HB 364 is a massive union power grab

We’ve christened HB 364 as the “Union Empowerment Bill version 2”

The Union Empowerment Bill version 1 was SB 110.

HB 364 is a massive union power grab coming to the Senate floor soon. The Democrats have used “dummy bills” and other tricks to avoid a fair hearing on the issue.

This bill is designed to tilt the collective bargaining process and representation proceedings heavily against the interests of public employers—and thus of taxpayers and the citizens served by government entities subject to collective bargaining.

Even more, the bill compromises the privacy of public employees who want a fair process free of intimidation.

In addition, the bill would take power over labor issues away from local boards and jurisdictions and centralize it in the hands of the New Mexico Public Employees Labor Relations Board—an entity that is less likely to understand the particular circumstances of local employers and employees than the local boards and jurisdictions.

Problems for employee rights:

  • It allows the union to elect to have a card check certification instead of an election, and do so without the employer’s consent. Card check is not only more vulnerable to fraud; it also violates the employee’s right to privacy in making a choice to support the union or not, which opens them up to coercion and intimidation. If private elections are appropriate for government representation, why is it not appropriate for union representation?
  • The bill allows local labor boards to continue to exist only if every union (and the employer) under its jurisdiction petitions for its continuance. The petitions have to be unanimous. Thus, if four out of five unions under a labor board want to continue under the local board but a fifth does not, then the wishes of the majority of employees are ignored and the local board is abolished.
  • Under this process, only boards that are sufficiently favorable to union interests can survive. Also, this process is a one-way ratchet toward centralization. There is no process for reviving local boards that do not receive sufficient petitions to continue. The bill specifically says “whenever a local board ceases to exist for any reason, it may not be revived.” According to the Attorney General, this language does not seem to contemplate the possibility of an error in determining whether a local board may continue, and thus provides no remedy for such an error. An inconsistency in the bill is that while it allows for local labor boards to continue, it removes all of the language in the law that governs the nature, make-up, term limits, and jurisdiction of local boards.
  • Public employees are given only a 10-day window for revoking their authorization for dues deduction. The bill also provides that no such revocations can occur before July 10, 2020. These provisions are suspect under the Supreme Court’s Janus v. AFSCME decision, issued on June 27, 2018. In Janus, the Court held that forced dues are a violation of employee First Amendment rights. Further, Janus elaborates that respecting the employee’s First Amendment rights requires an opt-in procedure not an opt-out procedure. Under this bill, an employee can opt-in at any time, but once he has opted-in, he has no right to opt-out except under a procedure that is designed to make it easier for unions to retain members and then only after July 10, 2020. The constitutional question is: What conditions are unions permitted to place on employees exercising their constitutional rights?
  • The bill also denies to public employees the right to pursue legal action regarding “fair share” dues collected prior to the Court’s Janus decision. It preemptively resolves such litigation by holding the issue moot.
  • The bill compromises the privacy rights of public employees. It requires employers to provide names, job titles, work locations, home addresses, personal email addresses, and home or cellular telephone numbers of public employees in the proposed bargaining unit.
  • The bill expands the definition of public employee to any job funded by a grant—even if just partly by a grant. Under that provision, for example, employees of any private non-profit receiving grants would be subject to unionization.

Problems for employer rights:

  • The bill requires employers to allow public employee unions to conduct union work during work hours, use public employer email accounts for conducting union business, and use public facilities for meetings without compensation for that use. These provisions requiring public resources to be used for union business may violate the New Mexico constitution’s Anti-Donation Clause.
  • The bill creates uncertainty about what collective actions are allowed. It says: “Public employees have the right to engage in other concerted activities for mutual aid or benefit.” Other than stipulating that “other concerted activities” do not include strikes, the term is undefined. Do “other concerted activities” include walking off the job, refusal to perform job duties, refusal to work overtime, engaging in work slowdowns, sick-outs, sit-ins, name calling and use of profanity?
  • The bill creates an obligation on public employers to continue bargaining even while a collective bargaining agreement is in force. The threat of perpetual bargaining will create uncertainty in labor relations.
  • The bill changes the definition of management employee to require that such an employee must devote a majority of time to management or executive functions. This attempt to expand the number of employees subject to membership in a collective bargaining unit will especially affect smaller entities where management personnel must perform multiple functions.
  • The bill prohibits a public employer from using public funds to influence employees regarding supporting or opposing a labor organization or whether to become a member of any labor organization. The State Personnel Office writes: “[T]he term ‘influence’ could be used out of context and has the potential to be used out of context in potential grievances against the state.”
  • The bill gives labor boards the authority to go beyond the administrative remedies traditionally allowed and impose any remedies deemed appropriate including compensatory damages and injunctive relief. That type of power is normally given to courts, not administrative bodies.

Problems for democratic accountability:

  • The bill authorizes arbitrators to ignore local government appropriations in awarding monetary judgements, thereby transferring from elected officials the power of the purse to out-of-state arbitrators.
  • The bill states “a collective bargaining agreement that provides greater rights, remedies and procedures to public employees than contained in a state statute shall not be considered to be in conflict with that state statute.” Such a provision allows a collective bargaining agreement to amend state law. It hands the legislative power to a non-legislative body.
  • The bill reduces the power of local jurisdictions by eliminating their option to have a local ordinance or resolution governing collective bargaining.

Process problems:

  • Central New Mexico Community College writes:
    “The proposed changes to the law are so broad and overarching that passing such a bill in the limited time available during this session is a matter of grave concern because it does not provide an adequate opportunity to assess the impact. The substitute raises questions of constitutionality as it relates to recent Supreme Court decisions and the New Mexico Constitution’s anti-donation clause.”
  • About SB 110, which is identical to HB 364, the New Mexico Council of University Presidents writes:
    “Proponents say it took them a year to communicate with unions and develop SB 110(the original bill), but no public employers were ever consulted or notified of the proposed changes during the course of its development. […] [The bill] proposes significant and numerous changes to existing law that cannot be addressed in a few days’ time—and although some amendments have been discussed, it is unreasonable to expect public employers to reach consensus on a bill so quickly after its proponents had a year to do so. We ask that public employers be given a similar amount of time to communicate among the counties, cities, school districts, colleges and universities in order to review the legislation and work with the unions to address issues they have with current law. “

The Rio Grande Foundation remains committed to meaningful reform and opposes HB 364 in its entirety.

Freedom Index 2020

The Rio Grande Foundation’s Freedom Index is back for the 2020 legislation session. Keep track of your legislators and how they vote on key legislation.

Visit the Freedom Index anytime at: rgfnm.com/score.

Here’s how it works:

Basically, legislation is scored on a scale of -8 (very bad) to +8 (very good). When a legislator votes on legislation, how they vote gets added into their score.

Example: if a bill is ranked as -2, and a legislator votes no, their score goes up by +2. Similarly, if a bill is ranked as +2, and a legislator votes yes, their score goes up by +2.

We’ll continue to track key legislation until the end of the session, February 20. Stay informed!

Donor Privacy: Santa Fe Litigation Update

Last week on January 29, after 18 months of waiting for a decision, we lost our case (at least temporarily).

As you recall, the Rio Grande Foundation was engaged with the City of Santa Fe in litigation over donor privacy, stemming from Mayor Javier Gonzales’ push for the now-infamous soda tax.

We lost the first round of litigation at District Court because we could not demonstrate actual threats of reprisals against the Foundation and our donors. That’s because the Rio Grande Foundation was never threatened. What we alleged is that the law would chill our speech because we were reasonably afraid of reprisals against our donors.

Typically, the threats come after the disclosure, and by then the horse has left the proverbial barn. Under the First Amendment, you don’t have to be threatened before your speech is chilled. A reasonable fear is generally sufficient. Indeed, we did show that similar groups have suffered similar threats, which is what the Tenth Circuit has required in other cases. The judge attempts to characterize her decision as being in accordance with Tenth Circuit precedent, but it’s clear she’s worried about it.

Our trial judge in this case never held oral argument, then sat on any decision for over a year-and-a-half. Neither the Foundation nor our legal counsel ever even met her, which is extremely uncommon in a case that reaches a decision on the merits.

No need to fear: the Rio Grande Foundation is moving forward in appealing the decision to a higher court. We’re not giving up the fight for donor privacy.

So, onward to the Tenth Circuit, where we ought to have better odds. We will keep you updated on our progress!

More students or fewer?

Recently, Bob Samuels wrote on Inside Higher Ed that one way for colleges to close their budget holes would be to open their doors wider:

If public universities are really committed to promoting access, affordability, and quality, they should consider increasing their funding by accepting more undergraduate students instead of raising tuition and restricting enrollments. While many would argue that higher education institutions are already unable to deal with the students they currently enroll, in reality, it costs most public research universities very little to educate each additional student, and the main reason why institutions claim that they do not get enough money from state funds and student dollars is that they make the students and the state pay for activities that are not directly related to instruction and research.

The basic idea is that universities aren’t maxing out their revenue because they don’t let everyone who is willing to pay the tuition attend. From an economist’s perspective, this is a fascinating suggestion, but also puzzling: why would schools fail to maximize their revenue? Afterall, if by letting in some extra students they could further support research activities and all the other fun stuff, why wouldn’t they do this? Why shouldn’t they do this?

Samuels suggests that the universities are not eager to do this since they would have to come clean about the true marginal costs of educating those students:

…I believe the main reason is that universities do not want to admit to the public that student dollars and state funds are spent on other things than instruction and related research.

William Patrick Leonard, Rio Grande Foundation’s Higher Education Advisor, responding to Samuels, suggests that letting more students might solve the budget problem, but it doesn’t necessarily help the students:

Bob Samuels’ argument is clearly aligned with the American ideal, that a college education should be available to all. His argument is flawed and serves only to benefit his constituency. I am not an elitist. Higher education should be available to all who can benefit. The question is determining these additional students’ ability, and I might add the disposition, to benefit. The problem is that our metrics for accurately identifying students with the minimal ability to benefit are grossly inaccurate. In our egalitarian society, many institutions have already pushed the limits of the left tail of the normal distribution in their pursuit additional tuition revenue. Ultimately, institutions have two choices when it comes to increasing revenue, increase tuition or admit more students.

The cynic in me suggests that Samuels is offering a self-serving rationale to ward off a potential reduction in force among his constituents. The more students enrolled the more revenue is earned under the guise of a core national value. On the surface, the institutions will do good, by doing good. These additional students, however, will likely be drawn from normally distributed populations. I suspect that more applicants from the left trail rather than the right will be enrolled. As more less capable and ill disposed students are enrolled, our already dismal retention and completion rates will sink even lower. Tuition revenue may increase and delay staff cuts but at the expense of ill prepared or disposed students.

I don’t think it is simply a matter of more or fewer students. I think that Samuels is wrong that state universities could simply admit more people because of the non-uniformity of students ability levels, as Pat Leonard suggests. The value of the education, in so far as a degree is a signal to employers, varies depending on how many people possess it as a credential and what kind of students are holding it.

In New Mexico, we need more clarity about what the inputs and outputs of higher education are, and what strategy is likely to increase the total welfare of the state’s population and its economy. As Pat Leonard says, increasing the universities total funds is not in and of itself a proper goal of state policy. It is only a means to an end.

Economic Knowledge and Economic Output

I have been asking over and over again whether New Mexico’s higher education institutions are providing as great a return as they could. I have mostly focused my criticism on the unexplained differences between various schools’ costs per student, implying different policies in school administration might lead to greater efficiency. Another important consideration for the well-being of state’s economy is what the students are learning (and what they are not learning).

We could divide learning into ideas that are personally useful and ideas that societally useful. The first kind directly helps a person operate most effectively in life and business — to correctly apprehend the reality around herself and to make choices according to the most reasonable theory she knows. The second kind contributes to better (worse) democratic outcomes as the wisdom (lack of wisdom) are meshed together. In both cases, if many people have foolish ideas, then society as a whole will be less wealthy, as many mistakes are made in business and government.

It seems reasonable to hope that state-subsidized institutions support wisdom and not foolishness. But, there is evidence that this isn’t the case.

Zogby International researcher Zeljka Buturovic and George Mason University economist Dan Klein recently co-authored a paper in Econ Journal Watch that indicated that college students don’t do any better than the uneducated in answering questions about basic economics. George Leef at the Pope Center discusses some of the explanations for this phenomenon, including:

The most persuasive explanation is the one they offer last: Few students are exposed to economic thinking in their college coursework. Courses in the principles of economics are rarely required and even when students do take such courses, it is by no means certain that the professors will teach them in a way that causes students to grasp such lessons as “price controls cause shortages.” Many economics professors are registered Democrats and are comfortable with government intervention in markets.

The questions are all about the basic economic verities that markets and trade have produced and continue to produce a great amount of wealth for society, and that restrictions on market activity often have negative side effects. Certainly, we would expect to see quibbling with some of the language of the questions, but some of the questions have clear answers, so anyone who gets them wrong is really misled in his thinking. See the two columns for college-attendees and graduates in Table 1 on page 183 (a pdf of that page is here).

Missing one or two of the questions could be due to misinterpreting the wording of the questions, but the large blocks of mistaken answers point to a misunderstanding of price theory and markets. How can 1/3 of college graduates believe that the standard of living is not any higher today than it was 30 years ago? Not knowing GDP growth has been dramatic is like not knowing about the Cold War. Isn’t this one of those things an “educated” person ought to know? Meanwhile, the questions about rent control and minimum wage illustrate students’ non-understanding of the effects of price ceilings and price floors. Such students would probably agree with the proposition that the government can make people’s lives easier simply by changing prices on a spreadsheet. Gee, why can’t we fix prices all the time to make everyone richer?

In thinking about the role of universities in preparing a new generation of leaders to guide society, it is depressing to consider that many of these individuals have not learned the basic tools of economic logic and some elementary facts about our society’s wealth creation processes. Economics has important lessons about structuring incentives and designing institutions to motivate individuals towards cooperative, productive behavior. It is no surprise that in the absence of this learning we see spending policies that lead to pernicious budget deficits even as the heavily funded programs don’t work.

A worse version of this story could be that colleges not only fail to teach economic verities, but actually work against a clear understanding by filling students’ heads with confused prattle about social democracy and other anti-capitalist ideological fetishes. In doing so, the schools are effectively undermining society’s ability to create wealth — a wealth that supports the operation of the academy. I ask, to what degree are New Mexico’s budget problems today, directly linked to a failure of certain college-educated citizens to apprehend basic economics?

Strategic Cutting versus Trimming the Hedges

In his response to my Albuquerque Journal article last month, University of New Mexico president David Schmidly announced that UNM had “identified $6 million in cost-containment measures in developing its fiscal 2011 budget.”

The Strategic Advisory Team made a report, which included short term reductions (summarized by RGF’s Corey Davis):

Short term recommendations are as follows, preceded by estimated cost-savings:
$173,184–1% invoice discount with vendors by paying in 10 instead of 30 days from date of invoice;
$315,000–provide capital projects’ vendors with PDF instead of printed docs;
$83,000–eliminate water coolers in offices;
$198,532–obtain multiple bids for furniture acquisitions;
$1,000,000–standardize the purchase of computers through a Dell contract;
$280,000–shift printing from desktop printers (which require printer cartridges) to copier fleet;
$1,000,000–centrally purchase all Microsoft software licenses;
$500,000–identify incorrectly enrolled participants in the employer insurance plans;
$360,000–have part-time employees contribute to the ERB only when they are at least .25FTE;
$1,000,000–divert budgeted salaries for vacant positions back to the university (“Historical practice has been that some units have balanced their budgets using vacancy dollars. This will need to be addressed.” p. 15);
$20,000–reduce Academic Program Review operating budget;
$70,000–reorganize Provost’s Office;
$40,000–reduce Freshman Family Day budget;
$300,000–reduce Extended University’s Instruction & General allocation;
$269,532–reduce frequency of office cleaning;
$200,000–reduce UNM Foundation’s Instruction & General allocation.

What is interesting about this list is that it doesn’t appear to include any re-thinking of the academic programs at UNM. There appears to be no consideration of the possibility that the university could better serve New Mexicans by altering the degrees offered. Contrast this with University of Maine’s recent changes:

From a UMaine press release on May 4th:

  • Elimination of the Dept. of Public Administration
  • Suspension of the German and Latin language majors
  • Suspension of the theatre major
  • Suspension of the women’s studies major and graduate concentration in that discipline
  • Reduction of music master’s degree concentrations from five to two, retaining music education and music performance while eliminating instrumental conducting, choral conducting and collaborative piano
  • Downsizing of the Master of Arts in Teaching program
  • Downsizing of the Center for Research and Evaluation in the College of Education and Human Development
  • Consolidations in the College of Engineering, including the assignment of certain Dept. of Mechanical Engineering teaching responsibilities to faculty members in the School of Engineering Technology
  • Elimination of bachelor’s degrees in aquaculture, wood science, forest operations and forest ecosystem science, folding those fields of study into other majors in more cost-effective way.

More about UMaine’s strategic plan can be found here.

The difference between strategic cutting and just “trimming the hedges” is that strategic cutting is done with an eye towards better opportunities whereas a little trimming is about doing basically whatever has been previously decided, just a little more efficiently. If the program is generally sound, these trimmings might be the appropriate course. But, with the state’s budget crisis, a more radical re-envisioning may be in order.

In the coming days I’ll explore UNM’s budget cuts to see if they actually are substantial and realizable.

Explaining Cost Increases at University of New Mexico

University of New Mexico’s president David Schmidly responded to my comment in the Albuquerque Journal, in which I pointed out that while Central New Mexico Community College has found cost-savings per student, University of New Mexico has increased costs per student. While the response is appreciated, UNM’s president has not responded to the substance of my complaint. I dissect his response below.

Efficiency is the key to the future of higher education. Our institutions must work diligently to make their operations more efficient, thereby bolstering the resources dedicated to student success.

Schmidly sounds like an economist here. But, “efficiency” is a toothless concept if we do not define it in terms of inputs and outputs. Efficiency has a both a numerator and a denominator. My op-ed talks about dollars per student. We could talk more specifically about dollars per English major, or even more specifically about dollars per C-average student in freshman English. We could further control for the quality of incoming students: How much does it cost UNM to train a C-average student with a middling SAT score into an average university writer? We don’t have data to make such detailed comparisons, but this is the direction we should proceed in. Alternative metrics are also welcome, so long as they can actually measure something.

The need for additional efficiencies does not increase or diminish in times of economic boom or bust. Rather it should always be the guiding motivation for all of our public institutions.

In fact, the need for additional efficiencies is greater than ever. The university is part of an economic system in which a decreasing amount of economic output means, ceteris paribus, less revenue for the state government. The state is the majority funder of higher education, thus its economic problems also belong to the state universities. Since post-secondary institutions purport to be generators of economic growth, economic trouble forces the question: Does higher ed generate returns sufficient to justify its costs?

The University of New Mexico has identified $6 million in cost-containment measures in developing its fiscal 2011 budget. The Strategic Advisory Team that I charged with finding efficient and cost-effective ways to conduct university operations will continue its work, as additional and more creative efficiencies must be found to help balance future budgets.

This is wonderful news. I would welcome a discussion with UNM (and other state universities) about the particulars of the cost savings they have found. It is worth asking what these areas of savings are and if we can generalize any conclusions from UNM’s experience.  It is helpful to know how to evaluate which programs are worthwhile, and which are not. This goes back to the question of metrics which is rooted in a theory of what education is attempting to accomplish, and what role it plays in the state’s economy.

Though the premise of targeting inefficiency found in a recent opinion piece from the Rio Grande Foundation showed promise, we find the content disturbing in its oversimplification. Building an argument based on the comparison of a community college and a flagship research university makes no sense, as the operations in mission and scope are too different to even allow comparison.

In fact, my argument is not based on a comparison of a community college and a research university. My Albuquerque Journal op-ed is a derivative product of a larger policy study that asks why some NM schools’ costs have gone up while others have gone down. To say that there is no possible comparison is to completely avoid the challenge.  Asking why the costs are different is an invitation to explain why this difference exists, which should lead to a discourse about what higher education is (and ought to be) pursuing.

Yet we find media stories seeking to do this as though the two were interchangeable. Outstanding community colleges like Central New Mexico prepare their students with skills to enter the workforce or to continue their education at a four-year institution. They offer affordability, accessibility and flexibility.
Research universities like UNM go beyond preparation to provide opportunities to pursue advanced degrees in specialized fields with faculty recognized nationally and internationally in their fields. They provide professional degrees in areas like architecture, law, pharmacy and medicine. They offer research libraries, Division I athletics, housing, museums, a comprehensive health sciences center and a teaching hospital. With all that, UNM remains affordable and accessible when compared to its peers.

So, this brings us closer to a fair comparison. But, what of those services that are comparable? Will UNM’s president join me in a call for complete transparency? I would propose a department-by-department comparison between state universities and with national peers.  How does UNM compare to CNM in subjects they both teach? Further, what does it actually cost UNM to produce architects, lawyers, pharmacists, and medical doctors?

CNM and UNM have different missions but we share the same goal — preparing our students to be contributing citizens, providers for themselves and their families, and the scholars who will lead us further into the 21st century.
We must never forget the true costs of failing to invest in the education of our children, failing to give them the opportunity to reach their highest potential, failing to search for the cures and solutions to our most pressing challenges.
It is through partnerships such as the one modeled by CNM and UNM that the real efficiencies and success of higher education will be realized.

All of this is lovely, positive talk. In order to translate good thoughts into reality requires seriously talking about how the cost structure of higher ed works and what is driving some schools to increase costs while others appear to be saving money.

Someone once said, “A goal without a plan is just a dream.” Similarly, rhetoric without accountability is just cheap talk.

Higher ed in New Mexico can be more cost effective. UNM’s efforts towards dialogue and reform efforts are appreciated and admirable. But, we have much work to do.

Tax Waste at UNM

With state revenues down, lobbyists from UNM are scrambling to secure funds from the legislature. Instead of working to cut a more crucial slice of the public pie this year, it might be a good time for citizens, legislators, and educators to come up with strategies for making higher education more self-sufficient.
In their ’08-’09 budget plans, University administrators diverted revenue and increased tuition to fund a series of projects with a $1,650,000 price tag. Under the guise of strengthening the University’s “core mission,” “enrollment management,” and “academic departments,” administrators made some expensive promises that deserve analysis.
$200,000 was allotted to keep Zimmerman Library open 24/7. This goal never saw the light of day, and librarians aren’t aware of any such plan. Instead of fulfilling their budget “goal,” University administrators decided to extend Parish Library’s operating hours, a smaller business library with fewer resources for the average student.
Almost half a million was portioned for “Enrollment Management,” which developed a “Parent Relations” website that helps parents understand the issues necessary for their youngsters’ college success, including suggestions for classes. It seems costly and excessive to encourage parents to continue pampering their children throughout college.
Another half million was diverted to offset the increasing costs of copying paper, telecom and other equipment, so the Provost’s office could hire more teachers instead of worrying about standard operational costs. Despite this goal, the University was forced to implement a hiring freeze because of funding shortfalls.
In November, New Mexico voters approved $7,000,000 in bonds to fund a new Science and Mathematics Learning Center. The University planned to break ground for the new facility during the fall semester, but even now, midway through the spring semester, no progress has been made.
These unfulfilled or superfluous projects represent only a tiny fraction of the University’s total budget. There are surely millions more taxpayer dollars funding broken promises and extraneous projects. High costs to the public could be countered if the University was encouraged to become more self-sufficient.
Although far from ideal, the UNM Health Sciences Center is an example of an educational enterprise that is far more sustainable than most at the University. With only a fraction of the total UNM student population pursuing a degree in a health-related field, the patient care services of UNM Hospitals provides 23% of UNM’s total revenue. However, the Health Sciences Center and UNM Hospitals combined account for 54% of UNM’s expenditures, so we can conclude that the medical programs at UNM are almost halfway self-sufficient. If these programs doubled their efficiency, they would be nearly sustainable and wouldn’t require billions in tax money to operate.
Professor Sharon Warner, former director of the Creative Writing program at UNM, organizes the annual Taos Summer Writers’ Conference, an entirely self-sufficient educational program. Warner’s program pays its own rent for the University property it utilizes, as well as pays well-known writers to teach at the conference. Her conference is a shining example of education that does not rely on taxes for funding. Students pay to attend because they know that the teachers have established reputations in the field, reputations that extend beyond the tangle of scholarly journals and the trappings of state run Universities. The product that these writers generate is paid for willingly, instead of through taxation.
When taxes meant for education are funneled through the bureaucratic machine it leaves way too much room, as we’ve seen, for mismanagement and dishonesty. Our educational system needs to reflect the more clear and direct trade that Professor Warner has been able to establish. Educators should be able to demonstrate more obviously that they possess knowledge that is monetarily valuable to students, instead of relying on a Ph.D. as an all-season pass to tax graft.

Proposed Tax Increase For Education

The New Mexico legislature has announced that it will be decreasing government funding across the state, which will effect spending on public schools. This has created an uproar among many people who believe that the solution to our education problem here in New Mexico is to give more money to schools. Toward the end of last year members of the New Mexico education board proposed a so-called solution, a one percent gross receipts tax increase to help aid public school funding.
Unfortunately, the only thing that the tax increase will do is create more of a tax burden on New Mexicans and New Mexico-based businesses during difficult economic times. Despite the money which the state plans to spend on government schools, study after study has found little to no correlation between better education and more government funding.
It’s easy to understand why it would be popular to increase education funds; more money should mean more books, better teacher pay, better facilities, and an overall better education. The problem within New Mexico’s education system cannot be solved by an increase in taxes. Certainly a cracked desk or a leaky roof has never caused a child to under-perform. Change must come from somewhere other than an increased supply of government money. It must come from a school’s drive to improve its quality and the realization on the part of parents and students that the educational product being provided is extremely valuable. This is not currently the case.
One option for improving this situation is to offer tax credits to students in low-income families. Parents can utilize tax credits when they decide to place their child in a school that is either private or outside of their district. Although this means that a child may have to travel longer distances to get to school, the benefits outweigh the losses. In the end the child gets a better education. After all, parents would not make the extra effort to get their kids out of the government-run school (and pay a portion of the new school’s tuition) if they were not receiving a superior education.
This tax credit proposal, which has been introduced in the Legislature as SB 355 by Sen. Pete Campos (D), is a more optimal solution than the proposed increase in sales tax. Tax credits affect only those parents who are paying the school fees. Furthermore, it creates competition without privatization. Schools will have incentive to improve, because parents have more options. Although tax credits will not solve all of our public school’s problems, they are a step in the right direction without wasting still more tax dollars.
New Mexicans must shift away from the belief that more money necessarily means better education, toward the idea that a smart use of resources and planning can guarantee better results.

Tax Lightning Still Shocking

“Tax Lightning” was first used to describe the shock a homeowner experiences upon receiving the initial property tax assessment from their respective county. It has since become more of an umbrella term to reference a larger problem: a severe property tax inequity among homeowners in New Mexico. When ownership of a property transfers, the property tax may be assessed by county assessors at current market value, pursuant to legislation passed in 2001 (HB 366). This has only become a hot topic in the past few years. People who purchased or developed properties at the height of the real estate bubble are paying inflated property taxes. Two property owners in the same district, perhaps even door-to-door, may be paying severely disproportionate property taxes. “Tax Lightning” remains an important issue; particularly with the 2009 state legislative session impending. This trend in property assessment at “current and correct” market value serves the budget concerns of county bureaucrats but chills our already weakened economy by penalizing home buyers.
While the weak housing market certainly makes it more difficult for potential home buyers to pull the trigger, the reality of “Tax Lightning” further hinders the market from returning to liquidity in New Mexico. A potential homeowner won’t enter the market because they face a significantly-increased property tax burden. While this is bad enough for those who are looking for bigger and better housing, the problem is even worse for current homeowner such as seniors, retirees, and those who simply need a lower house payment. Their incentive is not to downgrade to a smaller, more affordable house because they may wind up with a comparable monthly payment for a less valuable property, due to the new assessment and subsequent tax increase.
For some time now local newscasts, newspaper articles, and blogs have attempted to voice the concerns of those homeowners most directly affected by Tax Lightning. But the public outcry appears to have had little effect on this policy. Challenged assessments are continually shot down. The answer given to contesting parties has been the same, unaffected by public outcry: your property tax was assessed pursuant to the law. It follows then that new legislation is the only real means for change. Earlier this year, Senator Mark Boitano sponsored two bills addressing Tax Lightning which county assessors lobbied against. Bernalillo County Assessor Karen Montoya said that her office had considered the fiscal implications and determined that the State would lose too much revenue. The bills ultimately failed. In 2009, Senator Boitano and his colleagues will introduce new legislation that may be more amenable to the opposition. This new legislation may propose the following:
• Clarifying legal nuances regarding the formula to calculate property taxes and the definition of “current and
correct” and “valuation maintenance.” This may narrow the gap between those paying too much and those
paying too little.
• Applying yield control to debt service in addition to operating costs
• Maintaining a 3% cap regardless of a change in ownership
• Removing the 3% cap, reassessing all properties, and then imposing the cap again. Phase in the heavy
increase experience by some and the decrease experienced by others over a 4 year period.
It is clear that this issue is of great concern to those most directly affected. It should be of concern to everyone. It appears that legislation is the only way to interfere with the new trend in assessment. People are seeking shelter from the lightning storm. Concerns should be voiced to state legislators. The 2009 legislative session draws near, and with it a new opportunity to properly address this issue. The desperate state of our real estate market and the extreme dissatisfactions of property owners should be enough to influence legislation.