Early voting for yet another election is underway in the Albuquerque area. What, you didn’t know that? It might be by design, or at least it seems to be hardly accidental (considering how pathetic turnout was in the last municipal election which was better-publicized by far). This election is for a series of Albuquerque Public Schools (APS) and Central New Mexico Community College (CNM) bond measures. Of course, people working for those institutes have an interest in voting, but how about the rest of us?
Unlike most bond measures which are sold to the public as “not raising taxes,” the CNM bond would increase the Capital Mil Levy from .55 to 1.0 and increase all property taxes in Bernalillo County and parts of Sandoval County. The impact of the increase would be approximately $29.10 per year on a house with a market value of $200,000. That’s a decent-sized increase.
Early voting is going on now at the following sites:
Early voting started on January 13 and ends on Saturday, January 30. Voting sites will be set up at the following locations (shown in green on the map). Election Day is February 2nd with sites listed at the link above.
I took time yesterday to vote at CNM’s main campus and, while it took me awhile because the information I had didn’t specify WHERE on CNM’s main campus the vote was being held, I did manage to find the lovely portable trailer voting area which is located on the East Side of University overlooking Milne Football stadium.
You should do the same. the local economy is as weak as can be and new taxes won’t help. While CNM does a better job than many New Mexico colleges and universities, it also has 7 different locations in the metro area. Of course, APS has also had its well-publicized issues with taxpayer-funded contract buyouts etc. Voting down bonds is one of the few means of holding these bureaucracies accountable.
Kudos to KRQE’s Matt Grubs for his investigation into sick-leave abuse at the Public Regulation Commission. He exposed two employees for taking “unusual amounts of sick leave immediately prior to quitting,” a practice that “runs counter to PRC policy, state personnel rules and state law.”
New PRC boss Valerie Espinoza wasn’t pleased, telling the reporter: “I mean, to pay somebody sick leave that’s not actually ill is a travesty. Because you’ve got to remember it’s taxpayer money we’re talking about here.”
The report is another reminder that life really is different in the world of state-government employment. The sick-leave abuse was approved by a supervisor, and it remains to be seen if the PRC will take corrective actions.
But the larger issue of unfair pay and benefits deserves attention from the state’s elected officials. In 2014, research by the American Enterprise Institute showed that the “total compensation differential” between comparable government and private-sector positions in New Mexico was 20 percent.
The Land of Enchantment’s economy is sagging, and Medicaid-driven expenses are putting the state’s treasury in further jeopardy. With the legislative session set to get underway next week, now would be a good time for lawmakers to examine how employee overcompensation contributes to fiscal stress.
The Rio Grande Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development‘s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development’s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”
In December, of 18,102 projected jobs, 13,934 — 77 percent — were slated for right-to-work (RTW) states:
Eleven domestic companies based in non-RTW states announced investments in RTW states. Just five announcements went the other way.
RTW prevailed in foreign direct investment (FDI), too. Fifteen projects are headed to RTW states, with nine to occur in non-RTW states.
Two facilities were relocated from one type of state to the other — with both shifting from non-RTW to RTW. (New York to Florida and California to Nevada.)
Marquee RTW wins included CVS’s choice of Florida to base 500 “pharmacists, pharmacy technicians and administrative staff,” Farady Future’s plan to employ 4,500 at its new factory in Nevada, and Switch’s decision to build a data center for 1,000 IT professionals in Michigan.
Kentucky, once again, grabbed a big share of non-RTW jobs: 67 percent. But the Bluegrass State’s compulsory-unionism status is ambiguous. Counties are experimenting with their own RTW measures, and legislators could soon pass a RTW law that Governor Matt Bevin is sure to sign.
Methodological specifics:
* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.
* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases from additional sources.
* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.
* Intrastate relocations were not counted, interstate relocations were.
In 2014, New Mexico was gripped by “Tesla” fever. The talk centered on the possibility that the electric vehicle company was considering locating its “gigafactory” to produce batteries for its cars right here in New Mexico. Needless to say, that didn’t happen. They went to Nevada instead.
While the Rio Grande Foundation supported efforts to lure Tesla here, most of our attention was focused on the zero income tax, “right to work,” and zero corporate income tax laws that make Nevada more attractive than New Mexico when it comes to business. We were (and remain) leery of massive incentives for a single business. Nevada offered those to the tune of $1.25 billion, a figure that was quite high given that Nevada was likely better-suited than any other state as a site for the factory to begin with.
Of course we have also stated our concerns at the time about Tesla’s business model producing high-end electric vehicles. With oil having dropped from then- $110/barrel to $30/barrel today, Tesla’s mass-market appeal is further limited.
Now, some analysts (including this one at Seeking Alpha) are saying that the gigafactory is a “dud” for Nevada. Salient facts from the Seeking Alpha article include:
Driving under the influence is a problem throughout America, but in New Mexico, the toll is severe. The Land of Enchantment consistently ranks among the worst states for DUI accidents and fatalities.
While there are no failsafe solutions — with the possible exception of self-driving cars — one significant way to address the DUI problem is ride-sharing services such as Lyft and Uber.
Evidence is mounting that the availability of ride-sharing services reduces DUI incidence. A study by Temple University found that the presence of Uber led to between a 3.6 percent and a 5.6 percent reduction in alcohol-related driving homicides. Noting that there are 13,000 DUI-related deaths a year, researchers estimated that nationwide availability would save 500 lives annually and the economy $1.3 billion in losses.
Considering the seriousness of the DUI problem, it is unfortunate that New Mexico’s Senate has been a major obstacle to ride-sharing in our state.
In the 2015 legislative session, HB 272, introduced by Rep. Monica Youngblood, R-Bernalillo, passed the House of Representatives with bipartisan support — only to be killed without so much as a floor vote in the Senate.
The chamber’s agenda is controlled by Majority Leader Michael Sanchez, D-Belen, whose brother, a former House speaker, is the lead lobbyist for the taxi industry. That industry, of course, has been a leading opponent of ride-sharing services not just in New Mexico, but in cities around the nation.
As a result of the taxi industry’s successful campaign against HB 272, Lyft chose to leave our state entirely. Thankfully, Uber has proven more willing to “lawyer up” and take on the regulators who would shut them down.
The company’s challenge is considerable. Only a month ago spokesman Carlos Padilla told the Santa Fe New Mexican that the Public Regulation Commission views Uber as being in violation of the state’s Motor Carrier Act, as well as the bureaucracy’s rules.
It says a lot about government regulations that the leading opponents of ride-sharing are not dissatisfied customers, but opponents looking to use the force of government to block competition.
And then there is the DUI question itself. Academic research is important, but this New Year’s Eve in Albuquerque bolstered the case for ride-sharing. As reported by KOB-TV, police spokesman Simon Drobik said that out of 149 cars that passed through the department’s DUI checkpoint, only one person was arrested for drunken driving. Drobik said that while there were plenty of drunk people who passed through the checkpoint, they all had designated drivers, taxis, or Uber rides home.
The station noted that the city of Albuquerque — which has been far friendlier to ride-sharing companies than the state itself — worked closely with Uber to get people home safely from its New Year’s Eve celebration.
Is Uber the reason for the drastic decline in DUI problems this New Year’s Eve? There is too little evidence to be sure, but a quick Internet search turned up a KOAT-TV story from Jan. 2, 2013, with the headline “Dozens arrested, charged with DUI on New Year’s.”
A ride-sharing bill will likely be considered during the coming 2016 legislative session. The legislation will streamline and simplify taxi regulations in New Mexico. The industry should welcome such reform. But if history is any guide, ride-sharing still faces an uphill battle in the New Mexico Senate.
If Sanchez again blocks reform, will Democrats in his caucus defy their majority leader? Let’s hope so. If the free-market justification isn’t enough for them, perhaps the anti-DUI argument will be.
Either way, it is time for New Mexicans to let their legislators know that they support a policy that would promote both entrepreneurship and public safety in the Land of Enchantment.
D. Dowd Muska (dmuska@riograndefoundation.org) is research director 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.
There’s still a week to go until the start of the 2016 legislative session, but no bills relating to “Spaceport America” have been drafted.
That’s disappointing, because as the Pew Research Center reports, several states “see an opportunity to sell properties not even a governor can love.”
Governor Nikki Haley says her state has “a lot of money pits,” and she intends to “get rid of them.” Illinois, Georgia, and North Carolina are looking to unload real estate, too.
As for New Mexico’s spaceport, in the 2015 regular legislative session, Senator George Munoz (D-Gallup) sponsored a bill to sell off the white elephant. It didn’t get much attention, and didn’t make much progress. So far, there’s no indication that Munoz will make another attempt.
Too bad. With the state’s fiscal condition worsening by the day, every dollar counts, and all failed, anti-taxpayer schemes for “economic development” deserve to be sold to the highest bidders.
Recently a columnist attacked the surge in occupational licensing on the pages of the Albuquerque Journal. We at the Rio Grande Foundation have said many of the same things in critiquing the amount of and necessity for licensing.
Amazingly enough, someone (a self-described social worker) took it upon themselves to defend occupational licensing, the growth of which has been criticized by none other than the Obama Administration. Shockingly-enough, social workers are licensed in a vast majority of US states including New Mexico.
The columnist made several misguided points:
1) Safety: Studies on licensing requirements have found that licensing does not actually improve public health and safety. In its survey of twelve studies, the report identified only two that found that stricter licensing requirements increased the quality of services.
2) Licenses are career goals: so what?
3) Licenses lift people out of poverty: This is the craziest of all the author’s points. Raising the costs of entering a profession does not help the poor. It may help those who can pay the price of admission to the “club,” but that isn’t the poor.
Government licensing, especially when it is a prerequisite for employment is a serious problem. Your car’s brakes are at least as important to your safety as the competence of your doctor, but the government doesn’t license brake mechanics. That is done privately.
Things have been rather quiet on the Albuquerque Rapid Transit front recently. City staff has been meeting with opposed Central Avenue business owners in an effort to gain support for the project. Also, just today, driving down Paseo del Norte I saw a billboard promoting the bus rapid transit system (those billboards aren’t free, by the way, in fact they are more taxpayer-financed lobbying) as far as I’m concerned.
That got me to thinking, “With projected costs at $130 million now (including $30 million to re-locate water and sewer lines), what has already been spent on this project? After all, consultants (and advertising) don’t come cheap. Fortunately, thanks to the City’s “ABQ the View” transparency site (kudos to Mayor Berry on that), you can look up some information on how much the City has spent on consultants Parsons Brinkerhoff and HDR (the folks who brought us the Rail Runner, which is assisting in planning the system). The former has studied the issue for the City.
As we found on “ABQ the View,” HDR and Parsons Brinkerhoff have raked in a total of $12.3 million in the last few years. The City’s website does not break out exactly what the money was for, but we believe that a majority of HDR’s $9.6 million was for bus rapid transit while all or nearly allof the Parsons Brinkerhoff Company’s $2.6 million was for the bus.
Whatever the exact amount, City of Albuquerque taxpayers are already paying out significant money for a project that they’ve had no say over, has never seen even a stand-alone, up-or-down vote in City Council, and the final details of which are very unclear.
Over the years, New Mexicans have grown used to seeing their state at the bottom of a lot of good lists and at the top of many of the bad ones. This long-term systemic problem has grown worse due to declines in federal spending and employment at the Labs and military installations as well as plunging prices of oil and natural gas.
There are a lot of great people in New Mexico. We have a unique culture, internationally-recognized events and attractions, all topped off by incredible weather and landscapes. Unfortunately, for decades many believed that federal largess and mineral wealth were adequate bases for our economy. Business-friendly economic policies were ignored in favor of finding ways to tax and redistribute resources from these two industries.
This phenomenon is quite common. The list of resource-rich, but economically-backward nations is long including Saudi Arabia, Venezuela, Nigeria, Libya, and Iraq (to name a few).
In just the span of a few weeks New Mexicans found their state ranked poorly on a series of national reports:
*51st by the Associated Builders and Contractors on their “Merit Shop Scorecard” of issues important to the construction industry (adding insult to injury, neighboring Arizona ranked 1st);
*50th on the 24/7 Wall Street ranking of best and worst run states in America. The rankings were based in large part on our underfunded government pension programs, high unemployment rate, and high crime rate;
*Highest unemployment rate in the nation at 6.8 percent;
*Lowest graduation rate according to the US Department of Education;
*One of seven states to lose population in 2015 according to the Census Bureau;
*Tied for 46th in overall economic freedom by the free market Fraser Institute of Canada.
They say insanity is doing the same thing over and over again and expecting different results. New Mexico has relied on government and natural resources to solve its problems for far too long. It is time for a dramatic new free market strategy.
The strategy works wherever it is tried. Texas which continues to be a magnet for both jobs and people (it led the nation in population growth during 2015 and from 2010 to 2015) also ranked 3rd in overall economic freedom. It is a “right to work” state with no personal income tax and no corporate income tax. These are just a few of Texas’ many positive attributes when it comes to business and investment.
Colorado is another state that does a lot right. All tax hikes in Colorado must be approved by voters at the polls while government revenue growth is limited to the combined rates of inflation and population growth. The state also legalized marijuana in a way that maximizes market flexibility and is expected to generate an astonishing $1 billion for the state in 2016. Lastly, in 2004 Colorado adopted the “first-of-its-kind” voucher system for higher education.
Unfortunately, the complacent attitude of many New Mexicans is not going to change quickly or easily. Special interests have built up over the years that are perfectly happy with the status quo even if it impoverishes their fellow New Mexicans.
But more people than ever are demanding serious reforms. There are even some small successes to point to. For example, reductions in the excise tax on “micro-breweries” a few years ago has led to exploding growth in this area.
Last year with Republicans in control of the New Mexico House for the first time since the 1950s passed more than a dozen specific reforms designed to make our state more attractive to business investment. Unfortunately, the Democrat-controlled Senate with Michael Sanchez at the helm did not even hold votes on many of these reforms.
As we head into the 2016 legislative session, many of these same issues will be discussed. For the good of New Mexico, enough Senate Democrats must demand at least a fair vote on basic reforms. Long-overdue reforms will allow young, educated New Mexicans to find gainful employment at home rather than forcing them to relocate elsewhere out of economic necessity.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
Before the Holidays, the Heritage Foundation published a report that tallied up how some specific federal, state, and local policies impact average Americans. The table below provides the answer $4,440 based on the specific policies outlined which are usually nothing but self-inflicted “dumb” policies (like the recently-lifted oil export ban).
Land use regulation and occupational licensing were the most “expensive” regulations, but the ridiculous ethanol mandate and federal sugar program are not only expensive, but harm the environment. There are plenty of other harmful policies that place untold burdens on Americans, often impacting the poorest Americans the most. I have written about New Mexico’s occupational licensure laws and their negative impacts which fall disproportionately upon the poor.
Any specific stories or policy mistakes — especially right here in New Mexico — that you’d like to see addressed? Put down a comment!
For the third year in a row, the Foundation will be monitoring bills before the New Mexico Legislature.
Our system awards between -8 and +8 points for each bill’s adherence to the cause of liberty, opportunity, and prosperity in New Mexico.
Have a look at the early assessments. This will be a short session, but a number of significant bills have already been drafted, and there are many more to come.
Tracking a bill we need to know about? Have a opinion on a bill we’ve already scored? Email us and weigh in!
In a bit of good news for the Land of Enchantment, New Mexico has broken a three year string of appearances on the United Van Lines annual “National Movers Survey” list of “outbound” states (see map below).
The bad news is that according to data from United Van Lines, New Mexico still saw greater outbound than inbound traffic with outbound leading inbound 52.1% to 47.9%. Of course, in late 2015, the US Census Bureau listed New Mexico as among the seven states losing population that year, so the good news must be tempered somewhat.
Top inbound states for 2015 according to United Van lines were:
Oregon
South Carolina
Vermont
Idaho
North Carolina
Florida
Nevada
District of Columbia
Texas
Washington
Top outbound states were as follows (note that 6 of the top 9 inbound states have “right to work” laws — Washington, DC is not a state and relies entirely on tax dollars pilfered from other states — and 8 of the top 10 outbound states were “forced-unionism” states. Four of the top 10 top-inbound states do not tax personal income.
New Jersey
New York
Illinois
Connecticut
Ohio
Kansas
Massachusetts
West Virginia
Mississippi
Maryland
With the 2016 election right around the corner, the candidates are searching for wedge issues to appeal to large swaths of the electorate. Medicaid expansion, particularly in New Mexico and other states that have already participated, is proving to be a major sticking point.
The Affordable Care Act (ACA) contains a provision that expands Medicaid coverage to almost all individuals with incomes below 138 percent of the poverty line. But in the Supreme Court’s 2012 decision to uphold the ACA’s constitutionality, the court ruled that the federal government could not compel states to expand their Medicaid programs. At this point, 30 of them have done so (New Mexico chose to in early 2013).
The arguments over whether to expand Medicaid vary by state, but proponents often point to the federal government’s offer to foot almost the entire bill. For example, Ohio Gov. John Kasich supported Medicaid expansion as a way “to bring Ohio money back home” — that is, avoid bearing any of the cost.
My latest research suggests that this argument may be lacking, since it doesn’t account for associated increases in state and local spending.
Analyzing all federal funding to state and local governments finds that each additional dollar of federal money sent to the states is associated with an average increase of 82 cents in new state and local taxes. Across all states, a hypothetical 10 percent increase in federal grants to state and local governments would be associated with approximately $50 billion in additional increased state and local taxes, charges, or other revenue sources.
In real terms, this translates to an additional government burden of $158 per person. This is in line with existing peer-reviewed research that concludes that each dollar of additional federal grants is associated with 54 cents to 86 cents in new state and local taxes.
Under the ACA, states will be on the hook for 10 percent of the costs of expanding Medicaid. While 10 percent sounds like a small share, it represents billions of dollars that states will have to pull from other programs or raise taxes to fund. For example, the Kaiser Family Foundation projects that if neighboring Texas were to expand Medicaid under the ACA, the state would have to come up with an addition $13.5 billion in state money over the next 10 years. Implementing the ACA’s Medicaid expansion in the remaining 20 states, which would cost the federal government an estimated $470 billion over the next decade, would therefore cost state and local governments an additional $318 billion.
And the fact that these 20 states have not expanded the program reflects a realization that “free” federal money can be very expensive after all.
But why does federal government spending, which should theoretically replace state spending and taxes, in reality increase spending and associated taxes? The U.S. Government Accountability Office suggests two ways. First, federal grants usually require matching state spending, which is often paid for by increased taxes or fees. Many necessitate a dollar-for-dollar match in spending by state or local governments. Second, federal grants often have a “maintenance of effort” condition, which requires states to prolong the funding after a certain time frame. In this way, the federal government guarantees that federal money adds to state spending rather than takes its place.
Yet even when the federal government promises to cover nearly 100 percent of the cost, as it has done with Medicaid through 2016, state taxes can still increase because of increased ancillary costs, such as additional infrastructure and personnel. New Mexico, for instance, now needs to come up with an additional $85.2 million — or 8.5 percent increase in Medicaid spending — to keep up with skyrocketing enrollment.
And this extends beyond health insurance coverage. In 2012, New Mexico state and local governments received $5.9 billion in federal transfer funds and spent $13.1 billion raised from taxpayers. This so-called “ratchet” effect means that a hypothetical 10 percent increase in federal transfers to New Mexico would amount to about $590 million more in state and local spending — meaning significant tax and fee hikes.
These findings shed new light on the potential consequences of accepting federal money. While Medicaid expansion might make sense in some states, New Mexicans should be particularly wary of “free” federal money. It already costs them billions of dollars.
Eric Fruits, Ph.D., is president of Economics International Corp. and an adjunct scholar with the Rio Grande Foundation.
New Mexicans are increasingly “getting” the fact that their state economy needs some dramatic reforms, but there are still some who want a quick and painless “fix” to the problem. Exhibit “A” is Albuquerque’s “bus rapid transit” system which is more about “economic development” than transportation.
The latest item that seems to have taken on mythical status in “economic development” circles is broadband. The New Mexico Jobs Council has been led to consider broadband by consultant Mark Lautman who has been great at cashing checks, but whose efforts haven’t done much to turn around New Mexico’s foundering economy. According to the ABQ Biz First, “The Jobs Council has drafted a broadband infrastructure bill asking the Legislature for upwards of $600,000 for a detailed study of what it will cost to get the state up to adequate download speeds.”
How important is broadband to economic development? I haven’t seen any good data on that. Here is a report that ranks New Mexico relatively low in terms of Internet speed, but Australia and New Zealand have slow service as well, but seem to do just fine economically.
There is another issue and that is regulations. New Mexico has burdensome regulations on some broadband providers. Current state regulation by the PRC is outdated and forces large providers to focus more on the regulated traditional phone service rather than focus on our growth area….broadband. Legislation has been introduced in the past few sessions to address these issues, but like so much else, the bills never get through the Senate.
So, is slow/non-existent broadband a problem in New Mexico? Perhaps. One would think that if it were a deciding factor that areas of the state with speedy broadband would be doing fine economically while the rest of the state struggled. That is not the case. Of course, policymakers could start improving broadband by reducing onerous regulations rather than spending more money. Interestingly, while policymakers are rushing to provide broadband, American households are actually abandoning the service…
Concluding what has already been a very challenging 2015, a new report from Forbes has named New Mexico the #1 “Death Spiral” state due to its high ratio of “takers” to “makers.” According to the report, New Mexico is in the worst shape of any US state with 143 government clients for every 100 private-sector workers. The three other states with taker/maker ratios over 100 include such economically-challenged places as: West Virginia at 116, Mississippi at 111 and Arkansas at 103.
The scary thing to me is the margin by which New Mexico’s taker/maker ratio was larger than any other state. We’re at 143 and the next state is “only” at 116. Wow.
See the interactive map below:
While legislatures nationwide, including New Mexico’s, will be meeting in January, the US Supreme Court will be hearing the Friedrich’s v. California Teachers Association.
The case, if decided in favor of Friedrichs, a California teacher, would restore the First Amendment right to free speech for government workers who currently are forced to pay dues to unions which in turn use those dollars to engage in the political process in ways that many of those workers may not agree with. The idea is that workers should not be compelled to engage in “speech.”
Ultimately, the case could lead to “right to work” for all public workers in the United States when the decision is handed down by the Court this summer. That has the public sector unions running scared. The hard-left In these Times said the case could “decimate American public sector unionism”
Public sector unions are key because they represent the only real area of growth in the union movement:
We at the Rio Grande Foundation, of course, oppose coerced speech. If individuals want to join unions and pay dues, they should be allowed to do so, but no one (especially someone who works for the government) should have their hard-earned money forcibly extracted and handed over to special interests with whom they disagree. Also, none other than Franklin Delano Roosevelt opposed the very concept of public sector unions.
For Immediate Release: Tuesday, December 22, 2015
For further Information, Contact: Paul Gessing 505-264-6090
(Albuquerque) – Today, the Rio Grande Foundation announced it is suing the Obama Administration over the Clean Power Plan (CPP), which is an illegal rule to regulate carbon dioxide emissions from power plants. The Foundation is joining the Competitive Enterprise Institute (CEI) in asking the Courts to review the CPP rule.
Rio Grande Foundation President Paul Gessing said, “This is yet another unlawful Washington power grab by the Obama Administration that will cost New Mexico rate payers dearly. The Rio Grande Foundation believes the appropriate Christmas gift for economically-strapped New Mexicans is a lawsuit to stand up for those would pay the price for this ill-conceived and illegal regulation.”
In 2014, the Foundation, along with New Mexico Representatives Candy Ezzell and Tim Lewis filed comments against the CPP. In part, the Rio Grande Foundation cited, the traditionally-state nature of electricity regulation and the fact that under the plan, residential rates are projected to increase by 13 percent to 14 percent, while industrial rates are projected to increase by 23 percent.
Gessing concluded his remarks saying, “This regulation is a continuation of President Obama’s promise to make electricity prices ‘necessarily skyrocket’ while his Administration lavishes subsidies on so-called ‘renewables.’ The CPP is an effort to use government regulations to hinder the use of traditional energy sources.” The Rio Grande Foundation is taking legal action in an effort to stop these disastrous effects from happening.”
The Foundation’s 2014 comments as well as more information about the organization’s work on energy and a wide variety of issues relating to New Mexico’s economy can be found at The Rio Grande Foundation’s website, www.riograndefoundation.org.
Information on the Competitive Enterprise Institute can be found at: www.cei.org.
The Rio Grande Foundation launched our Twitter account in early 2015. It’s a key tool for keeping our supporters up to date on the Foundation’s work, as well as the latest information about public policy in New Mexico.
Each weekday, we distribute links to our research, op-eds, blog postings, and media appearances, as well as news articles, press releases, and government reports of interest to New Mexicans working for a freer and more prosperous state.
Thanks to all who followed us in 2015. If you’re not yet on the Foundation’s Twitter team, join us — and tell a friend!
Nothing seems to unite New Mexicans like the desire for “free” money.
Over the past few weeks, no fewer than three opinion pieces have run in various media outlets in support of Medicaid expansion. Two of these articles were from Democrat legislators.
While “compassion” and alleged health care improvements – unsupported by real-world data – were cited, a central argument involved “free” money that is flowing into the State from Washington.
Recently, I had the chance to testify before an interim committee of the New Mexico Legislature on the economic impact of Medicaid. The program for the poor was expanded under the federal health care law commonly known as “ObamaCare.” New Mexico was one of 24 states to expand the program in January 2014.
Initially, the expanded portion of the Medicaid program is being financed 100% by the federal government. Starting in 2017, that will go down to 95% and by 2020 federal support will drop to 90%. As 2017 approaches, New Mexico legislators have been quoted as saying that the increased cost of Medicaid is a “runaway train” and “you can’t put the brakes on health care costs.”
New Mexico’s budgetary outlook is indeed bleak as total Medicaid expenditures are projected to rise to $5.5 billion with state taxpayers kicking in nearly $1 billion of that annual total. It has been the fastest growing item in the budget and with the State paying an increased share of the program’s expansion costs, that growth rate will rise rapidly in the years ahead. This at a time when New Mexico’s budget is expected to be stagnant as oil and gas prices remain depressed.
Unfortunately for New Mexico, the “stimulus” effects of having the federal government pay 100% of the cost of Medicaid expansion are nowhere to be found. The Rio Grande Foundation examined job growth in the expansion and non-expansion states and found that the 20 states that turned down the “free” money by not expanding Medicaid saw slightly faster overall job growth than the expansion states.
How could “free” money not stimulate New Mexico’s economy? There are many explanations, but one is that welfare programs like Medicaid provide yet another reason for workers to drop out of the work force.
Another explanation is that much of the money doesn’t actually do anything to improve health care. It may result in additional hiring in the health care industry, but these are “paper-pushers” and relatively unproductive bureaucrats. Their productive labor is consumed by a wasteful bureaucracy rather than being put to work in the private sector economy.
Again, these are just two potential reasons why Medicaid expansion may not have “stimulated” New Mexico’s economy or the economy of other states that expanded Medicaid with temporarily “free” money.
New Mexico has long been reliant on federal dollars. As federal spending is increasingly consumed by entitlements (as opposed to research labs and military bases), we are seeing that this reliance has not been healthy.
A new Rio Grande Foundation report sheds some light on the negative side effects of federal dependency. The report shows that federal dollars increase state and local government spending by 99 cents for every federal dollar. Bloated state government makes it harder for businesses to operate in our State. In other words, those “free” dollars come with economically-harmful strings attached.
Rather than trying to jump-start New Mexico’s economy by pilfering more money from Washington, New Mexico’s leaders should embrace basic economic reforms. Taxes, occupational licensing,and labor reforms like “right to work” and repeal of the State’s “prevailing wage” law can positively impact the economy right away.
Longer-term, policymakers must improve the education system (and thus the viability of our workforce) through dramatic expansion of educational choice.
There’s no such thing as a “free” lunch and so-called “free” money is not the road to prosperity.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
It used to be that New Mexicans could say “Thank God for Mississippi…or West Virginia…or whatever.” As oil and gas prices have dropped, federal spending has shifted to “entitlements,” and the Democrat-controlled NM Senate has remained staunchly-opposed to needed reforms, the new mantra for New Mexico my be “New Mexico….we’re 51st.”
That was already the case recently when a national construction trade group labeled New Mexico the dead-worst place for the construction trades in the USA putting us even behind Washington, DC. Among the factors included in the report was “right to work” and “prevailing wage laws,” both of which New Mexico remains on the wrong side of thanks to the State Senate. And, as if losing to Washington, DC, wasn’t bad enough, our neighbor, Arizona, placed first.
Now, we have the November unemployment rates placing New Mexico…wait for it…51st (again). At 6.8 percent, New Mexico’s rate is higher than that of Washington, DC or West Virginia. Notably, West Virginians, realizing that their previously-blue state is in dire economic straits thanks to the Obama Administration’s “war on coal,” are seriously looking at becoming the nation’s 26th “right to work” state.
It would be great if West Virginia and New Mexico which have a great deal in common economically despite very different cultures, became the next two “right to work” states as a means of kick-starting their respective economies.
The good news out of the recent omnibus bill agreement in Washington is that finally, after 40 years, the unwise ban on exporting crude oil from the United States has ended. The bad news is…well, pretty much everything else in the bill. That includes a five-year extension of the investment tax credit for solar and an extension of the production tax credit for wind retroactively to last year and ending in 2019. There is a silver lining, however and that is that the wind tax credits will be phased down by 20 percent each year over that time span.
The solar tax credit on the other hand, currently a 30 percent credit for utility, commercial and rooftop solar installations — would get phased down through 2022. The credit would stay at 30 percent through 2019, and then fall to 26 percent in 2020. It would drop to 22 percent in 2021 and 10 percent in 2022.
So, “energy” is a big winner in all of this, but there is a major difference. According to the Washington Post reporter covering this story:
Despite rapid reductions in the cost of wind and solar, both still rely heavily on government subsidies. Bloomberg New Energy Finance has estimated that without the extension of the investment tax credit, solar installations would fall 70 percent in 2017 whereas an extension would boost solar projects by 50 percent through 2022.
In other words, the free market side was simply looking to overturn an obstacle to free trade in their product while the wind/solar lobby was looking for special favors from the taxpayer. It will be interesting to see if wind and solar can make themselves viable in the marketplace before these special favors end (there are other subsidies and mandates at the state level).
As a sign of just how clear-cut the case for crude exports was, none other than Larry Summers (Bill Clinton’s former Treasury Secretary) said, “The merits [of lifting restrictions] are as clear as the merits with respect to any significant public policy issue that I have ever encountered.” And yet, Mr. “All of the above” Obama remained bitterly opposed to the very end.
New Mexico’s political establishment sees Washington as an ATM. The Land of Enchantment depends, inordinately, on federal largesse, and a steady stream of press releases constantly reminds citizens of the jobs and tax revenue that come our way courtesy the nation’s taxpayers.
That’s why Carlsbad Caverns National Park’s announcement that its broken elevator won’t be fixed until next summer is worth noting. Busted since early November, it’s causing visitors to “hike in and out of the cave via the 1.25-mile Natural Entrance trail.” Not good for tourism, that.
It’s nearly unimaginable that a private-sector facility would take so long to fix a critical piece of infrastructure. The phrase “good enough for government work” comes to mind.
The news isn’t all bad, though. As highlighted by Sen. Rand Paul (R-KY), the U.S. Forest Service has spent “nearly $25,000” to “build the Smokey Bear Laundromat at the Lincoln National Forest in Ruidoso, N.M. — all while the closest laundromat can be found 0.2 miles away.”
