It has been announced that New Mexico will provide a $2.5 million tax credit and the use of city-owned land (it is unclear what subsidies will be given in terms of lease rates and/or property taxes) to facilitate the construction of a grocery store in downtown Albuquerque.

What I don’t understand is why taxpayers are subsidizing a new grocery store when there is already an existing grocery store downtown. It just doesn’t make sense. Government should not pick winners and losers by directing taxpayers’ resources to specific projects. I wonder how the owners of the current grocery store downtown feel about having a taxpayer-financed competitor? Also, if there was a market demand for more supermarkets in downtown Albuquerque, wouldn’t someone have built it already (absent, that is, from government interference?)

It is time to tell Mayor Berry, City Council, and our state leaders that this is not a wise use of scarce tax dollars.

Despite an abject lack of progress on Right to Work during the 2013 legislative session, the push for a Right to Work law in New Mexico (begun most recently by RGF) seems to be gaining steam. Mark Mix, the head of National Right to Work made a return visit to the Land of Enchantment which was written up in Albuquerque Business First.

We have done the research on the potential economic benefits of such a law. If we’d adopted a law during the 2013 legislative session:

By 2020, New Mexico would have 42,300 more people working as a right-to-work state,
with more that 2,000 in increased manufacturing employment.

By 2020, the state’s personal income would be nearly $5 billion higher and wage and
salary income would be $2.2 billion higher.

And, of course we welcome the support of NAIOP, Mayor Berry, and business and community leaders across the political spectrum. Of course, this Legislature can’t pass even modest tax reforms without raising taxes and increasing subsidies elsewhere. Game-changing free market reforms like Right to Work are simply too much for this Legislature to consider.

How else do you explain his refusal to bring legislation to a vote that would have preserved $5.5 million in federal funding for Temporary Assistance for Needy Families (TANF).

The bill, HB 12, breezed through the House on a 63-0 vote, yet Sanchez never brought the bill to the floor for a vote and even was the lone vote against it in the Senate Committee that heard it.

Now, there are certainly dozens of other policies that New Mexico’s Legislature has enacted over the years that continue to keep us poor, but if you believe in government welfare as Sanchez clearly does, how can you not push HB 12 through the Legislature?

If you haven’t already gotten your tickets to our exciting events on Monday and Tuesday, please do so here for lunch, here for our Santa Fe reception, and here for our Albuquerque breakfast.

However, we have another upcoming event coming up soon. Information on that follows (note that it is at the Marriott on Louisiana, not at the Pyramid off I-25):

One of the nation's leading experts on how over-regulation is choking off productivity and economic growth will be speaking in Albuquerque on Friday April 5th and you are invited.

Myron Ebell is Director of the Center of Energy and Environment at the Competitive Enterprise Institute (CEI). Ebell will speak from 12:00 noon to 1:00PM on Friday, April 5th, at the Marriott Hotel uptown (at Louisiana Blvd. NE and Interstate 40).

Cost of this event is $25 if you register before April 1, 2013 and $35 thereafter. You can pay online here or send a check noting that it is for the Myron Ebell event and listing the attendee names to: PO Box 40336, Albuquerque, NM 87196.

Mr. Ebell will give chapter on verse on how over-regulation such as the Dodd-Frank financial regulation, the Environmental Protection Agency, and the so-called "Affordable Care Act", among many others, are ill-founded, illogical and counter-productive, hindering a robust free enterprise market which can benefit all citizens.

Further, Mr. Ebell will address energy regulations due to the importance of energy to the nation and to New Mexico, a state with vast energy reserves. He is regarded as a national leader in challenging global warming assumptions, and was active in battling the proposed "cap and trade" congressional bill (that was defeated).

The event is hosted jointly by the New Mexico Prosperity Project, Citizens Alliance for Responsible Energy, and the Rio Grande Foundation.

Nobody reported on it, nobody talked about it. It got bi-partisan support. Now it is the law of the land.

Unfortunately, it has the potential to do incredible harm to New Mexico businesses. The bill was HB 216, the Fair Pay for Women Act. Who could be against that? After all, according to the folks who track such things, women earn about 77 percent of what men make. So, there oughta be a law, right?

Of course, as Reason Magazine points out, women make different job choices, take time off to raise children, and work fewer hours than men. All of those differences add up to significant salary “discrimination.”

So, it is now New Mexico law that “In addition to any judgment awarded to the plaintiff or plaintiffs, allow costs of the action and reasonable attorney fees to be paid by the defendant. In any new proceedings brought pursuant to the provisions of this section, the employee shall not be required to pay any filing fee or other court costs necessarily incurred in such proceedings.”

The potential for cases to be brought forth goes back up to six years, so if someone suddenly decides they were discriminated against five years ago, they can come back on their employer, take them to court, and force the employer to pay all of their legal costs. This is a disaster waiting to happen. UPDATE: some small good news is that the bill was changed before passage to state that suits “could be brought no later than two years from the last date of the employee’s employment.”

We at the Rio Grande Foundation apologize for not finding this before it was too late, but we wonder how such a business-unfriendly piece of legislation managed to pass through the Legislature with so little opposition.

Education Retirement Board member Brad Day has a must-read column in today’s Albuquerque Journal in which he outlines the sorry state of New Mexico’s pension system and how the situation is both getting to the point at which it will be irreparable and how the unions and the groups in charge of maintaining the system would prefer to stick it to the taxpayer rather than actually make these systems sustainable.

The pension bills passed this session may slow the bleeding, but more transformative changes like a shift to a defined-contribution system are needed.

Interestingly enough, a shift away from defined benefit to defined contribution, 401K plans, was recently approved by 83% of Boeing’s engineers. I don’t know all of the particulars of the negotiations and Boeing is obviously a private company, but it is possible to convince workers of the benefits of controlling one’s own retirement as opposed to relying on a business or government’s investments.

I’ve had a few opportunities to discuss the recent legislative session recently. This one was done with Mike Jaxson of KSVP radio as the session came down the stretch. I followed up with a second interview focusing on some of the last-minute tax deals made as the session concluded.

Lastly, I’ll be on with Bob Clark on 770 KKOB on Monday, March 25th from 9am to 10am to discuss the last-minute tax deal.

Gov. Martinez initially threatened to veto the budget passed during the recently-completed legislative session. The issues involved her priorities of “merit pay” for high-performing teachers and the 1% pay raise for government workers.

We support Gov. Martinez on both the teacher pay and the overall government employee pay issues, but more importantly, we don’t see how New Mexico can sustainably increase its budget by 4.4 percent in a single year with anemic national economic growth and an even more anemic New Mexico economy. How do we expect to generate enough revenue to pay the bills?

In summary, it would behoove New Mexicans if Gov. Martinez vetoed the budget or at least went in with a scalpel to take out some line-items that would bring annual growth down to 3 percent or less which is at least close to the combined effects of inflation and population growth on a year-over-year basis. It seems that her success in getting some corporate income tax cuts may have tempered her enthusiasm about vetoing the entire budget, but 4.4 percent spending growth at a time when the US economy is expected to grow by only 2.4 percent seems hard to sustain.

The sequester has been in effect for a few weeks now and, despite President Obama’s histrionics (and those of some Neoconservatives), the world has not come to an end. That said, some small reductions in government spending have taken place like the plowing of the main road into and out of Yellowstone.

Guess what? With a clear market incentive (tourist dollars), local chamber of commerce types stepped up to the plate and are paying the $70,000 or so to plow the roads! Imagine what other government activities the private sector could handle were it not regulated and taxed into oblivion by the overweening hand of government…road building and operation, air traffic control, trash collection, golf course maintenance, grounds keeping and building repair, and railroad operation (Amtrak), just to name a few.

In the waning hours of the 2013 New Mexico legislative session a compromise was achieved on certain tax policies that received a good deal of attention. The compromise does include one of Gov. Martinez’s top priorities (cutting the corporate income tax albeit from 7.6 percent to 5.9 percent over five years rather than going to 4.9 percent.

If that were the sum total of the legislation, we at RGF would be cheering the business-friendly change, but alas, that is only one part of the bill.

Additionally, the proposal revives the so-called “Breaking Bad” bill which we trashed recently. Again, the big hangup is that the proposal essentially expands the pool of money available for subsidies by carrying unused subsidy money (annual subsidies are up to $50 million) over from year-to-year. But this is not the worst part…

The worst aspect of the bill is that over time it eliminates “hold harmless” distributions to cities and counties over 15 years. Worse, it limits flexibility of local governments to apply those taxes to food or medical services. This is a gross receipts tax hike in waiting for New Mexico taxpayers.

Other provisions in the bill include a tightening of existing tax breaks such as the high wage tax credit (not a bad thing in exchange for lower taxes); allowing a single sales factor (a good thing), and mandatory combined reporting for “big-box” stores (not a good thing).

So, is this a good compromise? I think it is good enough to sign, but it is hardly the sort of “game-changing” reform that will make New Mexico a more business-friendly state. Were I the Governor, I’d probably sign the bill, but wouldn’t “take ownership” of this half-baked plan.

RGF has remained steadfastly opposed to subsidies for the film and television industries in New Mexico. Nonetheless, we had remained on the sidelines on HB 379 which originally was written to increase the subsidy for TV shows from 25% to 30%. In and of itself, that was not too big a problem as the subsidy was capped at $50 million and TV shows like “Breaking Bad” do have a longer-term presence unlike movies which come and go freely with little lasting impact.

Unfortunately, a separate provision was later added into the bill that would allow the unused cap space to “roll over” to following years. Thus, if $10 million were not used this year, the cap would be $60 million. This is not good as it adds uncertainty back into the program. This provision alone merits a veto or at least a veto of that line-item if possible. Oh, and union rep John Hendry has no idea what he’s talking about when he says “We bring more money in than we spend on these film incentives. This idea that it’s costing the state of New Mexico a penny is absurd.” Economists left, right, and center have come to the same conclusion that these subsidies are economically-harmful.

Now, as KOB-TV reports, Gov. Martinez is upset (justifiably) because the Legislature has not given funding for merit-based teacher pay. Again, this proposal is something worth considering and the refusal to fund it shows that when it comes to education reform, many in the Legislature are not serious. Check out the KOB TV story here.

UPDATE: Gov. Martinez has vetoed the “Breaking Bad” Bill.

SB 15 is innocuously titled “Campaign Finance Requirements.” And, it passed the Senate with NO opposition. Does that means it’s a good bill? Absolutely not.

According to the Center for Competitive Politics, SB 15 “proposes to create broad and burdensome disclosure requirements for individuals and organizations that make communications to the public that merely mention the name of a candidate in a specified time period before a primary or general election.”

The case against SB 15 goes on, saying:

The disclosure information required by S.B. 15 could also result in the harassment of individuals by their political opponents, and the proposed reporting thresholds for organizations speaking before the public on an issue could result in “junk disclosure” by associating a donor with a communication they have no knowledge of or may not even support.

In short, the language in S.B. 15 is so broadly defined that in order to comply with the bill’s far-reaching reporting requirements, it’s likely that many groups will instead opt not to speak. “This legislation proposes extensive and burdensome reporting and disclosure requirements that could chill the speech of many organizations,” said Nese. “If this bill is signed into law, a nonprofit organization in New Mexico that publishes a simple scorecard rating of legislator votes on its website could be forced to fill out complex paperwork with the state and reveal many of its donors.”

UPDATE: This bill will be heard on the floor of the House of Representatives and Senate prior to the conclusion of the 2013 session. Contact your legislators today!

If you haven’t already purchased your tickets for our upcoming luncheon on Margaret Thatcher on the 25th, our reception in Santa Fe later that day, and our breakfast in Albuquerque on Tuesday, you need to do so by Monday in order to get the best price.

More noteworthy is that it is women who are leading the charge for liberty here in New Mexico. It has been well-documented that we have the nation’s first Latina Governor, a conservative, but even in the Legislature, women are showing a strong resolve to vote for freedom. With just a day or so remaining in the 2013 legislative session, I logged on to our “Freedom Index” vote tracking site and noticed that the top five legislators in terms of pro freedom votes are ALL women. Reps. Herrell, Brown, Crook, Ezzell, and Espinoza currently hold the first five slots in the analysis of the voting patterns of New Mexico’s legislators when it comes to pro/anti liberty issues.

As if having such a strong contingent of pro-liberty women in the Legislature were not enough, I have always been struck by the large number of women who lead business and industry groups around New Mexico. Here is a (partial), by no means exhaustive list of women who lead pro-freedom, pro-business organizations in New Mexico (if I’m missing anyone, email me at info@riograndefoundation.org)

Terri Cole, Albuquerque Chamber;
Beverlee McClure, Association of Commerce and Industry;
Carol Wight, New Mexico Restaurant Association;
Minda McGonagle, National Federation of Independent Businesses New Mexico;
Karin Foster, Independent Petroleum Association of New Mexico;
Carla Sonntag, New Mexico Business Coalition
Marita Noon, Citizens Alliance for Responsible Energy
Lynne Anderson, NAIOP

Check out the following chart from the Heritage Foundation:

Another legislation is almost over and the Legislature has once again done nothing to improve educational performance in our state which so often trails the nation (which in turn trails the world) in educational performance.

Interestingly enough, the Obama Administration (unlike many Democrats in the Legislature) has actually been quite supportive of Gov. Martinez’s reforms. Now, we have Peter Orszag, Obama’s former Office of Management and Budget head, has written this article detailing how standardized tests can and should be used to evaluate teachers.

The use of such standardized testing to even partially evaluate New Mexico teachers has been anathema to the unions which have effectively killed any and all such reforms. Now, are standardized tests perfect? No. If we had a truly free market education system where resources were commanded by parents and children, not bureaucrats and politicians, they could choose whatever method of teacher evaluation they wanted. But that is not the reality. Standardized tests, imperfect as they are, accurately measure teacher effectiveness. Unfortunately, that accountability is not welcome in the world of education.

HT: George Richmond

Over the weekend, the Albuquerque Journal ran an excellent story on the UNM Campus in Rio Rancho, built at a cost to taxpayers of $13.5 million, which is severely underutilized. The story details the paucity of students who take classes on the campus and includes interviews with several local politicians who attempt to defend the white elephant.

Of course, the proliferation of college campuses is right in line with previous RGF research on the topic of New Mexico’s many college campuses and the fact that these buildings are too often built for “economic development” purposes and not due to actual demand.

This “build first, ask questions later” attitude is common in government, but especially common here in New Mexico. And, if you think it has gone away, you better think again. For one example, check out the scope of UNMH’s Master plan which includes adding an astonishing 1.5 million sq/ft of office space by 2020. And yet the plan spends more time discussing sculpture gardens than it does analyzing the budget or any demonstrated demand for that kind of massive development.

Are you or someone you know qualified to be a principal at a New Mexico school? New Mexico Connections Academy is hiring a principal to head up the unique virtual school which will open this coming fall. If you are a go-getter and interested in getting involved in this innovative educational option, check out the job qualifications and apply.

(Albuquerque) Responding to the ongoing debate over whether to increase state government employee pay in New Mexico, the Rio Grande Foundation has produced a new report, “Public v. Private Sector: Income Differences in New Mexico” that attempts to create an “apples to apples” comparison of the overall compensation of workers in the public and private sectors.

According to the Foundation’s analysis, New Mexico government workers are paid an 8.6 percent premium over their private sector counterparts.

“It is widely known and reflected in our report,” notes policy analyst Ben Sugg, “that government workers give up some upfront pay in exchange for more generous health care, pension, and time-off/retirement. The question is whether those ‘fringe benefits’ lead to relatively higher pay for workers in New Mexico’s state government or not.”

The Rio Grande Foundation analysis used a statistical technique called “Regression Analysis” in order to better understand the differences in pay among various types of workers. Regression analysis is a statistical technique for estimating the relationships among variables. In this paper, it is used to account for the relevant differences between state and private sector workers.

According to the report’s findings using regression analysis, despite having not received a raise since 2008, New Mexico’s public sector workers remain better-paid overall than their equivalents in the private sector. That difference is 8.6 percent. Read the brief for yourself here.

Update, appropriate to this study, check out this new article from Albuquerque Business First which states that “Private employers paid their workers an average of $28.89 an hour in wages and benefits in December 2012, while state and local governments paid an average of $41.94 an hour according to the U.S. Bureau of Labor Statistics.”

One of the tricky things about economics is that isolated instances or well-publicized stories (like a factory closing or a big store opening) can lead to inaccurate assumptions about the world around us. I today’s Albuquerque Journal business section, I attempt to explain that we need to use data not anecdotes when dealing with New Mexico’s economy and overall economic health.

Letter writer Christopher Timm misunderstands the work of my Foundation and others who are concerned about New Mexico’s weak economy. He cites the fact that new businesses open in our area “all the time” as a refutation of our repeated statements that our state’s economic situation is dire.

In a state of more than 2 million people, jobs and businesses will come and go. Usually no single business opening or closing will by itself drive the economy. The question, rather, is “how does New Mexico stack up relative to other states?” On this score we don’t fare so well.

Our poverty rate is the highest in the nation according to the Census Bureau; Economic freedom (according to the Canadian Fraser Institute) is worst among the states; according to The Economist, New Mexico is the most economically-reliant state on an increasingly erratic federal government, and our state has been losing jobs year-over-year since June 2011 while states throughout the west have been adding jobs. We were also named the top “Death Spiral” state by Forbes and made it onto the list of states from which people are moving (the only western state to do so) in a recent United Van Lines report.

Most depressing is the fact that the leadership in our Legislature would rather raise the economically-harmful minimum wage and throw more money at the film industry and a broken education system than make the tough choices needed to turn our state around.

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

Although we are far apart when it comes to public policy, I’d always gotten along personally with Sen. Jerry Ortiz y Pino. Unfortunately, when someone starts spreading lies about you in a public forum, that respect can evaporate in a hurry. So it happened during the ongoing show-trial of Secretary-designate Hanna Skandera in the Senate Rules Committee on Saturday.

Go to the video and fast-forward to the 1 hour mark. After stating accurately that I am a prolific op-ed and letter writer in the local media, Ortiz y Pino falsely claims that I am making 2% off of the contract for New Mexico Connections Academy. He goes on to state that (correctly) Rio Grande Foundation won’t be running the school, but goes on to falsely claim that Connections will be running the school.

Before making false claims in a public form in order to hurt Skandera, Ortiz should have checked his facts. I would have informed the Senator that:

1) I am just one of the members of New Mexico Connections Academy’s Governing Council, nothing more, nothing less;

2) Rio Grande Foundation, the organization which I run, has no direct involvement in New Mexico Connections Academy. We have researched and philosophically support school choice and digital learning options;

3) I and my colleagues on the Governing Council are not compensated by Connections Academy or anyone else for our work;

4) The Governing Council of New Mexico Connections Academy made up of New Mexico citizens “manages” the school not our curriculum/virtual learning partner.

The mail-in election in Albuquerque is turning into a debacle with more than 10 percent of votes being thrown out due to lack of signatures. Democrats are saying “count every vote” and are naturally critical of City Clerk Amy Bailey.

Of course, we were critical of the process at the outset and recognize that voting entirely by mail is problematic and should probably be abandoned entirely.

Rather than just blindly counting every vote in what is clearly a problematic process, how about just tossing the entire election out and putting the issue on the ballot at a time when turnout might be more respectable and when voters can show up in person? Just a thought and throwing out the election seems to be no further beyond the bounds of city law than “counting every vote” in a way that clearly violates the law.

Albuquerque’s City Council has signed on with $1.5 million of taxpayer money in support of a “hub” economic development concept from Florida. On one hand, we totally understand and appreciate Mayor Berry’s efforts to do something to spur economic growth independent of the federal government in Albuquerque.

Unfortunately, we remain skeptical about the likelihood of an investment of $1.5 million of city tax money (or more as the project develops) having the kinds of impacts seen in Florida. Rather, we’d like to see New Mexico’s liberal legislators wake up and realize that Florida’s success is driven by:

1) Having no personal income tax;
2) Being a “Right to Work” state;
3) An improving education system in which reforms (instituted by leaders like Hanna Skandera with the support of legislators) have led to dramatic improvement in areas like 4th grade reading. Check Florida vs. New Mexico.

These are just a few of the biggest reasons why entrepreneurs and small businesses are likely to set up shop in Florida and not New Mexico. I don’t know if the $1.5 million that City Council allocated to this “hub” concept will be wasted or not, but chances for success would be much higher if New Mexico embraced the business-friendly policies found in Florida.

Thanks to the folks at New Mexico’s Human Services Department for the following information on how fewer and fewer workers are paying the bills for the state’s Medicaid and SCI programs. Of course, this problem will be exacerbated by the ObamaCare Medicaid expansion.

With just a few weeks left in the 2013 legislative session, the wheat is beginning to separate from the chaff among legislators in terms of pro-and anti-freedom votes in the New Mexico Legislature.

Click here to access the site.

The good news is that two bills (both of them positive in terms of freedom) have passed both houses at this point.
Under the “Index Summary” tab, you can see how many points, positive or negative, your legislator has earned so far this session;

Under the “Compare Parties” tab you can find out which of the two parties in Santa Fe are voting FOR freedom and which are voting AGAINST freedom;

The “Legislators” tab allows you to look at details of each legislator;

The “Legislator Record” allows users to see which bills are included in the analysis and whether they are pro or anti-freedom;

The “Rated Legislation” tab allows users to access analyses for each bill included in the report and better understand the ratings.

Unfortunately, not much in the way of needed reforms has passed out of either house this session to date. Fewer bills have made it through both houses.

And, so far, the following priorities have either been killed completely or are on “life support.”

No “Right to Work;”

No pro-business tax reforms;

No serious effort at deregulation;

No school choice; and

No serious education reforms;

Our tracking site called “Freedom Index” allows users to see how all members of both parties are voting on freedom issues. More importantly, users (including legislators) can find out how pro-or anti-freedom various pending bills are.

With less than two weeks left in the legislative session, a lot can happen. We’re not impressed with the lack of action on some of the big economic and educational problems facing the state, but we remain hopeful that some additional pro-freedom reforms can take place in the closing days of the session. Be sure to contact your legislators to share your views with them.