New Mexico remains a slow growth state when it comes to population.

Tax changes took effect at the New Year. Here’s what they mean.

New Mexico’s Environment Department releases a draft “clean fuel standard.”

New Mexico’s RailRunner ridership rises slightly in 2024.

The Administration of ABQ Mayor Tim Keller was found to have misused federal COVID $$ to give raises to top officials.

Bills are being introduced in the 2025 legislative session.

In a win for freedom Canadian Prime Minister Justin Trudeau has resigned as Canada’s prime minister.

Biden is locking up large tracts of offshore resources in his waning days in office.

In the wake of the Rail Runner’s ridership collapse during the COVID 19 pandemic, the number of riders on the New Mexico Rail Runner Express continued to rebound slightly in 2024. The 2024 number is a slight, 2.6% increase over 2023’s number. It appears to represent a “new normal” for the commuter train system.

Of course, ridership remains well below what it was in 2019. And, given these numbers the Rail Runner remains a net carbon emitter relative to driving your personal vehicle. In 2024 the Legislative Finance Committee reported that ridership would need to be increased by 23% in order to simply break even on CO2 emissions.

Even these numbers are a big drop from those seen in the initial years of the Rail Runner which can be seen below:

As is so often the case at New Year’s new laws took effect with the start of 2025. This year New Mexico is among the growing list of states to reduce personal income taxes. That sounds great and is something that SHOULD be happening far more aggressively. But, while New Mexico is slightly reducing personal income taxes the full effect of the tax law passed last year is going to be rather mixed.

The tax cuts are explained here. The reductions are very slight and actually ADD a tax bracket which is not good. They will reduce taxes by an estimated $159 million this year.

Sadly, the Legislature did not stop there. They increased capital gains taxes by an estimated $61 million and corporate income taxes by an estimated $16.1 million. That is still a tax cut (on net) of $87 million annually (a drop in the bucket given the State’s massive budget surplus and spending growth, but there is more bad policy in the bill.

$13 million in geothermal credits;

$45 million for EV’s;

$18 million for solar credits;

$25 million for ‘advanced energy equipment’ (wind and solar) credits.

When taken together these tax credits for MLG’s preferred wind, solar, and geothermal industries (totaling $101 million in FY 2026) are greater than the $87 million being returned to New Mexicans.

Overall the tax provisions kicking in this year are nothing more than a missed opportunity and a variety of harmful subsidies.

As the following chart from Americans for Tax Reform highlights New Mexico’s high 5.9% top income tax rate makes New Mexico uncompetitive with its neighbors. Neighboring Oklahoma with a 4.75% income tax rate is 20% lower than New Mexico’s top rate.

According to new data from the US Census Bureau New Mexico’s population growth remained stagnant over the past year despite the State’s ongoing revenue boom thanks to the State’s booming oil and gas industry. As the map below shows only Mississippi, Vermont, and West Virginia are losing population. New Mexico joins Oregon, Wyoming, Louisiana, Pennsylvania, New Hampshire, and Maine as the slowest-growing states in the continental US.

Which states ARE growing? You can see for yourself below. But more importantly, three of the top 10 (Florida, Texas, and Nevada) lack an income tax. Nine of the 10 fastest growing states have “right to work” laws on the books (only Delaware does not). And three of the top 10 border New Mexico (Utah, Texas, and Arizona).

At the Rio Grande Foundation we have emphasized and will continue to work to highlight New Mexico’s policy failures that have caused it to lose its young, working age population. Sadly, nothing of note is being done in Santa Fe to address these issues and make New Mexico a more attractive destination for jobs, economic development, and ultimately young people.

According to news reports (based on a report by the City of ABQ IG) the Keller Administration spent $288,000 in federal money that was supposed to go to early childhood centers for bonuses for top employees instead. The bonuses were given to 27 city workers and ranged from almost $4,000 to $22,000.

This scandal-in-the-making raises numerous concerns:

1. How could Keller’s Administration be so blatant? They should know better.
2. We know that a LOT of COVID money was wasted and spent fraudulently. Hopefully there never is a “next time (pandemic),” but it was clear (to us) at the time that shutting down the entire economy was unwise. Allowing the federal government (both the Trump and Biden Administrations working with Congress) to hand out cash was not going to go well. This is just one of example with total COVID relief fraud topping $9 billion.
3. Why is the City involved in early childhood in the first place? APS runs the schools in Albuquerque and has its own bureaucracy and infrastructure. 

New Mexico’s Clean Fuel Standard rules took another step toward full implementation with the recent publication of a draft standard. As we at RGF have noted, this “standard” WILL increase gas (and diesel) prices in New Mexico. Of course, it will take time to be fully implemented.

While the Standard was adopted by the Legislature in 2024 and thus IS moving forward in some form, NMED will host an in-person meeting on Monday, Jan. 6, beginning at 4:30 p.m. at the Albuquerque International Public Library, as well as a virtual meeting from 12 p.m. to 1:30 p.m. on Thursday, Jan. 9. Additional details and links to the meetings are on the NMED calendar.

From Friday, Dec. 20 through Friday, Jan. 17 at 5 p.m., the department will also accept feedback through NMED’s public comment portal.

As you can see from the chart below (part of the draft put out by NMED) the full impact of the policy will take nearly 15 years to fully take effect.

A few months ago on the pages of the Albuquerque Journal Doug Peterson and I outlined our concerns about the proposed downtown Tax Increment Financing district. Unfortunately, the Albuquerque City Council recently adopted the TIF which (as the Journal notes) is “an economic development tool used to subsidize redevelopment projects.”

In other words, greater resources will be kept in downtown at the expense of surrounding areas.

But a TIF isn’t going to solve downtown Albuquerque’s issues. Solving crime would help. Bringing new businesses and economic activity to town would help downtown. Rather than redistributing a fixed pie, reducing taxes would grow the pie. Not all of the money would flow downtown, but with a lot of available office space some number of businesses would go downtown. And, of course ALL of Albuquerque and ALL of New Mexico would benefit from tax cuts.

And, of course, New Mexico with its exploding oil and gas revenues can easily afford significant tax reductions.

It is true that the massive surplus is under the State, not local control, but the City of Albuquerque has put together its “requests” for the 2025 legislative session. Sadly but not surprisingly, no tax reform was included in the Mayor’s or Council’s requests.

Former President Jimmy Carter has died at 100. While his overall legacy as President of our country is very much debatable, we will focus on his successful approach to deregulation here. One of the many reasons for “stagflation” which impacted the US economy in the 1970s was the non-stop growth in government regulations. Jimmy Carter did a great deal to address that situation.

In his first term in the White House President Trump took regulatory reform seriously and it was a bright spot in his economic track record, but with the death of Carter (a Democrat) it is worth highlighting the fact that Carter began the process of deregulating the US economy that led to the Reagan economic boom.

Here are a few of Carter’s regulatory successes:

Airlines;

Trucking;

Freight Rail;

Brewing;

Natural Gas prices.

Each of these deregulatory efforts reduced prices, increased innovation and diversity within the respective industry, and restored the role of markets in setting prices. Sadly, the political left is no longer are willing to acknowledge and do something about the ways in which government regulations hurt consumers (especially those with moderate incomes) by driving up costs and reducing options.

Conservatives are not always willing to tackle regulatory reform, but Trump HAS. So, here’s hoping Donald Trump will continue the deregulatory successes of both his own first term and Carter’s presidency.

On this week’s Tipping Point interview Paul sits down w/ Carla Kugler head of the NM chapter of the Associated Builders and Contractors. They discuss New Mexico’s performance in the organization’s Merit Shop Scorecard. They talk about New Mexico’s massive $6 billion in unspent capital outlay dollars and the State’s deteriorating roads. Finally, they discuss New Mexico’s construction workforce and how the state can find and train new workers in the trades and what ABC is doing about it. You don’t want to miss this important discussion!

On a narrow 4-3 vote the Albuquerque Public Schools Board voted to shut down Taft Middle School next year. As is typically the case there was a lot of “outrage” about this decision from families and employees as well as the minority on the Board. But it was the right move. And, it is something that needs to be done with more frequency at APS. The student population at APS has declined dramatically in recent years.

And the situation shows no signs of turning around in the years to come (according to data presented below from the National Center on Education Statistics):

The Archdiocese of Santa Fe (which unlike APS doesn’t have a nearly unlimited supply of money) recently closed Our Lady of Fatima school. More public and non-public schools are going to have to close because New Mexico is seeing a downward trend in its youth population. Part of this is a global phenomenon of declining birth rates, but New Mexico has also seen an outflow of families and young people thanks to bad economic, education, and crime policies that put us at a disadvantage when compared to our neighbors.

At least the APS board took action. More such actions will be necessary in the years to come.

There have been numerous media reports in recent months (spurred on by the MLG Administration) about supposed improvements in childhood poverty. In reality, MLG has been a disaster for New Mexico families and children. Crime, education failure, COVID lockdowns, and a simple unwillingness to use New Mexico’s massive budget surpluses to grow/diversify the State’s economy have been hallmarks of her time in office. And don’t forget her radical abortion policies.

These polices are a big reason why (according to UNM) “New Mexico’s 0-24 population is expected to be around 550,000 by 2040 which represents a decline of 20% over 20 years.”

So, MLG is desperate to make her Administration seem better for New Mexico children than it really is. Thus the continued misdirection (or outright lying) over the supposed decline in NM’s child poverty rates (which hasn’t really happened). As you can see below, we confirmed this with Dan Boyd of ABQ Journal who recently wrote an article that seemed designed to papering over the Gov.’s lies. RGF confirmed directly with Boyd that the Gov. is not being truthful (below).

Furthermore, we looked at the actual supplemental poverty data from none other than the Annie E. Casey Foundation (using Census data). The chart compares New Mexico’s supplemental poverty w/ the US as a whole. As you can see New Mexico’s measure is closely aligned with the national measure. Since the supplemental measure includes numerous government programs and benefits New Mexico has NEVER performed as poorly as it does in the traditional measure. New Mexico’s “improvement” on this measure largely tracks the national number.

Martin Heinrich and others in Congress could vote any day on a bill called the  Social Security Fairness Act which would allow certain government employees to collect Social Security without having paid into it. If adopted, this bill would accelerate the default of Social Security.

The Merit Shop Scorecard is published annually by the Associated Builders and Contractors (ABC). In the Index they The scorecard identifies states that are embracing the merit shop philosophy via legislation, policies, priorities and valuable programs. Rankings have been assigned primarily based on the core issues concerning merit shop construction, including state policies on Right to Work, prevailing wage and government-mandated project labor agreements.

You can see the map below. Not surprisingly New Mexico ranked 41st badly trailing ALL of its neighbors. Arizona ranked 5th, Utah was 8th, Colorado, 27th, Oklahoma was 16th, and Texas was 22nd.  Hawaii and New York were at the very bottom.

Currently the State of New Mexico is able to mask many of its policy failures thanks to its strong financial position (thanks to oil and gas). But, New Mexico laws relating to the construction industry leave much to be desired.

Despite consistent increases in spending, New Mexico continues to rank at the bottom in education. NM is around 33^rd in per student spending nationally — surpassing all our neighboring states — but the results remain unchanged.

New Mexico’s government continues to push a broken system, hoping that more money and more time will finally do the trick. This coming fiscal year NM is projected to spend around $33,000 per student, and NM students will spend more time in class than almost any other state in the nation.

If the current approach was going to work, it would have. It is long past time for New Mexico to do things differently. But what is it that we are doing so wrong? This question should trouble New Mexicans. We should be trying to replicate the success states around us are having. States like Arizona, that spend less per student and perform better in basically all the metrics. Arizona finally decided to make some radical changes, whereas New Mexico clings to left wing ideals. We refuse to see what actually works.

It is interesting to compare New Mexico to Arizona because the two states are very similar. Not long ago they had similar populations and economies. Today though, Arizona is booming. They have enacted sweeping education reform and adopted free market economic policy that has allowed for major growth. All the while, New Mexico remains adamant that policies of big government are working. Comparing Arizona and New Mexico is a stunning picture of how much damage an overbearing government can do.

50CAN, a nonprofit organization dedicated to building a student-centered American education system, put out a survey titled “The State of Educational Opportunity in America: A Survey of 20,000 Parents.” The survey asked parents questions about their kids’ schooling, because it is well documented that parents are the best indicator of student success.

50CAN data shows that, on average, only 35% of NM report satisfaction with their child’s school. Compared to 41% in Arizona, 43% in Texas, 44% in Oklahoma 40% in Colorado, 41% in Utah, and 45% nationally.

Only 54% of NM students participate in sports, compared to 62% in Arizona. That is a disservice to NM kids. While sports are not the central function of a school, they are an important factor in promoting mental and physical health. They are also an important part of the community and character building of NM students. A lack of participation in sports is just another example of the lackluster NM school experience.

Perhaps most importantly, only 27% of parents in NM are confident in their child’s preparation to go into the workforce, compared to a 34% national average. As it stands, schools in NM are not giving students the tools they need to flourish.

It is no surprise to anyone that NM trails behind other states in this survey. It has been that way for years, but the most frustrating part is NM’s refusal to change. Not only are we at the bottom of the list, but we are stuck there. States all around us are improving their schools, rather than mirror what they are doing, NM continues to double down. It is time to try something different.

Ultimately, New Mexico ranked below the national average in almost every single question asked by 50CAN. Questions that ranged from topics like school quality and opportunity, tutoring and mental health, out of school activities, parental engagement, and post school readiness. One exception being tutoring participation, which also doesn’t say great things about the education system. It does, however, say good things about New Mexico parents. They want their children to succeed. That is why school choice is an exciting idea. It invites parents into the broader discussion.

What Arizona has done differently than New Mexico is embrace school choice. They have made it easier to start charter schools; mandated open enrollment; established dollar for dollar tax credits for scholarships; and made it possible for parents to access the money that the state would be spending on their child. The successes of a system like this are undeniable. Arizona is moving in the right direction, while New Mexico is standing still.

The same survey from 50CAN breaks down responses to questions by school type, and it turns out, there are many things that private and charter schools do better than public schools. Without school choice and education dollars following the student, private schools are only an option for a small portion of the state. Private schools have a national parental satisfaction rate of around 65% compared to only 39% for traditional public schools. Charter schools need their charter renewed and public schools need students to pay tuition. That drives them to perform well.

School choice creates a sort of free market for the education system. The schools that serve parents and students best will stick around. Those that do not, become obsolete. In a competitive system, schools will be motivated to work for students. And they will be accountable to parents.

School choice is obviously not the only way to improve education. At the Rio Grande Foundation we believe that public school reform is the vital next step. Opportunity for All Kids NM (oaknm.org) is a project of RGF which is about improving education all over the state. This includes, but is certainly not limited to, educating parents about school choice. RGF is tired of seeing NM at the bottom of the list.

As we shared in this space last week despite continued growth in oil and gas revenues (totaling an expected $13.6 billion in FY 2026) Gov. Lujan Grisham’s proposed budget contains NO tax cuts or rebates for New Mexicans or business owners. Here is a bit more analysis of the Gov.’s proposed budget plan which represents a 7% increase over the previous year’s budget. Aside from the lack of any tax cuts or rebates, the most notable aspect of MLG’s budget is its size. Clocking in at $10.9 billion it represents a 73% increase from the final budget of her predecessor Susana Martinez back in FY 2019.

Have New Mexicans benefited from all of this new spending? Our roads are poor, our education system remains dead last (despite the addition of “free” pre-K and “free” college), and public safety remains a serious issue. Analysts note that New Mexico continues to grow more dependent on oil and gas.

More government spending hasn’t solved New Mexico’s big problems, but MLG and the Legislature show no signs of being willing to shrink the size of government and bring economic growth and prosperity to the State. So, we’ll continue to fritter away this unique opportunity to transform New Mexico into a prosperous, freer state.

On the latest Tipping Point interview Paul talks to Dean Stansel, lead author of the 2024 Economic Freedom of North America report. What is economic freedom and why is it so important? Why does New Mexico lag in it and why is it getting worse?

As reported earlier this week, New Mexico remains in an unprecedented oil and gas boom. New Mexico expects to collect a mind-blowing $13.6 billion from the oil and gas industry alone while even MLG’s proposed FY 2026 budget “only” spends $10.9 billion (spending has increased 45% since MLG took over in 2019).

But, don’t expect for businesses and taxpayers to see anything out of this latest budget. The Gov. proposes NO TAX CUTS or REBATES at all in her proposed budget according to Dan Boyd of the Albuquerque Journal. Instead, government will grow by another nearly 7% in the next budget, if adopted.

While the Legislature will put out its own budget plan before the upcoming 2025 session, don’t expect much help from the Legislature. Senate Finance Committee Chair George Muñoz (what passes as a “reasonable” Democrat in the Legislature these days) downplayed even rebates saying, “rebates were pretty much a waste of money” and that “the state could have used the money better by funneling it into trust funds for future use.”

While at RGF we prefer tax cuts and reform to rebates, Muñoz’ statement that they are a waste of money is ridiculous, especially when the alternative is for government to simply hold onto the money in various sovereign wealth funds or spend it on numerous ineffective programs. Sadly, New Mexico voters had a choice in November and decided to stick with legislative candidates who seem hell bent on putting as many resources as possible under government control while solving precisely ZERO of New Mexico’s actual problems.

via GIPHY

The Rio Grande Foundation’s work is heavily-focused on economic freedom. You can find the full Economic Freedom of North America report for 2024 here. Below are two charts which illustrate New Mexico’s performance going back to 1981 on the various components of economic freedom: Government Spending, Taxation, and Regulation (along w/ an overall ranking). These are, of course, relative to other states so everything is graded on a curve.

New Mexico ranks 47th in 2024.

You can actually see how states evolve all the way back to 1981 here. New Mexico hasn’t always been as bad as it is now.

New Mexico drops two spots to 47th in latest Economic Freedom of North America.

UNM football loses head coach. Why does this have economic importance?

“Free” college drives up attendance at New Mexico colleges and universities, but to what end?

Bernalillo County is voting on Tuesday to potentially raise County Commissioner salaries under the recently-passed constitutional amendment. Is YOUR county voting to increase commissioner salaries soon?

MLG wants to potentially move the New Mexico’s State Fair. Paul and Wally take a closer look. .

We took a look at Maxeon Solar’s financials and they are UGLY.

6% of federal workers are in the office full time while one-third are fully remote.

The chart below (taken from the Albuquerque Journal) highlights New Mexico’s ongoing revenue boom thanks to the oil and gas industry. State revenue once again is set to rise in FY 2026 meaning the Legislature will have plenty of money to both increase spending AND cut or reform New Mexico’s business-unfriendly tax structure.

While growth is not as rapid as it was for a few years, oil and gas revenue ALONE is more than enough to pay for New Mexico’s general fund budget for FY 2025 of $10.2 billion. The question is whether the recently-reelected “progressive” majority has the interest in enacting pro-growth tax policies for the benefit of New Mexicans and the State economy.

RGF will be working to make sure that tax cuts are as large and will improve/diversify New Mexico’s economy. We will also fight against ALL unnecessary and unfair tax hikes. It will be another challenging session but New Mexico’s problems can’t be blamed on a lack of resources.

New Mexico’s health care provider shortage remains a critical issue for our State. RGF’s president recently interviewed Fred Nathan of Think New Mexico on the subject and RGF has its own recommendations about addressing the shortage which can be found here.

There are numerous things that need to be done, but politicians in New Mexico are not all on board with solving the issue. Check out this letter to the editor written by the head of New Mexico’s Medical Association. 

Check out this paragraph:

During a recent presentation to the Legislative Health and Human Services Committee, I presented innovative solutions to the physician shortage, ranging from the elimination of prior authorization requirements to the creation of a Medicaid trust to secure care for generations to come. Instead of exploring those solutions, state Rep. Eleanor Chavez demanded to know my personal salary and my practice’s gross income. To make matters worse, when presented with data that New Mexico is the only state to have lost physicians in recent years, state Rep. Liz Thomson proclaimed the data is “propaganda.” Patients can assure Thomson that the data is very real. The following day, Thomson questioned how much physicians spend on wine.

Sadly, this kind of jealousy and ignorance is common in New Mexico among the “progressives” who dominate our Legislature and other elected bodies. We will be working this session to address the medical provider shortage. Hopefully the other “progressives” in Santa Fe are more willing to play nice.

On Election Day voters in the state of New Mexico overwhelmingly voted to revise New Mexico’s Constitution to put county commissions themselves in charge of setting their pay (Amendment 4). While at the Rio Grande Foundation we had our doubts about this plan the voters overwhelmingly passed it.

So, (with limited time left in 2024 to adopt new county commissioner salaries for 2025) at Tuesday’s meeting there will likely be a vote on the new salaries of Bernalillo County Commissioners. (Check your local county commission for details on their plans to vote on revisions as well).

Currently, commissioners in Bernalillo County receive $39,000 annually (see page 1009 of the agenda for Tuesday).

One plan would increase salaries to $150,000 annually. Another would leave salaries at current rates. Other plans would increase rates by some percentage rate of increase.

What is the correct salary for Bernalillo County commissioners? It would certainly not be wise to raise them 4X to $150,000. Whatever you think send commissioners a note by the meeting time on Tuesday at 5pm.

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.