New Mexico is a “Davis-Bacon” state. Such laws require that workers who are hired for public works projects are paid a prevailing wage which is equal to collectively bargained union wages. This regulation holds despite the fact that only 8.7 percent of private-sector construction workers in New Mexico are union members. By negating the merit system which was used by 92 percent of the construction industry, the law places wage setting power among the 8 percent who do use collective bargaining agreements.

Economically speaking, this is a form of price fixing which pushes out competitors who are willing to work for lower wages. The federal Davis-Bacon law (1931) is estimated to raise costs to taxpayers by 15 percent on federally funded projects. It is believed that New Mexico’s law increases the cost of school buildings, roads, and transit projects by similar rates (other studies such as this one from Columbia University indicate the markup is 30%).

Believe it or not, even the “died-in-the-wool” liberal Democrats in Washington, DC government are concerned about the costs of “Davis-Bacon” prevailing wage laws to the point that they are suing Obama’s Department of Labor.

Which states are saving money by repealing their “prevailing wage” laws? Check out the map below:

[show-map id=’2′]

The Rio Grande Foundation, along with a large and growing group of supporters across the state, has moved the issue of lawyer reciprocity onto the agenda of New Mexico’s Supreme court (see the petition, an explanation of the issue from an attorney, and our original discussion of the issue which was included in our regulatory report in early January). Now, we are asking for the general public to weigh in to support this regulatory reform which would make New Mexico more competitive with other states. Please note the deadline for public comment listed at the bottom of this note.

The Board of Bar Examiners is considering whether to recommend proposed amendments to the Rules Governing Admission to the Bar for the Supreme Court’s consideration.  The proposed amendments would implement a procedure for reciprocal admission on motion, and the Court is seeking input from all segments of the bar before considering the proposal further.  Because the Board submitted a substantial amount of background material that is helpful to a full consideration of its proposal, the submission from the Board will not be published in the Bar Bulletin due to space limitations but instead can be viewed in its entirety on the Supreme Court’s web site.

Contemporaneously with the submission of the proposal from the Board of Bar Examiners, the Court also received a request from several state bar members to consider the adoption of another proposal for reciprocal admission.  Ordinarily, the Court would refer such a request to the Board of Bar Examiners for its review and recommendation.  But since the Board’s proposal is now open for public comment, the Court has decided to treat the alternative proposal as a comment on the Board’s proposal, which is also posted on the Court’s website for public review and comment.

If you would like to comment on the proposed amendments from the Board of Bar Examiners, or the alternative proposal mentioned above, before either is submitted to the Court for further consideration, you may do so by either submitting a comment electronically through the Supreme Court’s web site at:

http://nmsupremecourt.nmcourts.gov/rules/index.php

or by sending your written comments by mail or fax to:

Joey D. Moya, Clerk
New Mexico Supreme Court
P.O. Box 848
Santa Fe, New Mexico 87504-0848
505-827-4837 (fax)

Your comments must be received by the Clerk on or before July 26, 2013, to be considered by the Court.  Please note that any submitted comments may be posted on the Supreme Court’s web site for public viewing.

In case you missed the big pageant over the weekend (my wife was watching it), you missed something newsworthy. Miss Utah was asked about the purported “wage gap” between women and men and gave a response that really didn’t make sense.

Interestingly enough, Texas Gov. Rick Perry recently vetoed legislation on this issue while Gov. Martinez signed legislation relating to supposed income inequality between men and women during the 2013 legislative session.

Thankfully, as the Independent Women’s Forum points out in the following video, when career choices, time in the work force, and hours worked are accounted for, there really is no gender gap.

We at the Rio Grande Foundation have had our differences with UNM Hospital for planning to invest a lot of taxpayer money into a project that we questioned.

However, the controversy, started by Rep. Michelle Lujan-Grisham over the Hospital’s outsourcing of transcription services is just silly. Another article appeared in the Albuquerque Journal with the headline “UNMH Outsourcing an economic decision.” Well, duh!

Of course, the author is with a union representing transcribers and Lujan-Grisham has a political interest in keeping those 57 people (and their families) happy. She’s got 100+ solid votes now. Who is going to vote against her BECAUSE of this effort? No one.

But the outsourcing is saving UNMH (or taxpayers) $500,000!!! That’s a decent amount of money even at UNMH. Now, imagine hundreds of potential cost-savings decisions made throughout UNMH’s budget and the budgets of government entities around New Mexico. Unfortunately, you can always count on a concentrated group looking out for their own best interests, but who defends the taxpayer?

So, kudos to UNMH. Stick to your guns on behalf of taxpayers. To the Laid off transcribers, it is time to either find another job in the field or get trained to do something that is more economically-viable and doesn’t need the intervention of a Congressperson to preserve your job. That may not be easy in New Mexico, but may I recommend North Dakota?

The “we can never cut any government program” crowd was in full-force recently on the Albuquerque Journal’s opinion pages with the New Mexico Center on Law and Poverty arguing that any cuts to food stamps would be a “profound mistake.” The arguments trotted out were very typical:

1) Welfare as economic stimulus;
2) Without food stamps, children will starve or won’t get enough food to eat and this will ruin their lives.

Of course, the implication is that food stamps are always and everywhere being used to benefit those who need them and that the doubling in food stamps since just 2008 is a direct result of the poor economy.

As Jim Scarantino reported, there has been widespread abuse of the cards given to recipients including in strip clubs. The legislation designed to curtail this situation somewhat was held up by Majority Leader Michael Sanchez. One wonders where the NM Center on Law and Poverty is on that issue.

The reality is that many of the funds allocated to food stamps do not go to poor people but the government is not eager to provide data that would allow analysts to better understand how the program is being abused and/or used to purchase junk food.

Of course, conservatives should not limit themselves to just attacking food stamps. They need to go after all of the wasteful agriculture subsidies in the farm bill (which is pretty much all $16 billion of them). After all, if you are perceived rightly or wrongly as being mean to poor people, you’ve got to take on the recipients of subsidies, most of whom are wealthy.

When discussing New Mexico’s graduation rates, we have always used “Diplomas Count”  from the Education Research Center. The latest report on national graduation rates was released earlier this month. Reports on the topic have noted that Diplomas Count and the State calculate graduation rates differently, but that New Mexico was at the very bottom in the latest report.

Obviously, this is not good news, but we wanted to put those findings into a bit of context. Using the Diplomas Count data, we looked back over more than a decade to see how graduation rates have evolved for New Mexico, its neighbors, and Florida (from whence Hanna Skandera came along with the “Florida Model” for education reform. Unfortunately (for New Mexico), as the data shows, not only is our state saddled with the worst graduation rate in the nation, our results did not improve much (at least relative to other states) between 1999 and 2010. The chart below illustrates the increase (or decrease) in graduation rates in the report.

This second chart illustrates the relative increase or decrease over the same time span:

Not surprisingly, Florida and Arizona have developed some of the most robust school choice programs in the entire nation.

The Rio Grande Foundation recently hosted a debate on the issue of inequality in America. Participants were Paul Gessing, president of Rio Grande Foundation and Nick Estes who recently worked as an analyst with New Mexico Voices for Children.

The footage of the debate can be viewed below:

“Rising Inequality in America … Should Government Respond? If so, how?” from Paul Gessing on Vimeo.

Nick’s powerpoint slides are available here while Paul’s are available here.

Leftists and their allies in the media are often very effective at portraying conservatives and libertarians as being heartless for their stances against massive government transfer programs. The reality is that government is the nastiest organization around because accountability is so elusive. Democracy, yes, but throwing the bums out is not the same as throwing them in jail and taking their ill-gotten gains.

George Will has a great column detailing how one person, Lois Lerner (most recently of the IRS) personifies in so many ways all that is wrong with government, especially the monopolistic and seemingly omnipotent federal government. Conservatives and libertarians have a golden opportunity to have an impact in terms of limiting government power if they approach the various scandals — NSA, IRS, and ObamaCare — from a principled position in support of limited government.

Two issues have bubbled to the surface in the local debate over economic development and the proper role of government. Those are:
1) Whether Bernalillo County should impose fees up to 3% on utilities that use right of way owned by the County;

On the this issue, we need to ask questions including the following:

How was the 3% number arrived at?
Do utilities impose costs on the County relating to its “right of way” for example in terms of moving wires or equipment that are not covered in the existing system?
Is a 3% fee going to cover such costs or result in excess revenues?
If so, what will those revenues be used for? Will they benefit utilities or their customers?
Who pays for rights-of-way currently?
How is this 3% fee different from a simple tax increase?

2) This issue relates to the ongoing discussion of Whether the City of Albuquerque and Bernalillo County should subsidize a grocery store downtown. Advocates explain their position in the initial article while I have written about the issue here;

If there is really a market for a second grocery store downtown, why isn’t one located there already?
Is it really in the best interests of taxpayers from all over the city and county to subsidize one part of Albuquerque?
If benefits are available for one business in one part of town, why not make these same benefits available for other businesses in other parts of town?
If there IS a market for another supermarket downtown, but the issue is one of public policy, what can the City and County do to mitigate of solve the issue?

Winthrop Quigley, business journalist at the Albuquerque Journal, had another economically-confused column on New Mexico economic policies and our potential for economic growth. Quigley questions efforts to lower New Mexico’s tax burden and make the state more attractive to businesses.

As Quigley notes, “our state’s corporate income tax changes were designed to signal…that New Mexico is open for business…competing with the rest of the country on the basis of price.”

Well, I’m not sure it is quite so simple. True, our state has relatively low wages and that can be a selling point, but this is an information economy. Quigley is right about that and the fact that we need an educated, entrepreneurial work force. But that doesn’t mean that you can’t be competitive on taxes and economic policy.

Ultimately, businesses and individuals want to work where they can keep a higher percentage of their incomes (low income taxes, both corporate and income) and control who they hire and fire with fewer hoops to jump through (Right to Work) to name just two policies that impact where businesses locate.

New Mexico has not been “in the game” when it comes to being economically competitive for much of its history. That can change, but even if it does, it will take time to transform and improve New Mexico’s economy. The flip side is that New York and California do very little well when it comes to economic policy. They are high-tax states with heavy regulatory burdens. They also have some specific industries that have developed there over the decades.

However, the reality is that people are leaving economically-unfree states like New York and California and moving to economically-free states like Texas. The reality is that New Mexico can be a destination for highly-skilled workers and jobs, but we need public policies in place that give people a reason to set up shop here.

For the first time ever, during the 2013 legislative session, the Rio Grande Foundation created a tool called “Freedom Index” which allowed legislators and constituents alike to see how our representatives voted on freedom issues on the floor of the Legislature.

We have created infographics for each house and each region of the state to allow users to compare their legislators against each other within the same region. Check out the following documents:

Eastern New Mexico
Western New Mexico
Southern New Mexico
Northern New Mexico
Santa Fe area
Albuquerque area
Statewide

Rob Nikolewski over at Capitol Report has done a great bit of reporting/research on our state’s exploding “disability” population. Between 2003 and 2011, the population rose by an astonishing 58.7%. Given that, it is no surprise that our state’s work force participation rate is among the lowest in the nation and the lowest in our region (see chart below):

SSDI (disability) is ripe for reform and even liberals like Joe Klein writing over at Time “get it.” Problem is that it is politically-tough to end government programs that encourage dependency.

Rep. Yvette Herrell had an excellent opinion piece in the Albuquerque Journal on Sunday that speaks to the merits of local decision making on a wide variety of issues. One that she did not mention was education which was discussed in an article that ran in today’s paper.

The gist of the story from today’s paper is that during the worst of the recent economic downturn, New Mexico policymakers had to reduce spending, including education spending. These reductions may have caused the state to spend too little under a federal formula that may cost New Mexico $34 million in special education funding. Interestingly, despite reduced funding, the education system has cannibalized funding for the broader system in order to preserve funding for special ed lest the state again fall below the federal thresh hold.

See the problem here? Washington is using our own money to hold our state representatives hostage in order for the state to receive even more of our money. And, while special ed is held relatively harmless, the rest of our kids suffer thanks to Washington’s arbitrary and inflexible formulas.

Education should be funded and administered as close to the people as possible, not by bureaucrats in Washington (I prefer total school choice, but at least state politicians are a bit more accountable to local control). If there is one federal agency that has completely failed and should be gotten rid of, it is the Department of Education.

I found this article from Albuquerque Business First at once fascinating and terrifying. The idea that any one entity employs 1 of every 14 workers and accounts for $7.8 billion in economic impact is shocking. The fact that this is just the DOE and DoD impact on our local economy is all the more astonishing.

To call Albuquerque itself a “one horse town” when it comes to its economy would be an understatement. Of course, the flip side is that I shudder to think what would happen to the local economy were Kirtland to ever close or even face significant cutbacks. RGF has been sounding the warning bell about the need to diversify New Mexico’s economy.

And, while the tax deal in the last legislative session may have a positive impact, there is much to do to reform the regulatory, tax, and education systems that hold us back from true prosperity.

Our friends at the Manhattan Institute have a new report, written by Senior Fellow Mark P. Mills, which drives home many of the points we’ve made about the positive economic impacts for New Mexico of exporting Liquefied Natural Gas (LNG).

According to the report, the US could eliminate its trade deficit and stimulate the economy to the tune of $600 billion annually through greater exports of energy. What can/should the government do to seize this opportunity?

Executive actions that would lead quickly to major economic benefits and send the right signals to domestic and world markets include:

Approving the application of any and all qualified entities seeking to export natural gas;
Approving the Keystone XL pipeline; and
Directing the Department of Commerce to approve any application to export crude oil.

In the near term, the administration and Congress should work together to:

Encourage private investment in hydrocarbon production.
Direct all relevant federal agencies to identify and resolve unintentional impediments to increased development of refineries, pipelines, and oil and gas production on private lands and, collaterally, avoid imposition of any proposed new rules or regulations on any industries and practices that are already heavily regulated at the state and federal level.
Open up greater access to hydrocarbon resources on federal lands.

Modern technology makes such development safe and environmentally responsible. The federal government controls and restricts access to 50 percent of all onshore hydrocarbon-bearing territory and 100 percent of the offshore territory, wherein 80 percent of that territory is off-limits to exploration or development.

Help the Bureau of Land Management (BLM) set administrative and budget priorities.
The BLM recently announced that it was postponing oil and gas lease auctions on land that it controls in California because of demands on its resources to deal with environmental litigation and because it is “concentrating its limited resources on … other priorities, such as granting renewable energy permits.”[24] Thus, the BLM is giving priority to projects that require federal subsidies resulting in purchases of Chinese solar technology rather than facilitating oil and gas development that is subsidy-free and results in exports to China and other nations.

New Mexico is by no means the worst state when it comes to indebtedness, but 21st from the top isn’t that great either. Per the usual, New Mexico performs worse than its neighbors including:

Texas – 46th;
Arizona – 42nd;
Utah – 34th;
Oklahoma – 32nd;
Colorado – 29th;

The heaviest state debt burdens are concentrated in the Northeast.

There has been a lot going on recently relating to the ObamaCare health care law. From the IRS scandals and the fact that the IRS will play an integral role in implementing the law to the Obama Administration looking for “donations” from major insurance and drug companies to assist with the law, the signs of disaster are becoming more prevalent as the law’s full implementation approaches.

I recently spoke to Mike Jaxson (see interview link) with Pecos Valley Radio about the health care law and some of the most important issues surrounding it.

From Investopedia: Regulatory Risk: The risk that a change in laws and regulations will materially impact a security, business, sector or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of investment and/or change the competitive landscape.

What does this mean? Quite simply, while governments often attempt to regulate on behalf of consumers or the environment, the reality is that government regulators are often arbitrary, captured by special interests, and make decisions based on misinformation or biases.

Check out this story from Dan Mayfield at Albuquerque Business First in which the author discusses the downgrade of the stock of the company looking to purchase the New Mexico Gas Company. The analyst who downgraded the stock notes that the deal “adds ratebase in a less-favorable regulatory jurisdiction … the deal clearly adds to TECO’s overall regulatory risk and could widen the company’s discount.”

In other words, New Mexico’s PRC is a highly-volatile organization fraught with regulatory risk. Doing business with it may be harmful to your bottom line…Beware.

And with people like Karen Montoya residing on the PRC (having previously exempted convicted felon Manny Aragon’s house from property taxes), wouldn’t YOU feel a little leery doing business in New Mexico?

The following letter to the editor ran in Saturday’s Albuquerque Journal west side edition relating to the finances of the Santa Ana Star Center in Rio Rancho.

The fact is that arenas — even when they have full-time sports teams as tenants — are notorious for losing money. Fortunately (as an Albuquerque taxpayer) Albuquerque did not build an arena. Unfortunately, Rio Rancho cannot go back on its bad decision. The best that we can do is learn from our mistakes.

The articles that appeared recently discussing the Santa Ana Star Center’s ongoing struggles, highlights problems that are by no means unique to Rio Rancho. Around the country and locally, government officials have big dreams of using taxpayer dollars to spur development. These dreams are often shattered when they hit reality, but elected officials are at worst booted out by voters while taxpayers are left paying the bills.

The Star Center was a costly mistake that will never pay for itself, even if the so-called “multipler” of benefits to local businesses is taken into account. According to stadium expert Andrew Zimbalist of Smith College, “the independent economic research that’s been done on the question of whether such facilities have an economic impact on an area has uniformly found that there is no positive impact.”

And this is for cities that have major league sports franchises filling the venue dozens of times per year. The Star Center has struggled to find regular, full-time occupants.

This is not to beat up on the Star Center or even the Rio Rancho officials who brought us this mess, but to spur the public – both in Rio Rancho and in Albuquerque – to recognize that spending 6.5 percent of your annual budget on a sports arena or events center is a bad idea.

Government should take care of the basics while leaving costly amenities like arenas and events centers to the private sector.

Paul J. Gessing
President
Rio Grande Foundation

Which sources of electricity are responsible for generating a majority of the electricity in the United States and which receive a majority of the subsidies? The following charts illustrate the issue nicely:

Notably, in terms of generation, solar doesn’t even generate enough electricity to be broken out (although it does under subsidies). The best ratio in terms of most electricity generated relative to subsidies is natural gas. Nuclear, which many free market advocates strongly support, receives a relatively high rate of subsidies, but nowhere near the immense quantities of taxpayer dollars given to wind.

There is no doubt that increased inequality of incomes is a reality in modern American society. To many economic conservatives and adherents to free market ideas like Rio Grande Foundation president Paul Gessing, this inequality is an inevitable result of broad societal changes, many of which are beyond the scope of government redress.

To left-liberals like Nick Estes, formerly of New Mexico Voices for Children, inequality is a serious problem undermining the very foundation of democracy and demanding an immediate and meaningful response from policymakers.

Who’s right? You be the judge. Gessing and Estes will face off in a debate over inequality in America. Attendance is free.

• When:  The debate will be held from 6:30 to 8:00PM on Wednesday, June 12, 2013.
• Where:  Room 2401 at the University of New Mexico Law School. The Law School is located at: 1117 Stanford NE, Albuquerque, NM  87131.
• Who:  Paul Gessing, president of New Mexico’s free market think tank and Nick Estes, formerly of the progressive think tank and advocacy organization Voices for Children. The panel will be moderated by Dennis Domrzalski a reporter with Albuquerque Business First. Questions will be taken from the audience.

Come by for an interesting discussion and see if we all can’t learn something.