This article appeared in the Albuquerque Journal on 6/24/13 and in several other papers state-wide.

Washington can’t seem to manage much of anything these days. Even before the myriad scandals started to take their toll on the Obama Administration, the government’s inability to manage money and resources was clear to even the most passive observer.

Notable among recent policy failures has been Washington’s inability to find even the smallest reductions in a $3.8 trillion budget – a budget which more than doubled in size in just over 10 years. This failure led directly to the hated “sequester” which, while not actually cutting year-over-year spending, did slow Washington’s growth somewhat.

By and large, Americans have gone on with their lives giving little thought to the over-hyped sequester. However, in an effort to inflict some pain on state governments, the Obama Administration saw fit to cancel royalty payments to the various Western states earlier this year. Royalties are the fees paid by companies that engage in certain activities on publicly-owned land. A vast majority of this money in New Mexico and around the West is derived from the various extractive industries.

For New Mexico, the loss amounts to $26 million this year. $109 million in total was cut from the budgets of the several Western states (New Mexico had the second-largest cut to Wyoming). Sen. Tom Udall and a bi-partisan group of Western senators recently penned a letter to the Obama Administration urging that such cuts not be made again next year.

While I appreciate efforts to stop future cuts by our delegation, this is not a discussion that should even be taking place. These lands are part of the respective states. They are supposed to be managed by the federal government on behalf of the states, but the funds are rightfully ours. Unfortunately, Washington doesn’t play by the rules.

If Washington did obey its own rules, many of these lands – excluding National Parks and Tribal lands – would have been transferred to the various Western states decades ago. After all, this was the pattern set up at the founding of our nation. Dating back to 1780, the Continental Congress designed a process by which the national government would “dispose of” lands under its control for the benefit of the nation. That process held true for two centuries, but was not allowed to work when it came to Western states like New Mexico which remains more than 40 percent federally-owned.

Whether federal or state government owns land may appear trivial at first blush, but we already have seen that federal budgetary mismanagement has resulted in the withholding of funds meant to support the activities of New Mexico government. And, of course we have well-documented problems with federal management of lands, including the lack of willingness to extract dead and dying trees, thus creating a “tinderbox” in New Mexico’s mountainous regions that have regularly caught fire in recent years.

Lastly, there is the basic reality that government’s functions are best managed locally. Washington instead enforces “one-size-fits-all” management policies that don’t work well for anyone.

The individual states, unlike Washington, have both the incentive and the local knowledge to manage local lands. They can often do so more effectively, without jumping through the hoops of Washington’s bureaucracy. The “rights of way” used by utilities on federal lands are but one recent example. The fact that these areas are too narrow and allowed falling power lines to start several of the fires burning in New Mexico has generated consternation from our Congressional delegation, but any federal action to expand or alter these “rights of way” is likely years away.

The good news is that New Mexico policymakers have seen the problem and are in the midst of working on solutions. HB 292, the Transfer of Public Lands Bill, was introduced on a bi-partisan basis by Reps. Yvette Herrell and Richard Martinez during the 2013 legislative session. Although it failed to pass, it began the discussion about who is best able to manage New Mexico’s public lands. Utah and four other states have already passed similar legislation.

Western states must act to put pressure on Washington to do the right thing by recognizing that local control of resources is not only sensible, but follows historical precedent. Local control was our birthright. It is time for Washington to restore local control of New Mexico’s lands.

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

First and foremost, I want to thank the folks at New Mexico Voices for Children and Veronica Garcia in particular for inviting me to their inaugural “Kids Count” rollout. I went because, while RGF and Voices don’t agree on much, it seemed like an interesting opportunity to learn about some new data and share views with those who may not agree with us.

There was a lot of useful data, albeit much of it depressing, as New Mexico is ranked 50th in the report. If you want some other unsettling information, check out my recent presentation on “How do we rate?”

So, the news is not good, we get it. But what does it all mean? Here are 4 points that encapsulate my take on the event and the poverty/educational system in New Mexico:

1) Poverty is the root cause of most of New Mexico’s problems. Liberals and conservatives certainly disagree on how to solve poverty. In fact, I recently debated Nick Estes (formerly of NM Voices) on inequality (which ultimately was about poverty). It goes without saying that the RGF perspective is that limited government, free trade, and the rule of law (not government programs) create prosperity. Left-liberals support more government spending on social welfare programs and increased regulations like higher minimum wages.

2) It is good to see the folks at NM Voices and the Annie E. Casey Foundation (which is behind the Kids Count report) discussing the importance of reading by 3rd grade. We have been talking about 3rd grade reading for four years (see presentation here and paper here.) We agree that learning to read by 3rd grade is important (as do Gov. Martinez and Education Secretary Skandera) and would love to see Voices step up to support accountability and choice measures that have been shown to improve 3rd grade reading scores in other states like Florida.

3) The keynote speaker at the event (from Annie E. Casey) repeatedly spoke of “a politics-free-zone” for education” and that this was somehow a goal that New Mexicans and people in other states should get behind. This sounds like a great talking point, but as long as the government is demanding tax money and then spending 12 or more years indoctrinating my child (whether for better or worse) in a program administered by no less than three government bodies (the federal government, the state, and the school board), how exactly is this supposed to be “politics-free?”

If you want politics-free education, leave the money with the parents and let THEM pick the school that is best for them and their child and let charities handle educating those whose families can’t afford it.

4) It is interesting when so-called “progressives” complain about the status quo in New Mexico as if they had no part in making our state 50th. After all, outside of the office of governor (which has flipped back and forth in recent years), New Mexico has been controlled from top to bottom by politicians of the liberal/progressive mindset. As I’ve written about before, the Legislature has been controlled by one party for nearly all of New Mexico’s existence with the exception of just a few years. The Courts and legal system have been under the control of the same people. And yet we are 50th in so many things that these very same liberal/progressives claim to want to change!!!

In conclusion, it is good to have these discussions. I don’t have to agree with the folks at Voices to have a discussion and learn something new. Now, if we can only get them to attend a few RGF events!

ADDENDUM: Leave it up to the hyper-political far-lefties at ProgressNow New Mexico to attempt to divert attention from the failure of New Mexico’s “progressive” public policies with a press release blaming Gov. Martinez and her vetoes for the fall to 50th. The same report put NM at 48th back in 2008. Perhaps the problem is the “progressive” left-wing Legislature?

The Rio Grande Foundation has led the charge in New Mexico on behalf of exporting liquefied natural gas, a potential boon to our state’s economy. We are encouraged that Gov. Martinez has seen fit to weigh in with the Obama Administration on behalf of LNG exports.

Rob Nikolewski broke the story at Capitol Report New Mexico and the letter is available here.

Kudos to Gov. Martinez for speaking out publicly in support of New Mexico’s economy. We wish our Congressional delegation were more outspoken (several Members have expressed support) and that President Obama would actually heed his own rhetoric about job creation.

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?