Fiscal Crisis in NM? Let’s Raise Construction Prices!

Legislation now moving through the New Mexico Legislature (it has already passed the Senate and will be heard in the House Labor Committee tomorrow). The legislation will expand so-called “prevailing wage” (read inflated wage) laws.
The simple truth is that this bill will increase costs to NMDOT projects by as much as 50% compared to the federal Davis-Bacon wage scales and thus reducing the amount of resources that NMDOT has to do what it is supposed to do ie. building roads, bridges, and other infrastructure. The State’s own fiscal impact report of SB 33 reinforces the expenses associated with this wage inflation proposal to be $135.4 million over the next three fiscal years.
Clearly, with the stimulus package now in place and state and local governments ready to build those “shovel-ready projects,” big labor is gearing up to expand its piece of the pie. Unfortunately, overpaying for labor means that taxpayers get less bang for their buck.

Councilor Benton Doesn’t Get It

Too many elected officials seem to get into politics simply to tell the rest of us what to do. One of the most prominent examples of this tendency is Albuquerque City Councilor Isaac Benton. Benton, in an op-ed published in the Albuquerque Journal, argued in favor of the City’s new green building codes and ripped the national industry group that is currently suing to prohibit the City from implementing the code.
While the industry group is suing on the basis of federal preemption of local law, the idea that governments rather than individual actors in the marketplace should determine how homes are built and what utilities they should use is ridiculous. After all, as we have seen recently with the rush to more fuel efficient cars, consumers will naturally purchase appliances that provide the greatest efficiency for the money.
Hopefully, Benton and those pushing costly green building codes on Albuquerque will suffer a legal setback in this case, but the probability of the nanny-statists and those who would control our every decision giving up is small.

ACORN and the Housing Crisis

New Mexicans, especially Albuquerque residents, have dealt with the radical leftist group ACORN on multiple occasions in the past. ACORN led the charge in imposing a higher minimum wage in Albuquerque (before the Legislature and Congress imposed their own wage laws). This wage law is now an important factor in making it difficult for teenagers and minorities to get jobs. Also, ACORN was found to have engaged in massive fraud in its campaign on behalf of the so-called “living wage” in Albuquerque (a practice ACORN has engaged in nationwide).
So, how does all of this fit in with the housing crisis? According to a new study by the Consumer Rights League, ACORN, among other things, played a lead role in forcing lenders to lower their standards, thus encouraging millions of Americans who could not really afford a home to purchase one while demanding that lenders give loans to people who were likely not to be able to pay them back.
If they did not financially support ACORN and cow-tow to their radical agenda, lenders faced the wrath of one of the most political grassroots organizations operating today. Full text of the study can be found here.

Feds stall on Native sovereignty and economic development

The Navajo Nation is planning on building a coal-fired power plant near Burnham, NM. It applied for an air permit from the Environmental Protection Agency in early 2004, but still hasn’t received permission to begin construction. The Diné Power Authority, a Navajo enterprise, filed a lawsuit against the EPA on March 18 attempting to force the federal agency to make a decision on the permit, according to the Albuquerque Journal (Navajo Enterprise Sues EPA Over Proposed Power Plant, Mar. 19, 2008). “The lawsuit claims the tribe is losing $5 million in… revenue for every month the permit is delayed.”
“The EPA says it was initially delayed by climate-modeling uncertainties… and then by nearly 1,000 mostly negative comments posted on the agency’s Web site,” according to the Santa Fe New Mexican (‘We want the smoke to stop’, May 21, 2008). The Feds say they have to respond to every comment before issuing a permit.
With improved emissions technology, the new Desert Rock Energy Facility will be able to crank out ¾ of the electricity with only 1/5 of the emissions currently being produced by the Four Corners Power Plant in Fruitland, NM (The New Mexican). On top of that, the operators of the new facility are “exploring options that may prepare the project to capture and sequester CO2 emissions from the plant in the future when technology exists that makes this process technically and economically feasible.”
On March 19, New Mexico Environment Secretary Ron Curry, who has a hand in delaying the permit along with the EPA, issued a statement that said, “We respect the sovereignty of the Navajo Nation and the rights of tribal governments to determine their economic futures and to pursue positive change within their communities. However, the responsibility of taking strong action to combat global climate change is one we must all share.”
Curry is operating in quite a paradox. If the government recognizes the sovereignty of the Navajo Nation, then why is it being prohibited from starting a project that will “bring $52 million a year in revenues to the tribal government and provide up to 400 jobs on a reservation where unemployment hovers around 50 percent” (The New Mexican)?
This anti-development mentality on the part of outsiders, mostly wealthy outsiders, was the point of the Rio Grande Foundation’s recent showings of the film Mine Your Own Business. In fact, the film drew a crowd of nearly 100 to Farmington for a showing of the film.

Feds Propose Increased Financial Regulation

On Monday, Treasury Secretary Henry Paulson disclosed a plan to massively increase the powers of the Federal Reserve to regulate private financial institutions. The unveiling comes 11 days after House Financial Services Committee Chairman Barney Frank proposed a “Financial Services Risk Regulator” which would be managed by the Federal Reserve and would have the “capacity and power to assess risk across financial markets regardless of corporate form and to intervene when appropriate.” (Frank Calls for Increased Regulation, Wall Street Journal)
Paulson’s plan would “allow insurance companies to opt out of state regulation in favor of a newly created federal insurance regulator” (Treasury Proposes Financial Overhaul, McClatchy Newspapers), further outsourcing our capacity to self-govern to the federal government.
“The proposals would broadly expand the powers of the Federal Reserve, merge the regulation of stock and commodities markets, fold savings and loan institutions under the umbrella of bank regulation and allow insurance companies to opt out of state regulation in favor of a newly created federal insurance regulator.
For consumers, Mr. Paulson’s plan would create a new super-regulator whose powers would cut across financial services with overarching responsibility for protecting investors and consumers.
The plan also would create a new federal entity to oversee the mortgage origination process.”
What we need is less regulation, not more, and especially not at the federal level when it comes to financing.
The third Federal Reserve attempt was successfully enacted in 1913. America had dissolved the first one and, under vehement opposition from President Andrew Jackson, the federal charter for the second one expired. One of the supposed objectives of the Fed is to prevent financial panics like the one in 1907 that slashed the value of stocks in half.
Unfortunately, 16 years after the creation of the Fed, we entered into the most severe economic depression of our nation’s history. It would seem that giving even greater power to the Federal Reserve might create more problems in the long-term than it would solve.

FCC, Chimayo Residents Threaten Property Rights

Federal Communications Commission representative Stephen DelSordo will be making an appearance at the Chimayo Elementary School gymnasium Wednesday, March 26, at 6:30 pm to discuss possible infringements of historical preservation made by a T-Mobile cell phone tower erected over two years ago, according to The New Mexican (Meeting set over cell tower, Tom Sharpe, Mar. 25, 2008).
Rio Arriba County ordinances regulate only towers more than 70 feet tall. The constructed tower is exactly 70 feet tall, but local residents are still urging for the FCC, which they believe is responsible for historic preservation in matters of communication tower placement, to review possible omissions of historic sites in T-Mobile’s application. After the tower’s construction, concerned residents formed a coalition known as Chimayo’s Council on Wireless Technology, which, in an open letter to the Rio Arriba County Commission, was successful in implementing a nine month moratorium in 2006 in order to study wireless emissions and change county ordinances accordingly.
Aside from the supposed desecration of historical sites, the Council on Wireless Technology claims “such towers can cause cancers, leukemia, heart disorders, immunological deterioration, sleep disruptions, anxiety, seizures, etc.” and “disrupt the ability of wildlife to function and cause disease in domestic animals.” Sounds a little bit like the X-Files to me and the Food and Drug Administration agrees.
The tower is the only one in the area that can provide service to T-Mobile and AT&T cell phone users. Did I mention that the tower is located on privately owned property? Local residents and free market advocates are encouraged to attend the meeting. Come to think of it, I haven’t been feeling the same since I used my wireless Internet connection this morning.

Don’t Forget: The State Hates Your NCAA Tournament Pool and It’s Illegal!

We at the Rio Grande Foundation don’t really take a position on gambling although our tendency is certainly that individuals and not the state should decide how to spend their hard-earned money. That said, we do take a position against “outrageous laws” in New Mexico.
This brings me to an outrageous law New Mexico has on the books that prohibits NCAA Tournament Pools. Said Greg Sanders of the New Mexico Gaming Control Board, “Even if the amount of money gambled is small, it’s still against the law. Don’t do it, there are agencies out there looking for it.”
There are several problems here. 1) The state has a lottery and garners millions of dollars from gambling on Indian reservations so clearly gambling is not a “moral issue”; 2) Don’t police officers have better things to do than break up nefarious NCAA Tournament pools? 3) If the state got a cut of the money from NCAA Tournament Pools as they do from the lottery and Indian gaming, what are the chances these private pools would be legalized? It’s all about the $$$.
So, have your tournament pool. Here’s a bracket to print out. And tell your elected officials that the police have more important things to do than chase after Super Bowl and NCAA Tournament pools.

Call off the Water Nannies!

Micha Gisser has an excellent opinion piece on the Albuquerque-Bernalillo Water Authority’s power grab in today’s Albuquerque Journal
Among his more salient points is the fact that from 1994 to 2006 the price of water, adjusted for inflation, increased by from 35 to 45 percent, thus causing consumers to reduce consumption. Presumably, if water is scarce and getting scarcer, this trend will continue with or without these ridiculous regulations.
Gisser also notes that installing rain water collection systems is simply not economically viable. Since the variable charge per unit of water is not in excess of $2 or $3. Consequently, at the most, the annual saving for the household for the required equipment will be $50. Assuming that the gutters-and-barrel structure has a lifetime of 20 years, at a 5 percent annual interest the break-even investment is approximately $625.
Concludes Gisser, ” Let the price of water— reflecting all production costs, including the cost of the new conversion dam and the rental cost of water rights— guide users on how much water to consume. People do not need water nannies, they can decide for themselves how to conserve toilet water and if and when to replace their lawns by desert shrubs and invest in rain barrels.”

Gas Prices Up, NM Oil Production Down

New Mexico is one of the largest oil and gas producing states in the country. Unfortunately, the industry — and other economic activities — are regulated by politicians who are totally ignorant of how wealth is generated and destroyed. That is why, despite record-setting oil and gas prices, the number of rigs operating in the state (according to the Albuquerque Journal) has dropped by 23 percent from last year (90 to 69).
Why would the number of rigs be dropping at a time of record prices? The answer is regulation, specifically new regulations that drive up the costs associated with drilling for oil and gas by as much as $200,000 at each well site.
With the road budget $500 million short and tax increases under consideration, one might think that the powers-that-be would like to keep money flowing into the state’s coffers, but in this state you never know.

The “Permit Raj,” Albuquerque Style

If you have ever seen the excellent film “Commanding Heights,” you are probably familiar with the “Permit Raj” which held India’s economy back for more than 50 years.
A story in today’s Albuquerque Journal (subscription required) reminded me that the “Permit Raj” is alive and well here in our own over-regulated city. First, “an unexpected city requirement triggered a two-month delay in the water park project at what is now the Park Plaza Hotel and Conference Center.” Apparently, the issue related to an “unexpected regulation” from the city that forced the developer to increase the number of public restrooms and showers. This may not seem like a huge deal to those who don’t understand major construction projects, but a two month delay can be costly. Whether the regulation is justified or not, it would seem that the City’s building codes should be clear enough that this doesn’t happen.
In another example of out-of-control regulation, the City has put a hold to renovation of the Wyndham Hotel at 2910 Yale SE. The 276-room Wyndham sits on land owned by the city as part of the Albuquerque International Sunport campus. As a result, the hotel operator must lease the land from the city. In and of itself, this is not a big deal, but now the developer has been told that the City wants to assume the roles of lender and hotel franchiser in the ground lease, neither of which was included in the letter of intent. The relationship requires the owners to provide detailed financial reports on the hotel’s operation, thus bringing problems of proprietary information and competition.
The City of Albuquerque needs to stop playing ridiculous games and instead work to promote and support business development, not scare it away. Otherwise, why not just move to Rio Rancho?