The Rio Grande Foundation recently published a comparison of government employment in New Mexico cities and counties. While the size of New Mexico’s state and local work forces combine for second-highest in the nation, there is a great variety among cities and counties. Rob Nikolewski of Capitol Report has dug into the numbers with some more analysis here.

Again, we have already done research finding that relative to the private sector, New Mexico’s state and local work forces are the second most bloated in the nation, states do allocate duties differently among state and local governments, so interstate comparisons are difficult.

I’ve written about the “two Americas” being government employees and the rest of us here and here. Now comes word from our own Rep. Heinrich that he rushed back to Washington recently to vote “yeah” on the latest federal bailout (aka stimulus), this one being $26 billion.

Among the beneficiaries of this new federal debt will be mostly government workers and the such, but one story caught my eye, that is that $2.5 million of the stimulus will be used to “Offset the costs of increased insurance premiums for public school teachers, administrators and teacher’s aides.” What a nice, heart-warming story, right?

But what about my health insurance? My Blue Cross rates are going up by 21% this year, but I’m not a government employee, so no bailout for me! Now, don’t interpret this as wanting a bailout… I just want the government to stop expanding at a breakneck pace and for the Obama Administration to stop greasing the palms of its favored constituencies. If Obama wants a real stimulus, he’d pare back government and give the private sector some breathing room in terms of regulations and freeing up limited financial resources. Until then, the economy will be stuck in neutral.

Yesterday afternoon, I participated in one of the series of town halls being held around the state on efforts by the Higher Ed Department on developing an education master plan. We at the Rio Grande Foundation have done a good deal of work on higher education and support the concept of a master plan to ensure that limited resources are used efficiently and that institutes of higher ed exist because they are necessary, not as trophies and patronage tools for local politicians.

While I made some of those points during the discussion, there are a few points that need to be addressed about the town hall format:

1) Approximately 1/3rd of the attendees were from the school at which the town hall was held, in this case SIPI. More than that in terms of the crowd of 25 or so were directly involved in the university system and therefore have a direct financial stake in more higher ed spending;

2) These events draw some eccentric and misinformed people. Attendees ranted about the $787 billion federal “stimulus,” the bank bailouts, tax cuts for the “rich,” and New Mexico’s K-12 system.

State Senator Dede Feldman was in attendance and, for a politician, did a remarkable job of not dominating the discussion. Although Feldman is a pretty liberal sort, she did make some good points including advocating tying reimbursements made by the state to higher education departments to graduation rates. This is a sensible, moderate solution.

While Feldman and most in the room avoided the topic of actually closing some components of our bloated higher education system, I think the way to do this is with our own equivalent of the federal government’s Base Realignment and Closure Commission. This would involve a commission studying which schools and branches are least necessary and then giving the Legislature the chance to vote up or down on the recommendations.

Anyway, perhaps the current Higher Ed Department can come up with a solid plan that the next Governor can implement. Coming up with a plan is simple; implementing it is the difficult part.

A lot has been said about the Bush tax cuts and whether to eliminate them, eliminate parts of them while keeping others, or to keep them. I’m a big fan of tax cuts of any kind and would like to see the cuts made permanent, but I doubt that will happen with Obama in the White House.

Left-wingers claim that these tax cuts caused our current financial and economic situation. Conservatives disagree with this, but haven’t proposed any coherent solutions of their own (with the possible exception of Rep. Paul Ryan).

I have a solution to the real problem – that is the exploding size of the federal government. Since liberals seem so intent on wiping away Bush’s legacy, let’s take the size of the federal government back to Bill Clinton’s last year when the federal government spent a mere $1.9 trillion.

Government didn’t seem too small back when Clinton left office, but federal spending has doubled since then to $3.8 trillion! That is our real economic problem and I’d like to see someone argue how that extra $1.9 trillion in federal spending has made us more secure and economically-prosperous than we were 10 years ago.

The Rio Grande Foundation has done a great deal of work analyzing the size of New Mexico’s state and local government bureaucracies. As a means of further exploring the situation, I decided to have our summer interns do some research to find out which city and county bureaucracies have the most employees per capita.

Check out the city chart ranked from most employees per capita to least:

The county employment chart can be found below:

According to the Albuquerque Journal:

West Mesa High School students could be pocketing $100 for each Advanced Placement exam they pass in math, English and science next spring.

And AP teachers won’t be left out either, collecting $100 in bonuses for each of their students’ passed tests.

This is one innovative, market-based reform that is straight out of the Florida playbook that Dr. Matthew Ladner outlined recently in New Mexico. While it is by no means a silver bullet, it is a step in the right direction towards more incentives for both students and teachers to perform well.

And yes, students should learn for the sake of learning, but sometimes those incentives are more powerful when an additional financial carrot is provided. It’ll be interesting to see how things unfold at West Mesa.

While cap and trade may have breathed its last breath in Washington, proponents are still fighting for a job-killing, energy-cost-increasing, New-Mexico-only carbon cap (Case no. EIB 08-19). There will be a hearing where the public can listen to the technical testimony August 16-20 in Santa Fe. The public comment period will be held at 7:00-8:00 PM Monday, Tuesday, Wednesday, Thursday, and Friday evening. However, anyone who can be present during the daytime, technical testimony hearing portion (Monday-Friday) is encouraged to attend to make the public opposition clear. It is important that those who oppose the regulation be present. Public comment matters. You do not need to be an “expert” and you do not need to give a speech, but you should be prepared to simply stand up and state “I oppose the NEE green house gas cap petition.” You will have a total of three minutes to speak.

If you cannot attend, you are still encouraged to voice your opinion via mail, fax, or e-mail. This can be done by sending comments to: Board Administrator, New Mexico Environmental Improvement Board 1190 St. Francis Drive N2153, Santa Fe, NM 87502 FAX: (505) 827-2836/ email: joyce.medina@state.nm.us

The Environmental Improvement Board is stacked with members hand-picked by Governor Richardson who are likely to support the proposal, despite opposition by a broad-based coalition of businesses throughout the state. Additionally, several of the board members have severe conflict of interest issues. Jim Scarantino of New Mexico Watchdog has done a great deal of work on this.

There is an ongoing series of meetings now taking place statewide relating to the state’s plan for higher education. As the Rio Grande Foundation has pointed out in the past, higher education is bloated and inefficient in New Mexico. While it is unlikely that the state’s plan will do much to address this issue, the fact is that the issue needs to be put on the agenda.

The schedule of statewide meetings can be found here. If you want to know more about our research on the higher education issue, check out this recent 30 minute interview on Christian TV station KNAT:

John Edwards was right about one thing when he ran for president several years ago. There are indeed “two Americas.” The two Americas are not specifically rich and poor , but government workers vs. the rest of us.

Now comes word from the USA Today that federal workers earn DOUBLE their private-sector counterparts. According to the Bureau of Economic Analysis, “Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation.”

We at the Rio Grande Foundation have found that New Mexico state and local workers are paid 11.5% more than their private sector counterparts, so we are a long way from the federal disparity, but the fact is that government workers are not living in the same economic reality as the rest of us. This needs to change with some serious downsizing in terms of both numbers of government workers and their pay and pension packages.

Jim Scarantino and I will be stepping in for Janice Arnold-Jones this afternoon. Among our topics for discussion will be Bill Richardson’s legacy, the failure of New Mexico’s “Solar Alley,” a discussion with our capital reporter Rob Nikolewski, and plenty of time for your calls which you can make at: (505) 265-1550.

I am not a believer in wind and solar power as our economic or environmental salvation. That said, the federal government has subsidies in place for wind power and those who wish to build wind farms are looking for wide-open spaces with strong, constant wind, to build their farms. Construction of these farms will generate short-term jobs and the leases for the land on which these projects are built will generate some long-term revenue…sounds like a winner, right?

Well, not in San Miguel County, New Mexico. According to news reports, the citizens of San Miguel County are nearly united in their opposition to this modest form of economic development. It’s not as if San Miguel County doesn’t need the jobs or income boost. According to Census data, the County is far more impoverished and has far lower income levels than the rest of the state of New Mexico (a relatively impoverished state).

Said one local of the proposed project “I don’t want to see turbines out there wrecking everything.” Now, I know environmentalists (and the NIMBY crowd) are pretty weak on property rights, but it would seem to behoove us all if we recognized that the owners of a particular piece of land should be able to do with it as they please as long as their is no direct, negative impact on their neighbors — and I’m sorry, but having a windmill within eyesight is not a “direct, negative impact.

There is no doubt that this NIMBY attitude is harmful to San Miguel County’s economy. Remember how difficult they made Val Kilmer’s efforts to create a few jobs? That said, this is a real problem for the future of wind power. If you can’t get the locals to believe that having a windmill nearby is benign, how are you going to make wind a viable power source?

While not going so far as to say that subsidies to ethanol should be eliminated, Sen. Jeff Bingaman has taken a small step towards energy policy sanity by at least bringing up the possibility of cutting ethanol subsidies. Bingaman is not exactly taking a major political risk here as New Mexico is not a major corn growing state and thus not reliant on ethanol subsidies like Iowa.

In typical Bingaman fashion, even his new-found pro-taxpayer (anti-subsidy) stance is at best mealy-mouthed with Bingaman saying that ethanol is “a mature technology whose market share is protected,” (by Congressional mandate, not economic viability, of course) and that Congress should scrutinize the subsidy and “weigh all factors, including the credit’s very high cost to taxpayers,” (approximately $6 billion annually) before again extending it.

Not exactly bold language from Bingaman, but he is Chair of the Senate’s Energy Committee and thus has a major say on the issue. It would be great to see New Mexico’s senior senator do something positive for taxpayers by eliminating ethanol subsidies. We’ll see if this is just posturing or if Bingaman will fight the special interests.

It’s hard to put a finger on a single reason, but as the Atlantic Monthly notes in this article, “Maybe it’s the lack of a state income or capital gains tax. Or the dearth of union workers. Or the plentiful labor supply on the border of Mexico, or the lower wages, or the stable and lean regulations. There’s something about Texas that makes it the most popular place for business to do its business…” I’d say that all of these factors play into Texas’ success. It would be great if New Mexico’s political leaders took a closer look for themselves.

Another report from Business Week finds that Houston is the American city with “the best mix of job openings, pay, and affordability.” Houston, of course, is unique among large US cities that lack zoning laws. Is this — along with the attributes like a lack of an income tax and less unionization — the factor that makes Houston’s economy so strong? I don’t know for sure, but I do know that the City of Albuquerque has a long way to go before it becomes a business-friendly place.

The following letter of mine on this topic was printed recently in the Business Outlook section of the Albuquerque Journal:

Mayor Berry should be applauded for his Administration’s efforts to streamline the business permitting and setup process. His statement that “business people don’t make money and jobs wandering through a government maze” is spot-on.

But, perhaps the fact that new programs are necessary to assist entrepreneurs and small-business owners with these processes is a sign that the City has too many rules and regulations in the first place? As the Mayor moves forward in his efforts to make Albuquerque a more business-friendly place, he and City Council should take it upon themselves to carefully analyze this maze of rules and regulations to determine whether they are absolutely necessary and cost-effective or whether certain ones should be scrapped entirely.

Among the most extensive and costly regulations are zoning and land-use planning which must be placed on the table for major changes. Notably, Houston, a city that does not have zoning regulations, has the highest level of entrepreneurial activity out of the 15 largest U.S. cities, this according to the latest Kauffman Index of Entrepreneurial Activity.

While helping guide businesses through Albuquerque’s thicket of regulations will undoubtedly help, more dramatic reforms will spur job creation and economic growth in the Duke City.

I feel bad for the folks at Schott Solar who just got laid off. But I also feel bad for New Mexico taxpayers (like me) who have been sold a pig in a poke by Governor Richardson and other politicians who have repeatedly thrown money at unproven technologies and business models. In the case of Schott Solar, we’re talking about $130 million.

The truth is that the slowing economy is but one of many factors negatively impacting Schott. Competition from cheaper producers in China is another. The real issue is that Richardson does not have his own money at stake and he is no expert in solar power or investing. Hopefully Schott is able to re-group and limp its way to the next economic recovery, but that $130 million taxpayer investment is looking mighty precarious at this point.

ALEC stands for American Legislative Exchange Council. The organization describes itself as “A nonpartisan membership association for conservative state lawmakers who shared a common belief in limited government, free markets, federalism, and individual liberty.” They are holding their annual meeting, with well-known legislators, policymakers, and commentators from across the nation gathering now in San Diego. Some of the more prominent attendees are listed here.

I am pleased to say that our own New Mexico Watchdog Jim Scarantino is in San Diego now presenting to the group on the “new media.”

The Rio Grande Foundation is quickly becoming recognized as one of the most effective free market public policy organizations in the nation. Won’t you support us with a tax-deductible donation today?

Ellen Bernstein of the Albuquerque Teachers Federation was in the Albuquerque Journal today railing on against balancing the budget by cutting education.

The funny thing about the article is that she really doesn’t offer any specifics as to how cutting education spending will actually affect student performance and harm New Mexico’s education outcomes? Of course, I’d hate to have to argue her point because up until the current financial crisis, real per-pupil education spending has doubled with little in the way of results to show for the increased spending.

Instead, Bernstein focuses on the economic harm that cuts in teacher salaries will have on teachers. She fails to mention that the rest of us are facing cutbacks and poor economic growth.

Of course, as Dr. Ladner pointed out last week, there is a path forward to real education reform and improved results, without increasing overall spending. Among Ladner’s more salient points is that increased class sizes are not really harmful. In fact, if we are able to weed out the least effective teachers and put those kids in the classrooms of the most effective teachers — even if we double their class sizes — education results and overall learning will improve. Unfortunately, as liberal columnist Leonard Pitts points out, the unions have been fighting against such accountability for years and show few signs of relenting, even with Barack Obama in the White House.

The Rio Grande Foundation has put together, but not formally launched yet, a new website containing large amounts of data on public school employee payroll and vendor payments in the state of New Mexico. This project involved large numbers of data requests of supposedly public information from school districts and governments statewide.

Unfortunately, just because information is “public,” doesn’t mean it is easy (or cheap) to access. Read articles on the topic from the Santa Fe New Mexican and the Reporter. One school district that was less-than cooperative was the Santa Fe school district which wanted to charge more than $1,200 for electronic documents. Now, I’m not claiming that there is no expense in putting payroll information together, but $1,200? Shouldn’t this data all be in electronic form to begin with? Paper copies can certainly be expensive — and New Mexico law is written with that in mind — but electronic copies should be a fraction of the cost of paper copies.

The fact is that New Mexico’s new “Sunshine Portal,” set to get up and running within the next year, needs to include school districts. While the current version of does not, hopefully legislators will demand transparency from the schools which spend nearly half of the state’s budget.

I received the following information from the Heartland Institute, a Chicago-based free market think tank that works nationally. The data are coming in on film incentives in the various states and, not surprisingly, it is negative in terms of economic activity generated by states giving taxpayer dollars and interest-free loans to film production companies.

Despite massive budget deficits and threats to cut essential programs, states across the nation are continuing to extend subsidies to the film industry through refundable tax credits and sales tax exemptions. At least 44 states currently offer some form of film subsidy, some subsidizing upwards of 30 to 40 percent of a movie’s production costs.

These flashy attempts to bring Hollywood to legislators’ home states have consistently failed to create long-term economic growth and bring in permanent jobs.

According to Greg Albrecht, chief economist for Louisiana’s Legislative Fiscal Office, even the most “successful” film subsidy programs bring little value. In Louisiana, he found, “Even if 100 percent of the reported production budget amounts were being spent purchasing goods and services from Louisiana suppliers, the economic benefits would not be sufficient to provide tax receipts approaching a level necessary to offset the costs of the tax credits.”

Doling out taxpayer dollars to filmmakers is no substitute for sound fiscal policy. States should avoid manipulating the tax code to favor the movie industry, or any other industry, over existing businesses. Such “economic development” schemes–film tax credits, state-owned golf courses, publicly financed stadiums, and the like–are nothing more than pork projects.

Instead of pushing an increasingly inefficient film subsidy “arms race,” state governments should look to boost their economies the old-fashioned way: by reining in government spending and creating a tax code that is low, non-distorting, and broad-based.

The documents cited below provide further information on the economic impact of film subsidy programs.

States’ Film Production Incentives Cause Jitters

The New York Times reports on the expansion of film tax subsidies and how much they are costing taxpayers. Among other examples, the article notes Louisiana taxpayers were put on the hook for $27 million for the Brad Pitt film, The Curious Case of Benjamin Button.

Movie Production Incentives: Blockbuster Support for Lackluster Policy
http://www.taxfoundation.org/publications/show/25706.html
Will Luther of the Tax Foundation says film tax incentives are corporate welfare that creates a subsidy bidding war among states.

Tax Credits for the Motion Picture Industry
http://www.budgetandtax-news.org/article/24182
The Massachusetts Budget and Policy Center outlines how film tax credits work, to whom they are given, how effective they are, and how many jobs they actually bring to Massachusetts.

Roll the Credits … and the Tax Incentives
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1309
Writing for FedGazette, a regional business and economics newspaper published by the Federal Reserve Bank of Minneapolis, Kathy Cobb analyzes the history of film tax credits and considers their effectiveness in producing real economic growth.

Hollywood East? Film Tax Credits in New England
http://www.budgetandtax-news.org/article/24181
Darcy Rollins Saas, a policy analyst for the New England Public Policy Center at the Federal Reserve Bank of Boston, examines the effect film tax credits have had in the Northeast. She finds, “revenue losses are exacerbated by the tendency of these tax credits, like almost all tax credits, to subsidize activity not originally targeted and to provide more incentive than needed to induce the desired response.”

Special Effects: Flawed Report on Film Incentive Provides Distorted Lens
http://www.budgetandtax-news.org/article/28093
Michael D. LaFaive, director of the Mackinac Center’s Morey Fiscal Policy Initiative, analyzes the state’s film incentives program and finds it has failed to produce the lofty economic results some have claimed for it.

Reviews for State’s Film Tax Credit Aren’t Good
http://www.projo.com/news/content/FILM_TAX_CREDIT_08-12-08_ALB5IV1_v12.412297f.html
The Providence Journal finds Hollywood is the real winner when states implement film tax credits. The story cites a report by the Rhode Island Department of Revenue which found, “The state gets back 28 cents for every dollar it gives up to the production companies.”

Indiana Film Incentives Fail to Attract Filmmakers So Far
http://www.indy.com/posts/10770
Indiana, where the legislature approved less-extravagant film subsidies compared with those in other states, has not seen an influx of movie production.

In case you missed it, the Rio Grande Foundation made quite a splash with our recent events on K-12 education reform with Dr. Matthew Ladner. This resulted in an editorial and a front-page story indicating that gubernatorial Susana Martinez had adapted much of the Florida model as her platform.

Ladner’s presentation is available here:

His powerpoint presentation can be found here. Ladner also sat down with the folks at KUNM for an interview which can be found here.

I like the way Mayor Berry is thinking about recycling. The mayor recently outlined a plan to work with private investors to construct a new $5 to $10 million recycling plant. This would hopefully boost the paltry 6% of the city’s “waste stream” that is now recycled.

While I am skeptical about the net positive impact of recycling, I am indeed a regular recycler as I take my cans, bottles, and papers to the local drop off centers around town. Given the conditions of these bins and the fact that they are regularly full, not to mention the issues the city has with recycling glass, I’m convinced the City could do better. That is where Mayor Berry comes in.

A new recycling facility would help the City expand its recycling efforts, and, by relying on the private sector, this could be done without additional expense to taxpayers. A win-win, right? Well, not if you are in organized labor.

The local AFSCME rep has concerns. He claims “We can run a facility like this inhouse that will be the most cost effective.” Really? Where were the proposals from organized labor before? Sure, the City should be open to serious proposals from organized labor as to how we can dramatically upgrade our recycling program at no cost to taxpayers. The thing is, it sounds like a new processing center is necessary and unless private funds are brought to bear, this center won’t happen.

AFSCME is the single largest contributor to political campaigns in the US, having donated more than US$38 million since 1990. Thus, they are sitting on a lot of money that they typically use to support their preferred big-government candidates. Perhaps $10 million of that could be invested in this center? I don’t know, but I think the answer here is to leverage private investment for public (taxpayer) benefit.

On Tuesday, voters in Santa Fe will be asked to take on $35 million in new debt — paid by property tax revenues — to fund a variety of projects at the Community College. We at the Rio Grande Foundation typically have our concerns about government debt issuance and bonds and this one is no different.

The biggest issue is that New Mexico is already dramatically over-served in terms of higher education institutions. This is true both in terms of government employment and the sheer number of institutions relative to a state like Arizona.

Lastly, what services does Santa Fe Community College provide that the College of Santa Fe does not? Would it make sense to combine the schools or at least share some resources before going to the taxpayers for more money? Of course, if voters simply vote “yes,” none of these issues will be addressed.

So, it turns out that New Mexico’s Construction Industries Division (CID) is going to scale back its proposed building codes due to industry concerns. No more mandatory sprinklers; no more demanding that if 50 percent of an existing building is remodeled, the entire structure must be upgraded to the new codes.

That’s great, but the CID wants to move forward with a policy that the new state regulations must be 10 percent stricter than new national model codes (whatever that means). Of course, folks from the CID claim that this increased efficiency is all for free because customers will benefit from less energy usage, but I remain unconvinced.

Regardless, it seems to me that the CID has overstepped its bounds by dealing with energy usage and sprinklers in the first place. Building codes should be there to protect the public’s safety from buildings that are dangerous or will fall down, not to mandate the latest environmental regulations or sprinklers.

After all, shouldn’t you be able to build your building and experience savings without some bureaucrat — waiting in the wings with the force of law — telling you how to build? Clearly, a horribly inefficient building will be an energy sink and would not be a popular choice in the market, but shouldn’t building buyers and tenants have that choice? The same applies to sprinklers. If sprinklers are a major benefit, the insurance companies will price policies in such a way as to make it worth our while — much like those anti-theft devices on cars — why do we need the state looking over our shoulders?

I say, get the CID back to making sure basic safety measures are in place. Leave energy efficiency and the deluxe sprinkler systems up to the free market lest they completely kill New Mexico’s building industry.

Governor Richardson and advocates of massive taxpayer subsidies to the film industry just don’t understand basic economics. According to the New Mexico Independent, Richardson is touting a new study on the decline of the film industry in California and its move to other states.

In a press release, Richardson stated “This study illustrates the value of our film initiatives from the point of view of a state that has lost significant numbers of jobs and revenue because of intense competition from places like New Mexico.” This is supposed to be taken as a justification for New Mexico taxpayers picking up the tab for 25% of film production costs and interest-free loans. The problem is that ANY industry would move to New Mexico given such largess. That doesn’t mean that it is a net economic benefit for the state (or taxpayers).

Let me explain it this way. If we give enough money to a particular industry, we will see increased activity in that sector. Where Richardson and his cronies fall down in their analysis is in assuming that the $60+ million for the fiscal year that just ended would not have resulted in even more jobs and wealth creation than the film subsidies. Richardson naturally assumes that he knows best, but as Nobel Prize-winning economist FA Hayek pointed out, central planners always face the problem of inadequate information relative to their counterparts acting in a free market.

Whatever the studies show, it takes a great deal of faith in the forecasting abilities of Bill Richardson to believe that central planning on behalf of the film industry makes economic sense.

Tom Molitor ran for the Legislature in the Republican Primary. He tells me he is done with politics (forever) and is now doing some writing for the Rio Grande Foundation. He is quite articulate and I am pleased to have him out there putting forth the ideas of individual liberty and limited government. In today’s Albuquerque Journal, Tom explains why Mayor Berry is on the side of the angels in his ongoing battle with the public-sector unions.

Read more of Tom’s recent writings and blogs over at Tom’s page at NewMexicoLiberty.com.