Business columnist Winthrop Quigley recently wrote a detailed article in the Albuquerque Journal about New Mexico’s economically-harmful gross receipts tax. The article made a number of good points, but I felt that it needed a few details about the specific harms associated with the tax as well as a discussion of some potential solutions.

Winthrop Quigley’s article on New Mexico’s gross receipts tax (GRT) is a must-read for anyone concerned about turning around our sluggish economy. We at the Rio Grande Foundation have fingered the tax as the single biggest obstacle to our economic success.

Another point on the GRT is its outsized impact on small businesses and entrepreneurs who contract with as opposed to hiring professional talent including accountants, legal help, and accounting services (to name just a few services). The GRT adds 7 percent or more to these services when purchased from a New Mexico-based as opposed to an out-of-state provider.

What can be done? The bad news is that the current, “Swiss cheese” GRT regime is untenable. Giving exemptions to a few, politically-connected industries and causes while socking everyone else with rates upwards of 7 percent on items that are not even taxed elsewhere, is a guaranteed jobs killer.

Policymakers must either embrace the GRT for all of its flaws by eliminating exemptions, reducing rates, and eliminating the personal income tax as a separate tax (the GRT in its pure form taxes personal income, but is currently exempted). This was the idea behind legislation introduced by Sen. Bill Sharer and Rep. Tom Taylor during the 2013 legislative session. The top rate under this proposal would have been 3 percent.

Alternatively, through a combination of fiscal restraint, a push to increase revenues elsewhere, and some type of rate increase, New Mexico could eliminate the GRT and switch to a traditional sales tax.

Neither path is easy, but the GRT is a big problem that demands a big solution.

Rio Grande Foundation has done detailed analysis of the GRT and its many harms. I also previously posted comments here about the Taylor/Sharer reform proposal.

Recently, the Santa Fe Reporter did a cover-story on the “education exodus” in New Mexico. While not specifically blaming Gov. Martinez’s reforms for the rate of attrition, that would certainly appear to be an underlying aspect of the article. Nonetheless, I responded to the article with the following published letter:

The important point here is that choice and competition are inherently pro-teacher. After all, teachers are professionals with commensurate freedom and pay tied to success and should be treated as such, not as unionized factory workers circa 1920.

I like Fred Nathan. His group Think New Mexico has largely embraced the view that New Mexico is in dire need of a healthy private sector and this can only come about with the adoption of free market policies. Fred recently had an article that outlined some specific reforms. Those reforms were countered by some conservative voices including Kenneth Brown who used to work at Rio Grande Foundation and, writing in the Santa Fe New Mexican, Jack Stamm, a friend and supporter of RGF.

Undoubtedly, Rio Grande Foundation differs from Think New Mexico in our approaches and policies. But where do we come down on their proposals? For starters, Nathan’s group proposes an economic development strategy based on post-performance incentives as has been enacted in Utah. Nathan claims great successes based on these strategies in his article. RGF is all for cost-benefit analysis of all economic incentives.

The idea of rebating companies for 30 percent of the new tax revenue produced when they relocate to or expand operations in New Mexico also makes sense and should be considered in the Legislature. Of course, we already know that film incentives are bad policy and that Right to Work and other regulatory and tax reforms are direly needed. I wouldn’t say there is much disagreement here.

Nathan’s other proposal involves allowing New Mexico’s public universities to offer in-state tuition to international STEM students and to enhance their STEM programs for local students. I don’t have a huge problem with this either although I question its effectiveness: The federal government controls immigration policy and that is where the bottleneck is in terms of skilled workers. Also, just because a student comes to New Mexico as a student doesn’t mean that they will choose to set up business here, especially once they learn about our business-killing gross receipts tax, our regulations, and our poorly-trained workforce resulting from an inadequate K-12 system.

In other words, bringing new talent here to start businesses will take a long time (they’re still college students by definition) and is a high-risk proposition. It might not be a bad idea, but New Mexico needs jobs and economic prosperity NOW, not in 10 years.

To conclude, I think Fred and his group are attempting the “art of the possible” given our current Legislature which, by and large, is controlled by the economically-ignorant. Rio Grande Foundation is looking big-picture, hoping to change public opinion to the point that whoever controls the Legislature embraces free market ideas because they are proven to work.

For even the most detached observers, the last few years have been tough ones in Albuquerque and New Mexico as a whole (outside of the fast-growing oil patch). So tough, in fact that author Wally Gordon recently penned a column questioning whether or not Albuquerque is “dying” in the same ways in which cities like Detroit have “died.” While I don’t have significant issues with Gordon’s analysis as far as it goes, he offers no serious policy reforms and, were he a self-identified “conservative,” he’d be immediately and harshly attacked as he lives in Edgewood, not Albuquerque.

Nonetheless, the potential “death” of a city in which I DO live is too significant to ignore. Is Albuquerque dying? I’d say “no.” While the economy is struggling mightily, none of the area’s major employers: Sandia, Kirtland AFB, or Intel have left. As you can see, this area is entirely too reliant on government jobs, but this is nothing new:

Unlike Detroit which was once one of America’s truly great cities, Albuquerque has never risen to those heights, nor has it experienced a total Detroit-style collapse. Were a base or a lab or Intel to close, this might change.

That doesn’t mean the situation is good:

Obviously, the police situation needs to be reformed, but the police and mental health situations are the result of, not the cause of our City’s maladies. The cause is our terrible economy and over-reliance on government. Unfortunately, the City has limited levers with which to work. Economic policy is controlled in Santa Fe, specifically by the liberal-controlled Legislature. Rio Grande Foundation has outlined 9 public policy reforms that the Legislature could move forward with right away, but the leadership in Santa Fe doesn’t have a clue about economics so they focus on raising the minimum wage and spending more money on pre-k programs.

Heritage Foundation is hiring for a media position out in the southwest.
Click here for the description.

The Albuquerque Journal’s Washington columnist, Michael Coleman, recently wrote a story quoting some Eastern publications (The Washington Post and a legislation tracking site called Legistorm) are the two mentioned) as they made snide/silly remarks about New Mexico Rep. Steve Pearce’s decision to hold three town halls regarding the lesser prairie chicken’s listing as “threatened.”

All of this seemingly humorous “clucking” about what is a very serious economic issue in Southern New Mexico (and due to it’s potential impact on oil and gas all of New Mexico) illustrates a very important point: when it comes to federal lands and federal land regulations, Easterners — especially in the media and government — just don’t get it. Unfortunately, reform of the Endangered Species Act is seemingly not on the radar screen right now, but federal land reforms are very much a point of discussion these days.

The standoff over Nevada rancher Cliven Bundy’s ranch was just the latest example, but Utah has already shown the way for Western states (like New Mexico) and supporters of federalism to combat the ignorance of those who have little knowledge of the extreme importance of land ownership and regulations to those in the West.

When it comes to government in a democracy, it is far easier to play the role of Santa Clause than Uncle Scrooge. In other words, it is easier to say “yes” than it is to say “no” when it comes to spending other peoples’ money and using government regulations to benefit special interest groups. As any parent knows, saying “yes” feels better in the short-run, but saying “no” is often better in the long-run.

“Unfortunately,” says Rio Grande Foundation president Paul Gessing, “New Mexico policymakers have been saying ‘yes’ for too long and needs a healthy helping of ‘no’ when it comes to government spending and regulations. The good news,” says Gessing “is that there are many free market policies that would be good for New Mexico’s economy and education system while also being quite popular with average voters.”

The Rio Grande Foundation has compiled some of the best of these ideas into a list entitled, Common-Sense Ideas for a Conservative Majority in the New Mexico House. This paper is available at our website and it includes specific policy ideas and relevant polling data and arguments that should make these ideas a proverbial “slam-dunk.” The document should be an invaluable resource as conservatives look to gain control of New Mexico’s House of Representatives for the first time in more than 60 years.

Several of the ideas outlined have been introduced as legislation in the past including elimination of 3^rd grade social promotion and creation of a system of tax credits for school choice. Ending “worker’s compensation” payments to drunk or drugged workers who injure themselves on the job and taking action to restore federally-controlled lands in New Mexico to state control are also included.

Other ideas involve opening New Mexico government to greater public involvement by eliminating unnecessary signature requirements for New Mexico’s volunteer legislature (or at least making the requirements equitable among the various political parties) and allowing for remote testimony in legislative committees.

Lastly, the Rio Grande Foundation offers several popular and free market reform ideas that have been implemented in other states. Such ideas include amending New Mexico’s Constitution to require voter approval for all tax hikes at the state or local levels, repealing New Mexico’s onerous “prevailing wage” law which increases construction costs for projects like roads and schools by 15 percent or more, and shifting all new government workers out of New Mexico’s failing “defined benefit” pension plan and into user-controlled-and-directed “defined contribution” plans.

We at RGF haven’t done a whole lot of commenting on the recent police shootings in Albuquerque. Although we do work on criminal justice policy from a predominantly fiscal perspective, the issues of mental health and police policy are not in our “wheelhouse.” What is in that “wheelhouse” is tax policy and we were asked to comment for a recent KRQE Channel 13 story on Albuquerque city councilor Klarissa Pena’s proposal to raise the local gross receipts tax by 1/8th of a cent to pay for additional mental health services. Unfortunately, due to a separate incident, we were not able to get on camera.

This is the first statement by anyone that I’ve read or heard about inadequate spending being the problem with APD shootings and our community’s efforts to work with the mentally ill. Interestingly, according to the Kaiser Foundation, New Mexico as a state is middle-of-the-pack when it comes to mental health spending per-capita. So, what will the additional money be used for, specifically? What problems are being caused by inadequate funding particularly given the fact that New Mexico’s courts have struck down “Kendra’s Law” which would allow involuntary commitment of the mentally-ill.

In other words, no one knows if more money is a viable solution for our mental health woes. If someone comes up with valid research indicating that such funds are needed, then a discussion will be worth having. Until then, it would appear that the court system, APD, and the law itself need to be the primary focus points. This proposal would spend money for the sake of spending it and “doing something” no matter whether it solves the problem or not.

It’s been a bit of a tough week for Gov. Martinez with the release of audio recordings from four years ago in which she says some not-so-nice things about her political opponents (in what she thought were private conversations), but of much more importance is that Gov. Martinez has done what Sen. Majority Leader Michael Sanchez refused to do: crack down on the use of EBT (food stamp) cards at casinos, liquor stores, and strip clubs.

The New Mexico Watchdog, then an arm of the Rio Grande Foundation led by Jim Scarantino, blew the whistle on this issue in late 2012, but Michael Sanchez refused to bring legislation with unanimous bi-partisan support to a vote, so it died, leading me to wonder why Sanchez would dislike poor people so much that he’d jeopardize federal funding for food stamps by leaving the program so wide open to abuse.

Well, at least in this circumstance, the Gov. has acted alone to preserve the integrity of a program that Sanchez and his liberal allies believe is among the most effective “economic stimulus” programs known to man (I think they are crazy, but that’s a different story).

So, perhaps when they are done ripping the Gov. for her potty mouth, the liberal legislators will sing her praises for standing up for the poor and helping stimulate New Mexico’s economy? I’m not holding my breath.

In recent weeks, a Nevada rancher named Cliven Bundy has become a national “cause celebre” among many conservatives and other folks who are concerned both about federal land policies and the militarization of our federal bureaucracies. Details here and here. Indeed, the situation is concerning and, while information is still coming out as the standoff has ended, the simple fact is that Washington owns too much of our land.

Carl Graham made this argument recently in the Washington Times and of course the Rio Grande Foundation has detailed the potential economic benefits of returning federal lands to New Mexico.

While the particulars of Mr. Bundy’s case are by no means a slam dunk given federal law and the Courts’ interpretations of those laws. Nonetheless, the standoff and the issues involved have brought to the forefront just how much of the West is owned by the federal government (85 percent of Nevada and 42 percent of New Mexico) and how poorly and heavy-handedly those lands are often managed. The issue of federal land ownership is what advocates of limited government need to focus on and should provide the basis for specific legislative and policy changes.

This series of charts from David Freddoso via our friends at State Budget Solutions, illustrate the troubling issue of states and their dependence on Washington. Interestingly, as the two charts note, New Mexico is one of only two states to both be among the most dependent states in the nation and that saw the greatest growth of federal dependence from 2001 to 2012. The growth in dependency chart is below while the overall dependence chart can be found at the first link above (Louisiana is the other state to both be among the most dependent and to have seen the dependency grow most quickly)

And, lest you think this dependency is not a problem, this chart from Monday’s Outlook section of the Albuquerque Journal which shows that of Western states, in terms of jobs growth over the past year, New Mexico lost jobs at the rate of 0.5% while all other states in the region gained significant jobs with Texas, Nevada, and Colorado having grown at 3.0% or above. Truly astonishing how badly New Mexico is lagging the region.

Rio Grande Foundation president Paul Gessing will speak at the 2014 “Tax Day” protest sponsored by the Albuquerque Tea Party. The rally is being held from 4 to 7pm at the intersection of Louisiana and Menaul on Tuesday, April 15. Speakers including Gessing will begin around 5pm.

In his remarks, Gessing plans to note that it has been just over 100 years since the federal income tax in its current form was created (in 1913). The IRS itself has been around for just over 60 years. As Supreme Court Justice John Marshall, noted in Marbury v. Madison, “The power to tax is the power to destroy.” When it comes to the IRS, there is no government agency with as much power, as much access to the intimate details of Americans’ lives (with the possible exception now of the NSA), and as much power to destroy the lives of the very same Americans this government “Of, by and for the people” is supposed to protect.

Unfortunately, President Obama is not the first President to abuse this agency which has been called the “American Gestapo” for his own political benefit. In Obama’s case, this has involved using the IRS to attack conservative organizations and those who have criticized his Administration in ways that resemble disgraced former President Richard Nixon.

The Albuquerque Tea Party has faced some of the most direct attacks at the hands of the IRS, but conservative organizations all over the nation are being attacked for the mere act of engaging in the political process:

• Groups like the Albuquerque Tea Party were specifically targeted and denied tax exempt status simply for being conservative. Lois Lerner, a former top official at the IRS, recently “invoked the 5^th Amendment” protection against self-incrimination in Congressional testimony in relation to her agency’s attacks on the Tea Party and other conservative groups;

• April 15 is the day Americans come face-to-face with the Internal Revenue Service. But nonprofits find themselves face-to-face with the IRS more and more often as burdensome regulations are proposed. Instead of focusing on educating the public and serving public needs, nonprofits are spending more time defending their freedom to do their work.

• What if a local citizen organization wants to register voters at the state fair, or hold a candidate forum on an issue they care about? The IRS is considering stopping this!

• Or what if an organization like ours wants to let citizens know how their elected officials are voting on issues? That’s an important role we fill—as watchdogs—and the IRS has considered severely regulating it.

• Tax Day reminds us that an added bonus for charitable giving is the tax deductions. Those who give help their communities while reducing their tax bills. It’s a win-win!

John F. Kennedy once said, “The raising of extraordinarily large sums of money, given voluntarily and freely by millions of our fellow Americans, is a unique American tradition… Philanthropy, charity, giving voluntarily and freely… call it what you like, but it is truly a jewel of an American tradition.”

The Beacon Hill Institute is an economic research think tank attached to Suffolk University in Boston. They do an annual “State Competitiveness Index” in which they rank all 50 states based on several public policy areas. Those areas include: Government & Fiscal Policy, Security, Infrastructure, Human Resources, Technology, Business Incubation, Openness, and Environmental Policy.

According to the index, New Mexico performed best (8th) in Openness and Environmental Policy. New Mexico’s worst scores were in Fiscal Policy and Business Incubation.

There are a number of indexes out there which purport to measure a state’s overall economic competitiveness. Given New Mexico’s frequent appearance at the bottom of such lists and our generally-poor economic performance, our state’s appearance at 44th on Beacon Hill’s list leads me to believe the data is fairly accurate.    

The Freedom Index is results for 2014 are available online in the form of a press release. How did your legislator vote on freedom during the recent legislative session? Click on the relevant city to view the information for each legislator. All data are available at the link above.

Alamogordo

Albuquerque

Carlsbad

Clovis

Farmington

Hobbs

Las Cruces

Los Alamos

Roswell

Santa Fe

The Rio Grande Foundation is hosting a luncheon talk with Matt Kibbe on Monday, May 12, 2014 at the Albuquerque Marriott Pyramid Hotel. He will be discussing his new book, Don’t Hurt People and Don’t Take Their Stuff: A Libertarian Manifesto. Luncheon tickets are priced at $30 for purchases made through May 5th, $40 for purchase made May 6th or later. Books will be available for purchase and signing at the door.

Click here for event registration form.

About the book:

In this essential manifesto of the new libertarian movement, New York Times bestselling author and president of FreedomWorks Matt Kibbe makes a stand for individual liberty and shows us what we must do to preserve our freedom.

Don't Hurt People and Don't Take Their Stuff is a rational yet passionate argument that defends the principles upon which America was founded – principles shared by citizens across the political spectrum. The Constitution grants each American the right to self-determination, to be protected from others whose actions are destructive to their lives and property. Yet as Kibbe persuasively shows, the political and corporate establishment consolidates its power by infringing upon our independence &ndask; from taxes to regulations to spying – ultimately eroding the ideals, codified in law, that have made the United States unique in history.

Kibbe offers a surefire plan for reclaiming our inalienable rights and regaining control of our lives.

About the author:

Matt Kibbe is the President and CEO of FreedomWorks, a national grassroots organization that serves citizens in their fight for more individual freedom and lessgovernment control. An economist by training, Kibbe is a well-respected policy expert, bestselling author and political commentator, and a regular guest on CNN, Fox News, The Blaze TV and MSNBC.

He also serves as Distinguished Senior Fellow at the Austrian Economic Center in Vienna, Austria. Dubbed “the scribe” by the New York Daily News, Kibbe is the author of Don’t Hurt People And Don’t Take Their Stuff: A Libertarian Manifesto (2014), Hostile Takeover: Resisting Centralized Government’s Stranglehold on America, (2012) and co-author of the New York Times bestseller Give Us Liberty: A Tea Party Manifesto (2010). According to Slate Magazine, “Kibbe … looks like Billy Bob Thornton cleaned up for a Job interview,” and is prone to wonkish pronouncements regarding music, philosophy and beer. Terry, his awesome wife of 27 years, takes no responsibility for his many mistakes or frequent embarrassments.

Click here for event registration form.

Unless you’ve been hiding under a rock, you are probably aware that New Mexico is one of four finalists for a Tesla battery factory that, if built, would be the largest battery factory on the planet. This has obviously generated a great deal of attention and has generated some interesting discussion among liberals and conservatives alike over how far New Mexico should go to bring this plant to our state.

For starters, New Mexico Senator Cisco McSorley led a group of Democrats in signing an “open letter” cautioning against being over-generous with incentives. I noted in an email correspondence with the Senator that we had some significant agreement which landed us on Scott Stiegler’s show on 770 KKOB last night (podcast coming soon), see photo below. The Senator and I spent two hours largely agreeing on the specific issue of Tesla incentives although I was critical of the current tax and fiscal climate in New Mexico and the lack of action on a Right to Work law.

Also worth checking out is this article from the Santa Fe Reporter which includes quotes from a variety of sources on the left, right, and center on Tesla.

I also appeared on a radio show panel discussion on KSFR in Santa Fe during which the issues surrounding Tesla’s potential investment in Albuquerque were discussed. Audio here.

President Obama recently celebrated the “success” of ObamaCare in insuring 7.1 million Americans. I guess after so many failures and delays, the President will latch onto anything that is not an explicit failure as a “success.”

For starters, the RAND Corporation has found that only 1.4 million of those newly-insured Americans were previously-uninsured. That means less than 20 percent of these signups are newly-insured, but it gets worse.

Remember when the media and others were touting the supposed millions of uninsured Americans to justify passage of the deeply-flawed law? According to the Huffington Post, the figure was 48 million uninsured. So, Obama’s health care law is insuring less than three percent of these supposedly-uninsured Americans. All of this at a cost to the American taxpayer of trillions of dollars (the price tag continues to rise as seen below) and piles of costly new regulations, not to mention the credibility of the Obama Administration and his allies in Congress.

Of course, due to the ObamaCare law’s reliance on artificial deadlines, for the first time in American history, the purchase of a perfectly legal product (the purchase of which is an explicit goal of government policy) is now prohibited until 2015.

This health care law is an amazing mess. It can’t be saved because every aspect of the law moved health care away from individual control and financing and towards centralization and third-party payment. It is time to end this debacle!

Excellent article recently in the Albuquerque Journal by former RGF economist Ken Brown. As a practice, I don’t take the time to rag on other organization’s proposals that would be ineffective or merely nibble around the edges as long as they don’t actively move policy in the wrong direction. Brown’s article is worth a read.

Speaking of ill-informed policy ideas that would actively move New Mexico in the wrong direction, the left-wing NM Center on Law and Poverty is an exemplar. They are suing the state claiming that taxpayers are not shelling out enough money to provide an “adequate” education. The facts could not be more to the contrary, but the term “adequate” is so ill-defined that New Mexico’s liberal courts could easily use some creative thinking to justify forcing taxpayers to pour more money into education.

Debunking NMPLC’s case is pretty simple:

Per-pupil education spending in New Mexico has grown tremendously in recent years.

New Mexico’s education spending is in the middle of the pack (25th out of 50 states) despite poor results.

The problem with education funding is that in socialized systems, resources wind up being poorly-distributed (it’s called the economic calculation problem). In other words, the problem in education is the lack of competition and economic incentives, not too little money. Nothing will change in New Mexico until policymakers move to a more competitive system.

Gov. Martinez has attracted the attention of at least one major news outlet for her recent statements about reducing the State’s role in providing the flow of money to government employee unions in New Mexico.

EDITORIAL: New Mexico challenges its public-sector unions
Gov. Martinez works to loosen the grip of AFSCME

By THE WASHINGTON TIMES Friday, April 4, 2014

The success of governors holding unions to account in the union strongholds of Wisconsin and Michigan has inspired imitators.

Gov. Susana Martinez of New Mexico — often mentioned as a prospective Republican vice presidential nominee in 2016 — wants the state government to quit collecting dues for the public-sector unions.

Government collection of union dues is not particularly costly for taxpayers, but it’s a unique and valuable perk for the unions. It’s so valuable, in fact, that Ms. Martinez was immediately scolded by a spokesman for the American Federation of State, County, and Municipal Employees, who called her announcement a “declaration of war.”

Given the chance to avoid mandatory dues collection, many government employees choose not to pay the tribute. Most employees would rather keep what they earn than send any of it to distant union bosses.

Membership plunged in the Milwaukee-area government employee union after Gov. Scott Walker freed employees from the burden of mandatory contributions. The Milwaukee union declined from 9,000 members and an income of $7 million in 2010 to 3,500 members and a deep deficit by the end of 2013.

Unions see direct deduction of dues from paychecks as key to their survival. The Rio Grande Foundation, a free-market think tank in New Mexico, argues that, far from a “declaration of war,” Ms. Martinez’s proposal is well to the left of Franklin D. Roosevelt’s opposition to the very existence of government employee unions. “The process of collective bargaining, as usually understood,” Mr. Roosevelt said in 1937, “cannot be transplanted into the public service.”

FDR understood that government unions had the power to manipulate bargaining to their benefit. Union dues could be used to elect the politicians who sit across the bargaining table.

Instead of an adversarial process that would lead to a fair bargain, it skewed the system. Union negotiators sat across the bargaining table from cronies eager to do their bidding. The taxpayers lost big.

The system became so unworkable in Detroit that the city collapsed into bankruptcy, but in other places government unions have been smart enough not to kill the host.

This isn’t so in New Mexico, where the host is gravely ill. Unlike neighboring Arizona and Texas, New Mexico is a blue state firmly controlled by Democrats. Republican governors are the exception, and the state House of Representatives has been in the hands of Democrats in New Mexico since the Eisenhower administration.

Liberal policies have not been kind to the Land of Enchantment. The Fraser Institute finds it to be the “least-free” state in the United States. Reliance on federal spending has impoverished the state. Despite clear skies and beautiful weather, it’s one of the 10 states losing population. Incomes are stagnant and the economic recoveries of its neighbors have dwarfed New Mexico’s.

Having Gov. Martinez in charge in Santa Fe, eager to implement authentic labor reform, puts New Mexico on track for an economic turnaround.

(Albuquerque) In a first step for “free trade” in legal services, the New Mexico Supreme Court has adopted partial reciprocity for attorneys (also known as reciprocal bar admission). In its pure form, lawyer reciprocity enables experienced attorneys from other states to practice in New Mexico. This basic regulatory reform was discussed in a 2013 Rio Grande Foundation policy brief that dealt broadly with regulations that hold back New Mexico’s economy.

Said Rio Grande Foundation president Paul Gessing of the Court’s decision, “We are pleased that the Court has concluded that failing to recognize the credentials of out-of-state attorneys – while providing protection to a small group of marginal, in-state attorneys – is unfair to New Mexico consumers of legal services and ultimately harms our economy.”

Gessing continued, noting that “In today’s economy, businesses can set up their headquarters wherever they choose. State requirements that attorneys be ‘barred’ once again to practice in New Mexico after having already gone through that process elsewhere, is not helpful as our elected official attempt to bring jobs and economic growth to our state.

Attorney Pat Rogers who has been leading a pro-reciprocity effort before the Court noted that, while pleased with this first step, “The Court did not adopt the less restrictive proposal favored by his group and the Rio Grande Foundation. The Court did, however remove a good portion of the existing restrictive barriers to competition in the practice of law, in NM. Consumers should be the winners.”

Concluded Gessing, “The New Mexico Supreme Court’s move towards reciprocity is a small, but necessary step forward in terms of reducing unnecessary regulations on New Mexicans.”

It has been a few years since our friends in the Albuquerque Tea Party and other Tea Party groups around New Mexico put together the tax-day rallies attended by thousands of New Mexicans. Those rallies have had an impact and have forced politicians in Washington and here in New Mexico to pay attention to issues of limited government. The Albuquerque Tea Party is planning a major April 15 “Tax Day” rally this year and I’ve been invited to speak to rally the troops. In formation on the Albuquerque rally follows:

At this point I don’t have information on Tea Party activities throughout the rest of New Mexico, but you can check here for contact information for Tea Party groups in your community. Of course, I’m sure I speak for the Albuquerque Tea Party in saying that you are welcome to visit the Duke City on April 15.

If you want to put your career and standing as a public figure at risk, it appears that there is no quicker path to destruction than to take on the gay rights lobby these days. Just ask the now-former CEO of Mozilla who just resigned due to pressure put on him as a result of a $1,000 contribution he made to a 2008 California ballot measure that banned gay marriage in that State (at least until the Courts got hold of it).

Regardless of your position on gay marriage (I share Jonah Goldberg’s view on the issue), this state of affairs where you have to toe the, now popular line on any public issue, is downright scary. More importantly, this kind of debacle provides an excellent argument on behalf of those, like us, who support donor privacy and understand the need to keep at least some donations to politicians and public issue campaigns private.

A group of Democrat legislators posted an open letter on incentives for the proposed Tesla “gigafactory.” In their letter, the legislators laid out some concerns and ideas related to incentives that may or may not be provided by the State of New Mexico to bring the factory here. The letter mentioned Rio Grande Foundation and our previously stated position on the proposed incentives which we’ve discussed here and here.

First, it is great to see a group of people with whom we generally don’t agree on economic development issues citing us as an authority on important economic development issues. Also, it is worth noting that “corporate welfare” and business subsidies are an area in which the left and right can agree, so, there are many good points made in the letter, however, there are also several points made in the letter that need to be addressed.

1) No unlimited subsidies for Tesla: It’s hard to disagree with this one although it is worth clarifying that tax exemptions are much different than outright subsidies. Schott Solar received actual payments totaling $16 million from New Mexico taxpayers. The film industry receives outright payments (made by other New Mexico taxpayers) of 25 or even 30 cents on the dollar and these folks have been some of the biggest cheerleaders for this policy (despite opposition from prominent left-wing economists).

In summary, RGF has supported tax breaks as an economic development tool for Tesla, but we don’t support the “investment” of taxpayer dollars.

2) Leverage the universities and Labs: Another worthwhile albeit somewhat obvious point. To the extent that research going on at New Mexico’s Labs can be of use to Tesla and that locating in the same geographical area as those institutions can be helpful to Tesla, this point makes eminent sense.

3) Disclosure of Costs and Benefits: Another worthy point. New Mexico needs to do a better job on behalf of its policymakers of understanding the real-world economic impact of tax incentives and subsidies. Getting objective research is not always easy, but it is worth pursuing.

4) Money-back guarantees (strong clawbacks): Sounds good in theory, but not realistic. Despite all of the hype, Tesla is an extremely speculative business. There’s no way they’ll put themselves on the hook for reimbursements to the State in the case of a failure. Negotiating aggressive clawbacks will likely kill a deal. New Mexico policymakers need to structure incentives in such a way as to not be “out” millions of dollars if Tesla were to fail.

5) Job quality standards: I have no doubt that a vast majority of Tesla employees (even on the assembly line and in the absence of unions) will earn very good salaries and will thus not be a burden on our Medicaid and social welfare systems. The bigger issue is the Democrats’ demands for in-state hiring quotas. This is another deal-killer. Tesla is going to want the best workers possible in its plant and isn’t going to want to deal with unnecessary and artificial in-state hiring rules.

Policymakers should know that if Tesla moves here, they will hire lots of New Mexicans to work in its facility. To hire 6,500 workers, there is no doubt that some of those people will have to come from elsewhere. The good news is that whether Tesla ever pays a dime in corporate taxes, those well-paid workers will pay taxes and generate economic activity in our economy.

One additional point not mentioned in the Democrats’ piece, but mentioned elsewhere is that New Mexico has plenty of water. Nearly 80% is used for agriculture, much of which is not economically-viable. Some of the water rights for flooding fields to grow hay, alfalfa, and corn in places where such crops are not a wise use of water can and must be eliminated whether Tesla comes here or not.

Rob Nikolewski cites three recent reports detailing New Mexico’s poor showing on a variety of national reports over at Capitol Report New Mexico. These reports center on our state’s weak personal income growth, our higher education system’s inability to get students to graduate, and our ongoing dependence on the federal government.

Here at Errors of Enchantment, we’ve detailed plenty of negative data surrounding the New Mexico economy, but quite frankly, it isn’t really news anymore. It is just another report that comes out with nothing but yawns elicited in the Legislature where the policy prescriptions in 2014 included raising the minimum wage, using the general fund to prop up a poorly-designed lottery scholarship program, and spending $550,000 to build a movie studio back-lot near Las Cruces to further subsidize the film industry.

Minor course corrections aren’t enough. New Mexico is on the wrong economic path (of dependence and a perpetual belief that government spending is the solution to our problems). It didn’t get their overnight and the switch to a free market economy won’t be easy or quick.