Rio Grande Foundation board member and commercial real estate expert Vic Bruno recently presented his thoughts on the intersection of public policy and the Albuquerque commercial real estate market. His presentation focused on the current economic situation as it is affecting Albuquerque and how past events and policy decisions led us to where we are today. He also addressed how we move forward and ways that policymakers and individuals acting in the commercial real estate market can thrive in this new paradigm.
The slides used in Bruno’s presenation can be found here
Video of the presentation is posted below:

As oil and gas prices rise, theoretically, New Mexico’s oil and gas industry should be booming and bringing a great deal of revenue to the state. Unfortunately, with an ever-increasing regulatory burden, the industry is moving elsewhere (particularly to Texas) where taxes, regulations, and corruption do not place such a heavy burden on those attempting to do business. Finally, a study has been undertaken to prove what operators in New Mexico’s oil and gas industry have been saying. The Canada-based Fraser Institute has done an international, provincial, and inter-state analysis of the barriers to investment in oil and gas exploration and production. The report is available here.
New Mexico fares poorly in the study beating out only Colorado, California, Alaska, West Virginia, and Pennsylvania in terns of the overall Extent of Investment Barriers (chart on page 30). Since the study relied on survey data, comments from those who actually do business in the various jurisdictions were a part of the data. Comments about New Mexico included:

Corrupt government. Furthermore, politicians want to stop development but they still want the income.
The state should rely on one agency to police the oil and gas industry rather than every agency,
county, and city, having a separate permitting procedure.
State government is extremely ‘anti-oil’; very hard to make a profit.

The study is an interesting read. Even more interesting will be the impact New Mexico’s increasing regulatory burden will have on one of the state’s most important industries and tax revenues over time.
Jim Scarantino and I will be discussing the findings of this study with its author Gerry Angevine on Saturday’s show at KIVA AM 1550 starting at approximately 9:15.

There have been several opinion pieces in the Albuquerque Journal recently on the issue of health care (such as this one from New Mexico Sen. Jeff Bingaman or this one). That is why it was so refreshing to see this article in today’s paper from a doctor who explains why nationalized health care is doomed to failure.
Writes Dr. Torre Near:

We, as individuals, can do more to improve our lives, but the way the current system is set-up, we have no incentive. The person who exercises every day, is in the normal weight range, doesn’t smoke, has less than two drinks a day and sees a doctor once every two years pays the same as the person who is fat, smokes, drinks, (who’s) exercise is working the remote and (who) sees the doctor every two weeks and is in the ER four times a year.
It doesn’t make sense. We have to change the system, and a national health care plan won’t do that. There have to be incentives to be healthy, just like there are incentives in car insurance to buy a lower cost car, avoid tickets and stay out of accidents.

While the specifics recommended by Dr. Near are somewhat lacking in specifics, there are plenty of ideas in New Mexico and nationally. Hopefully, Congress will kill proposals for government-run or socialized health care and then focus on recommendations that increase individual freedom and personal responsibility in health care.

The Rio Grande Foundation’s investigative journalist, Jim Scarantino, continues to uncover problems at New Mexico’s State Investment Council. The tale of Earthstone and the SIC’s $9 million investment in that company — in part the taxpayer investment was supposed to be used to build a factory in Santa Theresa, New Mexico that was never built (Scarantino reported on this here).
The unique aspect of Scarantino’s latest article, “Friends in High Places,” Anatomy of the SIC’s Bad Investment in Earthstone International” (which is available here) is that the SIC’s analysts actually tried to stop this investment from happening, but they were overruled by the Governor who had a strong desire to get the owners of Earthstone (well-heeled political donors to the Governor) some significant funding. As Scarantino reports:

The SIC knew that Earthstone was a bad bet. But only two months later, on January 27, 2004, the SIC announced that it would extend Earthstone $9 million in a convertible loan. What happened?
Documents in the SIC’s files reveal that promptly after being turned down by the SIC, Earthstone’s representatives began contacting other members of Richardson’s administration, particularly Rick Homans, who was then Richardson’s Economic Development Secretary. So, Governor Richardson, who exerts total control over the SIC, an entity that manages billions of New Mexicans’ taxpayer dollars, forced the SIC to go along with the Earthstone investment.
Unfortunately, as Scarantino reports, the story does not end with the loss of 9 million taxpayer dollars. Despite having not built its factory and not providing any new jobs for New Mexicans, Earthstone recently received another $3.5 million from the SIC.

New Mexico Sen. Jeff Bingaman, the only member of the Senate who will have a seat on both committees that are dealing with President Obama’s health care reform plan (Finance and Health, Education, Labor, and Pensions), had an article in Sunday’s Albuquerque Journal in which he laid out what he sees as some of the problems of our current health care system and solutions that he and his Democratic allies in Washington would recommend. So, what of the Bingaman plan? I’ll cite passages and analyze below:
1) “Health care costs are out of control because our system rewards more care, not better care.” Sure, resources in our current system are not allocated in an optimal manner, but Hayek pointed out the information problem more than 60 years ago. Will government do a better job at allocating resources than our current system under which more than 50 percent of health care spending is already done by the government?
2) “Uninsured rates are high, especially in New Mexico.” So, how about reducing mandates or allowing consumers to purchase care across state lines?
3) “We must clearly define what a basic insurance plan must cover. We must also end the practice of insurance companies denying coverage for pre-existing conditions.” I’m not sure where Bingaman gets off telling the rest of us what kind of health insurance options we should be able to choose from, but that mentality seems to pervade Washington and has for years. If I’m a college kid who wants just a catastrophic policy, is that “acceptable?” How about health savings accounts? Also, “guaranteed issue” will dramatically increase prices.
4) “Part of reform is making sure younger and healthier people are buying coverage.” Of course, guaranteed issue will force these younger, healthier people to subsidize those who take less good care of themselves and are older. How do you force these people into the system and is it really fair?
5) “The bill we send to Congress should shift us from a system that emphasizes ‘sick care’ to one that emphasizes prevention.” Of course this is a good idea. Perhaps if we deregulated the system so doctors and patients could contract with each other as one doctor tried in New York, we could achieve some of these laudable goals, but with insurance companies playing such an outsized role, this is not going to happen under any of the plans now under consideration.
6) Bingaman then argues for “Evidence-Based Medicine” but Twila Brase has demolished the case for that particular form of social control under which doctors are nothing more than assembly-line workers taking orders from the state.
7) Lastly, Bingaman argues that we need a “public option” to compete with private health insurance. This simply means that we will move quickly to fully socialized medicine over time. After all, government, subsidized with taxpayer dollars, does not “compete” on an even playing field with industry. Like Fannie Mae and Freddie Mac, the taxpayer-subsidized option has many advantages and will ultimately “crowd out” the competition.

Tea Partiers across the nation and here in Albuquerque are gearing up for the 4th of July Tea Party. While the Rio Grande Foundation will not be broadcasting live as we did on April 15 we will be supporting the efforts in spirit.
As the Tea Party movement grows and continues, organization will be key. To that end, our friends at the Michigan-based Mackinac Center have created a “Tea Party Activist Toolbox” which is full of helpful ideas for maximizing the effectiveness of the Tea Party movement. We at the Rio Grande Foundation stand ready to assist the Tea Parties throughout New Mexico in formulating policy and organizing to maximize their effectiveness.

To those who know anything about Albuquerque history, the idea of shifting a town may seem logical. After all, Albuquerque got its start at Old Town, but when the railroad came to town, downtown shifted to the current downtown which is known as “New Town.” All of this was done for market reasons, absent government subsidy. But that was the “good old days.”
Nowadays, the federal government — in this instance the Corps of Engineers — is more than happy to come in with hundreds of millions of dollars to move the town of Martin, Kentucky. Read the entire story from the Los Angeles Times here. All this for a town with a population of 633 according to the most recent census data. That is a subsidy of an amazing $138,000 per resident.
I don’t know if anyone has polled these people — wouldn’t be too hard with a population so small — but I’d think the Corps could probably convince them to move for $70,000 per person or less. And Obama wants to put the federal government in charge of health care and all energy-related decisions!
HT: PJ Chavez

Tune in to AM 1550 — New Mexico’s newest talk radio station which now has the call letters KIVA — from 9am to 10am this Saturday morning. Jim and I will be interviewing Richard Romero and discussing his run for Mayor of Albuquerque. Read a recent op-ed from Richard that appeared in the Albuquerque Journal.

With both anti-climate change and socialized health care legislation coming at us at the federal level, it is easy to forget what is happening at the state and regional levels. This is particularly the case with the Western Climate Initiative of which New Mexico is a part.
The Washington, DC-based National Taxpayers Union has written an excellent letter to John Huntsman, the Governor of Utah:

To inquire about the possibility that taxpayer dollars from states not supporting the WCI process, as well as federal funds, were used to underwrite this project against the wishes of several Governors….
These facts raise serious questions about the use of taxpayer funds in this effort from states that did not agree to partner in the WCI project – including Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Idaho, Nevada and Alaska. In fact, it is difficult to see how this was not the case, given the extent to which WGA time, staff and resources were spent to support the WCI.

No surprise that taxpayer money given to an unaccountable bureaucracy would be used to finance a push for bigger government, but it is good to see NTU on the case.

Yesterday’s Windsor Star (Canada) had this article about a young man with cancer and his struggle to get treatment. Among other problems, the patient, Mark Hunt, had to travel four hours to Buffalo rather than Detroit which is right across the river from Canada. Notice, of course, that his only treatment options are in the USA. Big surprise there since Canada’s socialized medical system makes the cost of developing and offering innovative, high-cost treatments too high.
Hopefully our Congressional delegation takes stories like these into account when discussing and voting on President Obama’s “public option” for government-run health care.

Not surprisingly, much of the so-called federal “stimulus” is being allocated towards “green” projects. One such item here in New Mexico is the replacement of traditional road lighting with energy-efficient LED lights. Reporter Kate Nash of the Santa Fe New Mexican asked me about the merits of this plan and quoted me extensively in her recent article on the topic. Feel free to post your own comments here.

The powerpoint presentation is available here.

The most recent episode of “Speaking Freely” has been uploaded. This week, Jim interviews RGF Board member Vic Bruno regarding his upcoming event on June 24. For the rest of the show, Jim interviews District 5 City Council candidate Dan Lewis.
Lewis who is running against Councilor Michael Cadigan discusses why he is running to represent District 5 and his overall vision for the city.

When I picked up this morning’s Albuquerque Journal, I was stunned to see the headline, “Workers Sue over ‘Wage Tax.’” The story detailed a lawsuit being brought against the state by AFSCME, the American Federation of TEachers, the NEA, and other uniions who apparently feel that their members should be exempted from both economic reality and state law.
Certainly, New Mexico’s budget faces cuts given the tough economic times and the Legislature, aware of this fact and not wanting to raise taxes or lay off large numbers of government workers, decided to increase the amount government workers must contribute to their pensions. Certainly, this would not raise any eyebrows were similar cuts made in the private sector. After all, businesses have limited resources and when the economy goes south, layoffs, wage freezes, and benefit reductions are part of life.
But unionized government workers don’t live in the real world. Rather, they know that governments can be influenced politically — making it doubly impressive that the Legislature chose to place part of the burden for tough economic times on this politically-powerful lobby. Unfortunately, while it seems doubtful that the unions have much of a case, it would seem that their suit is designed to raise the costs, both political and financial, of such legislative actions by fighting the battle in court.
We at the Rio Grande Foundation have done a great deal of work on the issue of New Mexico’s bloated and overpaid government work force. Studies can be found here and here. Hopefully legislators stick to their guns, and realize that New Mexico’s bureaucracy remains bloated and a prime target for future cuts. There can be no doubt that well-financed unions — financed with New Mexicans’ taxpayer dollars — will fight to avoid any cuts and will do so every step of the way because they don’t live by the same rules we do.

(Albuquerque) – Victor Bruno is one of the best-known and most respected commercial real estate brokers in Albuquerque and the entire state of New Mexico. He has been involved in commercial real estate in Albuquerque since 1973. Bruno will be discussing the local real estate marketplace and how national and global events are impacting the industry. A member of the Rio Grande Foundation’s board of directors, Bruno will especially emphasize the public policy decisions that have led us to the current situation.
• What: Discussion of current and future issues facing Albuquerque’s commercial real estate market with Victor Bruno
• When: Wednesday, June 24 from 7am to 8:15am;
• Where: The Albuquerque Museum located at 2000 Mountain Road, NW at the edge of Old Town Albuquerque;
• Cost is $10 payable at the door or at the Rio Grande Foundation website, continental breakfast will be provided.
Bruno’s presentation, “Don’t worry, be wary,” will help the general public and the practitioner alike learn the answers to the following questions.
• Who Are the Players? …. A description of who the many players in real estate are and what roles they play. (this will include government and politicians as players);
• What Happened? …. A reflection on the bubble years and how we got there;
• Where Are We Now? …. An update on present conditions (to include not only economic stats on real estate but a brief run down on local government overreach – issues like impact fees, smart growth, downtown revitalization, west side mess, Mesa del Sol and Suncal);
• Where Are We Headed? …. Nearly everyone says commercial real estate is about to tank and if so, why?
• What should we do next?
To attend this event, please reserve your seat for $10 at our website at http://www.riograndefoundation.org/pg_di.html. If you’d like to pay at the door, email us at rsvp@riograndefoundation.org or call us at 505-264-6090.

Recently, John Charles visited Albuquerque and presented on the drawbacks of Portland’s transportation and land use model. His powerpoint presentation is available here. As if to validate the timeliness of this presentation and the fact that many policymakers consider Portland to be the model for the rest of America, columnist George Will, writing in Newsweek recently, discussed Obama’s transportation Secretary Ray LaHood and the Administration’s emphasis on Portland-style rail and land-use planning.
Will writes, in a passage that backs-up Charles’ belief that the Portland model is really about controlling the rest of us:

For many generations—before automobiles were common, but trolleys ran to the edges of towns—Americans by the scores of millions have been happily trading distance for space, living farther from their jobs in order to enjoy ample backyards and other aspects of low-density living. And long before climate change became another excuse for disparaging America’s “automobile culture,” many liberal intellectuals were bothered by the automobile. It subverted their agenda of expanding government—meaning their—supervision of other people’s lives. Drivers moving around where and when they please? Without government supervision? Depriving themselves and others of communitarian moments on mass transit? No good could come of this.

Hopefully, Albuquerque residents will keep Will and Charles’ admonitions in mind when they head to the polls in the city election this October.

Speaking Freely airs on AM 1550 on Saturdays from 9am to 10am. This week, Victor Bruno, member of the Rio Grande Foundation’s board of directors and an expert on commercial real estate will join Jim from the NTU conference in Washington to discuss his upcoming event in Albuquerque. Reservations are $10 and can be made for the June 24 event can be made here.
Jim will also be interviewing Dan Lewis a candidate for the District 5 City Council seat now held by Michael Cadigan. Jim and I interviewed Cadigan a few weeks ago on the show. That episode is available here.
Tune in! And if you miss the show live, check back here for the podcast on Monday

The Albuquerque Journal has done some excellent reporting on the state’s supercomputer and an excellent new study by the Legislative Finance Committee. Unfortunately, such detailed reporting has not been seen on a statewide basis.
So, in an effort to explain the economics of the supercomputer and just how little sense it makes, I wrote an op-ed that appeared in the Las Cruces Sun-News. In summarizing the case against the supercomputer, I wrote:

The fact is that businesses and universities that expect to benefit from such projects should form their own privately-financed consortiums if a supercomputer is indeed a worthwhile enterprise.
One reason for this philosophy is that private businesses putting up “real” money — whether that is $13.8 million or millions more — have a very real incentive to make such a costly investment only if it is absolutely necessary and will lead to real productivity gains.

Having spent trillions of dollars on economic stimuli and bailouts all while unemployment has continued to spiral out of control and jobs still scarce, it will be interesting to see what President Obama and Congress do regarding the estate or death tax. According to a new study (see release here), New Mexico could add some 8,930 new jobs at no cost to taxpayers if the federal estate tax were repealed. The full study is available here.
Not all taxes are created equal. The death tax disproportionately impacts small business owners and others who create large numbers of jobs. Eliminating this tax would go a long way towards promoting real job growth in New Mexico and around the nation.

Jim Scarantino and I sat down this weekend with RJ Berry to discuss his candidacy for Mayor of Albuquerque. The interview is available on the Foundation’s website.

Last week, the Rio Grande Foundation hosted a events with John Charles of the Cascade Policy Institute. Among the points Mr. Charles made in his presentations was the fact that transit is not always “greener” than automobiles. After all, transit vehicles of all types are large and consume large quantities of energy both to construct (in the example of rail projects) and to operate. If these trains and buses are not consistently full, they will not be as efficient as they could be.
As if to second Mr. Charles in his presentation, Yahoo’s website today offered this story which also argued that transit is not always green. These are not the findings of a right-wing think tank, rather the scientists’ findings were published in the British Journal Environmental Research Letters.
Hopefully Mayor Marty and Albuquerque’s City Council will pay attention to this study before building a streetcar. It’s too bad Governor Richardson didn’t question the supposed “green-ness” of passenger rail before we got the RailRunner.

Most rational people might think that in today’s economy, with 9.4 percent unemployment rates, that workers would be happy to see a business putting their fellow laborers to work. That would not be the case for Carpenters Local No. 1319 of Santa Fe.
Instead, the union is protesting (subscription required) the fact that Lone Sun Builders is doing renovations on the Hotel St. Francis using non-union labor. The owner of Lone Sun Builders, the heroic Chet Karnas, said of his company and its workers: “No single individual in this company makes less than $11 an hour. Not one person. He also provides an ample benefits package including health care, a 401(k) plan with matching contributions, and life insurance.”
He and two other Lone Sun employees held a banner that said, “Employee benefits and great wages. Our benefits: Health, dental and life insurance. Health reimbursements, pension and retirement. Sounds like a real shady outfit to me. The unions hate nothing more than employers who treat their workers right without giving them a cut of the action. Here’s to you Mr. Karnas! Oh, and next time I recommend a hotel in Santa Fe, I’ll be sure to recommend Hotel St. Francis.

Jonah Goldberg makes several good points about the term socialism and its application to the economic and political situations we now face. Of course, as Goldberg points out:

The government effectively owns General Motors and controls Chrysler, and the president is deciding what kind of cars they can make. Uncle Sam owns majority stakes in American International Group, Fannie Mae, Freddie Mac and controls large chunks of the banking industry.

Our economy may not be completely socialist, but we are sufficiently socialist to make Hugo Chavez jealous. Facts are facts and we are moving rapidly in the wrong direction — at least if individual liberty is important.
My only quibble with Goldberg is that he attempts to paint socialism (or corporatism) as creatures exclusively of the left and the Democratic Party. He fails to appropriately castiate Republicans, particularly GW Bush for his massive spending and expansions of government into so many new areas of our lives.

If you are not already a listener, this is a good weekend to check out our radio show “Speaking Freely” from 9 to 10am on AM 1550 (listen here online). Mayoral candidate RJ Berry will be on the show. Berry had this column in the Albuquerque Journal in which he decried Mayor Marty’s having “grown the city budget by almost 50 percent between 2003 and 2007” and policies that Berry says have “put the city’s financial future, our public safety and our quality-of-life projects on shaky ground.”
Check back for upcoming interview with Richard Romero and Mayor Marty — that is if Chavez decides to run…