Secretary Designate for Education, Hanna Skandera, has been under attack by the status quo crowd (led by the unions) since day one. Why? She supports reforms to our educational system — like charter schools, digital learning, A-F grading of schools, elimination of social promotion, and “pay for teacher performance” that upset the status quo.

This issue is about to come to a head as confirmation hearings have been scheduled in the Senate Rules Committee. Skandera has been performing the role as “Secretary Designate” as no confirmation hearings have been held, but we believe that opponents of education reform are looking to oust Skandera from her job by getting a “No” vote on the Senate floor.

Skandera’s approval of a “virtual” charter school of which I am on the board may have been the final straw, but there is no doubt that the unions and the establishment that have given us a 49th in the nation education system are gearing up to defend their turf (this has nothing to do with educating our kids, of course).

It is time for New Mexicans who support increasing the number of educational options available to step up and make themselves heard. Let the members of Senate Rules know what you think. Let your senator know that you support Skandera’s efforts to reform education in New Mexico. The initial hearing is this Friday morning at 8:30am with a vote on the senate floor likely to occur in the days ahead.

Update: check out this story from reporter Rob Nikolewski on Skandera and US Education Secretary not having “classroom experience.” I actually disagree with the assessment that Skandera is not a “qualified, experienced educator” as required in the Constitution.

According to her bio: “taught Education Policy at Pepperdine University’s Graduate School of Public Policy.”

So, in order to teach in New Mexico, you can be at APS or Cobre, but Pepperdine doesn’t cut it?

In the days prior to the 2013 legislative session I visited Fred Martino at KRWG TV in Las Cruces to discuss the legislative session. We taped two segments of the program that recently aired and our now available online. See the segments below:

Recently it was reported that New Mexico’s proposed health insurance exchange has “stalled.” The article cited inaction from the Martinez Administration and a conflict of vision among legislators for the lack of “progress.” Everyone in the article seemed to be in agreement that failure to create a new exchange was a bad thing.

I couldn’t disagree more.

The purported demise of New Mexico’s state-run ObamaCare health insurance exchange is a good thing, not a bad one. RGF opposed ObamaCare “exchanges” from the start (even when they were a Republican idea during the Richardson Administration).

Now, it is true that the federal government will set up an exchange in New Mexico if the state doesn’t do it, but the good news is, as health care policy expert Michael Cannon writes:

Defaulting to a federal exchange exempts a state’s employers from the employer mandate — a tax of $2,000 per worker per year (the tax applies to companies with more than 50 employees, but for such companies that tax applies after the 30th employee, not the 50th). If all states did so, that would also exempt 18 million Americans from the individual mandate’s tax of $2,085 per family of four. Avoiding those taxes improves a state’s prospects for job creation, and protects the conscience rights of employers and individuals whom the Obama administration is forcing to purchase contraceptives coverage.

So, there you have it. The demise of a state-run exchange will exempt thousands of New Mexicans from an unnecessary tax increase.

Exchanges are NOT free market health reform. They have NOT been effective in states like Utah which has had an exchange for several years and upon which Gov. Martinez’a plan was based.

There ARE several market-based reforms out there and we published this report detailing a few of them back in 2008.

The wailing and gnashing of teeth over the impending federal sequestration, one might be led to believe that these are some really serious cuts. Check out the chart below from Tad DeHaven at the Cato Institute:

Of course, President Obama wants us all to believe that the sun would not rise and that we’d all starve if it were not for the benevolence of our “friends” in Washington. That is why he is putting out these lists of horribles to dramatize the draconian cuts we’ll see in the Land of Enchantment.

As I’ve noted before on this site, it is amazing we all feel worse off these days than we did say in 2000, since the federal government spends so much more more of our money on our behalf. It makes me wonder how America survived when Washington spent “only” 18% of our GDP rather than the 24%-plus it spends today. Oh, and unemployment back then was 4.2% as well as opposed to the 7.8% rate currently.

So, federal spending should fall. It NEEDS to fall. A federal government that consumes less of our economic output would be a good thing. Is sequester the best way to shrink Washington? Not by a long shot. The cuts are way too small and they don’t touch so-called entitlements which will ultimately make the federal budget unsustainable. Will sequestration be a debacle for the US economy? Only if the Obama Administration makes it one in order to prove a political point.

Tomorrow, the Public Education Commission (PEC), an elected, advisory board to the Public Education Department (PED) and it’s Secretary-Designee, Hanna Skandera, will consider an unprecedented move by the PEC to appeal the secretary’s actions on two charter schools to district court.

The PEC had denied the charters for New Mexico Connections Academy (NMCA) (of which I’m on the board), a statewide virtual school and Taos International School. Under state law, these charter schools were able to appeal to the secretary. She recently overturned the denial. The PEC agenda (see link) shows the body going into a executive session with their attorney to discuss “pending litigation.”

State law says, “If the secretary finds that the chartering authority acted arbitrarily or capriciously, rendered a decision not supported by substantial evidence or did not act in accordance with law, the secretary may reverse the decision of the chartering authority and order the approval of the charter with or without conditions. The decision of the secretary shall be final.”

The Rio Grande Foundation supports school choice, Skandera’s decision to offer more options to students in New Mexico, and state law which says the decision of the secretary is final.

Along with Pat Davis of the left-leaning ProgressNow New Mexico, I discuss the minimum wage hikes being considered in the Legislature and the potential for compromise on a variety of controversial issues in Santa Fe. (the opening screen lasts about 1 minute).

Eye on New Mexico February 17, 2013 from Paul Gessing on Vimeo.

First, the Albuquerque Journal had this very nice editorial on the issue which explains why the opponents of digital learning are missing the big picture and not asking the right questions when it comes to digital learning.

Secondly, one of my fellow board members at New Mexico Connections Academy, Carlo Lucero, had his own defense of digital learning in today’s paper. Check that out here. The most salient point: New Mexico has historically performed poorly in K-12 education. Shouldn’t we at least allow parents and students to pursue popular and innovative options?

If you have been hiding under a rock this week, you may have missed the story of an Albuquerque business that is refusing to pay the minimum wage increase. While this has generated local and even national attention, there are several points that highlight issues with the minimum wage. I’ll point some of them out here:

1) It is no surprise that this business is local and not a chain. People love to talk about “buy local,” but local businesses like this malt shop are far less able to cope with arbitrary wage mandates than are big companies like Wal Mart which have supported such wage hikes in the past.

2) The group of leftists protesting the business are “anti-choice.” When it comes to abortion, government restrictions are anathema, but if a willing employer and a willing worker come to an agreement in defiance of the law, that choice is bad and worth protesting. And, if you don’t think employees are “choosing” to work for the malt shop, they are free to find a job elsewhere. Either the workers like their jobs or are worried that they won’t find similar jobs elsewhere.

3) Some liberals have claim that minimum wages do not reduce demand for labor. The law of supply and demand is basic economics that liberals embrace when it comes to cigarette taxes and other areas of taxation, but that law of economics doesn’t apply to wages?

4) Sometimes civil disobedience pays off. Saying “no” when government overreaches is not always a successful business strategy and I’d expect that one employee lawsuit could put this malt shop out of business, but having the courage to “just say no” can make government back down or at least not enforce bad laws.

We’ve recently updated Errors of Enchantment’s look. We hope you like it. You can now comment quickly on any post using the new “Comment Count” icon. Thank you for your continued readership!

If you’ve never tuned in to Amy Goodman and the extreme left-wingers over at “Democracy Now,” you usually aren’t missing much. Goodman’s column also runs on occasion in the Albuquerque Journal, so residents of the Duke City can get more “Democracy” than they want.

Why am I giving her space on my blog? Recently, Goodman and her cronies aired a lengthy story in which they cast any conservative organization as in the throes of a vast right wing network of donors. But, if you fast-forward the video to the 20:25 mark, you’ll see a “report” on own New Mexico Watchdog Report and Jim Scarantino’s report on “phantom Congressional districts” to which “stimulus” money was sent.

Of course, Goodman and her cronies attempt to downplay the Watchdog story, but the truth is that if the government can’t get simple congressional district information even remotely correct, how do you expect it to track complicated data such as jobs created and lost? So, thanks “Democracy Now” for the airtime. I’m sure we can expect to be interviewed for a more even-handed story in the future.

With New Mexico legislators considering a Constitutional amendment that would tap New Mexico’s permanent fund in order to expand early childhood education and President Obama having mentioned the issue in his recent State of the Union address, the debate over early childhood education and it’s effectiveness is heating up.

Heritage Foundation has a very detailed report outlining the situations in both Georgia and Oklahoma. According to the section on Georgia:

The experiences in Georgia suggest that univer­sal preschool has not corresponded with dramatic improvement in students’ academic achievement. After years of universal preschool, fourth-graders in Georgia have seen only a seven-point overall gain in reading. By contrast, Florida’s fourth-grade students achieved the greatest gains–15 points between 1992 and 2007. In 1992, a year before the Georgia Pre-K program was established, Georgia fourth-graders were three points below the national aver­age of 215. By 2007, fourth-grade reading scores had risen just 7 points to 219, still lagging behind the national average of 220.

In terms of Oklahoma, the report concludes:

In Oklahoma, (National Assessment of Educational Progress) scores have declined since the state began offering universal preschool in 1998. Okla­homa was the only state to see a significant score decrease on the NAEP fourth-grade reading assessment and is the only state to see its reading scores decline over the 15 years from 1992 though 2007 out of all of the states that participated in the fourth-grade reading test in 1992.

And, while slightly more taking a slightly more positive viewpoint regarding early childhood education, Glenn Kessler of the Washington Post explained that Obama was fibbing (or at least dramatically stretching the truth) when he cited studies of the effectiveness of early childhood education in these two states as justification for his proposal to expand them at the federal level.

I recently talked to Mike Jaxson at KSVP Radio about the midpoint of the 2013 legislative session (the file will download). A few good things have happened, but there a lot more instances of legislative intransigence and lunacy that illustrate why we’re 50th in so many measures.

Another example of legislative malfeasance is the unions’ (through Democrats on the House Education Committee) killing of bi-partisan legislation to stop social promotion of 3rd graders who can’t read. $13.5 million worth of additional funding is apparently not enough to get the schools to do their job. And the beat rolls on…and New Mexico kids continue to suffer.

And, while we are unfortunately not able to track votes in committee, our new “Freedom Index” does give voters an idea of where their legislators are in terms of pro-freedom issues.

I received my ballot in the mail for the ongoing City of Albuquerque vote over whether to modify the current election process for mayoral and councilor positions to require 50% rather than the current 40% to win.

First, a word about the process. It is a bad one and easily open to fraud. I received my ballot last week and sent it in within a few days. My wife has not received hers yet. Nonetheless, if I got a chance to open the mail first, there’s nothing stopping me from voting on her behalf. What about wrong addresses? This is a low-profile election. A lot of people don’t know anything about the issues at stake or even that an election is being held. The process is wide open to problems and that alone makes it something that should be reconsidered.

Separately, I have to admit that I laughed at the fact that voters have to pay $.46 for a stamp to return their ballots. For a crowd that claims that requiring an ID to vote amounts to a “poll tax,” I haven’t heard a peep from liberals about the regressive “poll tax” this election. Perhaps that’s because this measure is backed by liberals and labor unions who want to make it harder for conservatives to get into office?

Oh, and then there is the issue itself. Should we raise the thresh hold for election from 40% to 50%? Sounds trivial except that it will cost taxpayers between $500,000 and $750,000 for each election.

As they say, “If it ain’t broke, don’t fix it.” Our system of electing mayors and city counselors is reasonable and effective. While Mayor Berry was elected by only 44 percent of the vote, the most recent polls I’ve seen show that 68% of voters approve of the job he’s doing. Even if you are among the 15 percent who strongly disapprove of Berry’s efforts, the proper solution is to support somebody in the next election, not to make expensive changes to the voting process.

The Albuquerque Journal had an interesting article over the weekend about legislation (SJR3) that would amend New Mexico’s Constitution to tap the permanent fund for early childhood education.

The concern of most conservatives revolves around the issue of tapping the permanent fund and how much such an initiative would cost future generations who are supposed to benefit from that fund. And, to be fair, the plan would spend hundreds of millions of dollars annually, thus reducing the amount of money in the fund. This is important, but I don’t think the “future generations” argument is an effective one. It hasn’t exactly stopped the spending spree in Washington and that involves trillions of dollars of debt that we’re passing along to future generations. Haggling over how much money we pass on to future generations is not likely to stir voters to action in opposition.

If we’re going to spend hundreds of additional dollars annually, New Mexicans need to know that their dollars are being used efficiently and effectively. That is where I believe the push for early childhood funding falls apart. We have one well-known and well-studied early childhood education system called Head Start (an $8 billion a year federal program). According to the government’s own studies, the effects of Head Start are “mostly gone by 3rd grade.” Further, “researchers found that the positive impacts on literacy and language development demonstrated by children who entered Head Start at age 4 had dissipated by the end of 3rd grade, and that they were, on average, academically indistinguishable from their peers who had not participated in Head Start.”

Worse, as this report from ABC News explains, Head Start has been plagued by scandal (again, the government’s own investigators uncovered this problem).

We will of course hear reassurances that New Mexico’s program will avoid the pitfalls experienced by the federal program. But wouldn’t New Mexicans be better off if we reformed our costly and ineffective K-12 system as it exists now (and into which those early childhood kids will inevitably graduate) and focused on helping New Mexico families coalesce and stay together rather than pouring untold millions into a new program, the benefits of which will likely wear off at a young age.

In recent months, the University of New Mexico Hospital (UNMH) has proposed building a $146 million expansion. In our view there should be specific criteria on the use of taxpayer money for new construction. UNMH should meet these criteria which include: Does the public want it and, in a world of limited resources, is the proposed project our highest priority?

To find out whether BernalilloCounty voters share our concerns about the proposed hospital expansion, we asked them and found that voters don’t think the hospital is a top priority and that they do want more accountability when major projects like this are considered.

According to the Utah polling firm NSON, only 15% of the registered voters in BernalilloCounty would make the building of a new hospital a priority. The public’s main priority, with 46% support, was to have more health clinics for the poor throughout the County. Even a new psychiatric hospital with behavioral health services got more support, at 16%, than the building of a new hospital. Still others wanted drug and alcohol rehabilitation services (10%). The poll was conducted January 13-16 with 400 registered voters in BernalilloCounty with a margin of error of 4.9%.

In this poll voters were asked to rank priorities for the health care dollar in BernalilloCounty, and 85% picked something other than the new hospital. Clearly, the local population believes that the time is right for healthcare clinics but not a new hospital.

There is more. When asked if taxpayer money meant for healthcare should be used to build a new hospital or used solely for the purpose of aiding the poor and indigent, 54% said use the money solely for the poor, and 30% would allow the money to be used for the new hospital. A significant majority of people want their scarce tax dollars to be used for its central purpose, helping the poor.

In addition, the public knows the Affordable Care Act (“Obamacare”) is being implemented and that it will bring massive changes to our system. When asked, voters said that UNMH should wait until ACA has taken effect, by a margin of 61% to 24%.  People want to wait to see what happens before making an investment in a hospital that’s not used.  ACA is supposed to drive people to the doctor, not the hospital, so big new hospitals may not be needed.

The most strongly-supported statement in the poll came when respondents were asked if new taxpayer-financed hospitals should be allowed with our without final say from elected officials. The voters said by 71% to 17% that hospitals of this kind should be specifically voted on by the CountyCommission before being considered by the state.

While advocates of limited government (as we are) were pleased with many of these responses, it is worth noting that voters do not think the county should do away with the mill levy for indigent health care. By a vote of 50% to 32%, voters said not to eliminate the mill levy. And when asked if the mill levy tax is too high, voters were split, with 46% saying it was about right, and 43% saying it was more than we can afford right now.

This poll clearly shows that the voters of BernalilloCounty understand the mill levy for indigent health care, support it, do not want to do away with it, and want to ensure that the money is spent wisely with oversight and accountability and is targeted toward efforts that they believe will benefit the low-income and needy.

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

This article from the Las Cruces Sun-News should be enough to make any New Mexican see red. A worker shows up drunk to work, injures himself, and applies for workman’s comp AND GETS IT (at taxpayer expense). That’s bad enough.

Worse, legislation introduced this session that would end this practice was killed by the Democrats on the House Labor Committee with their Chair, Rep. Miguel Garcia arguing that holding employees responsible for coming to work sober each day would be “punitive to the worker.” So, apparently in New Mexico, showing up to work sober is too much to ask…and these people wonder why we’re the poorest state in the nation?

Thankfully, the bill to eliminate worker’s comp for drunks has been revived in the Senate. There is hope, but the fact that this bill was killed even once is a sign that the liberals in Santa Fe are not serious about turning our economy around.

The process known as “Fracking” has opened untold reserves of natural gas throughout the United States transforming economies and shifting the global balance of power. Natural gas is stealing market share from coal and reducing carbon emissions, but remains unpopular among the hard-line far left.

In New Mexico, Rep. Brian Egolf has introduced legislation demanding disclosure of the ingredients in fracking fluids. Oil and gas companies don’t like this because they consider their fluid ingredients to be “trade secrets.” In Colorado, the Democratic Gov. Hickenlooper is apparently drinking fracking fluid.

No matter what happens in terms of disclosure, fracking is here to stay and New Mexico could benefit more than most from the long-term boom in natural gas usage. Hickenlooper’s stunt is just more evidence of the safety of fracking.

With our own Legislature embroiled in debate over whether or not to increase New Mexico’s minimum wage from $7.50 an hour to $8.50 an hour plus adjusting it annually for inflation, it is interesting to see President Obama jump into the fray over the minimum wage. Obama said, “If you work full time, you shouldn’t be in poverty.” His proposal is to increase the federal minimum wage to $9 an hour.

That got me to thinking. What is a “poverty wage?” And, where would the minimum wage have to be to keep Obama’s word? It’s not too hard to figure it out with the federal poverty guidelines. The guidelines below are for 2013 and include New Mexico. I have added in what a full time job: 40 hours a week, 52 weeks a year, would pay at various levels.

Poverty Level for one person: $11,490

$7.50 an hour (New Mexico’s current wage): $15,600
$9.00 an hour (Obama’s proposed wage): $18,720
$10.29 an hour (Santa Fe’s wage starting March 2013): $21,403

Obviously, it is worth noting that one person can live above poverty on just the minimum wage, so this is yet another silly/ridiculous statement from our President. But, you might say, what about children? The following chart from Pennsylvania illustrates the real income of a single parent. We are working to get a similar chart for New Mexico, but as you can see, with all of the government programs available, things aren’t so bad. In fact, the biggest problem is that due to the generosity of government benefits at relatively low incomes, there are few incentives for single moms (or dads) with kids to get more education and improve their work skills. They actually lose income once they make about $30,000 and don’t start earning more real income until they are making $70,000!

I’ll be on KRWG TV (airs in Las Cruces and much of the southern part of New Mexico) on Feb 14 and Feb. 21 at 7pm (Thursdays), Feb. 16
and 23 at 5pm (Saturdays), and Feb. 17 and 24 at 11am (Sundays). I taped two segments, so the first segment will be on starting tomorrow and through the weekend, the second segment will air next week. Eventually, both will be posted here.

Always enjoy sitting down with Fred Martino and we cover a wide array of issues.

In today’s Albuquerque Journal, the author argues that “privatization” is hurting New Mexico’s education system. His only actual argument is that “for-profit enterprise reserves some part of each dollar for product development, marketing, promotion, and profit, that private companies are skimming off taxpayer dollars that should go to our children.”

The author is essentially making the argument that monopolies are the most efficient economic model because there is no duplication of resources. After all, education systems already contract with for-profit textbook manufacturers, bus companies, and software providers for a variety of services. If anything, these businesses, operating in more or less competitive markets (especially for software) are far superior in quality and cost to anything that could be developed by governments. These companies produce superior products and services, not in spite of, but actually as a result of the competitive pursuit of profits.

A second undercurrent of the opposition to certain virtual charters and private sector involvement has arisen due to the fact that many of these private-sector providers are from (horrors) outside New Mexico. The view that “all good things come from New Mexico” is powerful among many who use it as a political bludgeon against anyone they oppose. And, while there may be some truth to the fact that our green chiles are the best, it is hard to argue that New Mexico-built automobiles (there are none that I’m aware of) are superior to those from other states.

It makes no economic sense to limit ourselves to providers from any geographic area, especially in the realm of education software. Most of the costs of any school are tied to teachers, not software, and the idea that we should rely on “home grown” products because taxpayer dollars are at stake is just silly and a recipe for disaster. Imagine only “New Mexico made” computers in our classrooms with New Mexico made chalk boards, desks, and textbooks. It’s just DUMB! It is far more important to obtain the best goods and services for our children’s education than it is where the given tool was created.

Several semi-related items in this posting regarding education issues:

1) Education reformer Michelle Rhee came up through the educational ranks considering herself a Democrat. I don’t know what she calls herself these days and it really doesn’t matter, but in this article, Rhee details her reasons for breaking with her party on the issue of education vouchers;

2) This article from the American Enterprise Institute found that Washington, DC’s voucher program produced $2.62 in benefits for every dollar it spent. Further, the program increased the high school graduation rate of students by 12 percent if they were lucky enough to win the annual scholarship lottery, which allowed students to choose from more than 60 private schools in the District participating in the program. More than 3,700 students won the scholarships and an estimated 421 extra students received their diplomas as a result of this program;

3) New Mexico’s educational struggles have been well-documented. We are consistently among the bottom five in a variety of education measures. The chilling thing about this is that even if our state moved into the middle tier in education results, we are still part of a nation that is trailing far behind its international peers.

4) A Constitutional Amendment (SJR2) has been introduced during the current legislative session by Sen. Tim Keller (one of the most thoughtful folks in Santa Fe regardless of party affiliation) to limit class sizes. This is unfortunate legislation has an estimated price tag of $610 million over three years. the evidence is inconclusive when it comes to academic outcomes and the preponderance of evidence is that it is not worth the high cost.

Even more importantly, this legislation flies right in the face of educational innovations, like blended learning, that allow for educational improvements and increased efficiency in terms of teacher/student ratios.

Check out our ad below. Interestingly enough, the front page of the Albuquerque Journal included a story about how University of New Mexico is being forced to come up with as much as $780,000 in additional funding to pay for the increase.

Over the weekend in an opinion piece in the Albuquerque Journal, Lucky Varela, after a few platitudes about Sen. Bill Sharer’s plan to completely revamp New Mexico’s broken tax system, attempted to “strangle” SB 368/HB369 in the proverbial crib. The point of SB 368 is to return New Mexico’s tax system which is based on a gross receipts tax, to something that has low rates (nothing above 3%), fair policies (all-encompassing), and simple. No more breaks for special interests or one, politically-powerful group with the money to send lobbyists to Santa Fe to get their break.

Varela attacks the plan for being “regressive.” Let’s be clear, a “regressive” tax is not imposed on low income people at a higher rate. It simply means that it takes a greater percent of one’s income at lower income levels. Regressive doesn’t automatically mean “unfair” and New Mexico’s tax code is already regressive. Varela never addresses the issue of whether Sharer’s plan would be better or less-regressive than it is currently. After all, there are a lot of tax incentives and deductions currently in the code that are targeted at higher-income taxpayers as a means of spurring economic growth and overcoming our business-unfriendly tax code.

First, let’s address the quality issue. There is a simple principle in taxation that you tax more of what you want and tax less of what you don’t want. Sharer’s bill would end the taxation of personal income as a separate tax and would fold that into the GRT at the same rate as everything else. Reducing taxes on income would increase productive activity. Also, under current law, New Mexico’s GRT creates a system of double-taxation. Contractors (lawyers, accountants, and more) are taxed by the GRT at rates of 7% or more and then that income is taxed again at up to 4.9%.

Interestingly, New Mexico’s GRT in its current form is applied at relatively high rates. We have the 16th-highest combined state and local burden on sales/GRT and yet our state (as noted in the report) taxes a lot of goods and services that are left untaxed in other states. This is the worst of both worlds.

Lastly, by increasing reliance on gross receipts taxes charged at low rates, New Mexico would actually be increasing the stability of its revenue stream. Income taxes are a volatile form of taxation. When times are good, revenues rise dramatically. When times are bad, they go way down. A low, flat, and fair GRT charged at low rates will generate a relatively reasonable stream of revenues.

New Mexico’s economy is quite poor because we do nothing particularly well when it comes to economic policies. Our taxes on wealth/property are low, but our taxes on business formation and entreprenurial activity are high (income/GRT). We have a poor education system, a poor legal climate, and too many restrictive regulations. SB 368 would make New Mexico’s tax code far more attractive to economic activity and business formation while generating the revenue needed to carry out the functions of government.

Ultimately, the poor in New Mexico will benefit from a stronger economy, more job creation, and higher wages under Sharer’s plan. They certainly haven’t been well-served by our current mess of a tax code.

There are two potential issues: One is that, as New Mexico’s economy generates far more tax revenue under Sharer’s proposal, how do we restrict the temptation to grow government programs even faster? The second issue is how do we keep rates low and avoid special interests getting their own carve-outs put back into the law and thus increasing rates again (after all, NM’s GRT used to be far closer to what Sharer is proposing).

The Rio Grande Foundation recently completed a report in which it analyzed dozens of state regulations that are holding back our economy and need to be eliminated or reformed. The need for deregulation has never been more apparent with our economy losing jobs and seeing an outflow of workers (according to a recent report from United Van Lines).

Unlike many issues in Santa Fe, deregulation has not historically been a partisan issue. At the federal level, President Jimmy Carter deregulated trucking, freight rail and airlines to positive effect in the 1970s. President Reagan continued those efforts in ways that led to significant economic growth throughout the 1980s.

To further illustrate the point that deregulation can and should be bipartisan, we are pleased to see that Think New Mexico has embraced the concept of deregulation, at least insofar as motor carriers here in New Mexico are concerned.

Think New Mexico has been working to pass House Bill 194, legislation sponsored on a bipartisan basis by Republican Rep. Tom Taylor and Democratic Rep. Carl Trujillo. The bill attempts to overcome many of the most absurd barriers to free competition in transportation services. These barriers harm both New Mexico’s economy and reduce options for consumers.

Today, entrepreneurs seeking to open new taxi, shuttle, or moving companies must gain the approval of the incumbent providers. Imagine Wendy’s having to gain the approval of McDonald’s before opening up a restaurant. One Albuquerque man who dreams of owning his own taxi business has been working for eight years to overcome this barrier.

According to (a staff response in a case before) the New Mexico’s Public Regulation Commission, which is charged with actually regulating motor carriers, “The Albuquerque Cabs appear to operate as a cartel: they are the only certificated taxicab companies in Albuquerque, they share the market evenly, they charge identical rates, and they have the same attorney. As a cartel, their interests may be best served by maintaining rates above the market rate and by discouraging competition, not by ensuring that the public is served by quality, affordable, and plentiful taxicab service.”

Cartels are creatures of government policy, not the product of a healthy free market.

Another barrier is pricing. In a free market, price competition is a primary determiner of market success. Under New Mexico’s arcane motor carrier laws, the state/government must approve all prices charged by these companies. Making matters worse, motor carriers have a special exemption from state antitrust laws that encourages them to form state-sponsored cartels and price fix. HB 194 would change all that.

With an active push for regulatory reform under way, the existing motor transport oligopoly is not going to give up without a fight. They have worked to introduce their own more industry-friendly legislation, SB 328, which muddies the waters and continues to allow existing providers to smother their potential competitors under a blizzard of legal filings using the current antiquated law.

Rio Grande Foundation does not always see eye to eye with the folks at Think New Mexico, but when it comes to regulating motor carriers, we agree that policymakers should stick to safety regulations, not micromanaging a potentially-competitive market for the benefit of a few well-connected special interests.

The aforementioned PRC staff brief concluded, “There has been a great deal of economic analysis of taxicab regulation in the past thirty years, with most experts agreeing that the public is best served by increased competition and limited barriers to entry.” We agree. It is time for the New Mexico Legislature to do what is in the best interests of consumers and entrepreneurs alike by truly deregulating New Mexico’s motor carriers by supporting HB 194.

The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization.