Under Obama’s Budget, energy producers — including those in New Mexico — would face more than $220 billion in tax hikes according to Americans for Tax Reform. While the President has repeatedly pledged not to raise taxes on middle-income Americans, the reality is that he has enacted and proposed several tax hikes.

As I pointed out a few months back, these include taxes on tobacco, tires from China, and steel pipes from China as well.

The latest report on the stimulus spending shows that government continues to benefit while unemployment rises in the broader economy. I’ve done two reports crunching data from recovery.gov, the official U.S. government website to track stimulus spending and employment impacts. The first showed that the number of jobs funded by stimulus dollars dropped during the last quarter of 2009 by 13% while the cost per job soared over 50% to $484,505 per job. That report is over at New Mexico Watchdog here.

Today’s report shows that government is gobbling up the stimulus dollars, consuming most of the funding and funding most of the jobs claimed. That report is here.

What is definitely growing is the public sector. Unemployment for everyone, though, is up sharply, to 8.3% from 7.8% in the previous quarter.

We’ve been saying for quite some time that New Mexico’s generous incentives to the film industry do not make sense. Yet another study backs us up on this point. A front page article on the incentives appeared in today’s Albuquerque Journal. According to the new study which was undertaken by a policy analyst with the Federal Reserve Bank of Boston, the state of New Mexico earned $0.39 in estimated new revenues per dollar of credit. In other words, we are losing money on the credits because new revenues are lower than expenditures. This information contradicts the now discredited Ernst & Young report issued in January 2009 found that each dollar of incentive generated a total of $1.50 in revenue.

Rather than going through all the ways this new film study discredits the idea that the film program is an economic boon, I’ll simply offer a few quotes from Lisa Strout of the New Mexico Film Office. Not surprisingly, she is quoted in the Journal article as saying “We will stick by Ernst & Young.” Well, duh. No matter how discredited the data, she has a direct financial interest in the film program. She won’t budge.

Better still, however, is Strout’s quote “Ernst & Young were very tough. They said if they could not get the data (to support an analysis) they would leave it out.” This, of course, directly conflicts with the Boston Fed’s reporting that “(The Ernst & Young) Study findings that increased tourism accounts for between 25 percent and 40 percent of the incentives’ economic impact are “difficult, if not impossible” to verify.

So, there you have it. New Mexico policymakers have created a powerful special interest “entitlement” to the tune of $80 million annually that includes a government entity (The Film Office) that lobbies on its behalf. Killing the program is simply politically impossible at this point. Hopefully the Legislature will seriously consider adopting Sen. John Arthur-Smith’s subsidy cap legislation.

I watched the Super Bowl last night and while the game was quite good, the commercials were pretty lame overall. However, one commercial by Audi made an impact. If the greens have their way, this could come true:

I (and I believe this is true for most economists) have always found the economic impact of taxes to be relatively straightforward. But regulations, particularly those pertaining to the environment, are a bit more difficult to figure out. After all, we all want a clean environment and environmentalists constantly remind us that regulations can push society and lead to resources being allocated to cleaning the environment.

This all leads me to the Pit Rules which have been adopted here in New Mexico. I have intuitively understood that the Pit Rule likely represented an overreach on the part of New Mexico’s regulators, but the ins and outs of drilling for oil and gas can be quite difficult to parse. So, I was pleased to see “Pit Rules Dry Up NM Drilling” which more clearly explained the economic impact of New Mexico’s pit rule than any analysis I’ve seen yet.

The article refuted Joanna Prukop, Former Secretary, New Mexico Energy, Minerals and Natural Resources Department, and her article, “Don’t Blame the Pit Rule…” Mr. Maxey, the author or the anti-pit rule piece displays far superior understanding of the oil and gas industry and how public policy impacts the migration of businesses between different political jurisdictions in a constant search for policies that are sensible.

I’m glad to see the oil and gas industry stick their necks out and oppose anti-business policies. Hopefully this is a trend that will continue and grow.

The Heritage Foundation blog had an interesting post about government labor unions. According to the blog, “2009 became the first year in American history that a majority of American union members work for the government.”

This is both unsurprising and troubling at the same time. First and foremost, while I have my concerns about the impact of private sector labor unions, the good news is that they ultimately benefit from private sector economic growth (just like the rest of us). To Government labor union members, however, the private sector economy is an irrelevant annoyance. They have absolutely no incentive to care.

Of course, as we have seen recently, government has continued to grow while the private sector is hurting and cutting back. Nowhere is that trend more prevalent than in heavily-unionized private sector industries where high-priced union labor unions have priced their members out of the market. Government knows no such check. That is why they are so dangerous.

New Mexico is an excellent case-study. As the Rio Grande Foundation has pointed out, our public sector work force is extremely bloated. And, as we see from recent efforts of the liberal House of Representatives to not cut government at all, the government labor unions (like AFSCME and The Albuquerque Federation of Teachers) have a very strong grip on New Mexico politicians.

Ellen Bernstein is the radical left wing head of the Albuquerque Teachers Federation. She wrote an article in the Albuquerque Journal on the ongoing debate over the potential West Side split of Albuquerque Public Schools. She made the point that “there is no data showing school district size as a factor in student’s success.”

This is indeed the case. In fact, splitting districts, a topic which the Rio Grande Foundation is neutral on, is not the type of fundamental reform that is really needed in New Mexico. Rather, if we actually want to improve educational results in Albuquerque or anywhere else, it is Bernstein and her cronies that must be dealt with first. They (the teachers unions) are a primary obstacle to improved educational outputs.

The effort to split APS, while understandable given its broken nature, is not targeting the root problem. Instead, choice in the form of vouchers or tax credits (two different things), smaller schools, and merit pay and accountability for teachers will actually improve schools. Unfortunately, Bernstein and her allies oppose every one of these options.

The Rio Grande Foundation (RGF), New Mexico’s only free market think tank, is starting a new Capital Reporter project and is looking for an independent, self-starting journalist to cover state government, particularly issues with the state government in Santa Fe.

The idea behind this project is to cover tax, budget, and fiscal issues for an online newspaper. Currently, the paper is online at: www.capitolreportnewmexico.com.

We are hoping to expand operations with video, audio and written content with a capable reporter who can provide objective, factually accurate reporting in these formats for a Web-based audience.

This would be a full-time job, but schedule is flexible. Busiest time of year would be legislative sessions. Salary and benefits will be based on experience with a baseline and incentives based on quality content. We are a virtual office, so self-starter necessary.

Interested parties should send a resume and cover letter or statement of interest to:

HumanResources@RioGrandeFoundation.org

In case you haven’t noticed, New Mexico faces difficult budgetary times. Thankfully, the folks at the Santa Fe Opera seem to recognize this fact and have given back $1.3 million in taxpayer money that would have been used to build a recital hall. Maybe the folks at the Opera should try to instill this sense of fiscal responsibility in members of New Mexico’s House of Representatives, the leaders of which seem to have no clue that cutbacks are necessary.

Oh, and I would be remiss if I didn’t note that the Opera’s recital hall project was contained in our 2008 Piglet Book (check page 22). Chalk another victory up to Rio Grande Foundation efforts to expose wasteful and unnecessary spending.

According to Dan Boyd over at the Albuquerque Journal, House Speaker Ben Lujan has postponed the body’s vote on a $5.6 billion budget bill. Reason being, the House “progressives” (or socialists) want to add another potential tax hike to the mix in order to avoid making any tough decisions that could cut their beloved government programs. Instead, they’d rather push $400 million worth of tax increases on New Mexico taxpayers.

Thankfully, the Senate, led by stalwarts like John Arhur Smith remain opposed to massive tax hikes absent any real attempts to redress spending or make government more efficient (the House would cut spending by only 1 percent). Unfortunately, Governor Richardson seems to be willing to forfeit his title of “tax cutting governor” as he has sided with the House thus far. Thankfully, Republicans in both the House and Senate have remained opposed to balancing the budget based on tax hikes.

The House’s behavior is no surprise. They have a long track record of doing the Governor’s bidding and being to the left of him on tax and budget issues. The question that moderates in the House ultimately have to decide is whether they are facing a massive repudiation at the polls this coming November. Obama seems to have taken Republican Scott Brown’s upset victory in Massachusetts as an opportunity to double-down and attempt to pass his left-wing agenda. New Mexico’s House seems to be following the same tactic which I believe will ultimately lead to electoral despair.

For the time being, New Mexico hangs in the balance and the Atlases in the Senate dare not shrug!

If you have never checked out the “Independent Forum,” I encourage you to check it out. Along with a handful of community leaders, I have been providing my own thoughts on various current-events issues, many of which are being considered by the Legislature in Santa Fe. This week’s forum question is on proposals for a “Ethics Commission.”

My thoughts are the first response (they typically are) so go ahead, put your own thoughts up there and if you agree or disagree, let me know: pgessing@riograndefoundation.org I’d be interested in your thoughts.

New Mexico’s free market think tank, the Rio Grande Foundation, is hosting a candidate forum for all current candidates – of both parties – for New Mexico’s 3rd Congressional Seat (currently held by Ben Ray Lujan).*

The forum will be held on Monday, February 22, 2010 from 6:00 to 8:00PM in the Jemez rooms of the Conference Center at Santa Fe Community College. The College is located at 6401 S. Richards Avenue, in Santa Fe. Admission is $5 payable at the door. Those who want to attend can send us an E-mail to: rsvp@riograndefoundation.org. Unfortunately, due to rules associated with this facility, no food or drinks will be available, but vending machines are available on-site.

This is not a formal debate format, rather it is an informal question and answer discussion that will allow average citizens, regardless of party affiliation, to “kick the tires” and find out more about the candidates who have declared for New Mexico’s highest offices. Attendees will have the opportunity to submit questions that help attendees determine each candidate’s stances on the issues and observe how they interact with the crowd.

The discussion will be moderated by Rio Grande Foundation president Paul Gessing. The event will be filmed by the Rio Grande Foundation with footage posted at: www.riograndefoundation.org. Media are encouraged to attend and cover the event.

At least, that is how much a voucher system implemented in Milwaukee is estimated to have raised graduation rates in that city according to a new study. Now, does that mean we should adopt vouchers in New Mexico? Maybe not, but the fact is that choice is working where it has been tried. Tax credits would be another option and pursuit of the full-fledged reforms adopted in Florida is another option.

Based on a separate study, the annual impact from 3,352 more MPS graduates would include an additional $21.2 million in personal income and $3.6 million in extra tax revenue. Perhaps New Mexico could at least partially solve its budgetary problems through the aggressive adoption of school choice? One can only hope…after all, raising graduation rates and a healthier economy…that’s change I can believe in! The full report on Milwaukee’s school choice results can be found here.

Given all the tax hikes now moving through the New Mexico Legislature, we at the RGF have had to choose our battles. That said, having written extensively on the dire economic harm inflicted upon New Mexico’s economy by the gross receipts tax, I thought our political establishment would focus on reinstating the grocery tax or going after smokers, drinkers, and junk food or high-earning taxpayers.

Thankfully, our friends at the New Mexico Tax Research Institute have re-explained to New Mexicans that the gross receipts tax charged in New Mexico is much different, and much more economically-harmful, than a traditional sales tax. The article appeared in the Albuquerque Journal on Sunday and I couldn’t have said it better myself. Raising the GRT in today’s bad economy would further exacerbate the already-severe problems associated with this tax.

I was originally scheduled to appear on KNME’s “In Focus” to discuss the upcoming vote on the $616 million bond measure, but the birth of my first child made that impossible. Thankfully, RGF Vice President Jean Baugh happens to be quite knowledgeable about education issues, so she stepped in and appeared on the show. Later on in the program, our investigative journalist Jim Scarantino, who appears regularly on KNME’s roundtable program also discussed the APS bond measure (along with other current events). Check it out below:

In the past, we at the Rio Grande Foundation have had our share — okay, maybe even more than our share — of disagreements with the Albuquerque Chamber of Commerce. After all, on a diverse range of economic issues involving limited government and taxes including: taxpayer-financed pre-kindergarten, massive government intervention in health care, restoration of the grocery tax, the RailRunner, the increased minimum wage, and more….they have come out on the wrong side.

All that being said, I am please to see that, with the lack of political support for restoration of the grocery tax, the Chamber is firmly opposing tax hikes as a mechanism for solving the current budget situation. In fact, they have a fine letter for which they are asking signatures. I am not sure how broadly they are casting their net in search of signatories, but if you are interested in signing on, send them an email here: signon@abqchamber.com

I still wish they’d realize that the Rail Runner is a huge boondoggle that will be a drain on New Mexico’s economy for decades to come, but this is a nice first step.

We’ll see you back in the blogosphere next week.

Perhaps our “leaders” in Washington and Santa Fe could benefit from watching this rap video (of all things)? It is at least an entertaining watch!

The Rio Grande Foundation has long been New Mexico’s most prominent critic of the Rail Runner. Scholar Ken Brown wrote this critical piece way back in January of 2006. I have also written on and discussed the numerous problems with the train many times over the years including this recent blog posting telling the train’s supporters to put their money where their mouths are and step up to close the train’s $750,000 deficit.

Well, it seems like more and more people are getting it. For starters, check out Trever’s excellent cartoon in today’s ABQ Journal:

Also, Joe Monahan, who we don’t always agree with, but certainly seems to have the pulse of the New Mexico establishment, made an interesting point in a recent blog posting on the Rail Runner:

The political impact of the troubled Rail Runner on the Dem Light Guv campaign of Lawrence Rael has already been mentioned. Lawrence was head of MRCOG and is taking credit for the Rail Runner. Then there is presumed Dem Guv nominee Diane Denish. She may have some tough questions to answer about how she sees the future of this train. However, maybe not too many if the R’s nominate Allen Weh as their Guv nominee. When he was GOP chairman Weh was supportive of the Rail Runner.

The long-term future of the Rail Runner remains troubling because it was not modeled after the expensive European model of speed–lots of speed–like well over 100 mph. That is hurting the train as cars race past it from ABQ to Santa Fe. And then there’s the recession. Fewer state employees mean fewer Rail Runner riders and lower gross receipts tax revenue means less money to fund the train,

In case you missed it, a few weeks ago, RGF analyst Scott Moody and RGF president Paul Gessing appeared on Bob Clark’s show on AM 770 to discuss New Mexico’s bloated government employment and unsustainable pension systems. Listen to the show here.

Also, Gessing discussed New Mexico’s legislative session and the federal health care debacle with Mike Jaxson on 990 KSVP. Click here to listen to this 15 minute interview.

Our investigative journalist, Jim Scarantino, is really on a roll. Yesterday he published a report on Governor Richardson’s efforts to implement stringent carbon caps through an unelected body, the Environmental Improvement Board, which is full of his radical environmentalist appointees.

Now it looks like the folks at National Review Online, including publisher Jack Fowler, have noticed. In a blog posting put up today, Fowler called Scarantino’s article an “fascinating post” and quoted extensively. Kudos to Jim and if you want to support Jim’s ongoing efforts, help us out with a tax-deductible donation here.

I have taken a closer look at the Albuquerque Public Schools’ $616 million bond measure and have my questions/concerns. First and foremost, the election date is February 2nd, but early voting is taking place right now and continues from 8 a.m. to 5 p.m., through Friday, Jan. 29, at the following locations:

* Bernalillo County Clerk’s Office Annex, 620 Lomas NW

* APS Building, 6400 Uptown Blvd. NE

* Alamosa Community Center, 6900 Gonzales Road SW

* Don Newton Multi-Generational Center (Taylor Ranch Community Center), 4900 Kachina St. NW.

Here are some significant issues that voters must carefully consider:

— Although proponents argue that property taxes will not go up as a result of this bond issue, the fact is that property taxes would fall significantly if this measure were to fail. Since Albuquerque taxpayers pay property taxes at a rate 25% higher than any of the top ten cities in New Mexico, one could certainly argue that it is time for a tax cut, especially in light of what I believe are some problems/wastes of resources in Albuquerque’s Public School system;

— New Mexico has a law on the books called “Davis-Bacon.” This law mandates that all government construction projects pay something called the “prevailing wage” which is essentially an inflated union wage. There is a federal Davis-Bacon law which applies to federal construction projects, but New Mexico is one of 25 or so states that enforce the prevailing wage at the state level as well.

These laws typically raise labor costs by 25% and total construction costs by 10%. On a project costing more than $100 million like the new Volcano Vista High School on the west side, we are talking about real cost savings if Davis-Bacon were repealed;

— Another unnecessary cost-driver – that is, something that makes project costs unnecessarily high – is the pursuit of LEED Certification. LEED stands for Leadership in Energy and Environmental Design. Arguably, but not necessarily (for reasons I won’t go into here), building to LEED standards includes increased energy efficiency. But that is only part of the story.

Obtaining LEED certification is an arduous, paperwork-intensive process that costs a lot of money. Estimates are that it raises building costs by 10% or more. Ironically, the certification process is completely unnecessary. In fact, APS could build to LEED standards relatively cheaply without going through the time-consuming and intensive certification process.

— Lastly, APS could save money by transitioning to modular school design or at least limiting the number of school floor plans used. Although specific data on this was difficult to come by in my research, I do know that modular construction is not widely used in APS projects and architects are hired on an ad hoc basis to design schools. Clearly, significant cost savings could be realized in this area as well.

According to Michael Coleman of the Albuquerque Journal, former New Mexico Sen. Pete Domenici has joined the Bipartisan Policy Center in Washington. The organization’s goal is to convince Congress and the president to rein in the national debt.

Interesting that Domenici would join such an initiative. I could see him leading an organization dedicated to spreading nuclear power or some other pro-energy cause, but Domenici’s record in Congress certainly doesn’t strike me as that of a deficit hawk:

For starters, in his final year in the Senate, he received a gentleman’s “C” from the National Taxpayers Union. That is not exactly the rating of a true fiscal conservative, but it is representatives of Domenici’s NTU ratings; Also, according to the NTUF, during the 109th Congress Domenici voted to increase federal spending by $465,395,000,000 during that Congress alone. Again, hardly fiscally-responsible.

Specific, costly policies supported by Domenici in recent years include votes for Bush’s massive $1.2 trillion prescription drug bill and support for the trillion dollar Iraq War. I’m sure there are more.

My point is not to trash Domenici and what seems to be a positive effort in retirement to tackle a serious problem. Rather, I just wish he’d acted on his concerns about America’s massive debt problem while he had the power to actually do something.

Great articles in the Albuquerque Journal today on the Rail Runner, the fact that event with $19 million in annual subsidies, that the train service needs to make up a $750,000 deficit, and the possibility that weekend service may have to be curtailed in order to cut costs.

Of course, there was the expected hue and cry from riders, merchants, and even the Albuquerque Chamber of Commerce over the possibility that weekend service will have to be reduced. By implication, these groups believe that the rest of us should be asked to dig into our pockets even deeper to fund their train. But there’s another way…

How about charging weekend riders a little more to make up the difference? Perhaps members of the Albuquerque Chamber and merchants near the train station in Santa Fe who supposedly benefit so much from the train would be willing to help fill the $750 million gap? It would seem to me that those who benefit the most from the train should be willing to pay a little more for it, particularly since the rest of us are already covering $400 million in construction costs and $19 million annually in operating costs. If these groups are not willing to put up any more money to keep the trains running, then perhaps it is not really as beneficial as they say.

Fair is fair…cut service or let beneficiaries pay more. Don’t burden the rest of us with an even bigger bill.