They’re the twin pillars of corporate welfare in New Mexico, and the “business” community wants them preserved.
Last week, the “Greater Albuquerque Chamber of Commerce and Albuquerque Economic Development … with 30 additional economic development organizations and Chambers of Commerce throughout New Mexico” wrote a letter asking “Senate Finance Committee and House Appropriations and Finance Committee members to keep LEDA (Local Economic Development Act) and JTIP (Job Training Incentive Program) funding intact as the state considers its budget challenges.”
LEDA, often called New Mexico’s “closing fund,” distributes subsidies for infrastructure in sums that can run into the millions of dollars. Its current “total unencumbered funding level” is $55.4 million, and such a relatively large pot of revenue could make a sizable contribution to sealing the budget breaches for the current and just-ended fiscal year.
LEDA has a legion of fans, but the reality of the program isn’t so rosy. The Legislative Finance Committee (LFC) has found that “the state does not receive sufficient reporting from businesses using … Local Economic Development Act … funds to properly evaluate” the program. Thus, “it is impossible to determine [its] relative effectiveness and cost-efficiency.” (What does LEDA think it is, the Legislative Lottery Scholarship Program?)
JTIP, with a fiscal 2017 appropriation of $6 million, “funds classroom and on-the-job training for newly-created jobs in expanding or relocating businesses for up to 6 months.” While the program is a treasured tool for New Mexico’s economic-development bureaucrats, there is no evidence that it makes meaningful, lasting contributions to job- and wealth-creation in the state. As reported by the LFC, the Economic Development Department has pursued “less reporting and oversight for JTIP by asking to reduce the performance measures for JTIP from four to two. The agency wanted to stop reporting the average hourly wage of jobs funded through JTIP and discontinue reporting the percent of employees whose wages were subsidized by JTIP still employed in New Mexico after one year. However, these are critical measures to ensure jobs funded are not low or minimum wage positions and that the workforce the state is training remains employed and in the state after the training. If a majority of funds are used to fund poorly paid positions and those employees then leave the state to find better job opportunities, it would be a clear signal JTIP is not serving its intended purpose.”
New Mexico’s business lobby has shown a lot of guts in recent years, through its advocacy for a right-to-work law. It’s a position that has surely drawn the intense ire of union bosses and the considerable number of local, state, and federal politicians who kowtow to Big Labor. But last week’s letter offers a reminder that old habits can be hard to break. Corporate welfare is not true “economic development,” but the “New Mexico Coalition for Jobs” stubbornly refuses to abandon government policies that pick winners and losers in the marketplace. Fairness issues aside, it’s not at all clear that LEDA and JTIP provide much “return on investment” to taxpayers. The programs should not be preserved — they should be among the first items chopped to balance the state’s books.
4 Replies to “‘Pro-Business’ ≠ Pro-Market”
Where are the url links to to the LFC studies on LEDA and JTIP, which are quoted in the article? Thanks.
Sorry Charles, all of the relevant links are contained in our new policy paper which is coming out on Wednesday: http://riograndefoundation.org/downloads/rgf_what_to_cut.pdf
LEDA and JTIP funds have been shown to overwhelmingly favor large entities, often from out-of-state. That means LEDA and JTIP funds are aiding organizations whose loyalty can shift as quickly as “corporate welfare” appears more favorable elsewhere. To keep the “Local” in LEDA My suggestion is to earmark more of the funds to aid Local companies who are challenged by lack of capital and could be poised to achieve significant growth. Companies that got started here by people who are here on purpose, rather than chasing “corporate welfare,” are the ones most likely to create long-lasting employment opportunities for New Mexicans – and the most likely to make decisions about resource allocation we can all live with.
Very good comment. While RGF doesn’t necessary believe in all aspects of the “keep it local” economic initiatives, we certainly agree with the sentiment that these programs benefit big out-of-state businesses at the expense of locals. Thanks!