The latest Wallethub report on how state unemployment rates are recovering is out. New Mexico remains among the least-recovered states as the graphic below shows:
In other news, according to an October 16 report from the Legislative Finance Committee that we obtained, Gross receipts tax collections in New Mexico were down $31.6 million in August compared to the same month last year, according to preliminary data from the Taxation and Revenue Department.
Furthermore, total fiscal-year-to-date GRT collections through August were down $30.3 million from the same period a year ago, or 6.3 percent.
Basically, it appears that the combined effects of the Governors lockdowns, their increased intensity, and the lack another round of federal stimulus are having serious, negative impacts on New Mexico’s economy. How long will this last? We have no idea.
You may have heard by now that PNM (pending PRC approval) has been purchased by the Spanish utility Avangrid. According to the Albuquerque Journal article detailing the purchase, Avangrid paid 19.3% above the PNM share price.
The following “check” was used by RGF president Paul Gessing as a prop in a 2019 hearing on the Energy Transition Act. It remains relevant as ever, but perhaps should be paid to the order of Avangrid now.
We don’t know exactly what this all means, but we DO know the following:
The 19.3% premium (paid by Avangrid) HAS to come from somewhere and it is unlikely those efficiencies of scale will be enough to justify that premium price.
This adds another wrinkle to the PRC election and ballot measure on the ballot this fall (the PRC will have to approve or deny this purchase).
Arguably the damage to NM rate payers has already been done (or baked-in) by the ETA. The major impact New Mexicans see from this purchase is that one of the State’s only major publicly-traded companies will be no more. Corporate sponsorships, jobs, and other aspects of PNM’s presence could dry up over time.
On this week’s discussion podcast, Paul and Wally discuss the rising number of COVID19 infections in New Mexico. The Gov. has planned a press conference later today. Paul argues that this rise is a result of the Gov.’s failed lockdown strategy and he expects more shutdowns.
In the best of times (pre-COVID19) New Mexico has not done enough to overcome its serious inherent challenges in improving student outcomes. That has become an even bigger challenge with the emphasis on “virtual” learning by the State and districts like APS and Las Cruces (to name two big ones).
The Center for Education Reform is a national education reform organization that advocates across the board for “choice” as well as teacher quality and innovation. In the group’s “Parent Power Index” New Mexico (as usual) under-performs its neighbors. Notably, Arizona, which obtains better results form similarly at-risk students for less money, is the top-ranked state in the nation. You can find the entire, interactive index below. In the same vein, the Center for Education Reform created a separate report card that just considers and ranks all 50 states based on their charter school laws environments. Again, Arizona takes the top slot while New Mexico ranks as a low-C in the rankings.
The fact is that New Mexico inherently has challenges in improving educational outcomes. Spending more money hasn’t achieved success. It would be nice if the Gov. or the Legislature defied their allies in the unions and focused on improving the State’s charter law and expanding school choice.
According to a recent Pew Center report New Mexico has very volatile tax revenues when compared to other states. That report was discussed in some detail in this Center Square story. New Mexico had the fourth highest volatility in tax revenue collection over the past 20 years.
What can be done? At the Rio Grande Foundation we have argued regularly for economic diversification through the introduction of more economic freedom, but Democrats who control the Legislature and Governor’s mansions have stood steadfastly against serious economic reforms including, but not limited to, gross receipts tax reform.
The following chart taken from the Pew chart directly shows that NM has the greatest volatility among its neighbors.
Some recent presentations by New Mexico’s Legislative Finance Committee (see chart below) truly show how we are NOT all in this together during the Gov.’s COVID 19 lockdown.
While an overwhelming majority of government workers (a huge sector of New Mexico’s economy relative to other states) are doing just fine, many areas of the private sector have been devastated by the Gov.’s lockdown policies. New Mexico’s oil and gas industry and its leisure/hospitality (tourism) are down massively while others are also way down in terms of employment. The full report is linked above while the relevant chart is below:
As Gov. MLG prepares further lockdown measures for New Mexico’s economy, a new Wallethub report shows that New Mexico (which is already poor and suffers from relatively elevated unemployment) is not recovering from the COVID 19 economic interruption as fast as other states.
In fact, since the start of 2020 NM is as seen the 2nd-worst recovery in unemployment claims since January.
The following shows NM’s performance on unemployment last week vs the same week in 2019.
Given the Gov.’s approach to the Virus and increasing spread (but not deaths), we expect further restrictions on New Mexico’s economy to be imposed this afternoon in addition to what she’s already done this week.
So much has changed for all of us in the last six months. It is time to take a look at the raw numbers of the restaurant industry.
To be sure, restaurants are taking the virus seriously. They are cleaning, sanitizing, social distancing, following the CSP’s, and wearing masks. The safety of restaurant employees and customers has been and always will be our top priority in restaurants.
The leisure and hospitality industries continue to report the most massive employment losses in the State, with a drop of 25,200 jobs—a 24 percent decrease from last year. It’s heartbreaking. Our employees are like our family. Layoffs may be the hardest thing we have had to do throughout this disaster. These layoffs don’t just affect our workers. They include their families that rely on their income for support.
A national survey of restaurant owners shows that we stand to lose one-third of our restaurants by the end of the year. That’s 1,155 New Mexico Restaurants. It’s heartbreaking to see life-long restaurateurs like Edna and Rudy Ortega of Ortega’s in Albuquerque walk away from their business of 30 years through no fault of their own. This virus takes no prisoners. There are far too many stories like the Ortega’s even to begin to share them here.
Despite meeting many of the (ever moving) gating criteria, NM continues to have some of the most economically restrictive policies during this pandemic. New Mexico is surrounded by states with indoor dining capacities, much more generous than NM.
At this time, NM only has a COVID policy with an intermittent economic policy. As a small business, you can’t succeed and grow, much less survive, without an economic plan. We need to know what is going to happen next, and it has to happen fast. Financial assistance and safeguards need to be a part of our State’s plan if our industry will ever be able to “come back.”
We are not in tune with the rest of the country. Before moving our indoor dining capacity to 25%, only two other states were closed. New Jersey and California have a much more robust economy to begin with and a better chance for recovery. As it stands now, only one other State is at a 25% capacity for indoor dining. If you look at the remaining 48 states, ALL are open to at least 50% capacity, with half of those being open at full capacity.
According to a recent survey of New Mexico restaurants, 54% reported sales being down from 20 to 70%. 16% of restaurants noted sales down over 70%.
Most restaurants reported that they could only accommodate 30% of the previous year’s customers due to social distancing and restrictions.
In a recent survey done by the New Mexico Restaurant Association, one-third of restaurants only have three months until they will have to close permanently, and another 30 percent would have to close permanently in six months.
Where does that leave us? Winter is coming. Survival on 25% capacity is near impossible. Increased costs as a result of the pandemic have hit all of us hard. We have asked, through channels, that the Governor open restaurants at 50%. We are doing our part by offering that with this increase, restaurants will close at 10:00 pm and we will support that all restaurants will need to get the NM Safe Certified Training as a prerequisite to open at 50%.
What can YOU do?
Follow the CSPs. Wear your mask. Contact the Governor to let her know you and your family are ready and willing to get back to our dining rooms.
Support the restaurants in your area NOW at this reduced capacity so that they can survive long enough to have hope that our state leaders will increase capacity to 50% sooner rather than later.
Gary Hays’ family has owned and operated Cliff’s (once upon a time it was Uncle Cliffs) Amusement Park in Albuquerque since the 1950s. Gary shares a few stories about the Park and its history (including dropping ‘Uncle’), but mostly they discuss the impact of the current lockdown policies being imposed by Gov. Lujan Grisham, it impacts on the company’s employees, how his industry is dealing with COVID-19 in states where they ARE allowed to open, and he talks candidly about the future of his family’s business. Gary also shares a few details about other policies (like the minimum wage hike) that impact his company.