Jon Barela and the Economic Development Department have rolled out their legislative agenda for the 2013 legislative session and, presumably beyond. There is a lot of good here and we hope the Legislature will act on several of the proposals. There are plenty of other economic development ideas that could/should be considered and there are also some ideas that we’d question the merits of. First, the proposal includes the following (explanatory links have been provided):
—Single Sales Factor
—Corporate Income Tax Reduction
—Local Economic Development Act (LEDA) – $10 million
—Job Training Incentive Program (JTIP) – $4.75 million
—Capital Outlay Reform
—Spaceport Informed Consent
Simply put, corporate income tax reforms and reductions are great ideas and long-overdo as are the legal protections needed for the Spaceport (although it is doubtful that the Spaceport could ever be a building block of NM’s overall economy). We also support and have supported in the past, reforms to New Mexico’s capital outlay system.
Unfortunately, JTIP, LEDA, and Main Street all represent bad tax and economic development policies. They are narrowly-targeted (as opposed to broad-based) and involve government taxing productive economic activities and shifting funds to other, less-productive uses. See our 2011 Piglet Book for details as the MainStreet and JTIP programs are prominently mentioned. LEDA became a center of controversy relating to subsidies for a big-box store in the South Valley. It may not be quite as problematic as the other two programs, but with government managing the process and targeting taxpayer dollars, it still defies the principles of good tax policy.
Some policies we’d like to see mentioned include: “Right to Work,” the adoption of regulatory cost-benefit legislation like that adopted recently in Indiana, and adoption of market, not “prevailing” wages for government construction projects in New Mexico. There are several other policy changes that could be adopted by the Legislature to spur economic growth, but these are just a few of the big ones.