Check out this new one-page report from the Rio Grande Foundation detailing potential job-loss scenarios if the minimum wage hike ballot measure passes in Albuquerque.

Jon Barela and the Economic Development Department have rolled out their legislative agenda for the 2013 legislative session and, presumably beyond. There is a lot of good here and we hope the Legislature will act on several of the proposals. There are plenty of other economic development ideas that could/should be considered and there are also some ideas that we’d question the merits of. First, the proposal includes the following (explanatory links have been provided):

—Single Sales Factor
—Corporate Income Tax Reduction
—Local Economic Development Act (LEDA) – $10 million
—Job Training Incentive Program (JTIP) – $4.75 million
—Capital Outlay Reform
—Spaceport Informed Consent
—MainStreet Investment

Simply put, corporate income tax reforms and reductions are great ideas and long-overdo as are the legal protections needed for the Spaceport (although it is doubtful that the Spaceport could ever be a building block of NM’s overall economy). We also support and have supported in the past, reforms to New Mexico’s capital outlay system.

Unfortunately, JTIP, LEDA, and Main Street all represent bad tax and economic development policies. They are narrowly-targeted (as opposed to broad-based) and involve government taxing productive economic activities and shifting funds to other, less-productive uses. See our 2011 Piglet Book for details as the MainStreet and JTIP programs are prominently mentioned. LEDA became a center of controversy relating to subsidies for a big-box store in the South Valley. It may not be quite as problematic as the other two programs, but with government managing the process and targeting taxpayer dollars, it still defies the principles of good tax policy.

Some policies we’d like to see mentioned include: “Right to Work,” the adoption of regulatory cost-benefit legislation like that adopted recently in Indiana, and adoption of market, not “prevailing” wages for government construction projects in New Mexico. There are several other policy changes that could be adopted by the Legislature to spur economic growth, but these are just a few of the big ones.

Leave it up to Bill Richardson and New Mexico’s government to construct a fancy $200+ million taxpayer-financed Spaceport without making sure that New Mexico’s laws are in order to make the project a success. Richard Branson recently stated that he has “quit counting the days” to first launch and that it is at least “12-18 months away,” an eternity in the business world. In other words, “who knows” if and when Virgin Galactic will truly use Spaceport America as a launch site, thus, hopefully spurring economic growth in southern New Mexico?

Interestingly, back in 2009, Virgin was saying “18 months” to launch. While this is starting to feel a bit like Lucy and the football, it is hard to blame Virgin for wanting to have liability protections in place for parts suppliers. Of course, they knew at the outset that New Mexico’s legal climate was close to that of a third world country, that we have high taxes, high crime, and bad schools, but they had nothing to lose since New Mexico taxpayers were on the hook for the project anyway.

A note to state policymakers: before blowing taxpayer dollars on speculative ventures like spaceports, let’s get the basics of good government under control. Let’s reform our legal and criminal justice systems, reduce tax burdens on businesses and entrepreneurs, and improve our schools. Until we do the basics, the success of ventures like the Spaceport are just a mirage.

I responded to some recent statements on energy subsidies made by NM Sen. Jeff Bingaman in a recent article in the “Business Journal.” As this is an online format, I have taken the liberty of adding the link to information from the Energy Information Administration by way of a footnote. See my letter below:

Letters to the Editor
Albuquerque Business Journal

In reading the recent article regarding the “renewable” industry’s pleas for ongoing subsidies for their businesses, Sen. Jeff Bingaman’s statement that “the tax code has become intrinsically lopsided against renewables in favor of fossil fuels” jumped out at me.

If not an outright lie, Bingman’s statement is at very least entirely inaccurate. According to data from the Energy Information Administration, Coal receives subsidies of about 6/100ths of a cent per kWh while solar receives an enormous 96.8 cents per kWh. Wind receives 5.25 cents per kWh and nuclear receives just under 1/3 of a cent per kWh.

In other words, wind receives 87.5 times the subsidy that coal and natural gas receive while solar receives an astounding 1,600 times the subsidy of coal and gas. To say that the tax code has become lopsided would be an accurate statement on Bingaman’s part only if he stated that it was lopsided in favor of politically-favored “renewables.”

Of course, their advocates will claim that wind and solar have fewer “externalities” in the form of pollution, but wind and solar require backup (usually natural gas) and even with the addition of expensive carbon sequestration technologies, both coal and gas are far cheaper and more reliable than so-called “renewables.”

Sen. Bingaman should correct his misstatement and Congress should recognize that energy subsidies of any kind are a fool’s bargain.

Paul Gessing will be on the Terri Q. Sayre show on 770 KKOB from 8:30am to 10am discussing the Albuquerque minimum wage issue.  Call in!

It is hard to believe that you can be too liberal and too supportive of big labor and more costly government for extremely liberal Santa Fe, New Mexico, but that may be the case. The Santa Fe City Council will vote next week on repealing an ordinance giving labor unions control over large taxpayer funded construction projects.

Earlier this year, Santa Fe Mayor Coss was able to get enough Santa Fe City Council members to agree and pass something called a Construction Workforce Agreement (CWA).  It is an ordinance that discriminates against 96% of New Mexico’s construction workforce who chose not to join a labor union.  The ordinance requires contractors on most Santa Fe public works projects to have CWAs (read union contracts) in place.

A number of city councilors have agreed to re-visit the issue on Tuesday, October 30.  Elected officials will respond to the voice of those who have the power to vote – but they need to hear from you!   Read more from the New Mexico Business Coalition on why this ordinance should be stopped.

The Rio Grande Foundation urges you, if you live in Santa Fe, to contact the City Council and ask them to repeal this ordinance.

HT: New Mexico Business Coalition

I discuss the major issues on the 2012 election ballot with Mike Jaxson of KSVP Radio in Artesia. You can tune in here.

Last evening, US Senate candidate Martin Heinrich had an event with US Sen. John Kerry. Rob Nikolewski who happens to work for the Rio Grande Foundation, but runs Capitol Report New Mexico, received an invitation to the event as did several other media outlets. Rob attempted to go to the event to cover it, but was denied access by Heinrich’s staffers.

Read the full story and see video of the encounter here. As Rob points out in his story, he has covered Heinrich as a Representative and as a candidate many times over the years and has always treated him fairly. I’m not sure what Sen. Kerry was going to say that was so mind-blowing or controversial, but it certainly makes the campaign look like they have something to hide.

According to a new report from the Friedman Foundation for Educational Choice, government school populations are slowly increasing while administrative and teacher hiring has exploded. According to the report:

Between FY 1992 and FY 2009, the number of K-12 public school students nationwide grew 17 percent while the number of full-time equivalent school employees increased 39 percent, 2.3 times greater than the increase in students over that 18-year period. Among school personnel, teachers’ staffing numbers rose 32 percent while administrators and other staff experienced growth of 46 percent; the growth in the number of administrators and other staff was 2.7 times that of students.

New Mexico’s bloat was even more extreme than the rest of the nation due in large part to its slow-growing student population which rose at 7 percent, less-than half the national average, while hiring kept pace with national trends.

Meanwhile, total school personnel in New Mexico increased 39 percent, teacher hiring rose at the slightly lower rate of 30 percent, and administrators and other staff grew by an astonishing 47 percent.

Check out the interactive map associated with this report here. Note that the bloat affecting New Mexico has not happened in many other states, including neighboring Arizona.

This story from Capitol Report New Mexico explains how the Public Employee Retirement Association (PERA) saw its unfunded liabilities jump by an astonishing $1.2 billion over the last year alone. That jump means the unfunded liability has risen from $5 billion to $6.2 billion. In the last three years alone, the unfunded liability has nearly tripled (it was $2.3 billion in mid-2009). But that’s not the worst of it.

The situation has deteriorated despite relatively strong performance in the stock market this year (the S&P 500, for example, returned nearly 15% over the past 12 months). That rate of return exceeds even the optimistic 8 percent rate assumed by New Mexico’s pension funds, so after a number of down years, things should have started looking up, not further down.

Of course, there are options for real reform, but they won’t be as popular as the milquetoast “reforms” the Legislature will be considering during the 2013 session.

As RGF experts J. Scott Moody and Wendy P. Warcholik, Ph.D wrote in a paper on needed pension reforms a few years ago, the solutions needed are:

Step 1—Fix the Public Sector Over-Employment Problem
Step 2—Transform Defined Benefit System into a Defined Contribution System
Step 3—Continue to Increase Employee/Retiree Contributions to the Retiree Healthcare System
Step 4—Expand the Private Sector

Once the election is over, Medicaid expansion and whether New Mexico should accept the federal government’s bribe, er, “support” to massively expand Medicaid. Of course, the results of the election could have an impact on whether New Mexico legislators are inclined to follow the diktats of ObamaCare and whether the president and Congress intend to keep the program in place.

John Goodman of the National Center for Policy Analysis discusses New York Times columnist Paul Krugman and his clueless statements/outright lies on Medicaid and health care in general.

In a separate brief, the Heritage Foundation outlines potential scenarios under the new health care law and how much it is likely to cost taxpayers at the federal level and in the individual states. According to the analysis, New Mexico will spend at least $330 million more on Medicaid under ObamaCare from 2014-2022.

The National Taxpayers Union has released its ballot guide for issues and amendments. Check the New Mexico version out here. The full report with ballot measures for the other 49 states is available here. Share it with your friends, family members, and others in search of information on ballot measures in their state.

This is short, entertaining video showing just some of the miseries of a world without capitalism and free markets.

The fact that New Mexico’s education system is in dire need of reform is not lost on citizens of our state. Recent polling found that 75 percent support the simple act of holding back third graders who can’t read.

This is good news! People clearly want to see reform — and our children deserve the best education possible for them.

While eliminating the social promotion of third-graders who cannot read would be a good start for the Legislature next session, we need to use all the tools at our disposal to ensure that kids can read and their schools are successfully teaching them to do so.

Hopefully, voters focus on this issue in the upcoming election and weigh support for such modest education reforms in deciding who they wish to represent their interests in Santa Fe.

The reality is that banning third-grade social promotion is not enough to improve our schools. In fact, no single education reform is going to solve the problems that have been with us for generations.

One reform that is sweeping the nation — but is being hindered here in New Mexico — is the fast-growing virtual/digital learning model.

Why is New Mexico, once again, falling behind in education?

We do have the state’s first full-time virtual charter school up and running in Farmington because an innovative school district saw the possibility of virtual education. But, New Mexico Connections Academy, a proposed full-time, statewide public virtual school that applied for another charter for the 2013-2014 school years, was denied on a 6-3 vote by the Public Education Commission.

Despite strong interest from parents, a thorough application, committed volunteer board, and no opposition voiced at a public meeting, the PEC turned down the New Mexico Connections Aca-demy charter application.

The application is now on appeal to Education Secretary-designate Skandera.

There are countless examples of how technology has positively impacted virtually every aspect of our lives. It is only now getting started in truly changing education.

The PEC’s decision was based in part on a Richardson-era legal opinion that questioned the legality of “virtual” charters. With such a mind-set, it is a wonder that New Mexico students are not forced to use only an abacus to learn math, or a wax tablet to learn how to write.

Michael O’Leary is an adjunct scholar with New Mexico’s Rio Grande Foundation, a limited government proponent.

Why do conservatives and libertarians tend to support markets over “democracy?” The following video provides a strong justification for that view:

While the ignorance and willingness to just make stuff up on the part of these people may seem reprehensible to some, the reality is that it is a direct result of “rational ignorance.” That is, given their likely minimal impact on the outcome of a given election, most people don’t pay that close attention to the issues. That is why “democracy” is inherently flawed. Interestingly, I’d say the interviewees are likely voters because they cared enough to lie about having seen the debate. A truly ignorant person would flat-out say “what debate?” and not really care. These people were trying to put up a front of being “good citizens.”

Free markets, on the other hand, create incentives (financial ones being preeminent) for all parties to become informed. And, even if you don’t understand all of the inner workings of an automobile (as I don’t), it is relatively easy to pick up a copy of Consumer Reports and find out what the experts say or rely on the power of market forces that kill off inferior products while boosting superior ones.

While politicians make promises that may or may not be kept, there are some issues on this fall’s ballot that voters have direct control over. One such issue is whether the City of Albuquerque should meddle further with the wages paid by local businesses. Check out the new advertisement below:

While much of the attention this November has been focused on the presidential races and the race for Congress, it is worth keeping a few facts in mind as you head out to vote in early voting (which begins this Saturday, October 20).

New Mexico’s Legislature makes a vast majority of the economic development and educational policies in the state. According to the US Census Bureau, our state has the highest poverty rate in the nation. According to Diplomas Count, New Mexico has the 2nd-lowest graduation rate in the nation. The New Mexico Legislature has been a monopoly for decades, with one party having controlled New Mexico’s House since the first-term of US President Dwight D. Eisenhower.

Bonds may not raise taxes, but they do cost real money that could otherwise remain in your pockets. If a project is indeed a priority like the Paseo del Norte Interchange, by all means vote for it, but also realize that higher education in New Mexico is bloated and recently handed out a $453,093 parting gift to departing NMSU President Barbara Couture.

According to the US Chamber of Commerce, New Mexico has one of the worst legal climates in America (44th). New Mexico’s judiciary is ripe for new blood.

New Mexico’s Public Regulation Commission is extremely powerful and scandal-plagued. Reforms on the ballot are modest, but should be considered a starting point for more dramatic reforms.

Lastly, there is no such thing as a “free lunch.” Leftists who support raising the minimum wage (as is on the ballot in Albuquerque) claim that mandating a higher wage for low-income employees will create jobs and wealth. What they don’t say is where the money will come from. Will it be manifest out of thin air? (that seems to be their prevailing theory); or, will it come as a result of price increases, increased automation, or staff reductions elsewhere? They don’t want to acknowledge these, far more likely, possibilities.

Keep these facts in mind as you head to the polls. Oh, and don’t keep this knowledge to yourself. Send this information to your friends and family. They’ll thank you for sharing factual information as opposed to rhetoric.

If you didn’t see it, the new study from the Employment Policies Institute that I blogged about yesterday really explains why laws mandating increased minimum wages are unwise. Here are some specific details on unemployment for 16-24 year olds (August 2012 data) that further bolster the case against higher mandated wages:

Albuquerque’s unemployment rate for 16-24 year olds: 8.8%
Santa Fe’s unemployment rate for 16-24 year olds: 21.9%
National unemployment rate for 16-24 year olds: 16.5%

Clearly, the job market for young people, the group primarily impacted by minimum wages, is far better in Albuquerque than it is in Santa Fe, despite the “City Different’s” low overall unemployment rate. Santa Fe’s highest-in-the-nation minimum wage hurts those it is supposed to help. Albuquerque should not follow Santa Fe’s path to economic self-destruction.

(Albuquerque) The Laffer Center for Supply-Side Economics at the Texas Public Policy Foundation has joined Rio Grande Foundation to publish a recent analysis of income taxes at the state level. The study, “Taxes Really Do Matter: Look at the States” authored by Dr. Arthur B. Laffer, a former advisor to President Ronald Reagan, and Stephen Moore, senior economics writer for the Wall Street Journal, debunks recent research by the Institute for Taxation and Economic Policy (ITEP), a group that advocates for state level income taxes.

In the report, Laffer and Moore found that in any ten-year period, the no-income tax states – Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming – consistently outperform the equivalent number of the highest income tax states – Oregon, Hawaii, New Jersey, California, New York, Vermont, Maryland, Maine and Ohio. No-income-tax states experienced a 14 percent population growth versus only 5.5 percent of the highest income tax states. Similarly, job growth in the no-income tax states was 5.5 percent while -1.6 percent in the highest tax states.

“The California/Texas comparison is especially interesting as California has one of the highest income tax rates at 10.3 percent and Texas has no income tax,” said Laffer. “Over the ten-year period studied, Texas gained nearly 870,000 transplants from other states while California lost over 1.5 million residents.”

“New Mexico provides further evidence for the Laffer/Moore thesis on the reduction or elimination of personal income taxes, said Rio Grande Foundation president Paul Gessing. “The top rate was reduced from 8.2 percent to 4.9 percent during the Richardson Administration which spurred economic growth, at least relative to other states.”

The data clearly shows that Americans are moving out of low tax states and moving away from high tax states and taking their incomes along with them. “You can’t tax an economy into prosperity,” said Laffer.

The Laffer Center for Supply-Side Economics is a partnership with the Texas Public Policy Foundation dedicated to preserving and promoting the core tenets of supply-side economics.

Laffer Center website: http://www.laffercenter.com/

Facebook page: www.Facebook.com/TheLafferCenter

Twitter feed: www.Twitter.com/LafferCenter

WASHINGTON – Today, the Employment Policies Institute (EPI) released a new study authored by University of Kentucky economist Aaron Yelowitz, which examines the impact of citywide compensation floors in cities like San Francisco. The study finds that (all else being equal) each additional $1 in wage and benefit mandates reduces young adults’ labor force participation by roughly two percentage points, increases unemployment by 4.5 percentage points, and causes a 26-hour reduction in annual hours worked.

In the City of Albuquerque, which is currently considering an initiative to create a $8.50 per hour minimum wage, similar employment consequences from a wage mandate are expected.

The full study and executive summary are available here

Progressive researchers have long insisted that San Francisco’s highest-in-the-nation compensation floor (including a soon-to-be $10.55 minimum wage, mandatory heath care coverage, and paid sick leave requirements) has had no negative impact on employment. However, by closely examining Census Bureau data from San Francisco and similar cities around the country, Dr. Yelowitz demonstrates that increasing compensation floors causes significant harm to the employment prospects of young adults.

“San Francisco might consider itself a unique progressive outpost where the laws of economics don’t apply, but this study’s results suggest otherwise,” said EPI research fellow Michael Saltsman. “The evidence is clear—labor and wage mandates create job losses, particularly for the least-skilled job seekers.”

Advocates for a higher minimum wage—such as those currently campaigning for an increase in Albuquerque– rely on a handful of outlying studies to make the case that a higher minimum wage has no effect on employment. Yet according to economists at the University of California-Irvine and the Federal Reserve Board, 85 percent of the most credible studies on the subject from the last two decades point to job loss following an increase in the minimum wage.

“Albuquerque voters are currently deciding whether to follow San Francisco down the path of onerous employer mandates,” Saltsman concluded.” They should think twice before adopting a policy that will eliminate jobs for the city’s most vulnerable jobseekers.”

The Rio Grande Foundation has been involved in ongoing discussions over whether or not to expand UNM Hospital. Over the weekend, the new President of UNM had an article in the Albuquerque Journal outlining why he believes the hospital expansion is needed.

Color me unimpressed. Rather than basing his arguments on the supposed shortage of hospital beds and the need for the hospital to build yet another hospital in order to serve the community, Frank chooses to focus on the supposed economic impact and “multiplier” impact of the hospital’s construction. To say the least, this is an argument that we take issue with. Frank’s argument is straight out of the Keynesian economic cookbook which becomes more discredited as every day goes by. After all, is it really more beneficial to the overall economy to tax people to the tune of $146 million to build a hospital or to leave that $146 million in the pockets of average citizens. You may see the hospital, but what is left unseen is what average citizens would do with the money if left to their own devices. Of course, advocates of bigger government always side with higher taxes and more spending.

As the New Mexico Board of Finance considers this hospital expansion, it needs to base its decision on whether the expansion is the highest and best use of taxpayer dollars, not some discredited economic theory that would just as soon allocate resources to fight off an alien attack.

What is Austrian economics? Who is responsible for the economic crisis? Should America adopt the Gold Standard? Tom Woods discusses these issues and more:

Tom Woods from Paul Gessing on Vimeo.

I recently participated in a policy symposium on the American family that was organized by the free market think tank Center of the American Experiment. The entire document can be found here and here. With more than half of New Mexico births coming outside of wedlock, the issue of the family is not one that free market conservatives and even libertarians can ignore.

Check out this exciting video which details the myriad benefits of digital learning:

ollie-riogrande from Paul Gessing on Vimeo.