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The Albuquerque Biz First newspaper has really come into its own in recent years making many useful contributions to the public policy discussions here in New Mexico. The latest, highly useful item that they have come up with is the “Recovery Index.” It is in a simple “infographic” format below.

Using a few very specific, but important metrics, it shows how various sectors of Albuquerque’s economy have recovered (or not) with the reference point being the recession. I follow this stuff pretty closely and none of it really surprised me with the possible exception of the fact that the government work force has expanded slightly. I’d be interested to know how the makeup of that work force has changed (what has grown or shrunk, federal, state, and local?), but it is a very interesting and digestible look at the real challenges Albuquerque (and New Mexico) face.

Senator Howie C. Morales (D-Silver City) has targeted the Land of Enchantment’s smokers. His SB 77 raises the per-pack price of cigarettes by a full dollar. (The revenue would be dedicated, of course, to “early childhood education.”)

At $1.66, New Mexico’s current cigarette-tax rate is already above the national average, and higher than those imposed by our neighbors in Texas, Oklahoma, and Colorado. (It’s close to Utah’s, and lighter than Arizona’s.) As the Mackinac Center reported last year, cigarette smuggling is a serious issue in the state.

The chart below shows that smuggling, as well as a falling population and the shift toward vaping, are contributing to stagnant revenue from the state’s tobacco tax:

Terrified that legislators will have less revenue to spend this session, on Monday, Sen. John Arthur Smith (D-Deming) advised his colleagues: “Go find money.” Morales is listening. You’ve been warned, smokers.

As the Foundation continues to scrutinize, and score, the bills being drafted for the 2016 regular legislative session, one thing has become distressingly clear: Lawmakers have no desire to simplify the tax code.

Republican and Democratic legislators alike are pushing all manner of tax credits and deductions. Here are a few:

* HB 34 creates a Thanksgiving-meal GRT deduction provided the restaurant had, “in the most recent five years … an average business income … of less than two million dollars ($2,000,000) per year.”

* HB 54 makes all health care practitioners eligible for the “Rural Health Care Practitioner Tax Credit.”

* HB 79 expands the “Working Families Tax Credit.”

* HB 107 reduces the severance tax rate on oil and natural gas obtained from “stripper” wells.

* HB 108 creates a “rural infrastructure tax credit” to “stimulate economic development.”

* HB 163 creates the “Home Energy & Water Efficiency Tax Credit.”

* HB 169 creates the “Capital Gain Reinvestment Income Tax Credit.”

* HB 174 permits local governments to suspend property taxes for “commercial enterprises.”

* SB 13 extends the “solar market development tax credit” until 2025.

* SB 16 creates an income-tax deduction for retired veterans and their spouses.

* SB 31 creates the “Technology Readiness Gross Receipts Tax Credit.”

New Mexico’s tax burden is far too high. Some levies need to be eliminated entirely, while the rates of others should be cut. But tinkering with the tax code — i.e., using fiscal policy to engineer outcomes that elected officials deem desirable — is an affront to fairness, simplicity, and liberty.

Regular readers of this site are likely aware of our frustrations with Albuquerque Journal business and economics writer, Winthrop Quigley. While Quigley does identify closely with the very liberal Voices for Children, in a recent column he (rightly) questioned their claim that “Medicaid is an economic engine” for New Mexico.

Back in November I testified before an interim committee of the Legislature saying much the same thing.

Does this mean Quigley suddenly “gets it?” Unfortunately not. While citing the groundbreaking Oregon Medicaid Study, he selectively cites the report’s conclusions. In fact, I posted a rebuttal to a previous Quigley column on Medicaid with further details on the study’s findings.

A central finding from the report was that “Medicaid has no statistically significant effect on employment or earnings.” This directly contradicts Quigley’s conclusion “It (Medicaid) helps keep people healthy, and healthy people are more likely to attend school and show up for work. Unfortunately, Quigley seems willing to embrace the obvious point that expanding a welfare program is no economic “stimulus,” but when it comes to the more fundamental question of whether Medicaid is worth its massive cost ($495.8 billion in 2014) or whether it it might be ripe for fundamental reform, that is beyond the pale.

“We have, over time, lost access to a lot of public lands.”

That’s Martin Heinrich, in an address to “conservationists” in Las Cruces on Saturday. (Look — he wore a camouflage vest!)

It was another admission of reality from a politician who stands firmly opposed to a solid solution to access squabbles: Transferring “federal” lands to state governments. In 2014, Heinrich penned a hysterical op-ed for The New York Times in which he claimed that doing so “would raise the possibility that some of the lands would be turned over to the highest bidder and that Western taxpayers would be saddled with the costs of overseeing the rest.”

Contrary to the claims of Heinrich and his deep-pocketed allies in the “green” lobby, the campaign against Washington’s distant, and agenda-driven, management of so much of the West isn’t an attempt to reward energy companies and despoil some of the nation’s most scenic terrain. It’s a logical reform of a system that isn’t working — a shift that promises better control of wildfires and more economic development (and tax revenue) for rural communities. And it’s been done before. As the American Land Council explains, in the 19th century, Congress relinquished its holdings in “western” states such as Michigan, Illinois, Alabama, and Florida.

Heinrich continues to peddle his “HUNT Act” as a tool to grant hunters and anglers better access to federal land. But the legislation is just more of the same. The answer is to get Washington out of the land business (excepting existing National Parks) altogether.

Thursday, January 28, 2016, at 11:30 a.m. MST
Doors open at 11:00 a.m.
A luncheon will follow the discussion.

Hotel Albuquerque at Old Town (Alvarado Room)
800 Rio Grande Boulevard NW
Albuquerque, New Mexico 87104
Map

About the Event

New Mexico’s action this past year to outlaw civil asset forfeiture is a promising example of the type of criminal justice reform that our system needs. Though there is much more work to be done to protect individual liberties, an examination of the state’s approach towards criminal intent could further help position New Mexico as a leader in justice reform.

Historically, a crime consisted of both a guilty act (actus reus) and a guilty state of mind (mens rea). The second requirement – the criminal intent – is now often absent from the growing proliferation of criminal statutes and regulations that carry criminal penalties. Laws at the state and federal levels classify thousands of ordinary activities as crimes, from shampooing a customer’s hair without a license to running a private daycare from one’s home. Worse still is that frequently the government is not required to prove criminal intent in order to obtain a conviction.

Legal tradition has long held that ignorance of the law is not a credible defense for criminal activity, but the sheer number of laws that currently exists makes knowing them all impossible. According to Harvey Silverglate, the average American commits three arguable felonies in the course of a given day. Have we have become a nation of accidental criminals? Can New Mexico lead the way for other states to examine their own penal codes and adopt measures that protect the innocent from harsh and undue criminal punishments?

Please join the Charles Koch Institute and the Rio Grande Foundation for a conversation with criminal justice experts who will explore these and other important issues.

Speaker Information

Moderator:

Paul Gessing, president, Rio Grande Foundation

Panelists:

Norman Reimer, executive director, National Association of Criminal Defense Lawyers
Robert Alt, president and chief executive officer, The Buckeye Institute
Vikrant Reddy, senior research fellow, Charles Koch Institute

Click here to register!

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.

• APS City Centre (map)
• APS Lincoln Complex (map)
• CNM Main Campus: BT2 (Basehart Temporary Portable 2) (map)
• CNM Montoya Campus: Building I, Room 111 (map)
• RFK Charter School (map)

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:

• The 2014 bond proceeds that were to be spent on the Gigafactory are long gone.

• But Tesla’s need for cash has continued. Only 15 months after raising the bond funds, Tesla pledged the bulk of its assets to secure a $500 million collateralized loan facility with a consortium of banks.

• Two months after that, Tesla raised an additional $738 million of capital by issuing additional stock.

• Tesla has not come close to its own estimate that it would complete the Gigafactory structure by the end of 2015.

• Tesla has spent about $300 million on the Gigafactory – far less than Nevada estimated would have been spent by now.

• Tesla’s only announced “partners” at the Gigafactory are Panasonic and two fledgling mining companies with contingent contracts for the supply of lithium-hydroxide.

• Tesla recently issued, at page 22 of its November 10Q filing, a caution that “we may have difficulty signing up additional partners.” (This was added to existing disclosures that “the cost of building and operating the Gigafactory could exceed our current expectations” and “the Gigafactory may take longer to bring online than we anticipate.”)

• As of September 30, 2015, Tesla had 50 employees at the Gigafactory and Panasonic had 32. During the third quarter, there were (on average) another 847 construction workers on site. Based on drone flyovers (which unfortunately are removed from the web soon after they appear), it appears that many, if not most, of the construction workers have now left the Gigafactory site.

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: