The Rio Grande Foundation hosted an incredibly well-attended luncheon 5 years ago in Albuquerque with prominent political commentator and television host John Stossel. We are excited to announce that Stossel will be returning to Albuquerque for a dinner gala on April 25, 2012. In part, he’ll be discussing his new book No, They Can’t: Why Government Fails – But Individuals Succeed

Reserve your seat today! Details on the Stossel event are available here.

I ran across this interesting report from Maine recently. The relevant information is on Table 1 which shows that New Mexico has a major private-sector tax burden differential with its neighbors:

NM is ranked 9th heaviest, Colorado is 48, Arizona is 33, Oklahoma is 31, Texas 46, and Utah, 36.

Voters in Roswell are heading to the polls now (Election Day is officially March 6) to vote on a gross receipts tax increase. The purpose of the tax will be for “economic development” as outlined in Roswell Ordinance 11- 05. Aside from that, details are somewhat unclear and analysis of exactly how raising taxes will spur economic development are lacking. It would seem that this lack of information would make the average voter skeptical about such a tax increase.

But, if that is not enough, we at the Rio Grande Foundation can add this: raising taxes on the population and business community at large in order to provide incentives and hire bureaucrats to lure businesses to town is a bad idea. It will not result in a more prosperous Roswell, but will benefit a few, favored businesses at the expense of everyone else.

Despite the abject failure of the leaders of the Democratic Party in New Mexico to enact any serious education accountability reforms or school choice, other states like Wisconsin have done so and the data are showing that school choice works.

According to the report:

Among the new findings are that students enrolled in the Milwaukee Parental Choice Program (MPCP)—the nation’s oldest private school choice program currently in operation—not only graduate from high school on time by seven percentage points more than students enrolled in Milwaukee Public Schools (MPS), but they are also more likely to enroll in a four-year college and persist in college. Tracking of both MPCP and MPS students over a four-year period reveals significantly higher achievement growth in reading for MPCP students, as well as higher levels of science achievement in upper grades.

Read the full study here.

The willingness of some in New Mexico to make excuses for why they oppose change and accountability requires mental flexibility and contortions that resemble the acrobats in the upcoming Cirque du Soleil productions (soon to hit Rio Rancho). Take for instance Michael Corwin, a flack for the Democratic Party, and his recent op-ed in the Albuquerque Journal.

He claims that Gov. Martinez and her reading accountability measures “sold out parents” by taking decisions out of their hands. That’s rich coming from a supporter of politicians that have done everything in their power to halt school choice in this state. Anyway, Corwin claims that if only Gov. Martinez had been willing to give parents the final say over whether a child moves on or not, then every thing would have been great and HB 69 would have passed.

Well, I’d certainly prefer to give parents more choices, but should parents be able to demand their 10 year old be put in 8th grade if that’s where they want him (Corwin and opponents of HB 69 seem to think this is fine)? If a non-reading 5th grader becomes a disruption to her classmates (in part because their parent(s) put her there, can the school do anything about it (Corwin and opponents of HB 69 seem to say no).

It would be great if our schools could offer true parental choice and be tailor made to student needs, but Mimi Stewart, Michael Corwin, et al don’t want this. They want parents to be able to micromanage their child’s education — undermining the authority of teachers and principles — without actually giving them a real choice over where they can send their kids to school.

According to a recent report from the Tax Foundation, New Mexico has the 16th highest combined state and federal “sales” tax. I use the parentheses advisedly knowing full well that New Mexico does not have a sales tax, but has a much more onerous gross receipts tax.

So, to say that New Mexico has the 16th-highest sales tax rate is accurate insofar as it goes, but our state taxes a lot of inputs that other states don’t tax. Gov. Martinez and the Legislature adopted some carve-outs this session, but as I wrote in this article, the gross receipts tax is a tricky tax to reform.

Instead, we’d like to see the tax restored to the low, flat, fair, “tax everything,” philosophy that could see rates as low as 3% and focus instead on reducing and/or eliminating the personal and corporate income taxes.

Yes, we at the Rio Grande Foundation have been critical of the Rail Runner in the past and want to shut it down. But, sometimes it is nice to get an outsiders perspective. In this case, I point you to this article from the Coyote Blog which is maintained by an Arizona-based blogger.

He recently visited our fair state, rode the Rail Runner, ran some numbers, and questions what the New Mexico politicians who set it up were thinking at the time.

With all of the talk about taxes and tax cuts this session, it is time for New Mexico’s elected leaders to get serious about some kind of comprehensive reforms. I explain RGF’s vision for tax reform in the Land of Enchantment over at NMPolitics.net.

The Rio Grande Foundation is pleased to announce that it is working with The Bill of Rights Institute to publicize this upcoming program.

The Bill of Rights Institute is pleased to offer 2 FULL scholarships (each a $1,500 value each) for  New Mexico students to attend the Constitutional Academy this summer. This premier program for high school students to study the Constitution will be held in Washington, D.C. July 9-14, 2012.

The program explores the Founding principles of limited government, freedom of religion, and economic liberty to name a few. While in D.C. students will explore the Capitol, Mount Vernon, the National Archives, and other sites while in D.C. and have reading discussions with college professors. For more information please visit their website at www.billofrightsinstitute.org, or contact Michelle Griffes at (703) 894-1776, ext. 15.

With all of the economic turmoil going on in the world, the terms “austerity” and “stimulus” continue to be bandied about. It is time for some understanding of these words. Winthrop Quigley recently reported on comments by an analyst from Bank of the West who argued against the US adopting “European-style austerity measures” lest they harm our economy. OK, well, if “austerity” means massive tax hikes, I agree with him, but if it means spending cuts as happened in Canada, it seems hard to argue that such “austerity” is not needed. See the chart below on Canada’s massive spending reduction:

Besides, if “stimulus” means engaging in deficit spending to stimulate the economy, the US government has been “stimulating” the economy for decades now.

By way of illustrating the wasteful nature of government “stimulus” spending (which, after all is the “whole point”), I thought this cartoon was appropriate:

Rep. Brian Egolf is among the furthest left legislators in New Mexico. He is a strong supporter of subsidies for the film industry and one of the most outspoken opponents of the oil and gas industry. He wrote an opinion piece that appeared in the Albuquerque Journal over the weekend which cited some polling data that attempted to paper over some very real issues and controversies over “conservation” and environmental policies.

One of the RGF’s most active supporters, Jim Crawford, did a thorough analysis of Egolf’s piece and the questions asked in the poll. Rather than duplicating his work, I have posted it in its entirety below:

Representative Brian Egolf’s column  presented some questionable conclusions based on a poll (linked to here) by Colorado College.

Colorado College is a progressive liberal arts college which is enough to make the poll results questionable even before examining the poll itself.

Representative Egolf is correct. CONSERVATION is not a partisan divider.  Conservation is the wise use and/or management of our resources.  Conservation is a much different concept than the tree hugging anti-use EXTREME ENVIRONMENTALISM depicted in the illustration with the column.

Even the most conservative, pro-industry, cheap energy, drill baby drill advocates are conservationists.  None among us favor wanton or wasteful destruction of resources.  Hardly anyone opposes reasonable protections. The debate has never been about conservation versus jobs but about extreme environmentalism versus jobs.

As with most polls, the devil is in the details of how questions were asked.  In the Colorado College poll, the questions were nearly all phrased in a way than nearly all of us would answer the same way.  For example, who would not agree that “Our national parks, forests, monuments, and wildlife areas are an essential part of New Mexico’s quality of life” (Q20)?

Then there are the questions like Q2 where the choices are an option that nearly everyone would agree with or one that almost nobody would agree with.  The choices were: “We can protect land and water and have a strong economy with good jobs at the same time, without having to choose one over the other. OR sometimes protections for land and water and a strong economy are in conflict and we must choose one over the other.”  We presently have strong protection for land and water, a strong economy along with good jobs. It has never been about choosing one or the other.  No wonder 80% of New Mexicans agreed with option 1.

Even more slanted are a series of questions where there are three categories of “serious problem” i.e. extremely serious, very serious, and somewhat serious.  The only other choice is “not a problem”.  Let’s face it.  There is no human use or activity that has no impact.  So again “not a problem” is not a likely option.  However, if we view the somewhat serious category as one where there may be some minor within reasonable limits, then those percentages combined with the not a problem group exceeds the combined extremely and very serious group.  A good example would be Q7 “The impact of oil and gas drilling on our land, air and water.”  In NM only 31% put this statement in the extremely or very serious category while 65% put it in the somewhat serious and not a problem categories.  New Mexicans are actually a lot less worried about these things than portrayed in Representative Egolf’s column.

Finally, Representative Egolf makes a big point about (QN2) where 71% of New Mexicans favored keeping our existing resource portfolio standards to force a certain percentage of renewable energy on our utility companies. Unfortunately, New Mexicans were never asked if they were willing to pay the $2.3 billion in increased electricity rates to achieve the standard.  The answer may have been different in that case.  There were no questions to test how much New Mexicans are willing to pay for utopian green quality of life statements.

We have all read the old adage about how figures lie and liars figure.  This poll was designed to arrive at a predetermined answer and does not deserve a lot of credibility. The most surprising thing about it is that the results were not more skewed than they are.

I was interviewed on “This week in Chaves County” on the good, the bad, and the ugly of the 2012 legislative session. Take a few minutes to listen by clicking on the first button here.

Heath Haussamen says it in a more polite manner here (and it is indeed a shame that it had to be cancer to drive Lujan from the Legislature), but House Speaker Ben Lujan embodies much of what is wrong with New Mexico politics. As discussed by Haussamen, Lujan is arguably responsible for killing the Gov.’s legislation to make sure 3rd graders who can’t read aren’t passed along through the school system to add to New Mexico’s 43% dropout rate. Lujan also prevented school choice tax credits from coming to the floor for a vote, thus protecting many of his fellow Democrats from having to vote against policy changes that is supported by 78% of New Mexicans and would provide a life line for New Mexico children who are in dire need of better educational options.

Will the heir-apparent, Ken Martinez be any better? I doubt it, but there is nothing set in stone saying he HAS to be the next house speaker.

For the next few weeks, Gov. Martinez and her staff will be going through the bills that passed both houses this legislative session (find a list of those bills here). Here are a few “off the cuff” thoughts on the end of the session:

1) The failure to pass any significant education reforms is a travesty. The Gov.’s 3rd grade reading bills failed as did the tax credit scholarship bills. The especially galling  fact about the scholarship bills (HB 166 and HB 65) both passed out of their respective House Committees, but Speaker Lujan refused to bring the Democrat-sponsored bills to the House floor for votes. Apparently, a majority in the Legislature is perfectly happy with 49th.

2) The tax cuts on the gross receipts tax that passed will help lower costs for some businesses. This is probably a good thing, but the piecemeal approach to tax reform is not ideal and will lead to increased tax complexity.

3)  Some important reforms to the PRC passed and are great news. Kudos to our friends at Think New Mexico! The series of bills will increase the qualifications for PRC commissioners, transfer the PRC’s authority over the reporting and registration of corporations to a one-stop shop for business registrations and filings at the Secretary of State’s office; and remove the PRC’s authority over insurance and reforms how Superintendents of Insurance are selected.

4) No action was taken to resolve New Mexico’s massive $10 billion unfunded pension liability. This is a real problem. Failure to act now only makes the problem worse.

I often write about the need for free market forces in our education system. The problem is that in a heavily-socialized, unionized system like K-12 education, market forces are a foreign concept.

Given this reality, it is hard to understand how good education COULD be. But, as Mark Perry points out on Jay Greene’s blog, we have myriad products available in the marketplace that have grown better and cheaper over time. Don’t believe me? Check the post.

You are invited to the following free event:
THE LIBRE INITITATIVE PRESENTS: FORUM ON ECONOMIC FREEDOM
Thursday, March 1, 2012 at 8:00 AM-1:30pm (MT)

Hotel Albuquerque at Old Town
800 Rio Grande Boulevard Northwest
Albuquerque, NM 87104

The LIBRE Initiative along with its partners seek to inform the community about how Economic Freedom is critical to our community’s Economic prosperity. Confirmed panelists and speakers include:

Jon Barela, Secretary of Economic Development
Paul Gessing, President, Rio Grande Foundation
Dennis Kintigh, New Mexico State Representative, District 57
Carla Sonntag, Presdient, New Mexico Business Coalition
Gerges Scott, Vice President, Energy Unit, DW Turner

Read more and register for free here.

We hope you can make it!

Want to know why America is in trouble? Take a look at this interactive website provided by the New York Times. It maps which counties throughout the US rely disproportionately on federal largess as a percentage of personal income.

Of course, New Mexico has more than its share of government-dependent counties, but we knew that already. The really scary thing is to click by the year (this map is from 2009) in the top right corner. Go back to 1969 and Americans are less than half as dependent on the federal government (7.8%) as they are today (17.6%).

In case you haven’t heard already, the US Supreme Court will be hearing briefs in a matter of weeks on the federal health care law colloquially known as “ObamaCare.” The Rio Grande Foundation (along with the Cato Institute, several other state and national think tanks, and a number of legislators) has signed onto an “amicus brief” relating to the “individual mandate” contained in the law.

According to the brief, the issue discussed in the brief is:

Can a limited government to whom a free people have delegated only certain enumerated powers commandeer that people into purchasing a product from a private business pursuant to its power to pass laws “necessary and proper for carrying into execution” the authority to “regulate Commerce . . . among the several States”?

For the lawyers out there and interested citizens, the full brief is available here.

Read my letter to the editor from the Business Outlook section of today’s Albuquerque Journal.

In his column on the various tax bills introduced in the 2012 legislative session Winthrop Quigley focuses on taxes, one reason that New Mexico is not economically-competitve.

However, economic policy is about more than just taxes. In terms of overall economic freedom, according to the Fraser Institute’s “Economic Freedom of North America,” New Mexico ranks 49th. Factors like work force freedom and regulations come into play in broader measures of economic freedom that are not reflected in studies of taxation. Yet their impact is very real.

Even on the issue of taxes, Bill Jordan of Voices for Children – an organization that has never met a tax hike it didn’t support – is simply wrong when he says that New Mexico usually is in the “middle of the pack.” Far more often, our tax code and tax burden places us in the bottom 10 among states.

While not a panacea, Gov. Richardson’s tax cuts did have a serious, positive, economic impact. New Mexico, a state that had been among the bottom 3-4 states in personal income saw income rise to 43rd in the nation. Yes, the broader national economy wiped out jobs everywhere, but New Mexico is better off than it was before.

Regardless who is right on the issue of whether taxes should be cut and how, passage of a “Right to Work” law as was just done in Indiana would be a no-cost way to make New Mexico more economically-competitive. I eagerly wait the day when Quigley and Voices for Children support such proven job creation measures.

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

There has been a much needed discussion of government pension plans in the Albuquerque Journal and in the Legislature. Brad Day, a member of the Education Retirement Board, had a column here. Someone who disagreed with Day wrote his thoughts up here. Rob Nikolewski at Capitol Report has an even more thorough discussion with Day available here. The New Mexico Senate has passed SB 150 which would make several modest changes to the ERB’s pensions. Unfortunately, it seems unlikely that this bill will pass out of the House in the short time still left this session.

Rather than re-hashing Day’s comments, I want to rebut the rebuttal to his remarks point by point. That’s because it is a fact that New Mexico’s pensions are unsustainable. Day gets it while his rhetorical opponent does not.

First point: “Social Security is not a Ponzi scheme. Instead, Social Security the world’s longest-lived Ponzi scheme: self-funded and faithfully paying benefits as promised since the 1930s!” Yes, it is. In fact, Social Security is worse than a Ponzi Scheme as no one is forced to pay into a Ponzi Scheme whereas they are forced to pay into Social Security. Really big Ponzi Schemes like Social Security take a long time to run out of money. It has a $9.2 trillion unfunded liability.

Secondly, he writes that “the ERB has $9 billion in assets that are invested.” That may be true and $9 billion is a lot of money for you or me, but if liabilities are even bigger (which they are), the system can still be insolvent.

Lastly, the author states “The 9.4 percent ERB employee contribution is actually higher than the typical 7 percent that private-sector employees contribute to their 401(k) plans.” So what? Government pensions are far more generous than the retirement plans offered in the private sector (not to mention their guaranteed nature which puts all the risk on taxpayers).

The fact is that even SB 150, if it passed, would not be adequate to make New Mexico’s pensions truly solvent. Further changes, as outlined here are needed.

Before the legislative session got started, I sat down with Fred Martino with Las Cruces Public Television to discuss education policy in the 2012 legislative session. While it appears that many of our (and the Gov’s) education proposals are not going to pass this session, we are going to continue to push for reform because 49th is not good enough. The interview is about 30 minutes in length.

Should I be able to waive my rights to sue somebody if I engage in an obviously-risky behavior? It would seem obvious that one should be able to do so (particularly if they are paying $200,000 for the privilege) , but I’m not a trial lawyer (thank God!). Also, in case you missed it, we at the Rio Grande Foundation aren’t huge fans of the Spaceport.

Nonetheless, we do hope the Spaceport succeeds (as best it can) as taxpayers have spent upwards of $200 million on it already. So, it is shocking, but perhaps not surprising, that the trial lawyers have convinced so many legislators to oppose efforts to protect those who will be providing space flights out of the New Mexico Spaceport from legal action. After all, there is already talk of a “Spaceport Glut.” Do opponents of liability protection really think Richard Branson and his buddies are stupid enough to come to New Mexico if they can go elsewhere and not be exposed to these lawsuits?

In case you missed it, New Mexico was the only of 11 states to have been denied a waiver by Obama’s Department of Education under No Child Left Behind. Winston Brooks is “embarrassed” by this.

And, if you’ve been to the Roundhouse or follow education policy in this state, you’d know that APS is just one of many school districts in this state that has lobbied hard against serious education reform. Of course, many of these reforms are the very things that the Obama Administration has been looking for in order to decide if a state is serious enough about reform in order to receive the waiver in the first place.

So, you fight reform and then you cast blame on others when Obama’s Administration doesn’t see enough reform. Pretty embarrassing, I’d say. The solution? Ban publicly-funded agencies like APS from hiring lobbyists or cut their budget until they fire them all.

If you watched the Super Bowl, you probably saw this ad with Clint Eastwood which has caused some controversy. The folks at Reason have come up with a more realistic parody ad: