One guess! Some interesting data and discussion from Wallet Hub on the various ways in which wealth and dependency can be measured. Check out the interactive chart below:

The Cato Institute has an excellent report that tracks education spending and education results in each of the 50 states over the last 40 years. To say that more spending has been wasted would be an understatement. The problem is not teachers or parents or administrators per se, but a government owned and operated…dare I say “socialized” educational system if schools are the means of production and educated students are what is being “produced.”

When I read Jim Folkman’s recent article in the Albuquerque Journal on the need for “downtown revitalization,” I wasn’t sure whether to laugh or cry. The basis of his article is that Albuquerque should have an attractive downtown. I couldn’t agree more. The problem is the rest of the article.

If government spends a bunch of money on amenities downtown, will that bring people in or do we need a strong economy to attract people to live in our City with a certain percentage of them being downtown? Folkman seems to advise the former (mass transit) while I’d argue the latter. Cleveland does have mass transit, but with all due respect, if downtown Cleveland is the answer, you’re asking the wrong question. Another city that has “invested” in arenas and mass transit is Detroit. Not exactly the model we’re looking for. See the following chart (taken from this study) for details on the population declines in several of the cities Folkman cites as “models.” Is this really what Folkman wants for Albuquerque?

Quite simply, I’d argue that a bustling downtown is the result of broader economic growth not the generator of that growth. I’m not sure where Mr. Folkman got his “study” which claims that “nearly 73 percent of all graduating college will move to an urban area for its attributes as much as for a job,” but this nugget of information is not convincing. I lived in Washington, DC in the mid-1990s when noted crack smoker Marion Berry was Mayor and that city’s urban core left a lot to be desired despite second-to-none amenities and a massive investment in mass transit. As Washington’s economy has grown in recent years and governance has improved within the District itself, the City’s urban core has been completely revitalized.

All downtown areas have their problems. There are plenty of bums in Washington, DC, but with a flood of office workers and young professionals in the area due to the strong job market, you hardly notice them. Downtown Albuquerque’s issues are made all the more obvious because it is like a ghost-town at most hours. A new convention center and more mass transit are not and were not the answers to downtown’s woes (I question whether the “Innovation Corridor” will have the desired impact without serious policy reforms in Santa Fe).

Downtown Albuquerque needs the same thing the rest of this state needs: Economic prosperity driven by private sector growth, in other words JOBS.

I was quoted extensively for this story on the New Mexico Spaceport. I particularly enjoyed this picture which included one of my quotes:

While the Spaceport continues to await it’s full start-up phase, the mistakes made with the Spaceport can provide a blueprint for what NOT to do with Tesla. There are many parallels, most specifically in terms of the speculative nature of the technology at play and the fact that while both space travel and automobiles are proven technologies, the models being tried here are unproven. See, for example, the recent story about the dramatic range reduction experienced by electric vehicles in cold weather.

Specifically, a large infusion of taxpayer dollars would be the absolute worst thing to do in the case of Tesla. Bill Richardson saddled New Mexico taxpayers with a spaceport with a dubious future and of questionable viability. Hopefully Gov. Martinez takes this lesson to heart.

I love being attacked. It means we’re being effective in our work to study and promote the ideas of individual liberty and free markets. In today’s Albuquerque Journal business outlook section, reader Chuck McCoy, based on one 2006 donation from the Washington, DC-based Cato Institute, called the Rio Grande Foundation “the propaganda arm of David and Charles Koch.”

Anyone who knows the Cato Institute knows that the organization is indeed respected nationally by elected officials of both parties as is the Rio Grande Foundation here in New Mexico. The fact that McCoy doesn’t actually attack our research or ideas is telling, in fact. It is much easier to repeat the meme that the Koch Brothers are evil than to engage in an intellectual battle.

Notably, liberal Sen. Ron Wyden recently spoke to the Cato Institute. The Rio Grande Foundation’s top education policy (school choice tax credits for low-income as well as special needs kids) was last sponsored by four Democrats, most of whom would self-identify as “liberal.” This is just one instance for both organizations. Ultimately, both are respected even if philosophical disagreements exist.

And, of course, that is the heart of the matter. McCoy (and too many on the left) just doesn’t agree with us, but they are too intellectually-lazy to make a coherent argument based on economic principles and analysis. Those who make a big stink about the Koch Brothers don’t attack the ACLU for taking $20 million from the Koch’s. They also don’t seem to care that the major left-wing think tank in this state, Voices for Children, recently accepted a $900,000 grant from the out-of-state Kellogg Foundation. This would support the Rio Grande Foundation’s entire budget for a several years, by the way.

I don’t begrudge Voices for Children for leaning on wealthy out-of-state funding sources. My biggest issue is that it is the very left-wing policies that Kellogg and others have enacted in New Mexico that has chased businesses and wealth out of New Mexico, thus forcing our entire state to be reliant on financial support from other, more economically-free states.

If you DO support free markets and limited government in New Mexico, don’t hesitate to make a tax-deductible donation here.

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

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

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

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

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

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

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

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

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

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

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

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

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

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

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

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

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

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

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

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

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

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

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

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

Sincerely,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is a very brief, simplified explanation.

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

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

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

March 5, 2014

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

Dear Ms. Nieto:

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

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

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

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

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

Sincerely,

Paul J. Gessing
President
Rio Grande Foundation

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

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

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

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

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

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