Opinion piece: New Mexico can ‘move the needle’ with regulatory sandbox

The following appeared in the Las Cruces Sun on Sunday, December 8, 2024.

Among the numerous economic policy areas that hold New Mexico back is its heavy regulatory burden. Unnecessarily heavy regulations on business can make it harder than necessary to start and grow a business in New Mexico. The good news is that at least some regulatory reforms show real potential for bipartisanship in Santa Fe.

New Mexico could (and should) take a step toward regulatory reform by embracing what are known as “regulatory sandboxes.” In 2023 Albuquerque Democrat Rep. Meredith Dixon introduced an innovative form of legislation (HB 356), “The Technology Sandbox Act.”

While it didn’t pass or get so much as a hearing in 2023, the concept is relatively new to New Mexico and needs to be at least heard and discussed in legislative committees in the upcoming 60-day session. The concept of “regulatory sandboxes” is one that could be applied successfully to other areas of the State economy.

First and foremost, what is a “sandbox?”  Simply put, it is a regulatory “space” for entrepreneurs and innovators, from small start-ups to large corporations, to try new ways of doing things without excessive, outdated regulations. Sandboxes allow regulators the flexibility to safely monitor and foster new ideas instead of simply shutting them down.

The concept didn’t come from a “red” state like Texas or “blue” state like California. It started in the UK in 2014 for financial technology innovations and quickly spread to other countries. In the US, several states targeted the fintech, insurance, and property tech industries while more states have begun to look at the industries of agriculture, healthcare, and energy.

Industry-specific sandboxes are a good way to start, but the goal is to allow for a universal sandbox to provide flexibility to all industries, creating a fair process that boosts economic growth while empowering businesses both big and small. Four states (Arizona, Kentucky, Utah, and now Missouri) have these broad sandboxes.

Outdated and unnecessary regulations don’t just hurt businesspeople. We can’t know how many business ideas either fail or aren’t attempted due to archaic regulations that are inapplicable to modern models. Sandboxes let businesses do what they do best: solve problems for consumers.

Hopefully New Mexico’s newly minted and much-changed Legislature will take a more business-friendly approach to all manner of public policy issues starting with the upcoming 60-day session. With a more moderate approach we can certainly hope that a focus on actually growing our economy and diversifying it while continuing to benefit from the oil and gas boom would be winning approaches for Republicans and Democrats alike.

We have made the case for tax reform and reduction, but New Mexico’s thicket of regulations also holds us back. Regulatory “sandboxes” are a bi-partisan approach that is worth exploring this session.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.