What if I told you that a business was planning to make close to a billion dollar investment in New Mexico? What if I told you that this company is a leader of may be a potential revolution in automobile fueling and technology and that they could help our state make the transition to cleaner, more affordable fuel for automobiles?

No, I’m not talking about Tesla which has, aside from the recent exploits of local basketball teams, been the talk of the state. I’m talking about the proposed purchase of New Mexico Gas Co. (NMGC), currently owned by New York City-based Continental Energy by Tampa-based TECO Energy.

Bringing Tesla to New Mexico could be a home run for New Mexico’s economy, but having a natural gas company that is owned by a utility company with a 115 year track record of serving its customers – as opposed to a hedge fund – could be at least a double.

For those who are concerned about rates and prices, TECO has proposed that NMGC customer rates will be frozen until at least July 2017. NMGC will retain its name, and its headquarters will remain in Albuquerque. While New Mexico’s economy has struggled mightily in recent years, TECO’s management is “bullish” on New Mexico. The company’s CEO John Ramil recently was quoted as saying, “The Company is looking at New Mexico to be a growing state, and New Mexico Gas Co. to continue its growth.
Given the onslaught of negative economic news from our state in recent years, it is wonderful to have a business that sees our state’s growth potential looking to come here and invest.

A positive attitude is an important factor, but the real potential for New Mexico lies in TECO’s willingness to replicate its successful Florida model of investing in filling stations for vehicles that use clean natural gas produced right here in New Mexico. Due to broader market forces and newly-discovered supplies, natural gas prices remain at historically-low levels, spurring calls for increased investments in fueling stations.

In fact, whether the fuel in question is gasoline, electricity, or natural gas, a large national network of filling stations is an absolute necessity in order for alternative fuels to become widespread.

TECO has a proven track record and stated interest in investing in infrastructure and the communities it serves. NMGC which is currently owned by a hedge fund with a business model that involves purchasing and “flipping” under-valued assets is unlikely to make such investments.

One final point on the importance of the NMGC sale is the need for government bodies to respect free markets and a business’ desire to sell a company that does business in New Mexico to another business. It is one thing for regulatory bodies to stand in the way of such transactions for tangible, specific reasons. It is another thing to stand in front of these business transactions out of abstract fears.

My organization has worked assiduously to research and explain how New Mexico can improve its economy. While there are myriad issues to overcome before our state becomes truly business-friendly, there is no easier way to become a pariah among investors and businesses than to be seen as a place where once you have invested resources, you are unable to sell those investments.

Venezuela and Argentina are just two nations whose economies have suffered greatly from such capricious state actions. New Mexico should not fall into that trap.

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

According to this story, the only people who can actually afford to buy the average new car (based on a basic income and cost formula) among the 25-largest cities in America is Washington, DC. See the chart below:

New Mexico Public Regulation Commission
PO Box 1269
Santa Fe, NM 87504-1269
Case number: 13-00231-UT
prc.records@state.nm.us

Comments to the New Mexico Public Regulation Commission on the purchase of New Mexico Gas by TECO Energy

On behalf of the Rio Grande Foundation, utility customers, and advocates of freedom throughout New Mexico, I urge you to approve of the proposed TECO purchase of New Mexico Gas Co.

For starters, New Mexico Gas is currently owned by an equity or hedge fund. This was always expected to be a temporary situation. It would be far better for New Mexico Gas to be owned by TECO, a utility company with a 115 year track record of serving its customers.

For those who are concerned about rates and prices, TECO has proposed that NMGC customer rates will be frozen until at least July 2017. NMGC will retain its name, and its headquarters will remain in Albuquerque. While New Mexico’s economy has struggled mightily in recent years, TECO’s management is “bullish” on New Mexico. The company’s CEO John Ramil recently was quoted as saying, “The Company is looking at New Mexico to be a growing state, and New Mexico Gas Co. to continue its growth.
Given the onslaught of negative economic news from our state in recent years, it is wonderful to have a business that sees our state’s growth potential looking to come here and invest.

A positive attitude is an important factor, but the real potential for New Mexico lies in TECO’s willingness to replicate its successful Florida model of investing in filling stations for vehicles that use clean natural gas produced right here in New Mexico. Due to broader market forces and newly-discovered supplies, natural gas prices remain at historically-low levels, spurring calls for increased investments in fueling stations.

In fact, whether the fuel in question is gasoline, electricity, or natural gas, a large national network of filling stations is an absolute necessity in order for alternative fuels to become widespread.

TECO has a proven track record and stated interest in investing in infrastructure and the communities it serves. NMGC which is currently owned by a hedge fund with a business model that involves purchasing and “flipping” under-valued assets is unlikely to make such investments.

One final point on the importance of the NMGC sale is the need for government bodies to respect free markets and a business’ desire to sell a company that does business in New Mexico to another business. It is one thing for regulatory bodies to stand in the way of such transactions for tangible, specific reasons. It is another thing to stand in front of these business transactions out of abstract fears.

My organization has worked assiduously to research and explain how New Mexico can improve its economy. While there are myriad issues to overcome before our state becomes truly business-friendly, there is no easier way to become a pariah among investors and businesses than to be seen as a place where once you have invested resources, you are unable to sell those investments.

Venezuela and Argentina are just two nations whose economies have suffered greatly from such capricious state actions. New Mexico should not fall into that trap.

I urge the PRC to allow the proposed sale to go through.

Sincerely,

Paul J. Gessing
President
Rio Grande Foundation
PO Box 40336
Albuquerque, NM 87196
505-264-6090

The following article originally appeared on the website “Does New Mexico Know Tom Udall?”

Tom Udall has been in Congress since 1999 when he won election to the 3rd (northern) Congressional District in New Mexico. Udall was elected in 2009 to the United States Senate, taking Pete Domenici’s seat upon the long-serving Senator’s retirement.

Since arriving in Washington, Udall has consistently voted with the liberal wing of the Democratic Party. According to the fiscally-conservative National Taxpayers Union, Udall has been an unabashed supporter of increased spending and taxation in Washington. The organization ranks every vote in Congress based on its impact on the size and scope of the federal government and Udall has never scored anything but “F.” Worse still, Udall accumulated the worst track record on spending and taxes during 2012 (the second session of the 112th Congress).

During 2012, Udall voted only 6 percent of the time in the interests of the taxpayer. Also in 2012, National Journal named Udall the “Most Liberal Senator” of them all, tied with Connecticut’s Richard Blumenthal.

For all the time he’s spent in Washington, Tom Udall has relatively few legislative accomplishments to his name. Having been in Congress since 1999 would usually result in some significant legislative items by a politician who clearly supports a large and growing federal government, but this has not been the case.

Udall has supported most of the left-wing domestic policies in Congress in recent years. He strongly supported and continues to support the ObamaCare health law as well as the Obama “stimulus” legislation known as American Recovery and Reinvestment Act of 2009 which spent $831 billion in a failed effort to goose the American economy.

Despite New Mexico’s status as a top energy producing state, Udall has typically supported the cause of radical environmental interest groups above those of an industry that supplies 31 percent of New Mexico’s General Fund revenues.

The League of Conservation Voters, for example, gave Udall a 100% score during 2013 and Udall has a 97 percent lifetime score. Udall voted to oppose the Keystone XL Pipeline which even Bill Clinton has endorsed, opposes expansion of offshore oil and gas drilling, and opposes oil and gas drilling in the Alaska National Wildlife Refuge.

And, despite relatively depressed natural gas prices, the importance of natural gas to New Mexico’s economy, and the potential for exports of natural gas to generate thousands of jobs and millions of tax dollars for New Mexicans immediately, Udall voted against legislation that would have allowed export terminals to overcome efforts by Not in My Backyard (NIMBY) groups to site natural gas export terminals.

While his legislative track record is bad enough, Udall seems to believe that the federal government, not individuals, is the best steward of New Mexico’s lands. Udall strongly supported efforts to create the Río Grande del Norte National Conservation Area in Northern New Mexico which tightened federal control over 236,000 acres of land. The land was ultimately declared a national monument without Congressional approval by President Obama in early 2013.

Not satisfied with this massive expansion of federal control over lands in Northern New Mexico, Udall is actively supporting efforts to create the Organ Mountains-Desert Peaks National Monument on 498,815 acres in Southern New Mexico. Udall has encouraged the Obama Administration to take unilateral action to designate the lands. Although the wilderness designation only deals with federal lands, private and state lands are interspersed throughout. These lands will be incredibly difficult for ranchers and others to use.

When it comes to economic policies impacting New Mexico, Tom Udall has clearly taken the side of those who wish to socialize control over our lands, reduce the capacity of private citizens to use our natural resources, and spend more of your hard-earned tax money. New Mexico needs better representation in Washington.

(Albuquerque) Hal Stratton, co-founder of the Rio Grande Foundation, has joined the organization’s board of directors of New Mexico’s only free market think tank bringing decades of leadership as a voice for accountable and constitutionally-restrained government.

In 1978, at the age of 27, Stratton ran for a seat in the New Mexico House of Representatives in Albuquerque’s District 29 and defeated the House Majority Whip. He was served a total of four terms in the New Mexico House.

In 1986, Stratton was elected to the office of New Mexico Attorney General. He is the only Republican to be elected to that office in New Mexico since 1928. Stratton was limited to one term as New Mexico Attorney General by the New Mexico Constitution and served from 1987 through 1990.

In 2000, along with George Mason University Economist Harry Messenheimer, PhD, Stratton co-founded the Rio Grande Foundation which was and remains New Mexico’s only free market think tank.

In March, 2002, Stratton was nominated by President Bush to be Chairman of the U.S. Consumer Product Safety Commission (CPSC). He served in that position until resigning effective July 15, 2006.

During the course of his tenure at the CPSC the agency implemented the largest recall in U.S. history involving children’s vending machine jewelry and imposed the largest penalty on an industry stakeholder for failure to report the distribution of dangerous products. Nonetheless, the fiscally-conservative Stratton actually reduced the CPSC’s total budget during his time in office.

Said Rio Grande Foundation president Paul Gessing, “When it comes to New Mexico’s economy and politics, Hal Stratton is one of the most knowledgeable people around. We are thrilled to have him on the board of the organization he co-founded more than a decade ago.”

Of his officially re-joining the Rio Grande Foundation, Stratton said, “Since returning to New Mexico after leaving the CPSC, I have been extremely impressed with Paul Gessing’s leadership of the Rio Grande Foundation and the impact the organization has had on public policy in New Mexico. I hope to further the organization’s mission on behalf of limited government and free markets in the Land of Enchantment.”

Gessing and Stratton are the only New Mexico signatories of the Statement of Principles of “Right on Crime.” Signatories to the letter which also include Ed Meese, III, Jeb Bush, Newt Gingrich, and Grover Norquist, support common-sense, conservative criminal justice reforms.

Gov. Susana Martinez, in an action that the unions are characterizing in the starkest of terms “This means war!” has endorsed the policy of no longer allowing government entities to collect dues on behalf of the unions.

For starters, I wonder if the unions will come under the same criticism for using the term “war” that Lobo Coach Craig Neal did recently. Unfortunately, when it comes to unions and their aggressive tactics (see Wisconsin), “war” may be an all-too-appropriate term.

Nonetheless, it is no secret that the unions have never been fans of the Governor or anyone who thinks that businesses should have the freedom to contract with whomever they wish at a fair market price and that parents should be able to send their children to the school of their choice.

However, when Martinez’s plan is painted as “radical” and “union busting” which it already has, remember that even that great ally of labor unions, Franklin Delano Roosevelt, opposed the very existence of government labor unions. To state the obvious, Martinez’s plan to stop using taxpayer funds to collect union dues is far more moderate than Roosevelt’s position on the issue.

That’s not to say that Gov. Martinez faces an easy task in implementing her “no dues collection” policy, but government labor unions have been at “war” with the taxpayers of New Mexico for decades, it is good to see that we have a powerful ally on our side.

I rarely laugh out loud at Albuquerque Journal headlines, but I did this morning. The headline was “Education Group Protests SF Contract.” What a euphemism! The National Education Association (NEA) is not concerned with “education.” It’s concerned with getting more money out of taxpayers. It does as all government employee unions do: by convincing politicians to hire more dues-paying teachers, limiting competition, increasing pay and benefits for its members, and supporting friendly politicians who will give them MORE.

The case from Santa Fe is a classic example. As the story notes, Santa Fe Public Schools have a new program designed to get dropouts back on track for a diploma. The rub is that they’ve hired a private company (heaven forbid) to run the program. Implied, but not stated in the story is that the teachers in the program are unlikely to be unionized.

The union cites a provision in New Mexico’s Constitution which states that “public schools, colleges, universities and other public educational institutions “shall forever remain under the exclusive control of the state,” and that no part of the funds “shall be used for the support of any sectarian, denominational or private school, college or university.” To say the least, this is a provision of New Mexico’s Constitution worthy of changing, but there will likely be a legal battle over whether it makes the school illegal or not.

The more important thing is that the NEA is attempting to deny students who are not being served by traditional schools a different option for their educational services because the program in question does not serve the selfish needs of the union.

Interestingly enough, an “important” provision of New Mexico’s Constitution is ignored on a daily basis in New Mexico schools. Sec. 8 states “The legislature shall provide for the training of teachers in the normal schools or otherwise so that they may become proficient in both the English and Spanish languages.” I don’t know how many of New Mexico’s teachers are fluent in Spanish, but I have met several teachers who taught in government schools and I don’t believe they spoke Spanish.

We’ve all seen the “shame on…” union protest posters in front of Albuquerque-area businesses. The New Mexico Watchdog did a story on the non-union protesters here. A lot of times the protesters perch themselves in front of hospitals and churches, but one Wichita car dealer (car dealers are master marketers) who managed to turn the tables on the protesters. Check out the photo below:

Check out the full article here. It just goes to show that sometimes the best way to stand up to a bully is through a little creativity and humor.

Our friends at the Institute for Truth in Accounting have put together, in honor of St. Patrick’s Day, a list of “gold-digger” states, those for whom federal revenues form the largest percent of their budget. Not surprisingly, New Mexico is on the list at number three. What is perplexing is just how great that reliance on Washington has grown in recent decades.

Stephen Moore was, until recently, an editorial board member of the Wall Street Journal and is now Chief Economist at Heritage Foundation. He spoke to a luncheon sponsored by the Rio Grande Foundation about what needs to be done to turn New Mexico’s economy around as well as what can be done to improve the United States economy.

Click here for Moore’s slides. Video of Moore’s presentation can be found below:

Stephen Moore discusses economic prescriptions for New Mexico and the United States on March 14, 2014 from Paul Gessing on Vimeo.

For even more information, check out the story Capitol Report New Mexico published on the event which included an interview with Moore.

Only in New Mexico and only under former Gov. Bill Richardson would the government hire consultants for a study that doesn’t exist. I was interviewed by KRQE Channel 13 for a story relating to Richardson’s efforts, specifically the commissioning of a $166,000 feasibility study, to determine whether New Mexico would be a likely location for an NFL team.

Now, I am a big NFL fan (Go Steelers!), but I could have outlined why New Mexico can’t support a team for a tiny fraction of that cost. After all, the Metro population of Albuquerque is about 750,000, making it the smallest of any pro-sports town in the nation outside of Green Bay, a city located in a relatively populated, wealthy state, and not too far from Milwaukee. This is a list of the 10 smallest pro-sports cities by state.

See the report from KRQE below which ultimately came to the same conclusion (and was thus spiked without so much as a written report being issued) for about $165,975 more than I just spent to figure this out:

Today, the papers reported on an absurd New Mexico law that prohibits “direct from manufacturer” sales of automobiles in New Mexico. As I recently wrote, while it would be great if they located their factory here, there are plenty of reasons to be skeptical about Tesla’s reliance on subsidies and its business model.

Of course, when it comes to government policies and Tesla, it cuts both ways. In fact, New Mexico law basically invalidates the company’s entire business model of selling its cars directly to consumers (we’re not the only state that does this). I’m SURE this regulation has nothing to do with preserving the business model of a powerful special interest group (auto dealers) at the consumers’ expense and the expense of innovative business models like Tesla’s.

I’m also absolutely positive that a company looking to make a massive, $5 billion investment, would NEVER decide to take their business to a state where their business model is legal as opposed to one where it is not…like a gun manufacturer moving out of a state (New York) where the Gov. has declared them and their ilk “unwelcome” and adopted some of the toughest laws regulating their industry.

The point is that New Mexico’s economy is unnecessarily hamstrung by burdensome regulations. We’ve critiqued a slew of those regulations here and here. The average citizen doesn’t understand anti-competitive regulations and how they harm them. The average policymaker (even really good ones) don’t relish taking on well-organized special-interests head-on.

The truth is that job-killing regulations are found throughout New Mexico Law. This is just the latest one to be discovered by the media and the public. I admit to not knowing that New Mexico prohibited “direct to customer” sales of vehicles, but was aware of the recent New Jersey ban. Perhaps policymakers can be convinced to take on at least some of these special interests in order to advance New Mexico’s flailing economy?

The City of Albuquerque is seriously considering a bus rapid transit (BRT) system on Central (and possibly in other corridors of the City). And, while we have a general idea of the total costs of construction ($85 million picked up by the City with $340 million picked up by federal taxpayers), we have no idea what the system would cost to maintain, nor do we have any idea whether the proposed investment is needed or how dedicating a lane of traffic along Central to just buses would impact other users (motorists, bicyclists, and pedestrians). Nor do we know exactly how much the proposed project would reduce in terms of commute times along Central.

While the Mayor is certainly correct in advocating less-expensive BRT over the light rail plan of his predecessor, that doesn’t mean BRT is needed or that it will have a net-positive impact on congestion (or economic development) along Central. As transportation analyst Randal O’Toole (generally a supporter of BRT) notes, “Unless the BRT line carries more new transit riders than the vehicles that once used the transformed lane, the resulting loss of roadway capacity leads to increased congestion.”

It is not as if the City of Albuquerque or Washington have money burning a hole in their pockets. As one recent commenter noted, there have been several security incidents on buses around town recently, “Sorry, Mr. Mayor, but the ‘next logical step in public transportation’ is a massive increase in public safety onboard the existing busses — more cops and fewer drug addicts and mentally ill who currently make riding the Rapid Bus along Central a non-starter for most citizens.”

As usual, we’ll keep an eye on things and weigh in as details emerge and the process moved along. At this point there are many questions left unanswered.

Over the weekend (Sunday’s paper), the Albuquerque Journal Money section included an article about the large number of New Mexicans living on the edge of financial disaster. The story centered on the Asset & Opportunity Scorecard which was created by the Corporation for Free Enterprise Development based in Washington, DC.

I don’t find too much to argue with in terms of the findings of the organization’s report card (which ranked New Mexico 42nd in terms of outcomes when it comes to New Mexico. It is no surprise that New Mexico performs relatively poorly in terms of financial security. After all, we’re among the poorest states in the nation. It’s hard to be financially-secure if you don’t make much money in the first place.

Unfortunately, the report’s authors’ showed their ignorance of how wealth and financial security are generated in the “policy recommendations” section of its report. Rather than emphasizing wealth generation and economic opportunity, the report’s recommendations focus (in general) on redistribution and expanding government. While a number of the recommendations are benign, there are several that show a left-wing bias. States are given points for:

Having an income tax (I’m not sure how that contributes to overall financial security;
Regulating paid tax preparers;
Having a minimum wage that is higher than the federal rate and indexed to inflation;
Providing taxpayer-financed loans for beginning farmers;
Expanding Medicaid under ObamaCare despite no evidence that Medicaid improves health care outcomes;
Proving taxpayer-financed pre-K, all-day-kindergarten, state-funded Head Start, and higher-than-average spending on K-12 education;

Ultimately, it would appear that the report is just another attempt by a well-funded liberal organization to influence states to adopt misguided economic policies. The fact that New Mexico comes in 26th should be of little comfort when you consider that New Hampshire, a state that outperforms New Mexico in nearly all economic and educational outcomes, nonetheless performs poorly on the group’s policy recommendations.

It is the talk of New Mexico that we’re in the running for a Tesla “gigafactory” that would produce batteries for the company’s vehicles. I’ll take this opportunity to say that we at the Rio Grande Foundation would LOVE to see Tesla set up shop here in the Land of Enchantment. It could be a true game-changer for New Mexico’s economy and a feather in the hat of Gov. Martinez’s administration.

However, as with everything, there are some caveats and details that we hope New Mexicans and their economic development specialists will consider as they work to land this “big fish.”

Giving tax breaks and incentives, even very aggressive ones like a blanket exemption from New Mexico’s onerous gross receipts tax, is okay. Allowing them the cheap or free use of land is okay. Spending significant tax money to build facilities or infrastructure is not okay. Offering the first two poses relatively few risks for New Mexico taxpayers in the event of a failure by Tesla or a decision to move for some reason. True, some costs will be shifted onto the rest of us and the land could theoretically be used for something else, but Tesla employees will also be paying a lot of taxes to work at the facility. That will benefit the state. Taking money from other taxpayers to finance Tesla’s building construction or plant could leave us holding the bag should things not pan out.

And, just to be clear, there are several significant risks to Tesla’s business model including whether lithium-ion batteries truly are the future. They also have some serious environmental issues that are often ignored.

Lastly, Tesla’s viability as a company is heavily-dependent on generous federal and state subsidies (yet another government subsidy for the rich that the left conveniently ignores). Should the political winds shift against Tesla or electric cars as they are slowly doing on ethanol, Tesla could implode entirely. This would leave New Mexico taxpayers on the hook as it is unlikely Tesla will set up shop here with onerous clawbacks.

With all of the energy policy focus on the Obama Administration’s indecision over approval or lack thereof of the Keystone XL pipeline, the issue of LNG exports had been lost in the shuffle (The Obama Administration has been indecisive on that front as well). As it turns out, all it took to get the issue back to the top of people’s minds is geopolitics and Putin’s invasion of the Ukraine.

Unfortunately for advocates of free market economic policies, mere jobs and economic growth were inadequate as a tool of placing pressure on the Obama Administration to act, but now, none other than House Speaker Boehner is in the Wall Street Journal demanding action from Obama on LNG exports. We certainly welcome the added pressure on behalf of good economic policy and agree that even the decision to export LNG could make Putin take notice. Hopefully, as the geopolitical situation changes, the pressure to export LNG will build to the point of policy changes.

Did you know that Washington State has the highest minimum wage rate in the nation ($9.32 an hour)? It is also a relatively healthy state economically-speaking according to this article from Bloomberg. As an aside, Washington has not one, but two, big-time entrepreneurs with New Mexico ties…two of the richest men in the world: Bill Gates and Jeff Bezos.

Does Washington State’s economic success mean that minimum wages aren’t harmful or that they are actually good? Of course not. It just means that other aspects of Washington’s policy/social climate are more attractive. Remember, minimum wages are one, small economic policy. And, while proponents of the free market may oppose them on principle, because they disproportionately impact low-income workers, by definition, the impact of minimum wages on the overall economy is relatively small.

What’s not small? How about the fact that Washington State has no personal income tax?

As Art Laffer and our upcoming speaker Stephen Moore noted in a paper done for RGF, having no personal income tax results in both greater economic prosperity and population growth. In other words, the positive impact of not taxing the productive activities of 60+ percent of the population that works (thus encouraging more of them to enter the work-force because they can keep more of their money) is far more important to a state’s economic growth than the tiny fraction of workers that make the minimum wage (or anywhere near it).

In other words, even though I remain 100% convinced that minimum wages are bad policy, I’d happily accept an increase in New Mexico’s minimum wage to $10 an hour or more in exchange for elimination of the personal income tax.

Southwest Organizing Project has submitted a petition to the Albuqueque/Bernalillo Air Quality Board which would require onerous new restrictions on businesses applying for permits. Specifically, applicants would be forced to pay for air quality monitoring with the permit not approved until after the reports were done. In other words, this is yet another costly impediment to doing business in Albuquerque.

In addition, the applicant would be subject to a lawsuit by any individuals who believed that they would be harmed by the project or proposed project, to compel compliance with the proposed regulation.

This is a very brief, simplified explanation.

This petition will be heard by the Air Quality Board on March 12th at 5:30 PM in the City Council Chambers in the basement of City Hall. It is open to the public and SWOP has been encouraging their supporters to attend.
You can submit a letter to the Air Quality Board in opposition to this Petition.

1. Email a letter to Margaret Nieto, Control Strategies Supervisor – Nieto, Margaret E. mnieto@cabq.gov (By March 6th if possible so it can be distributed to Board members, but it will received and recorded after that date)

2. Attend the meeting on March 12th to submit your letter and speak if you would like.

March 5, 2014

Margaret Nieto, Control Strategies Supervisor
Albuquerque Bernalillo County Air Quality Control Board
PO Box 1293
Albuquerque, NM 87103

Dear Ms. Nieto:

The Albuquerque-based Rio Grande Foundation respectfully requests that the Air Quality Board deny the “Petition to Amend Title 20, Chapter 11 of the NM Administrative Code”, submitted by Southwest Organizing Project.

It is hard to see this Petition as anything but a solution in search of a problem. Albuquerque’s air quality is considered to be very good. In 2013, it was named as 9th-cleanest city in America by the American Lung Association for year-round particle pollution.

Rather than cleaning up our already-clean air, this proposed Petition would provide another major hurdle to a wide range of commercial development in our City, due to both added exorbitant costs and time issues. Although the Petition claims to be interested in improving the quality of life in low-income and minority neighborhoods, its proposed mandates would, in fact, eliminate new jobs and services by driving new and expanding businesses out of the city and county. These requested regulations will severely damage the economic viability of the city and county as a whole, disproportionately impacting low-income and working-class residents of our City.

This Petition would not only affect small businesses like dry cleaners but also any business engaged in manufacturing. It would affect most buildings over 6 stories and many medical facilities since most must have a generator for life safety issues, and generators require a permit. It would affect any construction projects which must apply for a Fugitive Dust Permit and which, according to city staff, is a form of an air quality permit. This Petition’s reach would be sweeping and devastating.

This Petition, promoted under the guise of cleaner air, does significant harm and little, if any, good. It is a serious threat to our fragile economy, and, again, we urge you to deny the Petition at the March 12th meeting.

Sincerely,

Paul J. Gessing
President
Rio Grande Foundation

“Taxes, credits make NM Competitive” screams the headline from today’s Albuquerque Journal. The article by Winthrop Quigley discusses a new report from the New Mexico Tax Research Institute (NMTRI) which found that after accounting for the myriad tax credits and incentives enacted in the Legislature (largely at the behest of Gov. Martinez) New Mexico’s tax burden on businesses is the lowest in the region.

It’s an interesting study that is certainly worth a read. NMTRI does some great work. I can’t really say that I put much credence in Ernst & Young’s work since their findings that New Mexico’s film subsidy program generated $1.50 for each dollar spent, but I’m willing to give them the benefit of the doubt in this case. Nonetheless, it is worth recognizing the acknowledged limitations of this study. As the authors note, “New Mexico’s broad gross receipts tax base when combined with relatively high rates results in more pyramiding of tax than other states’ sales tax structures, increasing the cost of purchasing goods and services in New Mexico relative to others states.” RGF has analyzed tax pyramiding’s negative impact, so I’d label this a fairly significant shortcoming.

The good news of course is that, regardless of whether we are actually the lowest-business-tax state in the Southwest or not, New Mexico does seem to be moving in the right direction under Gov. Martinez. This is good news.

Other studies aren’t so favorable when it comes to business taxes. The Tax Foundation put us at 38th. The Small Business Survival Index puts us at 27th.

Business taxes are notoriously complicated with “sales factors,” gross receipts pyramiding (in New Mexico’s case) and targeted incentives being thrown about in ways that just aren’t as common in other areas of taxation. It would seem that if in fact New Mexico has a reasonably low overall tax burden on businesses that policymakers might want to take the step of reducing inefficiency by replacing many of these incentives and special provisions with low, flat, fair, and simple tax policies.

I’m not saying this will be easy, just that I think this is an area demanding more study and additional reforms. Kudos to NMTRI for taking such a knotty issue on. Hopefully the folks at Tesla see this analysis as justification to build their factory here.

The “social cost” of carbon may seem like an extremely esoteric issue. You can find the EPA’s discussion of the issue here. It is important to federal agencies, however, as they make regulatory decisions on permitting for activities that radical environmental groups want to stop.

As seems to happen frequently these days, the Obama Administration took action to politicize the issue of the “social cost of carbon” by ratcheting up the “cost” up in some otherwise innocuous regulations that otherwise dealt with the energy efficiency of microwave ovens (another unnecessary government overreach). Thankfully, under pressure, the Obama Administration did agree to open this particular regulation to comments rather than simply plowing forward with an abject lack of transparency and input.

The Rio Grande Foundation joined several other free-market organizations in providing comments to the Office of Management and Budget (OMB).

With all of the uncertainty over global warming and its economic and societal impact, it is nearly impossible to come up with a realistic number. What is known, however, is that arbitrarily increasing the “social cost of carbon” could be used as a bludgeon to kill economic development and jobs in the United States.

Recently, in the Albuquerque Journal and then in the Las Cruces Sun-News, a column I wrote on inequality and poverty was published. In it, I made the case that inequality is an amorphous and hard-to-attack problem, but poverty is clearly defined and worth our attention. Furthermore, poverty is best addressed through free markets and limited government.

Needless to say, the column received a strong response. In today’s Journal, my old debate opponent Nick Estes argued that jobs and economic growth are needed to cure inequality. First off, I agree with Nick that economic growth is imperative for raising living standards across all income levels. The main difference we have is that he sees government economic stimulus as the best means of achieving that end. As the chart below illustrates, federal government spending is at historically-high levels as a percentage of GDP:

Estes is simply trapped in the Keynesian mindset that government spending is needed to “prime the pump” when it comes to our economy when in reality, government diverts resources away from the private sector and into less beneficial, government programs. And, if federal spending helped reduce inequality as Estes posits, we’d see greater equality, not greater inequality.

Another response came in the form of a letter to the editor in the Sun-News. The writer basically argues that because we have a progressive federal tax system and rich people who believe that income inequality is important. The author seemingly claims that raising the minimum wage will have a dramatic, positive impact in terms of reduced inequality.

Lastly, there has been an ongoing discussion in the Albuquerque Journal’s Business Outlook section in which I was accused of not backing up my writing with data. I find that suggestion to be laughable. All this opposition is wonderful. It is a sign that my work is hitting its mark and forcing people to think about the issues. In other words, I’m doing my job.

(Albuquerque) Prior to the 2014 legislative session, the Legislative Finance Committee called for 1.5 percent pay hikes for all New Mexico government employees. Gov. Martinez proposed more modest pay increases. Rather than seeing pay increases for all state employees, Martinez planned to boost pay for about one-third of public workers. New teachers would have received higher pay.

In a “compromise” plan the likes of which are only found in government, the Legislature-passed- budget includes 3 percent cost-of-living salary increases for state agency workers and teachers.

Judges, district attorneys, state police and motor-transportation officers would receive 8 percent raises while prison guards, juvenile-justice officers, social workers handling child abuse cases and educational assistants in schools would get 6 percent pay increases.

In other words, the Legislature took its own proposed pay hikes and doubled them…or more.

Ironically, these proposed pay hikes come at a time of conflicting evidence over whether New Mexico’s government workers are overpaid or underpaid.

According to a recent report from New Mexico’s Personnel Office, “New Mexico’s average pay for 115 of 151 (government) job classifications trailed the average pay of the nearby states. Some workers’ average pay trailed the average pay in neighboring states by more than 20 percent including plumbers, biologists, engine mechanics, and chemists.”

The Rio Grande Foundation, on the other hand, analyzed data from the federal Bureau of Labor Statistics and Department of Labor to determine the earnings and compensation differences among employees of similar characteristics, skill sets, and occupations within the public and private sectors.

Using a mathematical tool called regression analysis to isolate relevant factors relating to employee pay including education levels, time of services, and more, the Foundation produced a careful analysis of data on both total compensation and benefits. The study finds that with benefits included, public workers in New Mexico make over 8 percent more in total compensation than a similar worker in the private sector.

Said Rio Grande Foundation president Paul Gessing of the differing approaches to government employee pay, “Gov. Martinez would be entirely justified in vetoing these pay hikes which went far beyond her original budget proposal and which unnecessarily increase the compensation disparity between government and private sector workers in New Mexico.”

The following was sent to me by Frank DuBois through Western Heritage Alliance. While I share their skepticism of online petitions, proponents of the land grab are using them, so opponents of the Monument designation should do the same.

The controversy around a National Monument in Dona Ana County has moved from local to national input. Secretary of the Interior Sally Jewell came to Las Cruces a few weeks ago for a listening session on the 500,000 acre Organ Mts-Desert Peaks National Monument. The environmental supporters had ample time to get notices out to rally support for the large national monument. Supporters of a smaller national monument for just the Organ Mountains had only 2 days to notify the local citizens of the meeting. The Sun News did not report about the meeting until the day of the meeting. Buses were used to bring supporters from Santa Fe, Albuquerque, Silver City and El Paso. Consequently, the room was packed to over capacity with monument supporters and the Secretary may have left with a false impression that the majority of the local people were in favor of a large national monument.

I have been skeptical of on line petitions until I received two from Senator Tom Udall, one asking for my signature on his petition in support of his bill S 1805 and the other on climate change. He will be using an online petition to generate support for his bill and or recommending to Secretary Jewell and President Obama he sign a Presidential Proclamation designating one fourth of Dona Ana County as a National Monument.

I have developed an online petition for those opposed to a large national monument to make it known to the President, Secretary Jewell and as well as Senators Udall and Heinrich that there is not a consensus in favor of the 500,000 acre national monument.

Click here for the petition.

It is important that you sign the petition and pass the link on to your contacts for their signature. Together, we can stop this major land grab.

Jerry G. Schickedanz, Chairman

Thanks to the show Breaking Bad, many Americans now realize that they don’t need passports to visit New Mexico. We surely appreciate the publicity. But New Mexicans have reason to be even more grateful to another industry.

The New Mexico Tax Research Institute (NMTRI) recently released a study entitled Fiscal Impacts of Oil and Natural Gas Production in New Mexico. It’s impressively researched, including detailed county-level analyses. The results show that absent the tremendous financial impact of the oil and gas industries, New Mexico would be a far different, poorer state.

NMTRI found that 31.5% of the state’s General Fund revenues—the primary source of funding for state public schools and higher education—come from taxes paid by the oil and natural gas industries. The General Fund also pays for state public welfare programs, environmental protection, tourism advertising and support, road construction and maintenance, and many other functions of state government.

Oil and gas tax revenues are more than 40% greater than all personal income taxes collected by the state and are second only to the gross receipts tax in total contribution to the state’s coffers. Simply put, the oil and natural gas industries are vitally important to New Mexico’s economy and thus to the state’s capacity for public services. Policies regarding these industries therefore can have tremendous impacts.

For example, last April Mora County commissioners passed an ordinance preemptively banning all oil and gas drilling there. This is not to dismiss legitimate environmental concerns, but vigilance is not the same thing as paranoia. A blanket ban is particularly dubious considering that Mora County is among the most impoverished counties in New Mexico: 23.8% of its residents live in poverty according to the USDA’s Economic Research Service.

Fortunately, in counties where drilling has been going on for decades, in both the Permian Basin (Southeast New Mexico) and San Juan Basin (Northwest New Mexico), support for the oil and gas industries is very strong. After all, these people understand the considerable economic benefits and tradeoffs of living among the oil and gas rigs better than anyone else.

Money for government services has to come from somewhere, and much of it comes from oil and gas taxes. Tax policy is not very interesting to most people, but public services are and the connection between the two couldn’t be closer.

With just a few more drilling bans we could see some ugly results. Imagine your local public school with 31.5% less funding. It’s a frightening picture.

Given the considerable value of the oil and gas industries, it’s worth wondering how we can reap more benefits from their presence. Our neighboring states also have plentiful oil and gas reserves, so raising their taxes is not a wise move. We certainly want to keep them here. Fortunately, there is another, better way.

The federal government owns a staggering 41.8% of New Mexico’s land. If the state government were to obtain the lands that are not national parks, military installations, or wildlife areas and manage it at the state level the pool of jobs and resources generated by oil and gas could expand dramatically.

More and better public services without having to raise taxes is a rare win-win for New Mexico taxpayers. That is why the idea has gained bipartisan support in Santa Fe. Washington’s mismanagement of this land and its royalty payments has long been in need of remedy. The federal government has little motivation to do better.

Increasing state control of federal lands may not be realistic in today’s political climate, but what is even more crucial is preventing the federal government from further movement of federal lands into categories that prohibit oil and gas development. National parks and monuments are natural treasures; such designations should not be used to make ever more resources off limits to development.

New Mexicans have been relying on the oil and natural gas industries for years to fund public services. Policies that restrict these industries could be devastating to education, public welfare programs, and many other government services that we rely on. Policies that fail to account for the future productive potential of these industries shortchange New Mexico residents.

McElroy is a Policy Analyst with 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