On this week’s interview Paul talks to Romie Sandoval and Ricardo Hill. These two young men were legislative staffers for Republican legislators during the session. We discuss how things work “behind the scenes” and how average people can both get involved and influence policymakers. Sandoval and Hill are political consultants in their full-time jobs, so we discuss various issues around getting candidates elected in New Mexico.
Episode 488: Reviewing the 2023 New Mexico Legislative Session
On this week’s conversation Paul and Wally discuss the 2023 session and its conclusion. Most notably, they address the massive tax “omnibus” package that wound up passing. It did not include needed reforms, but there were numerous components to the bill.
They also consider the situation with regard to medical providers. Previously it had appeared that no action would be taken on medical malpractice, but that changed quickly in the final days of the session.
Finally, Wally and Paul offer a broader perspective on the session. With “progressives” firmly in control, did they have an organizing principle or a strategy? How about the minority Republicans? How should they message what happened and didn’t happen?
The Freedom Index scores are almost finalized. You can find them here.
2023 New Mexico legislative session recap
Going into the 2023 legislative session, we at the Rio Grande Foundation had three goals.
1) Use the state’s massive $3.6 billion surplus to reform the “pyramiding” and business service taxation inherent in New Mexico’s gross receipts tax;
2) Push for SOME kind of serious education reform to improve upon New Mexico’s abysmal 52nd position in the National Assessment of Educational Progress (NAEP).
3) Restore “democracy” by placing some kind of limit on this and future governors’ emergency powers.
Sadly, none of these ideas were taken up and thus the session must be considered a failure.
Additional goals included pushing the Legislature to address the impending electricity shortage which could hit New Mexico as soon as this summer, addressing the medical provider shortage, and helping to push back against bad bills.
The “omnibus” tax reform (HB 547) DID include a gross receipts tax reduction that will be both phased in and contingent on robust revenues. Sadly, it utterly failed to address business services taxation. It also included electric vehicle and energy storage subsidies, film subsidies, higher corporate and capital gains taxes, and taxes go up for drinkers (5 cents per drink), cigar smokers, corporations.
Perhaps Gov. Lujan Grisham will veto all or part of the bill? There is simply no reason for tax hikes with a massive surplus available.
Spending went up dramatically. At the start of the session the Legislature and Gov. largely agreed on a big-spending budget increase of 12% to $9.4 billion. When the dust settled in Santa Fe, the Legislature passed a $9.6 billion budget with an increase of 14% in a single year. NM government is already bloated and has grown quickly in recent years. New Mexico continues to waste money.
4) The best single bill of the session was SB 523 which passed late in the session as Gov. Lujan Grisham seemingly put the screws to Democrats reluctant to reconsider a 2021 law that was favorable to the trial attorney industry. Doctors and patients alike are breathing a sigh of relief, but that doesn’t mean New Mexico won’t face a doctors shortage moving forward.
5) Voting bill HB4 included automatic registration at government offices like the MVD, mandatory drop boxes, felons voting before their time is completely served and a permanent absentee voting list. The bill will have negative impacts on the integrity of our voting process.
Thankfully, a number of bad ideas died in the session.
6) A new paid leave scheme was put forth under SB 11 which would have resulted in tax increases borne by employees and employers alike. It fortunately died after passing the Senate.
7) Most big environmental schemes failed: SB 520 net zero, HB 426 clean fuel standard, and the “green amendment” HJR 4 all died ;
8) Bills to ban plastic bags statewide died;
9) HB 25 and HB 28 which would have increased New Mexico’s minimum wage both failed.
10) Despite devastating NAEP test scores the Legislature didn’t act in a fundamental way to improve the State’s failing K-12 system. And, despite the threat of electricity reliability issues nothing was done to keep the lights on.
How did your legislators vote on these and other issues? Check out the Foundation’s Freedom Index here.
No surprise, Wallethub finds New Mexico taxpayers get terrible return on investment
The 2023 New Mexico legislative session resulted in a grab-bag of policies that included both tax hikes and tax cuts. Overall the session, even with a $3.6 billion surplus, offered no fundamental approach to economic development or anything else.
The folks at Wallethub have a new report showing that New Mexicans receive the 3rd worst return on investment (ROI) of any state in the nation. Only California and Hawaii perform worse. For full details click the link above, but a few of the charts below highlight the abject failure of New Mexico government to perform its basic functions, a situation enabled by voters who continue to elect the same politicians year after year.
RGF opinion piece: Interest rate cap study warning to NM
The following appeared in the Quay County Sun on March 15, 2023.
Elected officials who use the power of government to “help” people often fail to account for the possible unintended consequences of their actions. Even the noblest of intentions can unintentionally hurt those it’s meant to aid.
Such is the case with New Mexico’s new law imposing a price control on the interest rate that lenders are allowed to charge on a short-term loan. Proponents claim it will make a “real difference” for people, but the only difference it’ll make is in the ability for people to access credit.
On Jan. 1, H.B. 132 “Interest Rates for Certain Loans” became law and immediately prohibited lenders from imposing an annual percentage rate (APR) that exceeds 36%.
When the bill was before the Legislature in the 2022 budget session, the Rio Grande Foundation led a coalition letter highlighting the potential consequences it would have on lower-income borrowers across New Mexico. We noted that other states with a price ceiling on interest rates offer a cautionary case study on the perils of such a policy. These cautions went ignored.
Now, a new research study examining Illinois’ 36% “all-in” annual interest rate cap on consumer loans confirms what we predicted: caps restrict access to loans and harms consumers with lower incomes and credit scores.
Professors at Mississippi College and Mississippi State University, in partnership with the Federal Reserve, found that a hard 36% cap significantly decreased the availability of small-dollar credit in Illinois and worsened the self-reported financial well-being of many consumers.
Their data confirm that following the cap loans overall decreased by 8% but are down a whopping 44% among subprime borrowers. That means people who are most vulnerable to unexpected expenses in life find themselves unable to access the credit they need.
That’s because from a lender perspective, the math simply makes it impossible to provide short-term small-dollar loans to subprime borrowers under a 36% rate cap. Unlike those with means, “high risk” Illinoisians found they could not borrow the money they needed, and 40% of individuals noted “their overall financial well-being had declined” in the aftermath of the cap.
As lead author of the study reviewing Illinois’ rate cap, Thomas Miller noted in front of the Senate Banking Committee in 2021, “An interest rate cap does not make loans less expensive; it makes loans less available.”
Miller’s research confirms that H.B 132 will have a severe impact on short-term lending here and harm working class New Mexicans as the law goes into effect.
It’s an unfortunate truth that more than one-third of Americans are unable to cover an unforeseen expense of $400, a fact that is exacerbated by this period of price inflation. In these events, Americans can turn to small dollar credit products to help them handle issues as they arise, like medical expenses or car repairs.
Government-imposed price controls rarely accomplish their goals. Whether levied debit card fees, gasoline, or prescription drugs, or in this case, interest rates, setting price controls at below-market rates leads to shortages, inefficiencies, and an increase to black market activities.
More people will look toward the unregulated underground market to get the products they need.
Paul Gessing is president of New Mexico’s Rio Grande Foundation, which promotes limited government, economic freedom and individual responsibility. Contact him at:
Yes, the Biden Administration really was trying to ban gas stoves (urged on by Sen. Heinrich)
The Biden Administration, Sen. Martin Heinrich, and the left in general have all denied that the Biden Administration EVER intended to ban gas stoves. Here is ONE of many such denials from an Albuquerque-based media outlet. In reality, an internal memo between the Administration and the Consumer Product Safety Administration clearly stated that the Administration was planning to move forward on a total ban.
Fox News actually broke the story, but the relevant text has been pasted below. An NPR is a “Notice of Proposed Rulemaking”:
A few things about gas stoves:
🔥 They emit dangerous air pollutants that can cause serious health risks
🔥 Without proper ventilation, indoor air quality can reach levels not considered safe for the outdoors
🔥 No one will be trying to pry them from your cold, dead hands
— Martin Heinrich (@TeamHeinrich) January 12, 2023
Episode 487: Kathleen Sgamma discusses energy policy, Deb Haaland conflict of interest, and more
On this week’s interview Paul sits down with Kathleen Sgamma, President of the Western Energy Alliance. Kathleen spends her time advocating for energy issues in the “Intermountain” West which includes New Mexico.
Kathleen and Paul discuss an underreported scandal involving Interior Secretary and New Mexico politician Deb Haaland. They also discuss Haaland’s role in making decisions about Chaco Canyon itself as well as the Willow project in Alaska which had not been finalized as of our conversation.
Check out this important conversation about energy and New Mexico’s important role in American energy production!
Tax bill — the final analysis Part 1 (Gross Receipts Tax)
The 60 day legislative session is in the books. Fans of public policy that would result in increased economic growth, an improved education system, affordable, reliable electricity, and rule of law were sorely disappointed by the 2023 session (if they had any expectations to begin with). But, we at Rio Grande Foundation had low expectations coming into the session. Even with those low expectations we were pretty disappointed by the lack of legislative focus on improving New Mexico’s business climate or prospects for economic growth.
You can read through the complicated legislative history of the tax omnibus HB 547 here.
We hoped for fundamental reform of the gross receipts tax “pyramiding,” but we knew that even this would be an uphill battle despite the State having a $3.6 billion surplus. Indeed, no actual plan was ever put forth among the numerous “omnibus ” tax bills to address the pyramiding issue, so we can assume that the Democrat-led Legislature never made that a priority.
Here is our take on what happened in the FINAL bill (we have commented on the several previous iterations). Our comments are (broadly) in order of the overall importance of the policies considered:
Lack of pyramiding reform, but GRT rates reduced 0.5 percentage points. Sadly, instead of taking effect next year the tax reduction will take effect over FOUR years. If that’s not bad enough if GRT revenue in any fiscal year after 2025 and before 2030 is less than 95 percent of GRT revenue from the previous fiscal year, the rate would snap back to 4.75 percent. New Mexico is in the midst of an unprecedented boom in oil and gas and SHOULD see continued growth, but there is no need for these “triggers,” especially when, as Rep. Christine Chandler noted, “delaying the full implementation of the GRT rate reductions for four years was necessary in order to pay for the film tax credits.”
It is hard to conceive of a more economically-misguided approach than to put broad-based tax relief on hold in order to throw more money at an already heavily-subsidized film industry. Under the new law SOME film projects will be reimbursed for a mind-blowing 40 percent of their overall spend.
The ONLY glimmer of real GRT reform is that at the last second a provision was inserted into the bill to eliminate taxation of deductibles and co-pays for medical care. This is something we have advocated for for many years. It represents some positive movement in the effort to address the doctor shortage.
More to come on the rest of the bill in the next few days.
Senate takes mediocre House-passed tax omnibus bill & makes it worse
With just 48 hours or so left in the legislative session, the majority Democrats just can’t seem to settle on a final tax package. The bill (HB 547) which started off terrible as introduced in the House, was improved significantly before being voted on in the full House, has now passed the Senate after several amendments that will make the bill significantly worse.
Here are the lowlights (just the changes). You can find our discussion of the House-passed bill here.
- The Senate-passed bill adds EVEN MORE GENEROUS film subsidies on top of those New Mexico already pays out. New Mexico taxpayers could pick up the tab for as much as 40% of the cost of certain films. The bill also nearly doubles the overall cap on film subsidies from $110,000,000 annually to $210,000,000.
- Alcohol taxes will go up by 5 cents per drink and more of the money collected (relative to the House-passed bill) will go to the general fund as opposed to alcohol treatment programs.
While these changes are bad and make the Senate bill an overall negative in our Freedom Index, in reality, the worst part of the bill as passed by both houses is the increases in capital gains taxes. Current law allows a 40% deduction. This bill takes all of that away except for $2,500. The only exception is the sale of a business that would net 40% deduction if the value is $300,000 or less. Republicans have pushed for removal, but Democrats seem unwilling to remove from the bill.
The House-passed version of HB 547 was a +1. The Senate version is -2. The Senate version now heads back to the House for concurrence. We’ll see if they buy what the Senate is selling or not. Also, Gov. Lujan Grisham should carefully consider how many tax hikes she wants to sign with a $3.6 billion surplus.
RGF president interviewed by KOAT 7 on City of Albuquerque spending to clean underpasses
The City of Albuquerque and State of New Mexico share the cost of cleaning up under Interstate highway underpasses. Unsurprisingly costs have skyrocketed since 2020 as the homeless problem has worsened and City leadership has refused to deal with the issue head-on. KOAT Channel 7 covered the issue and interviewed Paul Gessing about the problem and the costs it imposes. You can watch here or by clicking on the picture below: