New Mexico has a renewable portfolio standard (RPS) that mandates that so-called “renewable” sources account for 10 percent of all power generated by 2011; 15 percent for 2015; and 20 percent for 2020 and thereafter. While environmentalists would have us believe that these government regulations will create jobs and spur economic growth, the real story is far different. According to a new study commissioned by the American Tradition Institute and the Rio Grande Foundation finds that New Mexicans will pay $2.3 billion more for electricity than they otherwise would because of the RPS. The new study can be found here.

A “quick findings” page can be found here.

I have been writing quite a bit recently on the ever-increasing amount of money New Mexico taxpayers spend on K-12 education. My column on the issue is now posted at Heath Haussamen’s site.

Albuquerque Journal Business journalist Winthrop Quigley recently wrote about American health care. The theme of the article is basically that there are often unintended consequences when it comes to changing health care laws.

Quigley also relied on a GAO report that attacked health savings accounts for being targeted at the wealthy when this study was flawed and other studies have shown that health savings accounts are attractive for everyone, not just the rich.

I responded with a letter to the editor that appeared in the paper on Monday and is found below:

Winthrop Quigley is absolutely right that policy decisions – even ostensibly pro-market ones – made in Washington, DC, often have unintended consequences. Nowhere is this clearer than in the area of health care where policies are adopted on top of policies, often with contradictory results.

Unraveling this mess of policies will take political will and humility, two things that are in very short supply in Washington, but things will move in a better direction if certain principles are followed including:

• Not all wisdom comes from Washington. Let the 50 “laboratories of democracy” tackle the health care issue their own way;
• Spending on health care programs – including Medicare and Medicaid — should be managed at the state level. The block grant model worked in the 1990s with welfare reform, it could work again;
• Better decisions and greater efficiency will result from putting health care dollars back in the hands of patients and consumers, not governments and insurance companies.

The aforementioned principles have been ignored by Democrats and Republicans alike, leading to our current mess. President Obama’s health care law, like Bush’s massive Medicare prescription drug bill, centralized decision-making and has led (or will lead) to massive deficits and inefficient delivery of health care services.

We can and must do better in health care for our own health and for the fiscal health of the nation.

In case you missed it, the Albuquerque Journal had a friendly editorial in Saturday’s paper in support of Sen. Fischmann’s (D-Mesilla Park) legislation, SB 52, that requires public records that exist in an electronic format be provided that way if the person requesting them agrees. The legislation passed the Senate unanimously and is in the House.

The editorial noted that we at the Rio Grande Foundation traveled to Deming to obtain public records that the district possessed in an electronic format. Rather than simply giving us the information in that format as we requested, we were forced to accept printouts and scan them back in to an electronic format. Fischmann’s legislation would change that and we applaud him for that. Hopefully the House supports the effort.

Was I the only one who was repulsed by the fact that Al Sharpton was asked to speak to the New Mexico Legislature recently for “African-American Day?” Aside from the fact that he is a proven liar, Sharpton is an extreme liberal who used his speech to the Legislature to “boost public education (read more spending) and shield governmental workers from ‘unfair’ budget cuts.”

While I suppose that the lefties should have their moment in the sun, I think it would only be fair to have a principled, black advocate of free markets and limited government out for the next “African-American Day.” May I suggest Walter Williams, Deroy Murdock, or entrepreneur Herman Cain. We at the Rio Grande Foundation would be happy to work with legislators in their future endeavors to ensure that more perspectives than that of the extreme left wing of the black community are presented.

County Commissioner Michael Weiner is proposing that Bernalillo County purchase the County Line Restaurant and turn it into a community center due to disagreements over noise from outside musical performances.

Weiner’s is a bad idea for many reasons. Most importantly, while I don’t know how how much the County Line pays in taxes, it is a taxpayer. I’ll bet a decent amount of the money spent at the place is from tourists who want a bite to eat after visiting the Tram. Noise issues can be difficult to resolve because they involve two sets of conflicting property rights, but I think that as long as the noise is kept to reasonable levels and is not done late into the night, deference should be given.

The bigger issue is that New Mexico needs every private sector job it can get. Using taxpayer money to close down a restaurant and put a community center in is a bad idea. The neighbors need to sit down directly with the restaurant management to work something out.

We at the Rio Grande Foundation pretty much focus our attention on New Mexico. But, New Mexico taxpayers pay federal taxes and that means that we pay for the billions of dollars the federal government sends overseas in the form of so-called “foreign aid.”

Foreign aid is both ineffective and immoral because we are using government force to transfer money from US taxpayers to foreign despots. With all that is going on in Egypt right now, it is readily apparent that the $1.5 billion the US is sending to the country is not being used for the benefit of that nation’s people, but to keep a corrupt regime in place.

Sen. Rand Paul is one of the few people in Washington who is serious about eliminating the budget deficit and putting the federal government on a sound fiscal footing. He says that we should eliminate all foreign aid. I think he’s right.

Sen. Tim Jennings made front page news this morning with his proposal that cities chip in to pay a portion of the costs for the New Mexico film industry’s subsidies which totaled $65 million last year. From a tax policy perspective, this proposal makes a lot of sense.

Simply put, the state’s General Fund bears the whole price tag of the subsidies currently. According to the Film Office’s own numbers, this program generated $600 million, which, as an aside, when taxed at the 5% state GRT rate or the 4.9% personal income tax rate, generated approximately $30 million in taxes. Thus, the program is a money-loser.

Nonetheless, you may have noticed that I did not include the city portions of the GRT in this calculation. Regardless of how much the film industry actually generates in tax revenue, since local governments pay nothing for the film industry, they are getting a free ride at the moment.

It only makes sense that the cities that benefit from this program, primarily Albuquerque and Santa Fe which have benefited disproportionately from the subsidies. Of course, as the article notes, the financially-strapped cities are not exactly jumping on the bandwagon to support this industry that is supposedly so important to their economies. While I have no knowledge of Jennings’ actual reasoning for this effort, I think that actually asking the various entities — whether they be cities or the industries that benefit from the film program — chip in a significant amount, will show just how deep the support for this program really is.

I usually don’t write about things for which I don’t have all the facts, but I think the recent problems involving the loss of natural gas service throughout many areas of New Mexico and the subsequent backlash is one topic that demands some speculation.

Before getting into this, it is important to note that politicians are the first to cry “foul” when instances of “price gouging” come to light. Price gouging simply involves raising the price of a specific good when supplies are extremely tight. While this may sound cruel, it also signals that distribution of the limited good should be allocated to those who are most willing to pay for it.

The problem for New Mexico gas is that there is currently no way to price gas in a time and supply sensitive way. It is all handled through the PRC.

But what if customers had the benefit of real-time pricing data? Once that meter started to jump, customers could have drastically cut back on usage. My family, hearing of the shortages, made sure to start a nice, hot fire in the fire place. Could more New Mexicans have done this if pricing signals encouraged them to do so? At this point, all we can do is speculate.

However, the technology for real-time pricing is available. In a free market (admittedly this is somewhat difficult in the utility sector, but I believe it can be done or we can at least move toward it), utilities would have a strong incentive to increase usage at off-peak times and reduce usage at peak times. Pricing is the best mechanism for doing this.

I have written a great deal this week about annual spending on public education in New Mexico. Read here and here.

APS Board Chairman Martin Esquivel attacked RGF as “right wing,” etc. for citing Census data claiming that per-pupil spending in NM is $9,000 annually. Esquivel strongly denied that and cited numbers approximating $3,000 annually. Well, the good news is that we have firm data on what APS spends. And, to put it nicely, APS spends way MORE than the $9,000 annually put out by the Census Bureau.

According to the APS website, the total budget for the district this year is $1.3 billion. Also according to APS figures, the district educates 89,500 students. From there it is simple math. How do the numbers shake out? It turns out that APS actually spends a remarkable $14,525 annually per-pupil.

As Adam Schaeffer of the Cato Institute points out in his recent report on education spending, APS is not alone in attempting to obfuscate how much it really spends on education. If Esquivel is so concerned about a 500 student school that is making due with “only” one principal, the issue is in mis-allocation of resources, not a lack of resources.

President Obama just doesn’t seem to understand that the nation is in dire straits in terms of fiscal policy and that government make-work projects are not the way to get our economy going.

The president released his $53 billion plan for so-called “high-speed” rail although the top speeds of the trains would be nowhere near the speeds of near 200 mph reached by European high speed trains. Transportation analyst Randal O’Toole has previously debunked Obama’s boondoggle for the Rio Grande Foundation.

Oh, and to all you rail fans out there who think this is a great idea, remember that these trains would be funded out of “General Fund” dollars (more debt from China) while our roads are paid for (by and large) by the people who use them in the form of gas taxes and other user-fees. I’d love to see the federal government get out of the road funding business and leave it to the states and/or private companies, but the fact is that roads mostly pay for themselves while these trains will be budgetary black holes.

In case you missed it, on the 10pm newscast last night, Channel 7 KOAT did a great story on our report on rising education spending in New Mexico.

APS Board president Martin Esquivel made my day by attacking me and the Rio Grande Foundation personally. He also offered his own half-baked data on per-pupil spending (as you can see halfway through the story). The data would seem to indicate that per-pupil spending for APS is in the $3,000 range annually.

This is ridiculous. As the National Center for Education Statistics points out, nationwide spending per-pupil is close to $10,000 annually. For our study, I got the data directly from the US Census Bureau. According to the chart on page xiii of this report, New Mexico spent $9,068 per-pupil back in 2008. No state spent less than $5,765 per-pupil. There is no way that APS is spending one-third of the state average on education.

Where is Esquivel getting his data? Who knows? They are not exactly known for their transparency.

The simple fact is that the schools should not be immune to cuts, but massive reforms are needed to increase transparency and improve accountability and performance.

With the Legislature facing a budget deficit during the current legislative session and K-12 education facing at least minor cuts, many in the education establishment are saying that education spending is declining or that the schools have been “cut to the bone.”

Dr. Jose Armas of the Latino/Hispano Education Improvement Task Force recently wrote in the Albuquerque Journal about these supposed cuts saying “Let’s dispel the myth that we’re throwing money at education. New Mexico has been steadily cutting education budgets for decades.”

In an effort to replace empty rhetoric with actual data, we at the Rio Grande Foundation took a close look at the United States Census “Public Education Finances” report which has tracked education spending by state since the 1991-1992 school years. This data clearly shows that per-pupil education spending in New Mexico has risen dramatically over the past two decades. A chart detailing this dramatic rise can be found below. The full report including chart is available here.

Allen Sanchez wrote in Sunday’s Albuquerque Journal about the need for New Mexico to invest in early education. His plan is to use permanent fund dollars (as opposed to General Fund money) to pay for the plan. Unlike many fiscal conservatives, I don’t hold the permanent fund to be sacrosanct (if we used the fund to eliminate New Mexico’s personal income tax, I’d be all for it), so that is not my disagreement with Sanchez.

My real issue is with the supposed effectiveness of early childhood education. Perhaps it can be done right, but it is well-documented that the largest such program (Head Start) is a miserable failure.

Rather than expanding New Mexico’s failing educational system even more, policymakers need to focus on turning around the existing system. Interestingly enough, we at the Rio Grande Foundation have worked with Sanchez on the issue of school choice and reforming the current system, but they have (again) chosen to focus attention on other issues.

Regardless of what you think of early childhood education, the fact is that if our K-12 system is not improved dramatically and immediately, having really prepared 5 year olds is just not going to do much.

Rio Grande Foundation president Paul Gessing appeared on “In Focus” on Friday night to discuss New Mexico’s film subsidies. Mr. Walpole unfortunately got away with a fib at the very end of the interview. We do indeed know exactly how much other tax incentives are reducing tax revenue to the state. That data is available here (provided by the Tax and Revenue Department).

In case you missed it, Channel 13’s Larry Barker did an excellent report last night on the boondoggle that is New Mexico’s Supercomputer. View the full report below:

NM super computer: Cash in, trouble out: krqe.com

The good news is that Gov. Martinez has pledged to sell this “White Elephant.” We at the Rio Grande Foundation pointed out this wasteful boondoggle in our 2008 Piglet Book which can be found here.

SR Larson is an economist from Wyoming. He has a few interesting things to say here about the budget battle and developments in New Mexico’s budget.

For those who are interested in the NASBO report on state spending, a direct link can be found here.

The Albuquerque Journal recently profiled the various legislators that have proposed specific legislation relating to government pensions. Unfortunately, as this subsequent editorial explains, none of the plans, even if they were all passed, would actually solve the problem.

The editorial cites Utah as one state that has replaced a defined benefit plan with a defined contribution plan. This is exactly what needs to happen here in New Mexico, immediately. Even that step does not completely solve the problem as we need to raise the retirement age, reduce benefits, and up contributions for existing retirees.

None of this will be easy or popular, but New Mexico’s pension problem is 3rd-worst in the country. As Scott Moody has pointed out in his work on behalf of the Rio Grande Foundation, the pension problem is bigger than policymakers and the media realize, so aggressive steps are necessary.

So far, no one in the Legislature seems to be willing to address the issue.

There are some people in jail in this country for some pretty silly things, but I think this story might take the cake. Going to jail for attempting to send your kids to a better school is quite simply absurd.

Of course, it makes no sense whatsoever to draw arbitrary lines on a map and then make kids go to their “neighborhood school,” but that is the way we do things in this country. Of course, this woman is just one of many who would like better schools for their kids, but our current, socialized educational system still manages to have wide gaps between rich and poor. Hopefully New Mexico policymakers will embark upon ambitious reforms during the 2011 legislative session, including some robust school choice programs like tax credits.

There is an excellent opinion piece in today’s Albuquerque Journal regarding the way New Mexico’s prevailing wage law is calculated. As we noted in our policy paper on eliminating the budget deficit, the changes made to the law back in 2009, going back to the old way of calculating the prevailing wage law could save taxpayers $60 million annually.

Simply put, New Mexicans should not over-pay for labor on state projects. It is unfair and it takes resources away from other government priorities and will stifle economic growth.

While re-calculating New Mexico’s prevailing wage law as the legislators write would be an important step, the fact is that public works projects should be constructed at market wages that don’t require arbitrary calculations based on local wage rates, etc.

And, while some contractors will not like this, the fact is that strengthening preferences for “local” contractors as some would like to do is only going to increase prices and/or reduce quality. This effort should be abandoned in tough budgetary times as well.

Along with Sen. Sander Rue, I recently sat down with Diane Kinderwater to discuss government transparency, New Mexico’s budget, and several other issues. The show was taped before the session began, but is still relevant. The video is 30 minutes in length and begins at the 1 minute mark.

We in the US are constantly told by the media and self-interested politicians that US manufacturing is on the decline. It is true that jobs have been lost, but what is left unsaid is that American manufacturing is still the most productive in the world and that it produces high-value goods.

Obviously, higher-productivity is good and this belies talk of a sustained decline in US competitiveness and massive job losses due to free trade. That said, if the US wants to remain competitive — whether that be in manufacturing or any other sector of the economy — we need to address our high corporate tax rate and work to improve the quality, specifically in terms of education, of our work force.

Rarely have I seen eye-to-eye with regular opinion piece writer Dr. Jose Armas. On Sunday, I thought that was going to change with this opinion piece. It starts out well enough with discussion of New Mexico’s well-documented education failings, applauds Governor Martinez, and generally talks about the need for change to improve education.

Then he states the following:

Let’s dispel the myth that we’re throwing money at education. New Mexico has been steadily cutting education budgets for decades.

My friend Republican Gov. Dave Cargo told me that his education budget was nearly 55 percent of state spending. Another friend, Democratic Gov. Jerry Apodaca, says his was over 50 percent. That was in the 1970s. Today’s budget has dwindled to 45 percent. And the current proposed cuts threatens to chop education funding to 42 percent.

While I don’t deny that as a percentage of the overall budget, K-12 may be a lower percentage than it used to be, Armas is flat-out wrong in stating that “New Mexico has been cutting education budgets for decades.”

Instead of assertions, let’s look at the Census data. Starting in 1992, when New Mexico spent $3,835 annually per-pupil (according to Table 16).

According to the handy-dandy inflation calculator from the Bureau of Labor Statistics. What would we be spending today if per-pupil expenditures rose at the rate of inflation? According to the BLS, it would be $6,139.83.

What is actually being spent per-pupil? According to page xiii of this document from the Census Bureau, back in 2008, New Mexico was spending $9,068. In other words, per-pupil K-12 spending in New Mexico is more than a third higher IN REAL TERMS than it was back in 1992. That is hardly the picture Armas draws.

The fact is that New Mexico’s schools need dramatic reform, not more money.

RGF released its pig book recently (available here). To celebrate the occasion, we took “Porky” around to some of the most wasteful projects in the Albuquerque area.

There are short videos of “Porky” taking a few swings a taxpayer-subsidized driving range, hanging out at Rio Grande Nature Center State Park, riding the Rail Runner, and jogging on the new stimulus-funded bike bridge over the Rio Grande where he even got to hop in a big rig and honk the horn.