Errors of Enchantment

(Albuquerque, NM) – The latest edition of the Economic Freedom of North America report is out. The report measures government spending, taxation and labor market restrictions using data from 2017, the most recent year of available comparable data.

New Mexico is the 45th most economically-free state in the union, that’s down from 42^nd place in the 2018 Index. The report is compiled by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

New Mexico scored 5.17 out of 10 in this year’s report, far behind top-ranked New Hampshire (7.93) and above lowest-ranked New York (4.49), which ranked last for the fifth year in a row. Said Rio Grande Foundation president Paul Gessing, “

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, report co-author and the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute.

Rounding out the top five freest states are Florida (2^nd), Tennessee (3^rd), Virginia (4^th) and Texas (5^th). Rounding out the bottom five are West Virginia (49^th), Alaska (48^th), Vermont (47^th) and Oregon (46^th). New Mexico was noteworthy in that it lagged dramatically behind its neighbors on economic freedom. Aside from Texas at 5^th-freeest, Oklahoma ranked 9^th, Colorado 13^th, Arizona 20^th, and Utah 23^rd.

The report also includes an additional all-government ranking, which adds federal government policy to the index and includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces.

From 2003 to 2017, the average score for U.S. states in the all-government index fell from 8.23 to 7.92. Across North America, in the most-free jurisdictions, the average per capita income in 2017 was 9.2 percent above the national average compared to 3.4 percent below the national average in the least-free jurisdictions.

“Higher levels of economic freedom lead to more prosperity, greater economic growth, more investment, and more jobs and opportunities,” said Dean Stansel, report co-author and economics professor at Southern Methodist University.

If you are a reader of this blog and you are on the various social media outlets, you might want to consider following RGF president Paul Gessing on Twitter @pgessing

A lot of the Foundation’s information is distributed online along with interesting news and articles….and sometimes interactions with New Mexico’s political classes.

An issue that has been discussed and pushed by the Rio Grande Foundation since its founding is school choice. Charter schools are one form of choice and we are pleased that New Mexico has them (although Democrats have been persistently attacking them in recent years).  So, I had this short discussion with a very “progressive” state representative on Twitter. Of course, his “solution” is exclusively focused on spending more money and expanding government. Our solution is to improve the existing system via greater competition. But, when you make a salient point you get, “OK, boomer.”

The so-called “progressive” (the dominant wing) of the New Mexico Legislature claims they care about children and educational outcomes, but they are literally fixated on tapping the permanent fund for universal pre-K despite ample research showing that pre-K is not an effective means of improving educational outcomes.

Education is just one of many areas in which New Mexico lags. And, the dominant political party has continued to do the same thing over and over again (spend more money, pick winners and losers) for decades. Until the voters decide to change directions we’ll get more of the same results.

Paul visits with Zachary Fort of the New Mexico Shooting Sports Association and Alexandra Garza a lobbyist for gun rights issues. Topics include recent legislation, the growing gap between rural and urban citizens of New Mexico, and possible legislation that may be considered in the coming session of the legislature.

This fall, the biggest issue on ballots across the nation was in Colorado where voters in the “blue” state overwhelmingly turned down politicians’ efforts to grow government. The vote was 56 to 44% to keep TABOR in effect.  That vote is one reason why the AVERAGE Coloradoan makes a mind-boggling $17,000 per year MORE than the average New Mexican. 

What is TABOR and why is it relevant to New Mexico? TABOR or (Taxpayers Bill of Rights) is the best single law on the books in any US state in terms of limiting government. It amended the Colorado Constitution to limit annual spending growth (at all levels of government) to the combined rate of inflation and population growth. Money above that needs to be returned to the taxpayers. There other aspects to TABOR including the requirement that a vote be taken ANY time politicians want a tax hike, but for New Mexico these days, with oil and gas revenues flowing into government coffers, it is worth discussing the limit on government revenues.

As can be seen below, when Gov. Martinez left office at the end of 2018 the State’s General Fund budget was $6.3 billion. This year the Legislature is expected to have approximately $8. billion. That’s an increase of nearly 27 percent in just two years.

As illustrated in the chart below, given New Mexico’s slow population growth during that time period and a modest inflation increase of 3 percent, New Mexico government will have grown by an incredible $1.648 billion IN REAL TERMS over just two years. We believe New Mexicans (like their counterparts in Colorado) deserve those refunds. How much are we talking about?

By our calculations, as seen below, every man, woman, and child in New Mexico should be given a $786.49 refund thanks (largely) to the oil and gas industry.  For my family of 5, that would come to $3,932.45. Rather than pouring the money into wasteful government in the worst-run state in the nation, (Colorado is 6th-best BTW), New Mexicans deserve their money back!

No one likes or wants hazardous waste, but so many products we consume and depend on every day result in the creation of some amount of such waste. The disposal of such waste is strictly controlled in the United States and here in New Mexico.

The State’s Environment Dept. has proposed new, costly regulations on hazardous waste, which, if adopted, will take effect in January of 2020. The Environmental Improvement Board (EIB) is an unelected government board here in New Mexico which will be considering new fees to be imposed on businesses which generate hazardous waste. The Hazardous Waste Bureau had proposed the increases early in 2019.

There is currently a fee paid by companies that generate hazardous wastes from their operations. The new fees represent an increase from 100% to 16,600% over the old fee structure.

These fees are expected to cover the administrative and operational costs of the Bureau, but will do little to improve public safety or the environment. There are more than 3,000 companies in New Mexico that generate hazardous waste as a result of normal business operations. The increased fees will likely be used for more inspections (and fines) than for helping the companies cope with the very complicated waste management rules in the State of New Mexico.

They are just another cash grab by State government. The new fee structure will target businesses that produce small amounts of waste but will affect the large waste generators the most. You can read about the regulatory process and how to comment for yourself here.

The proposed fee increases are detailed here.

A webinar that explains the new fees is available at http://EHStips.com/NMED27

On this week’s podcast, Paul discusses a recent meeting with Grover Norquist of Americans for Tax Reform in New Orleans. In addition to sharing information on the problem of transit projects like the Rail Runner and ART, Paul took the opportunity to remind New Mexico’s political leadership, especially Republicans  who are out of power these days that taking the ATR pledge not to raise taxes is a good starting point if the Party is serious about ever taking power in New Mexico.

New data from Albuquerque’s bus system shows just how bad our existing bus system is.

New Mexico’spersonal incomes still lag behind neighbors.

The New Mexico United soccer team is looking for $30 million in capital outlay money from the State for $100 million facility. But how much MORE from other taxpayers?

Finally, an op-ed from the Albuquerque Journal makes some solid points against Social Security tax elimination. Paul offers a few thoughts on the issue that was previously discussed on the podcast with Fred Nathan.

Continuing their unblemished record of arguing for more taxes, bigger government, and less freedom, the latest piece from a former UNM Law School professor attempts to make the case for a higher gas tax. 

There are so many reasons against raising the gas tax, but here are several:

1. New Mexico is in the middle of historic budget surpluses with general fund spending (thanks to record oil production) booming from $6.3 billion to nearly $8.0 billion over a two year time period. That’s a 27% increase. There is plenty of money available to build and repair roads, especially in Southeast New Mexico where roads have been impacted by the incredible oil and gas growth.
2.  New Mexico JUST increased taxes with a significant portion of that tax hike ($52 million annually) going to roads starting this year.
3. New Mexico should stop wasting $30+million annually on operating the Rail Runner. Ridership on the train is vanishingly small and wastes money that could otherwise be used for road maintenance. To keep spending money on this boondoggle while also calling for higher taxes is ridiculous.
4. Gas taxes are “regressive.” Not only do the poor allocated a greater percentage of their incomes to paying such taxes, but low-income folks also drive older, less fuel efficient cars.
5. Finally, although the current political situation in Santa Fe is unlikely to result in needed reform of New Mexico’s labor laws, the fact is that reforming the State’s Davis-Bacon “prevailing wage” law could result in cost reductions for a variety of transportation projects including roads (and schools). A 2017 fiscal analysis from the Legislature found that legislation that would simply have reduced the impact of New Mexico’s law would have saved New Mexico’s Department of Transportation between $20 million to $22 million annually based on 2017-2018 active construction projects.

New Mexico government is already bloated and the State is considered the worst run in the entire nation. Rather than just handing more money over to Santa Fe, it is time we expect a little better management of our tax dollars.

The New Mexico United soccer franchise had a great first season. With Santa Fe swimming in oil and gas revenues, the team’s ownership is already looking to cash in with a new soccer-specific stadium. Their plan (released after this interview was recorded) is for a $100 million facility with $30 million coming from the State. 

But, the plan is not finalized yet and local taxpayers can expect to also face additional demands for money to pay for a new facility for the team. Rio Grande Foundation president talked to KOB TV Channel 4 about the issue. While the comments were shortened dramatically for the story, the gist of the situation is that stadiums should NOT be funded with taxpayer dollars. That being said, the team and its owners/investors must come up with a significant proportion of the funding. Creative ideas like using the underutilized UNM football stadium or soccer facilities should also be considered.

I know it may seem silly at this point to argue directly to the GOP in New Mexico given their lack of political power in the Land of Enchantment, but the political winds shift and MLG and the “progressives” in control of the New  Legislature show every sign of moving too far to the left.

So, if the GOP is every going to gain the upper hand, they need to present a principled alternative to leftist policies, not a lighter shade of grey. One easy way to draw a clear line in the sand is to clearly state that you will not raise taxes (especially given the size of the budget surplus, but especially given the size of New Mexico government). In 2019 some Republicans caved to calls to raise taxes despite record surpluses. This has frequently been the case over the years. IT NEEDS TO STOP!

The group Americans for Tax Reform has a pledge that can (and should) be signed by ALL candidates of ALL parties running for office. Here is a link to the ATR pledge.  If you are serious about getting elected AND turning New Mexico’s economy around, saying you won’t raise taxes is a good starting point. Since we at the Rio Grande Foundation care mostly about legislators, I have helpfully placed that pledge form below: