Otero County residents are voting on whether or not to increase the County gross receipts tax rate in order to build the spaceport hundreds of miles away near Truth or Consequences. I argued recently in the Alamogordo Daily News that voters should be wary about voting for higher taxes due to the unique nature of the gross receipts tax and the fact that this particular tax hike will be far more costly than 1/8th cent.

Paul Gessing, president of he Rio Grande will appear on Channel 4 in and around Albuquerque (or the local NBC affiliate in your area) at 6:30pm on Saturday October 18. Click here for schedule. He’ll be discussing various issues in climate change and the hysteria in some circles over “global warming” on a half-hour program called “The Climate Case An examination of the state of the environment.” Aside from Mr. Gessing, Weather Channel Founder and global warming skeptic John Coleman will appear. The opposing side will be represented by two UNM professors.
While my role on the show is to talk about the politics of global warming, not the science, there have been some interesting stories recently about climate. First and foremost, there is widespread belief that the coming winter could be extremely cold, in part because the sun has no sunspots (thus signaling a cold winter). Only time will tell, but the idea of a new phase of “global cooling” must make Al Gore very concerned that the global warming gravy train has left the station.
Then there is this interesting story about major climate change taking place on Jupiter. No word on whether humans have caused this to occur, but considering that we’ve never stepped foot on the planet, I doubt even Gore can pin the blame on automobiles. Just goes to show that our solar system is ever-changing and the climate on planets — including ours — is not exempt.

Marita Noon of the Coalition for Responsible Energy has an excellent article in today’s Albuquerque Journal. The fact is that, despite the ongoing economic crunch, we still need to be concerned with energy policy and ensuring that Americans have access to gasoline, electricity, and heat at reasonable prices.
Thankfully, as Noon points out in the article, New Mexicans have repeatedly expressed support for energy exploration, including offshore drilling and opposition for increasing taxes on energy companies. This economic crisis will pass and, when the economy strengthens, there is no doubt that energy will again be an issue. That is why it is so important that we continue to put the pressure on our elected officials in New Mexico and in Washington to make sure that we don’t harm our economy by cutting off access to energy, the foundation of our economy.

Another New Mexico-based think tank — usually considered to be moderate or slightly left-of-center — called Think New Mexico recently released a study calling for smaller schools. While the Rio Grande Foundation has focused on tax credits for education and, more broadly speaking “choice” and market-based reforms as the best means of improving educational results, we fully support Think New Mexico’s call for smaller schools.
According to research from Think New Mexico:

New Mexico’s graduation rate ranks second from the bottom of the 50 states and the District of Columbia. Only 54.1% of New Mexico’s children graduate from high school, compared with a national average of 70.6%. An average of 77 students drop out each school day across New Mexico – nearly 14,000 per year.
Decades of research have shown that smaller schools have higher graduation rates, higher student achievement, lower levels of student alienation and violence, and higher levels of satisfaction among students, parents, principals, and teachers. Small schools also dramatically improve the performance of low-income children, which helps to narrow the persistent achievement gap.
The most effective high school size, according to the research, is 600-900 students. Yet, in 2007, more than two-thirds of New Mexico ninth graders entered high schools with populations larger than 1,000 students, and nearly a third entered high schools with more than 2,000 students.
Small schools are not only better for students, they also cost less to build and operate. Researchers have found that the most efficient schools are those serving 300-900 students. Schools larger than this experience “diseconomies of scale”: inefficiencies and increased costs that result from increases in bureaucracy, security, and transportation. In addition, if the operational cost of a school is calculated “per graduate” rather than “per student,” small schools are substantially more efficient than large schools because their dropout rates are much lower.
The capital costs of small schools can also be far less per student than those of large schools if the small schools are designed to take advantage of community educational resources like gymnasiums, pools, libraries, and sports fields, rather than duplicating these facilities. Several New Mexico charter schools have successfully applied this community-based model, at a savings of millions of taxpayer dollars.
Think New Mexico recommends that the legislature and Governor Richardson enact legislation requiring that: 1) any school receiving state capital outlay funding for construction must have a capacity of no more than 225 students per high school grade level, 120 students per middle school grade level, or 60 students per elementary school grade level; and 2) schools receiving additional state funds to serve at-risk students must establish smaller learning communities if they exceed these size limits and if they have not already done so.

While not explicitly “market” or “choice”-based, the call for smaller schools will certainly make New Mexico schools more manageable. Broad-based choice should still be the ultimate goal of education reform (and it will continue to be the centerpiece of our reform efforts), but forcing schools to downsize should result in improved results.

In case you missed it, a few weeks ago I appeared on Bob Clark’s show on KKOB 770 to discuss the Rail Runner tax hike. A link to the show can be found here.

Recently, two Rio Grande Foundation economists, Ken Brown and Micha Gisser, had a column in the Albuquerque Journal discussing the health care plans of Obama and McCain. While Obama claims his plan will not lead to “socialized medicine,” Gisser and Brown believe that his reliance on government will inevitably lead to a breakdown of the current system.
As far as McCain’s plan is concerned, they say that it would:

McCain’s plan is radical yet simple: It would offer every individual $2,500 and every family a $5,000 refundable tax credit to purchase health insurance. He would abolish the current tax code where employers purchase health insurance for their employees with pre-tax dollars. We can safely assume that his plan, while subsuming Medicaid, would leave Medicare intact.
For the poor, McCain’s tax credit would be offered in the form of a negative income tax. Thus, McCain’s plan is in fact a voucher extended to every citizen, from Bill Gates to the poorest person sleeping under a bridge. Allowing people to purchase health insurance across state lines, and overriding the hundreds of state-coverage mandates, will open up a huge national market for the tens of millions of voucher holders. At long last the spiraling cost of health care will level out.

McCain’s plan likely is better, but I wonder, even if he gets elected, will Congressional Democrats go along? I don’t think we’ll get to find out.

While it will take quite some time to discern the success or failure of the massive government intervention we have seen throughout the US economy in recent weeks, one policy — the ban on short-selling — has already been proven a failure. As the article points out, “The short selling ban hasn’t stopped the decline in bank stocks. An index of the 34 U.K. financial stocks on the banned list has fallen 22 percent since Sept. 19, compared with an 18 percent drop for the FTSE 100 Index of the largest U.K. companies and 10 percent for the FTSE All-Share Index.”
This is no surprise since government intervention in the economy caused this mess at the outset. As this article points out, it was government policy that created the Great Depression as well. Hopefully policymakers stop these interventions and let the economy run its course, but at this point there is no guessing what will happen next.

The Cato Institute recently released its annual “Economic Freedom of the World” Index. The full study can be found here. Unfortunately, the news for the United States is not good. Since 2000, our score has dropped from 8.55 which was good for second in the world, to 7.86 which was good for only 10th in the world (check page 177 of the index for US rankings and scores). I can only imagine how the current financial crisis and massive government intervention in the economy will affect our relative level of economic freedom.
According to the authors, “Lower ratings in the legal structure area and for the
administrative costs of clearing customs were primarily responsible for the rating reduction of the United States.” Sound money, size of government and regulation have all suffered in recent years as well. It would be simple to lay blame for this slide at the feet of President Bush as he has presided over this decline in freedom, but our nation’s entire political leadership has been working to destroy economic freedom in recent years and I see no lights at the end of the proverbial tunnel.

It seems like only yesterday that Congress and all manner of people who are ignorant of basic economics were bashing oil and gas companies for their supposed efforts to manipulate prices and keep them high. Now, with the global economy on the skids, crude prices are plummeting right along with the stock market and are likely to keep dropping.
So, the question must be asked: where are the speculators and manipulators? If Exxon has an iron lock grip on the prices it charges for its product, why aren’t they keeping them high or at least stabilizing them? The simple fact in is that they don’t control prices; they are “price takers.”
While the information above is simple economics, the more interesting issue is how the collapse in oil and gas prices will impact New Mexico’s budget and economy. Months ago I wrote about the impact lower oil and gas revenues could have on New Mexico. It would appear that the chickens are coming home to roost.

Jonah Goldberg spoke at a breakfast in Albuquerque on September 19th. The event was sponsored by the Rio Grande Foundation and New Mexico Prosperity Project. The event was outstanding and several people told me afterwards that it changed their entire outlook on politics (for the better). While the video is not perfect, the sound quality is very high, so turn up your speakers and listen to the talk.
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A few weeks ago I posted information on some of the ballot measures that will appear on New Mexicans’ ballots this fall. Not all of the information was available at the time, but at last, the Secretary of State’s office has put sample ballots online. Ballots statewide are available here and are listed by county. They are long and have a lot of important races and ballot measures on them, so I recommend you look at them early and figure out your votes ahead of time.

At last, complete text of the Rail Runner tax hike is available. The Bernalillo County language is as follows: Shall Bernalillo County impose a one-eighth of one-percent gross receipts tax which shall be dedicated to the Rio Metro Regional Transit District in equal portions for the purpose of management, operations, capital planning, construction or maintenance of the New Mexico Rail Runner Express, and for the management, operations, capital, planning construction or maintenance of the Rio Metro Regional Transit District System, pursuant to the Regional Transit District Act?

According to this recent report from the Albuquerque Journal’s Business section (subscription required although a shorter free article is available here), New Mexico’s State Coverage Insurance program has stopped enrolling new members at 40,000. This has occurred two years earlier than the government originally expected.
SCI is a funded through the federal SCHIP Program. The state pays $100 million per year on the program, approximately 1/4th of the total cost. New Mexico uses SCHIP, a program intended for children, to fund insurance for adults under a waiver that expires in 2010. Because New Mexico already has such generous Medicaid standards, the state couldn’t find enough people to spend SCHIP money on, so, in their infinite wisdom, the program was expanded.
The result is that between an employer and employee, costs for insurance under SCI come to $110 per insured person, per month. The cost of the program to federal and state taxpayers is $400 million annually and $40,000 people are covered for a total cost of $10,000 per insured person. This leaves a total cost per insured person of $11,320 annually. Considering that my Health Savings account costs my employer a total of $3,600 annually, we the people are getting ripped off big-time. Don’t you just love government programs? Couldn’t we just give everyone who doesn’t have insurance in New Mexico a fully-funded HSA and be done with it?

In his posting below, Jim rightfully bashes Congress. I want to trash our beloved Albuquerque City Council too. During last night’s meeting, Council approved $147 million in TIDD subsidies in order to redevelop Winrock Shopping Center. Abundant literature shows that TIDD and TIF are economic losers.
At the very same meeting, in a move that could have helped revitalize downtown — yes, remember downtown, the area that is at the center of so many government planning experiments — Council denied the Church of Scientology a permit that would have allowed them to get to work right away on moving into new digs.
The problem with putting government bureaucrats and politicians in charge of development is that they will subsidize their friends and contributors and they will obstruct those, like the Church of Scientology, that may be outsiders or hold unpopular views. Unfortunately, this is currently the way of the world.

I have written previously in this space about our new legislative tracking website, NewMexicoVotes.org. Recently, we released our “missed votes study” which simply tallies up which legislators are showing up to vote when they are supposed to.
Certainly, there are often legitimate excuses (illness being one example) for legislators to miss votes, but nonetheless, we feel that voters should have some idea if their elected officials are doing their jobs or not. One story from the Santa Fe New Mexican is available here. The Associated Press also picked up the story which can be found here.
The missed votes study itself can be found here.

Over at Town Hall, citizen activist Paul Jacob has compiled a list of the top 10 ballot measures on the ballot nationwide this November. Sure, we are voting on the Rail Runner (ex post facto) of course, but wouldn’t it be great if citizens could put issues they want on the ballot?
Here in New Mexico we really don’t have this capability as we lack the initiative and referendum process (in most cases at the state level). I realize that in a liberal state like New Mexico, this could be dangerous, but I’m willing to take my chances that allowing the people to have a greater say in the rules they live under will be a good thing. What do you think?

Micha Gisser is a former UNM professor and currently serves as a Senior Fellow with the Rio Grande Foundation. He had a very interesting article (subscription required) on taxes in the Business Journal section of the newspaper recently. Gisser essentially went through the tax cutting successes and failures of the last three Presidents to have cut taxes significantly — JFK, Reagan, and George W. Bush and discussed their impact on the overall economy. I have previously compared the size and scope of these tax cuts here.
To sum up his arguments, Kennedy’s tax cuts were Keynesian in nature with the top income tax rate dropped from 91 percent to 70 percent and they succeeded in reducing unemployment from 5.7 percent to 3.8 percent while the deficit was actually reduced at the same time.
Gisser goes on to discuss Reagan’s tax cuts which included reducing the top income tax rate from 70 percent to 28 percent. He calls the record of these cuts “mixed” because budget deficit increased dramatically under Reagan. Where I disagree with Gisser is that the deficit and tax cuts are separate matters. The deficits under Reagan were at least partly spending induced as this chart shows.
Lastly, there is Bush whose capital gains tax cuts in particular Gisser calls a success. Although Gisser gives Bush an undeserved pass on his spending (see previous chart), it is important to recognize at a time when Bush’s economic policies are increasingly unpopular that his tax cutting policies are not to blame. Rather than raising taxes as Obama proposes, we should make the Bush tax cuts permanent and look for ways to reduce our corporate tax burden which is among the heaviest in the world.
Overall, Gisser makes a compelling case, but rather than saying that a particular tax cut has a “mixed record,” we should look at cutting taxes as a way to shrink government. Ultimately, that should be the goal.

Councilor Isaac Benton created a task force and stacked it with his friends and supporters of the streetcar. Recently, the task force released its recommendations. Not surprisingly, they recommend continuing the 1/4 cent gross receipts tax that is up for renewal at the end of 2009. Also, given Benton’s bent towards control of development and personal mobility, he urges more financial support for transit. Lastly, while his task force supports the idea of the streetcar, they naturally view additional funding (more tax hikes and subsidies) as essential in order to move the project forward. Specific recommendations are below:

By a unanimous vote, the Task Force recommended continuation of the gross receipts tax for transportation, set to expire at the end of 2009. This tax will provide continued funding to maintain, improve, and repair city roads and to help maintain and operate the ABQ Ride transit system. The recommendation to continue the tax, which generates approximately $38 million annually, is tied to new comprehensive policy recommendations for each of the tax’s five programs: road maintenance, road rehabilitation, road deficiencies, trails & bikeways, and transit. A central focus of the Task Force’s recommendations is increasing capacity of the city’s existing street
system by improving efficiency and flexibility for private vehicles, transit, pedestrians, and bicyclists.

The report also contains a recommendation about how the tax should be allocated in the future. “One of the most important recommendations from the Task Force is to increase Transit’s share of the tax from 20% to 36%,”
said Councilor Benton. “More and more people are using ABQ Ride every day. We must respond to the citywide demand for transit that has resulted from $3- and $4-dollar-a-gallon gas.”

On the question of the modern streetcar, a two-thirds majority of the Task Force supported the concept, further analysis, and development of the streetcar. However, it would limit such use of the tax to a maximum of 14%
of the total proceeds, and only if leveraged on a 3:1 basis with other sources. These could include State and/or Federal support, private sponsorships, and a Tax Increment Development District.

The report, once introduced at Monday’s Council meeting, will be referred to the Finance and Government Operations Committee, which could hear the report as early as their October 15th meeting.

Congress just passed a $700 billion bailout bill. While that deal will inevitably hit average Americans in their pocketbooks there is another “bailout plan” on the ballot this November in New Mexico…whether or not to bail out the Rail Runner. Unlike the Congressional bailout which voters had little real power over, voters will be able to support or oppose the bailout of the Rail Runner that will increase the gross receipts tax by 1/8 cent.
As I point out in today’s New Mexico Business Weekly, the Rail Runner is already nearing completion and there is no reason for voters to bail out this overpriced project now. If we’d been asked to give an up-or-down vote on the project before it was already rolling down the tracks, then a “yes” vote may have been a reasonable choice. At this point, if voters approve this tax hike they are saying nothing but “tax me more.” This seems like an absurd move while we’re in the midst of an economic crisis, but voters are easily duped.

When promoting market-based education reforms like tax credits, we at the Rio Grande Foundation are often confronted by those who believe — even if they don’t clearly explain their position — that New Mexico students can never achieve educational success, in part, because the population is too poor or too Hispanic. It is true that minorities have historically not performed as well as other students, particularly in public schools, but there is no reason this must be the case.
A new study from the Arizona-based Goldwater Institute, “Demography Defeated: Florida’s K-12 Reforms and Their Lessons for the Nation,” debunks the myth that Hispanics can’t perform in the right educational environment. This study which can be found here shows how Florida, a state that has embraced far-reaching school choice reforms, has enabled minority students to excel. As the study points out:

In 1999, when these reforms were enacted, nearly half of Florida fourth-graders scored “below basic” on the NAEP reading test, meaning that they could not read at a basic level. But by 2007, less than a decade after the education reforms took effect, 70 percent of Florida’s fourth-graders scored basic or above. Florida’s Hispanic students now have the second-highest statewide reading scores in the nation, and African-Americans score fourth-highest when compared with their peers.
In fact, the average Florida Hispanic student’s score is higher than the overall average score for all students in Alabama, Alaska, Arizona, Arkansas, California, Hawaii, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, and West Virginia.

The fact that Florida Hispanics out perform New Mexico’s entire student population should indicate that vouchers and tax credits (both of which Florida has adopted) can improve results. Hopefully, New Mexico policymakers will take notice.

No, I’m not going to tell you who to vote for. Candidates are human beings, likely to shift positions with little notice and once entrenched, it is darn near impossible to get rid of them. Besides, we could run into trouble with the IRS.
That said, there are plenty of ballot issues on the November ballot that may be getting lost in the shuffle, what, with all the attention focused on the Presidential, Senate, and House races (not to mention legislative races) statewide.
While ballots may vary locally, here are some of the proposed ballot measures and what they will do along with some thoughts about how believers in free markets and individual liberty might respond.
Constitutional Amendments
CA 1 Increase the size of certain school boards to nine members and conduct elections by mail-in ballot.
Proponents argue that increasing the size of the school board will somehow improve their administration, but it would seem that it is a half-hearted attempt at best. Allowing choice and forcing schools to compete for students would be more effective.
CA 2 Allow midterm salary increases for county officers.
Do we really need to pay bureaucrats any more than we already do?
CA 3 (2008) Require confirmation of heads of cabinet-level departments or agencies who are subject to senate confirmation at the beginning of each term of a governor.
This is largely irrelevant because the Senate will more than likely act as a rubber stamp. True accountability only comes with greater transparency.
CA 4 (2008) Allow school elections to be held with other non-partisan elections.
Yes! Giving a broader swath of voters the ability to vote on school elections, especially bond measures and tax increases will prevent education bureaucrats from monopolizing low-turnout votes. Also, holding all of these additional elections costs taxpayers’ money.
CA 5 (2008) Require the governor to fill a vacancy in the lieutenant governor’s office by appointment, with consent of the senate.
Like amendment three, this amendment will have very little impact.
Ballot Measures
Measure A: Should the state issue $14,725,000 of debt to build additional senior centers?
Measure B: Should the state issue $11,019,000 to build new libraries?
Measure C: Should the state issue $57,925,000 in debt to build a variety of health care-related facilities?
Measure D: Should the state issue $140,133,000 in debt to build higher education facilities? This ballot measure explicitly provides for property tax increases to pay for the debt on these bonds.

Believers in limited government and free markets should vote against ballot measures because they represent deferred tax increases and result in an inevitable expansion of government. This article provides some insights as to why voters would want to vote “no” on bond measures.
There is yet another issue on many New Mexico voters’ ballots (voters in Bernalillo, Sandoval, Valencia, Santa Fe, Los Alamos, Rio Arriba and Taos counties) this November, that is the 1/8th cent tax hike to pay for the Rail Runner commuter rail project and some other transportation projects. Believe it or not, no one has the exact language for it (or at least they won’t give it to me). Needless to say, we at the Rio Grande Foundation have been longtime critics of the Rail Runner and can’t imagine anyone who believes in limited government would vote for such a project, particularly since it is nearly completed already and won’t be abandoned if the tax hike is defeated.
Watch this space for specific ballot language.

Congressman Ron Paul is one of the few elected officials nationwide who seems to actually understand the causes of the current financial crisis and the potential negative effects associated with the $700 billion bailout that was defeated in the House of Representatives yesterday. Check out the short video from Dr. Paul:

With all the action and talk about the bailout, the health care issue has been moved off the front pages. Nonetheless, there is still discussion back and forth on the issue. Dr. Jim Tryon, a prominent New Mexico doctor who has advised Governor Richardson and others on health care reform, wrote on the topic in the Albuquerque Journal. In his article which can be found here he argues:

(Our) health care “system” is a non-system. Can you imagine running a $6 billion dollar enterprise without a chief executive and a board of directors? Without a governance structure there is no way to coordinate the business of health care. Without an empowered governance structure, special interests will continue to rule and protect their individual turf, and profit, at the expense of the whole.

Of course, the idea that health care should be a “system” seems like a fallacy to me. After all, a system sounds like something that the government would control from the top-down. Medicare and Medicaid are “systems,” but those are not models we should adopt. We don’t have a grocery system, but there is no problem getting food at your local supermarket.
Rather than creating a “system” — even a more coherent one than exists now — adopting reforms in order to free individuals and businesses from unwise government policies would be more sensible than forcing a top-down system on everyone. After all, the fact that so many involved in the health care debate exercise their power to say “No” is probably a good sign that widespread support for any single reform option is not there (thankfully). Maybe we can give greater freedom a try for a change?

Google has been one of the most innovative companies in the world for some time now. Their web browser is used by hundreds of millions of people every day and I couldn’t get around town without their maps. According to recent news stories, however, their most recent innovation may take the cake…at least as far as combining environmental and bottom line benefits are concerned.

The company is considering deploying the supercomputers necessary to operate its internet search engines on barges anchored up to seven miles (11km) offshore.
The “water-based data centres” would use wave energy to power and cool their computers, reducing Google’s costs. Their offshore status would also mean the company would no longer have to pay property taxes on its data centres, which are sited across the world, including in Britain.

So, use ocean water to save massive amounts of electricity and hang onto more revenue at the same time. What a beautiful concept. We’ll see if google’s floating data center idea “floats” and whether it can keep politicians’ grubby hands away from these platforms or if they’ll find some way to tax.

According to the new U.S. Economic Freedom Index 2008 Report which was co-published by the California-based Public Research Institute and Forbes, New Mexico is less economically-free than most states (as indicated on the chart on page 11, it is ranked 41).
There is no question that New Mexico lags in economic freedom and that it relies heavily on the federal government for its daily bread, but this information is particularly interesting considering that Forbes is one of the sources. After all, the magazine has written glowingly of Albuquerque as a place for doing business. Albuquerque is certainly not dramatically freer than the rest of the state, so what is the disconnect?
Does Forbes not believe that economic freedom is integral to business? If they believe that, then I’d urge them to take a look at this international index of economic freedom. More likely, it just seems that the writers of those puff-pieces on Albuquerque simply don’t understand economics and they are basing their recommendations on the amount of handouts our local governments give to those who know how to lobby properly or have the right connections.