The performance of Albuquerque’s Mayoral challengers at a recent forum left the audience about as comfortable as a priest at a Miley Cyrus performance. Mayor Berry can simply adopt the campaign slogan of, “Hey, I’m the only sane one in the race” as his mantra.

Pete Dinelli supports something called Project Labor Agreements which even Santa Fe repealed because it was found to be too wasteful. These agreements raise prices of public projects and have been found to exclude women and minorities from PLA jobs.

Paul Heh thinks New Mexico is a Right to Work state. The answer to this question (it isn’t) takes less than 10 seconds to find on the Internet. One wonders what other misconceptions he’ll take into the Mayor’s office with him. Oh, I just found it. Heh has sent out a press release calling into question the legitimacy of the FBI’s statistics on crime (the ones that indicate that crime is down in Albuquerque). He claims that with 200 officers fewer on the streets that “If there is no report, then there is no incident for the FBI to count.”

Sounds fishy to me. I haven’t heard any news reports about police not showing up to take care of murders or other violent crimes, yet those rates have dropped. One would think that such problems would make news as they have in Detroit. After all, if a friend or family is murdered or violently assaulted, people are going to AT VERY LEAST want the cops to come and take a report of the incident.

Heh also fails to make a compelling case that more cops = less crime. Like any policy, there is a law of diminishing returns. Does Albuquerque have too few, just right, or too many cops? That would be a good bit of data to have, but Heh would seemingly rather govern in a vacuum.

Berry is not always as conservative as RGF might like. We’d love to have seen him bring in private managers for the City’s golf courses and zoo. But in the valley of the blind, the one-eyed man is king. Mayor Berry is doing better than that as compared to Dinelli and Heh.

Testimony Before Courts, Corrections, and Justice Interim Committee
Friday, August 23rd, 9am, Room 322

Rep. Gail Chasey, Co-Chair
Sen. Richard C. Martinez, Co-Chair

Introduction

Good morning Madame and Mr. Co-Chair, members of the Committee. My name is Paul Gessing, I’m President of the Rio Grande Foundation, New Mexico’s free market public research institute or think tank. We’re based in Albuquerque, NM. Thank you for inviting me to participate in this hearing.

I’ll be the first to admit that I am not an expert on criminal justice issues. That said, criminal justice issues are by definition economic issues. New Mexico’s economic policies are the bread and butter issues of my organization. Criminal justice policies impact the economy in three major ways:

1. Direct spending on the criminal justice system including everything from police to prisons;

2. Foregone revenues including everything from potential taxes paid (or not paid) by those who are incarcerated or unable to find work due to their criminal records to the economic potential to tax drugs like marijuana;

3. Lost economic growth due to crime/inadequate public safety.

While I don’t consider myself an expert on criminal justice issues, I am one of the original signatories of the Right on Crime statement of principles. This statement has now received support from 54 conservative leaders across the nation.

The basic premise is that the traditional “lock em up” mentality that has historically dominated conservative thinking on crime is too expensive and lacking in effectiveness to continue without a serious re-evaluation of the goals, tactics, and fiscal implications of our criminal justice policies.

Background

To be clear, New Mexico is historically not a state that has followed conservative criminal justice policies. Incarceration rates, for example, are far lower here than they are in most surrounding states. That does not mean that New Mexico policymakers are doing everything right or as cost-effectively as possible, it just means that “lock em up” has not been the criminal justice model in New Mexico as it has been in Texas, for example. That also doesn’t mean that policymakers in our state can’t learn something from what other states are doing on criminal justice issues.

Let’s start with some data. I have provided the Committee with a regional breakdown of the 2012 Peace Index which is put together by an organization called Vision of Humanity. The most notable aspect of this data for New Mexico is the high rates of homicides and violent crime (and relatively low rates of incarceration, lower than any state in the region besides Utah).

The crime problem in New Mexico is not limited to violent crime. According to 2011 data from the FBI’s Uniform Crime Reports, New Mexico has relatively high rates of property crime relative to the rest of the region. Notably, the entire southwest region has relatively high rates of most crimes.

Personally, as a resident of Albuquerque’s West Side, I can attest to the fact that crime can be a blot on life in New Mexico. Having lived for 8.5 years in Washington, DC and its inner-suburbs with no problems, I have witnessed a drive by shooting in my neighborhood and our car has been broken into as well. One of my former employees, Paige McKenzie was beaten within an inch of her life on the side of a road in Bernalillo.

My family and I love New Mexico and can’t see moving, but more timid souls might have simply left. This is lost talent and lost economic activity for our businesses and our economy. Worse, those people tell their friends and put their message on social media. Word spreads.

But I’m not here to say we need to spend more money on criminal justice or even that hiring more police is the answer. Rather, I think we need to re-deploy resources to improve our justice system in ways that keep violent offenders behind bars, rehabilitate those who can be rehabilitated, keep those who are not real threats in the workforce and involved with their families, and reduce contact with the criminal justice system among those who have no need to be involved in it at all.

There are some specific ways to reduce crime and/or reduce the costs of criminal justice at the same time. These have been outlined in Rio Grande Foundation policy papers including the 2009 “Criminal Justice Policy in New Mexico: Keys to Controlling Costs and Protecting Public Safety” and an opinion piece “Reforms can cut costs, improve public safety.”

1. Drug Courts: New Mexico has 853 inmates incarcerated for drug possession.

Drug courts are a proven alternative to incarceration for low level drug offenders. Drug courts offer intensive judicial oversight of offenders combined with mandatory drug testing and escalating sanctions for failure to comply. According to the National Association of Drug Court Professionals, the average recidivism rate for those who complete drug court is between 4 percent and 29 percent, in contrast to 48 percent for those who do not participate in a drug court program. Similarly, the General Accounting Office reported recidivism reductions of 10 to 30 percentage points below the comparison group.

A 2006 California study found drug courts cost less than $3,000 per participant, far cheaper than prison.12 New Mexico has 35 drug courts in 25 of 33 counties, which have processed 9,500 offenders since 1994. The recidivism rate of New Mexico drug courts is 11.9 percent. A New Mexico Sentencing Commission study of the Bernalillo County Metropolitan DWI Drug Court found graduates were one-third as likely to recidivate as comparable offenders who did not participate in the drug court.13 As recommended in the June 2008 report by Governor Bill Richardson’s Task Force on Prison Reform, New Mexico can benefit further from the expansion of drug courts.

If we assume that half of these drug possession offenders should not be eligible for diversion from prison because they had large quantities of drugs that are associated with dealing or have too many prior offenses, New Mexico could still save $13.2 million based on the state’s $31,000 annual per-prisoner cost of incarceration.

2. Another source of potentially significant savings lies in diverting from prison probationers and parolees who are revoked for technical violations of their supervision, not new offenses. In 2008, there were 413 such revocations to prison. Instead, New Mexico could use a graduated sanctions matrix that relies more on intermediate sanctions such as curfews, electronic monitoring, supervised work crews, and short periods of incarceration in county jails. If this diverted just half of this pool of offenders, it would save $6.4 million.

3. Law Enforcement Assisted Diversion (LEAD), otherwise known as pre-booking diversion:

Law Enforcement Assisted Diversion identifies low-level drug offenders for whom probable cause exists for an arrest and redirects them from jail and prosecution by immediately providing linkages to treatment and social supports including harm reduction and intensive case management. By diverting eligible individuals to services, LEAD is committed to improving public safety and public order, and reducing the criminal behavior of people who participate in the program.

4. Research has proven that treatment is effective. In Arizona which also implemented this policy more than a decade ago, a study by the Arizona Supreme Court found that 77 percent of drug offenders got clean as a result of the treatment. The national Drug Abuse Treatment Outcome Survey of 10,000 participants found that residential treatment resulted in a 50 percent reduction in drug use and 61 percent reduction in crime while outpatient treatment resulted in a 50 percent reduction in drug use and 37 percent reduction in crime. Dr. Nora Volkow, Director of the National Institute on Drug Abuse (NIDA), stated, “Research findings show unequivocally that drug treatment works and that this is true even for individuals who enter treatment under legal mandate.”

Performance-Based Probation Funding: In December 2008, Arizona implemented performance-based probation funding. Under this incentive-based approach which has not been adopted in New Mexico, probation departments receive a share of the state’s savings from less incarceration when they reduce their revocations to prison without increasing probationers’ convictions for new offenses. The probation departments are required to reinvest the additional funds in victim services, substance abuse treatment, and strategies to improve community supervision and reduce recidivism.

Unlike Arizona, New Mexico has one unified, statewide probation and parole department. The Pew Center on the States Public Safety Performance Project recommends that a performance based probation funding system appropriate 30 percent of savings from a reduced revocation rate to the department and an additional 5 percent if the department demonstrates improvement in employment, drug test results, and victim restitution collection. Although results of Arizona’s measure are not yet available, Ohio adopted a somewhat similar funding policy called RECLAIM

(Reasoned and Equitable Community and Local Alternative to Incarceration of Minors) that gives money to counties that treat juveniles who would otherwise be incarcerated and deducts funds for low-risk juveniles who are sent to state facilities. The policy has been highly successful, as the recidivism rate for moderate risk youth placed through RECLAIM was 22 percent, compared with a
54 percent rate for such offenders in state lockups.

5. New Mexico can also join 36 other states by implementing a policy to release geriatric inmates who are no longer a danger to the public. Such inmates are even more expensive to incarcerate due to health care costs.

Based on Oklahoma’s experience, 17 infirm New Mexico inmates could be released every year on geriatric parole with savings of $844,594, which assumes a higher $50,000 incarceration cost per year that is supported by research on geriatric inmate medical costs. Geriatric inmates have a recidivism rate of less than five percent and not a single participant in Oklahoma’s model program has committed a new offense.

6. Finally, more halfway houses would provide an alternative for the 130 inmates who have been paroled but \await release because they lack housing. A halfway house costs only $25 a day, while prison is $85 a day. Assuming 120 days of time at a halfway house instead of prison, this policy would save $936,000.

7. Some other reforms would provide long-term benefits by making it more likely that ex-offenders will become productive members of society rather than career criminals going through prison’s revolving door. Currently, 41 percent of New Mexico probationers and parolees are employed. Employed ex-offenders are three times less likely to re-offend. One barrier to employment is that New Mexico employers have been held liable for negligent hiring of employees with questionable backgrounds.

The Urban Institute noted, “The high probability of losing coupled with the magnitude of settlement awards suggest that fear of litigation may substantially deter employers from hiring applicants with criminal history records.” That fear is not without basis. Employers lose 72 percent of negligent hiring cases with an average settlement of more than $1.6 million. New Mexico can address this by immunizing employers from such suits – suits should be permitted for failure to supervise but not merely for hiring an ex-offender.

8. Barriers for Nonviolent Ex-Offenders to Obtain Occupational Licenses: Under the New Mexico Criminal Offender Employment Act, even convictions not directly related to the occupation are grounds for ineligibility. One solution is to allow ex-offenders to obtain provisional licenses that are valid for a shorter period of time and subject to immediate revocation if they commit a new offense, violate a term of probation or parole, or violate a rule of the occupation. Such provisional licenses provide a positive incentive for success while still holding the ex offender accountable.

Texas lawmakers enacted House Bill 963 in 2009 authorizing provisional licenses. The legislation specifies that a provisional license becomes a permanent license after six months if the license holder is in full compliance.

The Rio Grande Foundation has done considerable work on the issue of occupational licenses. While we’d love to see a reduction in their number, scope, and expense, the very least we can do from a criminal justice standpoint is to not throw up additional barriers in front of ex-offenders.

9. Use of Private Facilities. The recent decline in New Mexico’s prison population coupled with the potential of many the proposals outlined here for controlling the demand for prison beds should render the current capacity adequate. However, to the extent new capacity is needed at some point, expanding an existing private prison would be the most economical solution. Private prisons are proven to be less costly to operate.

A Rio Grande Foundation study examined per-prisoner department of corrections budgets across 46 states and found that states with at least 5 percent of their prison population in private prisons spent about $4,804 less per prisoner in 2001 than states without any private prisons.

The study further found that cost savings increase along with the percentage of inmates in private facilities. For example, New Mexico was calculated to save more than $50 million as a result of having 45 percent of its inmates in private prisons. Similarly, a December 2007 study by Vanderbilt University researchers found that states with a higher percentage of inmates in private facilities had lower public prison costs per inmate, suggesting that competition drives efficiencies in state-run prisons.

10. On this point, I want to clarify that the views here are my own and those of the Rio Grande Foundation, not Right on Crime. According to Harvard Economist Jeffrey Miron who visited New Mexico earlier this year, completely legalizing and taxing marijuana would result in total savings/revenue increase of $52 million annually. $33 million of that would come from reduced expenditures. Were New Mexico to tax marijuana at a reasonable rate that maximized profits, it would collect approximately $19 million annually. In essence, we could pay the total operating and infrastructure costs of the RailRunner and have a few million left over for those balloon payments coming down the road.

Barring such an aggressive approach, it is certainly worth considering HB 465 as introduced by Rep. Kane and passed the House during the 2013 legislative session. The Fiscal Impact Report for the bill was inconclusive in terms of cost-savings, but they would seem to be significant.

Conclusion

I have laid out for you 10 points on criminal justice issues that could be considered by those of all political stripes when dealing with criminal justice issues.

Each of these proposals, if adopted, would:

• Reduce direct spending on the criminal justice system including everything from police to prisons;

• Increase potential taxes paid into the system;

• Reduce lost economic growth due to serious crime issues/inadequate public safety.

I hope you’ll carefully consider these ideas and consider them in a bi-partisan manner.

A few years ago, San Juan County adopted a junk ordinance designed to get old cars and other eyesores out of the front yards of homeowners in unincorporated areas of the County. The Rio Grande Foundation weighed in and supported the ordinance in part because of the safety concerns associated with having junk strew about with nothing to stop small children or others from wandering into danger. The unsightly nature of junk strewn about in plainly visible areas further bolstered the case for such reasonable rules.

Now, we see that San Juan’s County Commission is considering taking land use regulations a great deal further by zoning a large portion of the County. We believe that zoning is fraught with problems and that the introduction of zoning has inherent, negative impacts on both private property rights and freedom. Rather than zoning, we believe that the traditional standard of “measurable and tangible harm” is the best way to mitigate disputes among neighbors.

For starters, a brief history of zoning is in order. Like so many policies that infringe upon our freedom today (the income tax, for example), widespread use of zoning arose out the “progressive” era of the early 1900s. As land-use expert Samuel Staley notes, “the political climate of the era provided the context for zoning and helps explain the rapid increase of zoning and urban planning more generally throughout the United States…Rather than letting private markets decide what housing should be built, at what heights, at what densities, and where, the ‘community’ would decide.”

Philosophically-speaking, zoning collectivizes property rights. It establishes what kinds of homes can be built, their size, sometimes even their outward appearance, and the density of neighborhoods. Similarly, zones determine where businesses can locate. Proposals to develop property for uses not designated by the zoning code required an amendment to the zoning map or plan.

Zoning implicitly politicizes all land use by involving the “community” in a decision that should be made privately or with the involvement of neighbors. The decision to “grandfather” a use (such as your home) is a political decision, not one based on private property rights. In fact there is no enforceable individual property or civil right to land use under zoning; courts have routinely upheld the legal right of cities to rezone properties regardless of the wishes of individual property owners. Citizens can object as a matter of due process but cannot challenge the substance of the regulation itself, which is presumed to serve the general welfare of the community. Zoning establishes a legal entitlement granted by government to use property in designated ways.

In other words, the adoption of zoning inherently shifts property rights from the individual to the collective. And, while all major New Mexico cities and many unincorporated areas of New Mexico have zoning laws, this does not mean that zoning is good policy either from the perspective of property rights or economic growth. In fact, Houston, America’s fourth most populous city, not only lacks zoning, but provides a useful example of how lacking bureaucratic control over land-use policies can be a competitive advantage. By avoiding zoning Houston is able to dramatically speed up the approval process while ensuring the land market responds effectively to economic trends.

Under conventional zoning securing a rezoning for a major project can take years. In Houston substantial developments such as multifamily housing can be approved through the performance-approval system and be fully constructed within a year. This flexibility has allowed Houston to be the leading job-producing city in America and the lowest living costs of any major metro (according to Business Insider).

With only six percent of San Juan County privately-owned, having maximum flexibility in land-use policies is especially important for the County’s future if it is to grow and generate jobs and economic growth for the Four Corners area. After all, if Houston can survive and thrive without zoning, clearly San Juan County can do the same.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation

Las Cruces officials have been “revitalizing” their downtown at taxpayer expense for decades. It hasn’t worked very well. So, I read with great interest this news story which details a plan being put forth by some in the community to enable some downtown businesses to obtain lower-cost liquor licenses.

We detailed the problem of over-priced liquor licenses in New Mexico and how they stifle business and job creation in our guide to regulatory reforms from early 2013. Of course, we’d prefer legislators to work on broad-based reform of New Mexico’s outdated and broken liquor licensing system, but the efforts to create a semi-deregulated “pilot program” is commendable, even if it dove-tails with a Main Street Program that we have serious problems with as a big-spending boondoggle (see here and here for examples).

It would be great to see something along the lines of Jack Kemp’s “enterprise zones” where the heavy hand of government is dramatically-reduced. This proposal is at least a first step away from reliance on tax dollars for economic growth and redevelopment and a realization that too often, government is the problem, not the solution.

Opinion writer Donna Crawford, writing in today’s Albuquerque Journal, makes several salient points about “green” energy. Her basic point is that the push for “renewable” power is being made with little heed for what actually works in providing steady, cost-effective power.

Enviros don’t seem to want to acknowledge that the US is actually reducing its carbon emissions, largely through the free market adoption of fracking for natural gas. China, on the other hand, is rapidly increasing carbon emissions:

In fact, the US is getting cleaner, not dirtier, year after year. Sure, government regulations have prodded things in this direction, but individual choices and the free market have been moving faster than government. Unfortunately, many on the left like Doug Morris, an apparent Marxist from Eastern New Mexico University who wrote a recent article in the Journal, seem to think that the world is getting worse every day. Except that it just ain’t so…

Poverty is being reduced globally and in the USA;

If anyone thinks racism is worse today than it was 50 years ago when MLK led the March on Washington, you are just nuts;

And, of course, the environment is cleaner.

In case you missed the news, voters turned down a tax cut referendum in Rio Rancho last night. The measure would have reduced the GRT by 1/8th of a cent to pay for higher education, but Councilors had pledged to increase the tax by 1/8th of a cent to pay for additional public safety personnel. The vote was nearly 60/40 in favor of keeping the higher ed tax. Here are some lessons we’ve taken from the effort:

1) (KISS) Keep it Simple Stupid: Cutting a tax for one purpose only to have another tax raised, “hold-harmless money,” temporary v. permanent taxation, and the difficulty of earmarking funds for a specific purpose, all muddied the issues of whether to support or oppose the ballot measure.

2) Have an end-game: In the wake of this failed ballot measure, we now have a situation where conservatives have made the case for increasing taxes for more police and fire. Liberals will be happy to make the case for higher taxes and the police and fire unions have been led to expect more money with that expectation now denied. Does anyone think there won’t be a great deal of pressure to increase spending or taxes for public safety?

3) Never underestimate UNM: They have lots of money, media sympathy, graduates, and a whole host of businesses and contractors that directly benefit from their activities. Taking them on, even with the support of the fire and police unions is an uphill battle.

Albuquerque City Councilor and candidate Isaac Benton is not a favorite of the Rio Grande Foundation and those who enjoy freedom. Benton’s basic philosophy seems to be one of “government knows best” and “money is no object,” especially when it comes to taxes.

Now, he has even called someone “despicable” for the sin of spending money in opposition to one of Benton’s cherished big-spending projects, a traffic roundabout in the North Valley. The roundabout seems to be on the shelf for now in favor of a left turn arrow, but it would have cost taxpayers $1.5 million and slowed traffic which concerned many neighbors including the man who donated $40,000 to the anti-roundabout campaign.

Remember, Benton is supposed to be a “public servant.” If I called my boss “despicable” for engaging in legal, even laudable activity, I wouldn’t be in my job for long. After all, this donation clearly is not going to some kind of favor for the donor. He’s not getting a government contract or trying to curry favor. Rather, he’s putting up money to educate and get across a particular point of view.

I guess where Mr. Benton is concerned, having an opposing point of view and being willing to act on it qualifies as “despicable.” He’d rather us act like a bunch of minions.

There are certainly plenty of hard-working people in the Land of Enchantment, but this story from Milan Simonich at the Las Cruces Sun-News should give both our policymakers and the rest of us pause. The story is of a cookie plant in Deming, NM, a rural area with relatively high unemployment. Despite high unemployment, the factory has been unable to find people who are willing to work.

This, despite eliminating a costly and probably unnecessary drug test; also, despite offering pay incentives and rapid pay increases;

So, the owner has automated, thus taking his plant from 48 people down to 41. But he still has problems finding workers who will show up.

What is going on? While RGF cites the problems associated with government-imposed minimum wages, that really isn’t the problem here as the worker is willing to pay the minimum wage, but still can’t find reliable workers.

As with all major problems, the issue is one of incentives:

The federal government and New Mexico have increasingly offered generous welfare benefits. According to a new Cato Institute report, the various welfare programs given by the federal and state governments to residents of New Mexico pay the equivalent of $13.41 an hour (see Table 3). Why would you go to work for $7.50 an hour when sitting on your butt pays almost double?

The vote on whether to reduce Rio Rancho’s gross receipts tax by 1/8th is tomorrow and Councilor Tim Crum, one of the conservative majority, has made what we think is the correct call: he’s still endorsing the tax cut on the ballot, but is not committing to support the subsequent 1/8th cent tax hike to fund police and fire that is being planned by his fellow majority on City Council.

This is largely what we endorsed in a recent blog posting and article that appeared in the Observer. Hopefully, other Councilors will support Crum’s position.

Proponents of the tax hike (including the fire and police unions) claim that more police and fire are needed. That may be true, but those are the absolute CORE functions of government. If Rio Rancho needs more cops and fire fighters, they need to eliminate other government functions, not raise taxes. Besides, more cops don’t necessarily equal less crime. In this article which appeared over the weekend in the Albuquerque Journal, it is noted that as the size of Albuquerque’s police department has shrunk, the crime rate has declined. Before blindly pouring more money into cops in particular, shouldn’t we get a better grip on what is really needed in terms of crime and criminal justice needs?

During the 2013 legislative session and Hanna Skandera’s “confirmation hearings,” the issues of digital learning and private sector involvement in education took center-stage. Legislation introduced by Rep. Mimi Stewart D-Albuquerque would have banned for-profit companies from certain education-related activities (the bill was vetoed by Gov. Martinez).

Another bill, this one introduced by Rep. Mary Helen Garcia, D-Las Cruces (also vetoed by the Gov.) would have stripped authority from the Secretary of Education to approve charter schools over the objections of the Public Education Commission (PEC).

The PEC opposed several charter schools in the 2012-2013 approval cycle including Connections Academy, a “virtual” school that is up and running as of Fall 2013. Concerns over digital learning played a lead role in the PEC’s decision to deny the school’s charter. Full-disclosure, I am on the Board of Directors of the Academy which was approved by the Secretary over the objections of the PEC.

As I argue in a new Rio Grande Foundation report on digital learning, policymakers should drop their opposition to both digital learning and for profit involvement in education and instead embrace their potential for the good of New Mexico’s children.

For starters, digital innovation has enhanced all of our lives. The explosion in inexpensive, readily-available, digital photography has enabled average people to take high quality pictures and experiment in ways that weren’t available just two decades ago.

America’s education monopoly has been slow to adapt to technological changes. This is one reason why K-12 spending has exploded nationwide over the past 30 years while educational results have remained stagnant. Unfortunately, New Mexico is 50th in the nation in graduation rates according to the authoritative Diplomas’ Count report. Our policymakers should embrace needed reforms and innovations rather than fighting them.

In terms of for-profit involvement in K-12 education, the profit-motive, if harnessed appropriately to the education system can provide significant benefits. As Frederick Hess of the American Enterprise Institute notes:

The watchful eye of investors can lend for-profits a healthy discipline. The prospect of returns means that promising profit-seeking ventures can offer employees lucrative long-term opportunities and can tap vast sums through the private-equity markets. For-profits have a relentless, selfish imperative to seek out and adopt cost efficiencies.

Nonprofits, by contrast, have little incentive to become “early adopters” of cost-saving tools and techniques such as online instruction.

For-profits are already involved in provide transportation services, computer software and equipment, and a wide variety of other learning tools including textbooks. They are an integral and even unavoidable part of our education system that, with proper management and incentives, could be a boon for New Mexico’s children.

When it comes to embracing digital learning, New Mexico is in the middle of the pack according to the latest report card put together by Digital Learning Now, a national organization dedicated to the expansion of digital learning. Two states, Utah and Florida are “running away from the pack” in terms of embracing online learning.

Utah’s ground-breaking Statewide Online Education Program was established by the Utah Legislature in the 2011 General Session. The program enables eligible students to earn high school graduation credit through the completion of publicly funded online courses. It is a national model that all states should pursue when it comes to digital learning.

Florida too has fully-embraced the digital learning revolution. The state which has seen rapid improvement in 4th grade reading scores on the National Assessment of Educational Progress and been a model for education reformers nationwide (including New Mexico) has fully-embraced digital learning.

Rather than being afraid of and putting up barriers to digital learning and for-profits, Florida policymakers have been updating and expanding their laws governing digital learning for more than a decade as technology and the marketplace of digital providers continues to evolve and expand.

The way Americans access and use information is changing rapidly. Our schools must keep up or our children will be left behind in the 21st Century economy. It is time to embrace digital learning and for-profits in education. We have nowhere to go but up.

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

I never thought Ashton Kutcher (AKA Chris) would appear on Errors of Enchantment, but he made some recent waves with a powerful and insightful speech at the Teen Choice Awards. See below. I especially appreciate his comments about work and it’s value (a message that is so often undermined by the far left who seem to value welfare more) and his admonishment to not accept the world as it is, but to help make the world what you want it to be. These are the innovators and entrepreneurs we need to improve our nation and especially our state.

With Obama having given himself the freedom to change the law, it is no surprise that he has again altered his signature health care law. The latest change involves delaying caps on the law’s out-of-pocket insurance costs for a year.

As Avik Roy notes over at Forbes:

First, there was the delay of Obamacare’s Medicare cuts until after the election. Then there was the delay of the law’s employer mandate. Then there was the announcement, buried in the Federal Register, that the administration would delay enforcement of a number of key eligibility requirements for the law’s health insurance subsidies, relying on the “honor system” instead. Now comes word that another costly provision of the health law—its caps on out-of-pocket insurance costs—will be delayed for one more year.

Who knows how the law will ultimately look when the Administration is done altering it? Of course, as Harry Reid pointed out earlier this week, the endgame is a “single-payer” system.

Fear not, however, if you don’t want to cooperate with the law’s requirement that you purchase health insurance, you get around it and avoid paying the penalty.

Airlines are in the news these days. The Obama Administration has put a stop to the proposed merger of American Airlines and US Airways arguing that it will harm consumers through higher costs and reduced competition.

Then, there was this column from leftist Harold Meyerson of the Washington Post arguing that today’s airline industry is a useful metaphor for the deterioration of the middle class in America. I think Meyerson’s metaphor is apt although he does not fully flesh it out and fails to see reality.

As the chart below, airline fares have fallen dramatically since the airlines were deregulated by Carter and Ted Kennedy in the 1970s:

Also, more Americans than ever are flying and they are doing so more safely.

And, yes, as Meyerson and his left-wing ilk are eager to point out, there are some airlines that will charge extra for just about everything on a flight and some other airlines that are providing more luxuries than ever. That is called choice. Some people want a hot towel and plenty of leg-room. Some want to get from A to B as cheaply as possible.

Unfortunately, the modern left, whether that be Meyerson or Obama (or Michael Bloomberg), believe that they know what is best for you and me. Instead of using another airline if prices go up, Washington steps in and makes the decision.

Rob Nikolewski of Capitol Report New Mexico has taken an interest in the issue of occupational licensing in the wake of RGF’s event relating to the issue on Milton Friedman Day. This issue was brought up to the largely-liberal panel on KNME’s The Line. See the brief discussion below which included a liberal attorney commenting on New Mexico’s lack of reciprocity for attorneys:

This piece appeared as one half of a pro/con debate with Nick Estes, formerly of NM Voices for Children. His column can be found here.

President Obama is again touting the wonders of government spending and what positive impacts his “investments” in the economy would have if the Republicans would go along.

Unfortunately for Obama, government over-spending is a problem, not a solution when it comes to America’s economy. If Obama wants to get the economy moving, he needs to repeal the job-killing ObamaCare law, work with Paul Ryan to reform entitlements, reduce the burden regulations place on the economy, and embrace America’s newfound role as a major producer and exporter of energy.

Every penny of added government spending adds to America’s debt burden. More importantly, government spending typically redirects resources away from the more efficient private sector and into less efficient government.

Take the so-called “stimulus.” The Congressional Budget Office (CBO) says it “created or saved” 2 million jobs. That may be true, but the stimulus spent $787 billion. That’s $393 thousand per job saved or created!

Set aside the fact that “saved or created” is deliberately opaque language that provides few actual details. Also, consider the sheer madness of taxing and borrowing $393 thousand from productive areas of the economy in order to create a single job.

Keynesians argue that increased government spending will spur the economy. They believe government spending has a “multiplier effect” as it circulates through the economy and that this leads to economic growth. History shows that they are very wrong.

If the Keynesian stimulus model worked so well, America would be booming right now. That’s because America has been following the Keynesian model for years. The federal budget has more than doubled since 2000. Back then, Washington consumed about 18 percent of the economy; today it consumes nearly 23 percent (an increase of more than 27%). The unemployment rate in 2000 hovered around 4.0 percent as compared to the current rate above 7 percent. Where’s the stimulus?

The aftermath of World War II provides another useful example. Federal spending which rose to more than 40 percent of GDP during the War, was reduced to just 12 percent by 1948. This, to the consternation of Keynesians who argued that reduced government spending would lead to double-digit unemployment rates. In reality, unemployment remained under 4.5 percent in the first three postwar years — well below the 20th century average.

Rather than increasing spending, America’s political leaders might consider addressing government regulations. According to Ten Thousand Commandments, a report published by the Competitive Enterprise Institute, Americans spent an astounding $1.806 trillion in 2012 complying with federal regulations. This lost money does not increase wealth or pay down America’s massive debts.

Address entitlements!

Social Security’s problems were inevitable. As a “pay as you go” system of generational transfer – lacking any investment mechanism – the system was doomed to have serious structural problems once fewer people paid in than were receiving benefits. The problems are real and go beyond deficit implications. Social Security will consume 30% more of the entire US economy in just a few decades.

Social Security’s biggest problem is the lousy rate of return which amounts to about a third the rate of AAA corporate bonds for most retirees. We can do better by reforming the system with private accounts that provide actual ownership and superior rates of return.

Medicare and Medicaid are in even deeper crisis, but the solution is actually simpler. We need to move beyond Washington’s “one-size-fits-all” mentality and allow the 50 states to experiment with innovative ways to improve care and reduce costs. To say that these government health care programs are mere purchasers of health care in a “free market” is laughable. Government now accounts for more than half of all health care spending.

More government spending will not help America’s economy. The Keynesian model has failed. It is time for our political leaders to make tough choices by deregulating the economy and reforming entitlements in ways that improve taxpayers’ return on our investments.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation.

(Albuquerque) Children throughout New Mexico are heading back to school. And, with the opening of the state’s second totally virtual school, New Mexico Connections Academy, the exact nature of that school is changing more rapidly than ever.

And, according to a new report from the Rio Grande Foundation, “New Mexico Policymakers Should Expand, Not Limit Online/For Profit Education,” this is an encouraging development. Furthermore, according to the report, policymakers, particularly the Legislature, encourage rather than discouraging the trend towards “virtual” learning with involvement of for-profit businesses.

According to Rio Grande Foundation president Paul Gessing, “the report details the many benefits of virtual learning and the involvement of for-profits, including:”

• Increased efficiency and innovation;
• Ability to leverage capital markets and additional resources to benefit education;
• New educational models including “blended” and “virtual” models;
• Ability to leverage truly excellent teachers across geographical barriers and other classroom limitations.

In addition to outlining the benefits of digital learning and for-profits, the report contains a report card outlining how New Mexico’s policies inhibit or promote digital learning. Specific ideas are provided for improving the public policy environment with an eye towards implementing many aspects of Utah which has the best laws in the nation when it comes to digital learning. New Mexico is middle-of the-pack.

Concluded Gessing, “New Mexico has two virtual charter schools and Albuquerque Public Schools has begun to embrace digital learning with pledges to increase and improve upon digital options available to students in the district. Nonetheless, policymakers, especially in the Legislature, have spent their time attacking rather than encouraging innovation in education. For the sake of our children, it is time for that to change”

According to Reason, there was a recent spat between the folks at the far-left Nation magazine who until recently did not pay their interns at all and Wal Mart which the left often criticizes for not paying what they believe to be “fair” wages. Interestingly enough, Congress, which loves to hold itself up as a paragon of all that is good and holy, does not pay its interns.

Continuing with the theme of the minimum wage, Tom Woods has an excellent article on the recent protests in New York City by fast food workers. As Woods writes:

Since no one else seems willing to hire them at their current wage rate, it seems to me that the very last institutions they should be angry at are the fast-food restaurants themselves, the only institutions on earth doing anything to improve their standard of living. Why don’t they protest all the places that pay them $0, having refused to hire them at all?

Lastly, if these NYC fast food workers really want to make more money, perhaps they should move to North Dakota where such workers are being paid well (and where the cost of living is far less).

Travis Brown has been making waves with his excellent website How Money Walks which details how wealth moves from states with poor economic policies (especially taxes on income) and to those with good policies. Brown, in a recent column in Forbes, compares Texas and New Mexico. Not surprisingly, New Mexico under-performs relative to Texas, but has made strides in recent years including Richardson’s tax cuts and the corporate income taxes that were passed last year in New Mexico.

Notes Brown regarding the battle to create jobs and spur economic growth:

The competition among states for companies and jobs has never been fiercer. State leaders have started to recognize that having a more attractive tax code is the key to winning this race.

While the economic news can be depressing for New Mexicans, good tax policies make a difference. Richardson’s tax cuts took the top income tax rate from 8.2 to 4.9 and dramatically reduced taxes on capital gains, resulting in personal income growth for the 2000’s that exceeded any state in the region and the national average by a long shot. See the following chart which was taken from an RGF paper on the Richardson tax cuts:

Only Oklahoma compares with New Mexico in terms of personal income growth during the decade. Interestingly, Oklahoma happened to adopt Right to Work in 2001.

The fact is that New Mexico can change (it must if we are going to really get our economy on-track and reduce poverty levels).

Recently, Rio Grande Foundation president Paul Gessing and Dr. Deane Waldman who is an Adjunct Fellow with RGF, a pediatric cardiologist, an author on health care issues, and sits on the board of New Mexico’s health exchange, recently appeared on a panel sponsored by the Sandoval County Republican Party to discuss the health care law known as ObamaCare.

Charlie Christmann, Chairman of the Party, video recorded the proceedings which are available below:

ObamaCare Panel Discussion Held by Sandoval County Republican Party on Saturday, July 27 from Paul Gessing on Vimeo.

Many in the teaching establishment, especially among the unions, mistakenly call Rio Grande Foundation and other education reformers “anti-teacher.” Nothing could be further from the truth.

Rather, we view teachers as being not altogether different from the rest of us. We respond to incentives to perform well or work harder and our talents generally fall along a bell curve: some are awesome, most fall in the middle, and some really stink. We believe that a freer market in education (as opposed to the socialized model found in the US) would both encourage excellence and allow for greater earning opportunities by top-performing teachers.

I found this story about a teacher who earns $4 million in South Korea to be fascinating. He engages in a wide variety of entrepreneurial and innovative behaviors that allow him to do quite well financially. He also operates in at least a sector of the South Korean education sector that is open to such activities.

New Mexico in particular and the United States (to the extent that the federal government remains involved in education) should embrace reforms including digital learning and the profit motive that enable in-demand teachers to earn serious money like this gentleman in South Korea.

The Rio Grande Foundation has just launched an exciting new project designed to spur a more robust public policy debate in New Mexico. While we certainly appreciate the print media outlets as they exist, we felt there was something lacking. Specifically, that was an opinion website that allowed both sides of the various public policy issues to square off, making their best arguments and allowing average New Mexicans to engage and participate in discussions.

The website is NMPolicy Debate and the first debate topic “Addressing the federal deficits and debt” has been posted. The debate is between my previous sparring partner Nick Estes (formerly of Voices for Children) and myself.

This is a brand new project and a work in progress. We are looking for new participants to write on policy issues from both sides (the most important rule at the site is that each issue must have both sides represented). If you want to write a column, please send a message to info@riograndefoundation.org with a brief note on potential topics. We will work to match writers with their counterparts, but if you know of someone on the opposite side of the issue, that is great.

As Thomas Jefferson once wrote, “An informed citizenry is the only true repository of the public will.. . . The People cannot be safe without information. When the press is free, and every man is able to read, all is safe.” I hope you’ll read and participate in this exciting project.

The letters section of the Albuquerque Journal is often good for a laugh. One example was a letter on the Keystone XL pipeline (which is waiting approval from the Obama Administration) that ran in last Wednesday’s edition of the paper, John Spar (who happens to be on the Board of Wild Earth Guardians) made numerous claims in opposition, but cites no sources to back up his opinion.

Here are the facts. Though Spar seems to think that Canada’s development of its oil sands hinges on KeystoneXL, Canada has made it clear that it will proceed with or without America’s approval of KeystoneXL. China and other Asian countries want Canada’s oil.
One of America’s greatest competitors for Canada’s energy resources, China has already invested tens of billions of dollars in Canada’s oil sands resources, some of that just recently.

If the KeystoneXL pipeline is not approved, pipelines will be built to Canada’s coast, which brings us to Spar’s environmental claims.

Obama’s own State Department released a statement in August 2011 and earlier this year finding that Keystone wouldn’t have a significant impact on the environment. But if Obama rejects the pipeline, the reality is that it would likely increase greenhouse gas emissions. Transporting the oil by tanker to Asia would almost certainly create more emissions than moving it by pipeline to closer U.S. Markets. A single pipeline transporting 150,000 barrels per day moves a volume equivalent to 750 tanker trucks, or a train of seventy-five rail tank cars. Plus there are more opportunities for tankers to have a mishap as they move about than a single, well-controlled and monitored pipeline.

According to an article in the Washington Post, greenhouse gases from oil sands are exaggerated. Production technologies are also steadily reducing environmental side effects, including greenhouse gas emissions.

As for jobs, TransCanada puts the initial construction and manufacturing jobs at 20,000. A Canadian Energy Research Institute study from June 2011 estimates up to 80,000 jobs by 2019 and 179,000 by 2035. Other estimates run as high as 340,000.
In light of the recent Associated Press story noting that four out of five American adults now struggle with poverty and more than 55 straight months of over 7.5% unemployment, it seems contrary to the nation’s interests to hold up this beneficial project.

A special election is now under way in Rio Rancho. The vote will determine whether or not to reduce the gross receipts tax in the City by 1/8th of a cent. The tax will actually go down by 1/8th of a cent. Rio Rancho’s City Council plans to re-impose the 1/8th cent tax to pay for additional police and fire in the City.

Because it would on-net lower taxes, RGF is supportive of the ballot measure as written, but we’d like to have seen the tax repealed with no tax added for public safety. We strongly encourage Rio Rancho’s City Council NOT to impose this tax increase. We haven’t seen clear evidence that crime is out of control in Rio Rancho and if it were, this is THE core function of government and adequate police and fire should be handled first with other spending taken care of later. Here is some information comparing Rio Rancho to other localities on crime.

A few other points:

As we have pointed out in the past, New Mexico has too many branch campuses. In fact, CNM and Highlands already have campuses in Rio Rancho. It would seem that with New Mexico’s flagship university, UNM, a half hour drive from most Rio Rancho residents, that voting against continuation of the tax would not make one “anti-education.”

Also, even if voters vote down reducing the tax, it would seem that Councilors who have supported the ballot measure have won some concessions from UNM to be more aggressive in providing services to the City.

According to RGF research, Rio Rancho has seen its tax burden increase a good deal in recent years and now trails only Albuquerque in terms of overall burden as a percentage of income. Given that Rio Rancho is competing most closely with Albuquerque for businesses and residents, it would seem that Rio Rancho should focus on positives like lower crime, better schools, and lower taxes (already slightly lower, but could be better).

I just went shopping for some office supplies including copy paper. As I walked out the door, I realized that at least some of the purchases should be tax-free since this is the start of the New Mexico’s gross receipts tax holiday. In reality, none of the items I purchased including copy paper were tax free…and that is part of the problem.

A lack of transparency is one reason such tax holidays are bad tax policy and they should be eliminated. As the Tax Foundation points out in a recent policy brief on the issue:

Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.

Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. However, free advertising for what is effectively a paltry 4 to 7 percent sale leads many larger businesses to lobby for the holidays.

Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating between products and across time, and distorting consumer decisions.

While sales taxes are somewhat regressive, this is often exaggerated to sell the idea that sales tax holidays are an effective way of providing relief to the poor. To give a small amount of tax savings to low-income individuals, holidays give a large amount to others.

Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a “holiday” from its tax system, it is a sign that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.

The Tax Foundation notes that such holidays are “politically-expedient,” but that is not good enough. New Mexico policymakers should do what they can to reduce rising GRT rates. One way to do this would be to eliminate the silly tax holiday.