New Mexico has been lagging its regional neighbors for many years. Throughout its 100 years of statehood, New Mexico has missed out on a great deal of private-sector economic development that has instead flowed to more economically-free states such as Colorado, Texas, and Arizona. New Mexico has instead relied on a steady and ever-growing flow of tax dollars from Washington for economic growth.¹

Unfortunately, this reliance on Washington has not made New Mexicans prosperous or their state wealthy. Rather, New Mexico has the highest poverty rate in the nation according to the Census Bureau.²

And, while economic trends are best understood over the long-term, New Mexico has again been lagging behind its regional counterparts as the growth of federal spending has stalled. The following chart from the Albuquerque Journal shows that New Mexico is the only state in the West that lost jobs between August 2011 and August 2012.³

It is often said that the definition of insanity is doing the same thing over and over again and expecting a different result. One area where this is true is in the area of government regulations. New Mexico suffers from overregulation of its economy. These regulations increase economic costs to businesses and consumers alike and enrich well-connected special interests. The Rio Grande Foundation has compiled a list of regulations that should be eliminated or at least modified in ways that liberalize markets. Most of these regulations are economic in nature, but some of these regulations are simply silly and place unnecessary burdens on those looking to run for the Legislature (as one example). It is often said that the definition of insanity is doing the same thing over and over again and expecting a different result. One area where this is true is in the area of government regulations. New Mexico suffers from overregulation of its economy. These regulations increase economic costs to businesses and consumers alike and enrich well-connected special interests. The Rio Grande Foundation has compiled a list of regulations that should be eliminated or at least modified in ways that liberalize markets. Most of these regulations are economic in nature, but some of these regulations are simply silly and place unnecessary burdens on those looking to run for the Legislature (as one example).

Notably, deregulation is not a partisan issue; at least it has not been during recent U.S. history. President Carter and Congress deregulated the airline, freight rail, and trucking industries, as well as the micro-brew industry that has spawned an entire new craft beer market in the last decade.⁴

Every day for the next several weeks, the Rio Grande Foundation will be E-mailing its "Burdensome Regulation of the Day." Our hope is that as we approach the 2013 legislative session, policymakers in Santa Fe and around the state – many of our proposals are not targeted at the Legislature – will consider addressing these issues in ways that make New Mexico more attractive to businesses and entrepreneurs while encouraging the spirit of free and open competition that has been so integral to the fabric of American life and economic growth.

Unlike so many other economic development schemes, these regulators issues can be addressed without any cost to taxpayers. If there are "costs" associated with demolishing these regulations, they come from removing privileges given by government to special interests. Those benefits will, in turn, accumulate to the population at large instead.

¹The Economist, "Greek Americans?" July 30, 2011, http://www.economist.com/node/21524887

²The Huffington Post, "How New Mexico, Poorest State in America, Fights Poverty," September 13, 2012, http://www.huffingtonpost.com/2012/09/13/new-mexico-poverty-rates_n_1881321.html

³Employment Highlights, Albuquerque Journal, Business Journal, October 22, 2012

⁴William L. Anderson, "Rethinking Carter," Mises Daily, October 25, 2000, http://mises.org/daily/535

It is a new year and another opportunity for New Mexico to turn over a new leaf by becoming a freer, more economically-prosperous place. We at the Rio Grande Foundation provide the intellectual ammunition policy makers need.

The latest policy area to cause us concern involves regulations right here in New Mexico. Some regulations may be necessary, but many regulations do nothing but protect well-connected special interests at the expense of consumers.

To publicize the negative impact regulations can have and explain what can be done to make New Mexico’s regulations work for consumers, not special-interests; we at the Rio Grande Foundation are going to send an E-mail every day starting tomorrow. These E-mails will explain:

• How deregulation can spur competitiveness and economic growth.
• That deregulation is not a partisan issue.
• How some of New Mexico’s unnecessary regulations hinder our economy and thus make us all poorer.
• What we can do to make regulations in New Mexico work FOR consumers and businesses rather than against them.

The Legislature start meeting in mid-January. It is important that if you find the ideas contained in these daily E-mails compelling and interesting that you share these ideas with your friends and family as well as your legislators.

Please forward this and subsequent E-mails to those who you think might be interested and encourage them to sign up for the Rio Grande Foundation’s E-mail list. Also, keep an eye out for media appearances relating to the need for regulatory reform.

For more information on this and other important economic issues to New Mexicans, check out our Website: www.riograndefoundation.org.

See the full paper here.

Recent press reports indicate that state workers are lobbying for higher pay. That’s no surprise because we all want higher pay.

The question that needs to be asked and perhaps studied is: “Is New Mexico government losing high-performing employees to the private sector or jobs in other states?” Surely the government has these data…

After all, we at the Rio Grande Foundation understand that governments don’t operate in anything resembling a competitive free market. Before blindly offering raises to government workers simply because “they deserve it,” policy makers should analyze whether the labor market is indicating that New Mexico government workers are indeed “underpaid.” Our past analysis indicates that government workers in New Mexico are both too plentiful and highly paid. Is that still the case?

We know that New Mexico is not creating many jobs these days.

As we approach the fiscal cliff with Obama simply unwilling to agree to any deal that doesn’t massively increase taxes (and Republicans unwilling to press the issue on spending), I see this story about an airport in New Hampshire that is basically giving flights to Boston away so that the airport can tap into $1 million of our tax dollars.

Oh, and just in case you think this doesn’t happen here in New Mexico…

As Margaret Thatcher famously said, “The problem with socialism is that you eventually run out of other people’s money.” Unfortunately, with the printing presses revved up to full speed in Washington, we won’t realize we’re off the cliff (both fiscal and the overall economic cliff) until it is too late.

I recently spoke to KRQE Channel 13 about the impending “Fiscal Cliff.”

Leap off fiscal cliff would cost N.M.

Every day that passes and we find out more about ObamaCare makes the law look worse and worse for average Americans. Soon, a series of major tax hikes resulting from the health care law will take effect.

But, as RGF scholar Deane Waldman points out in his new article at American Thinker, the law’s supporters have “drunk the Kool Aid” and will not be deterred.

(Albuquerque) New Mexico’s business community and other groups have long discussed in broad terms the need for “regulatory reform.” And, as the Rio Grande Foundation has discovered by undertaking an exhaustive review of regulations imposed by various New Mexico governing bodies, our state is indeed overregulated at great cost to taxpayers, potential entrepreneurs and workers, and consumers.

Said Rio Grande Foundation president Paul Gessing of his organization’s findings, “We looked high and low for some of the most obvious and egregious regulations on a wide variety of issues. While the primary state-level regulatory bodies in New Mexico are the Legislature and the Public Regulation Commission, burdensome and unnecessary regulations administered by the Courts were an unexpected discovery.”

To publicize the need for regulatory reforms and elimination, the Foundation will be publishing “an email a day” throughout January. These emails will include information on what other states do or don’t do to analyze regulations prior to adoption, explain how former US President Jimmy Carter used deregulation to set the table for the 1980s economic boom, and outlines a path toward wiser, fairer, more economically viable system for New Mexico’s various regulatory bodies.

Among the most egregious regulations found in the report:

• According to the Institute for Justice, there exist 52 low-income occupations that require licensing in New Mexico, including everything from funeral attendants to animal trainers. These requirements order individuals to pay fees as well as invest a considerable amount of time in training and education for jobs that could easily be learned in other ways;

• In 2009 the New Mexico State Legislature passed SB 33, which mandates that prevailing wages be set by collective bargaining agreements. These “Prevailing Wage” laws unnecessarily increase the prices taxpayers pay for roads and schools (and other public works progress) by up to 15%;

• New Mexico’s “common carrier” laws require potential entrants into the market for taxi cabs and other motor vehicle industries to gain approval from their competition. As Leslie Linthicum wrote in a recent Albuquerque Journal piece, this resulted in one prospective taxi operator spending eight years fighting to obtain approval from the Public Regulation Commission;

• The New Mexico Spaceport which cost taxpayers $209 million will be a total failure unless the Legislature passes a liability exemption for suppliers of parts and equipment for the spacecraft that will launch from the Spaceport. This liability exemption will not impact New Mexicans in any direct way unless they choose to pay $200,000 to go into space.

Concludes Gessing, “These and other regulations are holding New Mexico’s economy back. Nonetheless, deregulation should not be a partisan issue. While we have tried to be thorough, there are undoubtedly other rules and regulations that should be addressed. We welcome the input of others (and encourage you to sign up for the emails) at: info@riograndefoundation.org

Needless to say, the RailRunner advertisements you are seeing are paid for by you, the taxpayers. Interestingly, the ads focus on the future of commuting in Albuquerque and show a bunch of kids saying how happy they are that their parents made the “investment” in the train. Ironically, it is those very same kids who are going to be stuck with the bill for the Rail Runner in about a decade when those balloon payments come due.

In case you missed it, the media is now reporting that the vaunted $20 million New Mexico Supercomputer is going to be parceled out. Supporters of the project claim that “Encanto’s capacity helped leverage $60 million in federal funding for university research.”

“Helped leverage” is what they call “weasel words” along the lines of the Obama Stimulus which “helped create or save” X number of jobs. Even if it brought $60 million in totally new spending to the state, the project is still a waste of money because what matters when government goes about creating jobs is not money generated, but tax revenue generated. After all, the computer was purchased with 20 million tax dollars. These dollars are the product of some fraction of economic activity generated elsewhere in the marketplace (7% in the case of Albuquerque’s GRT).

So, the only thing this supercomputer “stimulated” is more government spending and higher taxes. Like the film subsidies, Spaceport, RailRunner, and subsidies for Schott Solar and Eclipse Aviation, Richardson’s legacy will be one of boondoggles falling apart. Unfortunately, we have to wait another decade before the true cost of the Rail Runner is fully understood.

Recently, we at RGF made a pretty big deal out of a Forbes report that called New Mexico the number one “death spiral” state in the nation. Albuquerque Journal economy reporter Winthrop Quigley took issue with the report and argued that New Mexico, while it has some problems, is not in a “death spiral.”

Rio Grande Foundation policy analyst Marcos Portillo wrote the following response to Quigley which appeared in Monday’s Albuquerque Journal.

Mr. Quigley may believe that Forbes’ “death spiral” claim is unwarranted, but the fact is that New Mexico’s economy is among the worst in the nation.

Quigley’s assumption is that New Mexico will continue getting infused with federal dollars into the foreseeable future. Federal funds currently make up nearly $6 billion of the $15 billion in total state expenditures. New Mexico also has one of the highest concentrations of federal employees (of about 33,000) in its various military bases and laboratories.

When the federal government tightens its belt, our economic problems could worsen.

Currently, New Mexico is: Ranked dead last in economic freedom by the recent Fraser Institute report;

Has a poverty rate that is highest in the nation;

Has an education system ranked 46th of 47 by the US Department of Education;

Has a Human Services Department website proclaiming that it is “serving one in three” even prior to the massive government expansion under ObamaCare.

Has a judicial climate ranked 44th of 50 by the US Chamber of Commerce;

And, while most states experienced some economic growth over the past year, New Mexico lost more jobs than any state but coal-dependent West Virginia.

There’s great potential in NM and many good things about the state and its people. Unfortunately, its current economic structure is dependent on the whims of bureaucrats 3,000 miles away and public policies are holding us and our citizens back.

Marcos Portillo
Additional contact information
Policy Analyst
Rio Grande Foundation

I talked with Mike Jaxson of KEND radio in Roswell. Download the interview here.

Too often in New Mexico, the business lobby has attempted to overcome our state’s poor business climate by providing enough tax credits, deductions, and handouts to bring certain well-connected businesses to town. That may be changing and we at the Rio Grande Foundation couldn’t be happier.

See this article in which Association of Commerce and Industry (ACI) president Beverlee McClure outlines a solid, free market agenda for the 2013 legislative session. For starters, McClure acknowledges that New Mexico can no longer rely on our weather and spending from Washington, a point that we have made repeatedly over the years. Better still, according to the article:

ACI will be supporting a variety of economic development legislation, including bills regarding a single-weighted-sales factor, right-to-work requirements, an economic development closing fund, and informed consent for flight from Spaceport America.

McClure said New Mexico needs to develop a state-wide economic development plan that identifies the jobs and industries it wants to attract. Once a plan is in place, lawmakers can work to pass tax and other bills to attract those industries

Now, we’re not exactly fans of government efforts to identify jobs and industries to the exclusion of others, however, political and economic realities being what they are, there is a low likelihood of this Legislature and Governor agreeing to far-reaching, market-based policy reforms. And, at least ACI is talking about attracting “industries” rather than specific “companies.” We’ve seen how the Eclipse and Schott deals fell apart and taxpayers were left holding the bag. Focusing on targeted industries is a much better option.

The corporate tax reforms (and presumably rate reductions), right to work, and spaceport informed consent provisions are all solid. Once again, kudos to the ACI team.

This is a great posting from Walter Russell Mead on the ways in which online learning could potentially revolutionize and democratize higher education system. Imagine, a Harvard or MIT education available to everyone! Of course, as Mead points out, those middle-tier universities have a lot to lose if such a sweeping change comes.

And, speaking of digital learning, the folks at New Mexico Connections Academy had our appeal hearing before Education Secretary Hanna Skandera this week. Who Said You Said New Mexico covered the action.

This is the second of my occasional audio editorials for KUNM 89.9FM. It tackles the need for expanded school choice in New Mexico. Check out the first one on economic reform here.

It may sound odd to say this given the general “malaise” if you will in this country, but 2012 was a good year. Yes, the national political scene is a mess, but, when presented with real problems that have simple, straight-forward solutions, advocates for limited government at the state level were able to take action to solve those problems.

Indiana and Michigan became the latest states to pass Right to Work legislation designed to make themselves more economically-competitive while Wisconsin Gov. Scott Walker held firm against the overreach of big labor in Wisconsin.

In Washington, Republicans and their candidates, by contrast, remain flacid and generally unable (or unwilling) to explain how free markets and limited government benefit average Americans and should form the basis for the US economy. Lack of vision is not a good electoral strategy and the results this past November show that. Their performance in the ongoing “fiscal cliff” negotiations remains lacking with too little talk of specific and immediate spending cuts and too much talk of raising taxes.

The moral? Federalism. Problems get solved when they are manageable and devolved to the appropriate level. Conservatives must always understand that Washington is a monopoly government (two things not known for efficiency and responsiveness). At least the states are competing governments (when it comes to population and economic growth) that cannot print their own money (as can Washington).

Still don’t think 2012 was a good year, check out this article from The Spectator.

Rob’s article recently ran in the Santa Fe New Mexican. He makes the much-needed-to-be repeated point that spending is the problem in Washington and that both parties are to blame.

I also ran across an interesting chart from Veronique de Rugy of Mercatus Center. There is a lot of talk about going back to Clinton-era tax rates to achieve fiscal solvency. But how about going back to Clinton-era spending levels, too? During his two terms in office, President Clinton reduced spending as a share of gross domestic product from 21.0 percent of GDP in fiscal year 1994 to 18.2 percent in 2001. Today, spending stands at 24.3 percent of GDP. As the following chart shows, excepting interest on the debt, all areas of spending have grown in real terms and overall spending today dwarfs spending at the end of Clinton’s Administration.

We recently praised Farmington for being relatively tax-friendly, but some recent personnel decisions raise questions about the actions of Farmington city government. I was quoted in an article on the topic that appeared in the Tri City Tribune recently.

Much has been said about the “fiscal cliff” in Washington. Not nearly as much has been said about the impact slowing federal spending will have on New Mexico. Less still has been put forth in terms of economic policies that can make our state less dependant on Washington.

For starters, it is worth a bit of history. The Rio Grande Foundation has recently produced a chart showing New Mexico’s per-capita personal income as compared to the national average dating back to 1940. Since about 1960, New Mexicans’ personal incomes’ have been between 75 and 85 percent of the national average, thus making us, by most any measure, among the poorest states in the nation. That’s the bad news.

The really scary news is that back in 1940, prior to WWII and the rise of the military-industrial complex, New Mexico was truly “dirt poor” with personal income levels barely above 60 percent of the national average.

The question is, if we see spending cuts of the scope needed to close trillion dollar plus deficits, will New Mexico wind up dirt poor again? It will unless our elected leaders make needed reforms.

We at the Rio Grande Foundation have promoted a variety of tax, budget, labor, and education policy reforms with limited success in the Democratic-controlled Legislature. And, while these reforms are unabashedly free market, they are nonpartisan.

One area that has, at least in the past, had strong support from Democrats is the issue of deregulation. President Jimmy Carter (and a Democratically-controlled Congress) deregulated the airlines, trucking, and railroads, not to mention home-brewing which eventually spawned the multi-billion dollar craft brewing industry. Arguably, this spate of deregulation set the table for the Reagan-era economic boom.

Democrats supported deregulation because economic regulations tend to cost consumers (the little guy) in terms of money, quality, and variety. They tend to protect the incumbents who are often well-connected, big-dollar, special interests.

New Mexico needs a coherent system for reviewing new regulations and rules. Before legislators or the PRC adopt a particular regulation, there needs to be a thorough, non-partisan review of the likely costs and benefits. Of course there are a number of specific regulations that should be re-considered if policymakers are serious about boosting New Mexico’s economy.

• New Mexico law currently requires all public buildings over 15,000 ft2 to be LEED (Leadership in Energy and Environmental Design) Silver certified. Both the building technique and the certification process drive up costs;

• According to the Institute for Justice, there exist 52 low-income occupations that require licensing in New Mexico, including everything from funeral attendants to animal trainers. These licenses tend to provide barriers to entry for current professionals in the field, thus limiting job creation and raising costs;

• The PRC enforces “common carrier” regulations that fix the rates and limit the amount of individuals who can legally provide services such as tow trucks, taxis, moving vans, buses, shuttles, ambulances and railroads. Prospective companies seeking to enter the market must file a “certificate of public convenience and necessity” that can be challenged by incumbent providers. Imagine Wendy’s needing approval from McDonald’s to build a restaurant!

• Certify teachers based on student outputs, not inputs. The Legislative Finance Committee recently found that New Mexico’s three-tiered-licensure system to be an utter failure in improving student performance. Let’s open up the teaching profession and pay teachers for improving student performance, not the number of degrees they get.

• New Mexico could make health insurance more accessible for the cost-conscious and young by eliminating some of the 59 mandates now placed on all health insurance policies sold in the state.

• Not only are utilities required to generate 20% of their electricity from “renewables” by 2020, they must generate or purchase specified amounts of wind, solar, “other,” and from so-called “distributed” sources. It is one thing to force utilities to buy a certain amount of “renewables” and allow them to creatively and cost-effectively attain that standard. It is another to micromanage the process by mandating very specific sources.

These are just a few of the dozens of rules and regulations that elected officials should consider revising or repealing to stave off further economic decline in our state. New Mexico can reap the benefits of deregulation if only its leaders will embrace the legacy of Jimmy Carter.

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

Should taxpayers finance the New Mexico Bowl (as was played today)? I am not a big fan, but in this particular case the numbers are so small as to make them at once irrelevant and clearer. The Albuquerque Journal had an interesting article on the finances of the Bowl game a few days ago and it was noted that the state had dialed back its contribution to $50,000.

One point missed in the article, however, was that the taxpayer dollars used to fund the game don’t stop with the state. Taxes on hotels are used to fund the Albuquerque Convention and Visitors Bureau which amounted to another $198,000 for the game. That’s a total of $248,000 from taxpayers. With this year’s game having attracted 24,610 fans, taxpayers are putting about $10 into the till for each attendee. How many people traveled from out of state for the game and spent a night or more in a hotel, ate meals and restaurants, and otherwise paid at enough taxes to break-even? How many people who watched the game on TV will decide to travel here to visit? It’s hard to say.

What is easy to say is that once-a-year football games are not enough to generate jobs and economic prosperity for New Mexico. So, enjoy the game, but by all means, let’s get to work on making New Mexico a more free mark-oriented and prosperous state.

It has been claimed by angry union leaders in Michigan and other states that adopt “Right to Work” laws which eliminate compulsory union membership that such laws create a “free-rider effect.” A good article here explains that unions ARE NOT required to represent all employees at a given company. The problem is that unions do not exercise this option for political reasons.

Also, this interactive website illustrates the ongoing shift of workers to states that preserve worker freedom from states that do not have such protections.

HT’s Jack Swickard and Harry Messenheimer, PhD.

If you haven’t already seen it, I was quoted in an article on the future of Spaceport America that ran in media outlets all over the country today.

Rob Nikolewski has an even more detailed article on the Spaceport that includes interviews with head of the Spaceport Authority Christine Anderson and myself that was done after a panel discussion on the topic that took place in Santa Fe.