “the list of readiness goals — to protect our employees, vital infrastructure and neighboring communities while also having specific plans in place to restart facilities and help restore fuel supplies if there are disruptions.”

The situation in the Gulf has nearly nothing in common with hydrocarbon-production in the Land of Enchantment. As The New York Times reported in 2011, New Mexico is not afflicted by severe weather, and our seismology is usually quite calm.

Zero hurricanes, light tornadic activity, few earthquakes, no active volcanoes, a dearth of mudslides, and perhaps best of all, no blizzards — that’s good news for the oil-and-gas industry here.

Quite a lot is said and written about New Mexico’s susceptibility to the volatile revenue produced from energy commodities traded on a global market. It’s a legitimate concern, but thankfully, Mother Nature keeps the state safe from the trouble it causes other energy-rich regions. It’s an inherent advantage — one of several that the Land of Enchantment enjoys. So why not add some smart policymaking, and finally get the state out of its economic doldrums?