Today’s Albuquerque Journal included a column from Kathy Chavez, President of an organization called Albuquerque the Educational Assistants Association. The organization even has a website here.
Essentially, Chavez argues that while teachers and principals have received salary increases of 20 percent to 40 percent over the last three year, “classified employees,” that is, those who handle non-classroom related functions, have seen stagnant salaries. Chavez wants a raise for those people and takes Sen. John Arthur Smith to task for proposing a 2 percent increase next year.
Who’s right? It is hard to say because there is no such thing as a free market in education. Public education is a government monopoly with almost no competition in the system. Therefore, it is hard to tell what pay structure is “fair” and schools and districts have no need to compete for staff. If Chavez and her ilk are serious about increasing pay, they must seriously consider educational choice as a means of increasing salaries. Given the AFT’s statement on both vouchers and privatization, the AFT seems unlikely to embrace any market-based education reforms in the near future.
Lastly, while I’m not saying Chavez doesn’t have some point, New Mexico spends more on administration and other outside-the-classroom costs than any other state in the nation…that is, less of each education dollar in New Mexico goes to the classroom than any other state. Go here and click on NM on the map of the USA. Clearly, we are spending large sums on administration, where it is going is anyone’s guess.

Those who understand economics understand that capitalism and free markets are the most efficient and fairest means of allocating resources in any society. Unfortunately, most people (including our elected officials) don’t necessarily understand that. Thus, we fall prey to those who would lead us to believe that some central planning agency will allocate resources more effectively than individuals and companies interacting in a free market. This was the thinking among economic planners in the old Soviet Union and it is the thinking behind New Mexico Governor Bill Richardson’s health care proposal.
In response to the Governor’s government planning model, the Rio Grande Foundation recently released an issue brief, “Cutting Costs and Improving Health Care in New Mexico,” that outlines several ways in which New Mexico could cut health care costs, improve quality, and improve upon its ranking as the state with the third-highest rate of uninsured in the nation.

The Rio Grande Foundation has long decried New Mexico’s economically-destructive Gross Receipts Tax and urged other states to avoid our mistakes.
Unfortunately, at least in Maryland, that message seems to be falling on deaf ears. That state recently decided to levy a 6 percent tax on companies that provide computer support services, computer programming, consulting services for computer systems design and disaster recovery.
Critics say the tax will be a “small-business tax,” as many smaller companies outsource their computer network maintenance work. Of course, those who like bigger government call the $200 million tax hike a “fiscal necessity.”
One would think that Maryland, a state with the 5th-highest personal incomes in the country would not be taking economic policy cues from New Mexico, a state with the 45th highest personal income level in the nation, but revenue-hungry governments are not known for their discretion. If Maryland is wise, they will refrain from adopting the rest of New Mexico’s GRT “model” which includes rates as high as 8 percent and includes nearly all services, not just those related to computers.

I didn’t come up with the title for this piece which appeared in today’s Albuquerque Journal so the point is not that renewable energy should be considered at the same level as fossil fuels.
My real point is that Marks unfairly targets the very energy industry that does so much for New Mexico’s economy in a recent opinion piece. If New Mexico produced little in the way of oil and gas, bashing the industry that fuels America’s economy would be reprehensible enough. Since we do rely disproportionately on oil and gas severance taxes, it is just ignorant and foolhardy.

No wonder the health care debate here in New Mexico has gotten so off track. The policymakers and advocates seem to have little or no understanding not just of markets, but of how bureaucracies actually operate. Two opinion pieces that somehow managed to get published in today’s Albuquerque Journal are perfect examples.
The first article, “Start Health Care Reform in ’08,” by Charlotte Roybal of the Health Care for All campaign first discusses New Mexico’s failure, despite reports to the otherwise, to reduce uninsured numbers. Fine, without reform, little change is to be expected.
Roybal then goes on to discuss the Governor’s proposed Health Care Authority and how it would slash administrative costs and should generally be accountable. Of course, no specifics are offered, but plenty of buzzwords like “transparency”, “meeting health care policy needs”, and “clear balance of power.” None of this actually gets to the heart of what the Authority will actually do and how it is supposed to control health care costs (in reality that will be rationing), but we’ll just figure it all out after it passes I suppose.
The second article, Health Care Fixes Require Thought, by Dr. J. Deane Waldman at the University of New Mexico, starts out like the author is making a case for Evidence Based Medicine, a concept that would bring the scientific method to health care. The practice, while it sounds good, if imposed in a bureaucratic and governmentally-controlled system, would result in utter stagnation in innovation as doctors would be unable to offer new and patient-unique treatments.
Strangely, the author does not dwell on the topic and instead launches into the doctor and nurse shortage in New Mexico, all without mentioning that we are one of the only states nationwide that taxes health care services under the gross receipts/sales tax. There are many reasons that fewer Americans are studying to be doctors and nurses, but the most important one is socialism. We have a quasi-socialized system already and we are on the verge of going all the way. The only way to improve health care is by restoring the individual to the equation, not by adding more government on top of what we already have.

An editorial in today’s Albuquerque Journal discusses ways in which the state can do a better job of attracting dentists. New Mexico has no dental school and I’m sure that is a hindrance on some level, thus measures have been taken to attract dentists to the state, but the Journal is not optimistic about one reform that would do more than others to attract dentists: stop charging them the state’s gross receipts tax!
As the Foundation has pointed out on a number of occasions here, and here as well, New Mexico’s gross receipts tax is economically-devastating with rates upwards of 8 percent in some areas. This would be bad enough if the tax were only applied to retail purchases, but the tax is also levied on services provided by dentists, doctors’ co-pays, and deductibles, and all fee-for-service procedures.
Clearly, before we embark on a “universal coverage” scheme of indeterminate cost, we should enact simple reforms like eliminating unnecessary taxation, right?

Newspaper readers throughout New Mexico are aware of the financial problems and the very real potential for closure at Albuquerque’s afternoon newspaper, the Tribune. While I am certainly sympathetic with the plight of the Trib and hope that new ownership can be found, I take issue with a recent article in the paper which cited the Trib’s potential demise as an example of “concentrated media ownership” and argued that “A huge majority of columnists in most daily newspapers are right-wing.”
First and foremost, while the Tribune is indeed in trouble, that has little to do with media consolidation. Instead, it is the result of increased competition from other news sources (including blogs) and declining readership among newspapers — especially afternoon papers — nationwide.
The author cites a recent report from a group called Media Matters which found that a majority of newspaper columnists carried in major newspapers nationwide are “right-of-center,” writers, this may be a response to reader demands. After all, liberal newspapers like the New York Times are losing readers faster than their more conservative counterparts.
Hopefully the Trib pulls through, but if it doesn’t, it is market trends, not “conservative, corporate media ownership” that will have caused the loss of the paper.

New Mexico Governor Bill Richardson has failed to gain the vaunted status of “front-runner” in either New Hampshire or Iowa that would generate the scrutiny that we’ve seen of say Mitt Romney’s religious beliefs or Barack Obama’s past drug use.
Nonetheless, in attempting to educate voters nationwide on Bill Richardson’s record — especially as it relates to the state’s all-important energy industry — I wrote this article for nationwide distribution.

Bernalillo County will be lobbying the Legislature during the 2008 session for the ability to raise property taxes on County residents. Leaving aside whether it is proper for our elected representatives to use our tax money to further increase our taxes, this request, if fulfilled, will inevitably result in higher taxes, no matter what the County Commission might say.
Ostensibly, the increase is “necessary” to fund the jail and there are major problems with who places people in the jail and whether or not they are financially responsible for them. But, those problems should be addressed before the County simply sticks its hands further into taxpayers’ pockets.
Perhaps the most troubling aspect of the article in today’s Tribune is the expressed willingness of some of our political leaders to increase the gross receipts tax in lieu of the property tax. The gross receipts tax is simply the worst, most economically-destructive form of taxation here in New Mexico and further increasing it would hurt the Bernalillo County economy.

The Club for Growth is a free market political action group based in Washington, DC that attempts to elect or defeat candidates based strictly on their free market credentials — taxes, spending, trade, regulation, school choice, and tort reform to name a few. The group has done write-ups for most of the presidential candidates at this point and recently released their white paper on the Democratic candidates including Bill Richardson.
Clearly, while the Club views Richardson in a clear-eyed manner with all of his very real flaws, when conservatives look at Richardson in the context of a Democratic primary with Clinton, Obama, and Edwards, he doesn’t look quite as bad.

Lawrence Rael, Executive Director of the Mid Region Council of Governments, argued today in the Albuquerque Journal that New Mexico’s Rail Runner is a great deal compared to the Utah Transit Authority’s Commuter Rail project because we are getting more train for less money.
Rael looks at the cost increases that have happened in Utah and argues that the Rail Runner’s costs are “on-target,” despite the fact that Phase II which requires the laying of new track is only in its early stages. The fact that New Mexico could see the very same cost increases seems like an impossibility to Rael.
Of course, regardless of whether or not the Rail Runner is ultimately a better deal than Utah’s commuter train, that does not mean that we are getting a good deal. In fact, roads like Paseo del Norte are a far more efficient use of limited transportation money than projects like the Rail Runner or commuter rail in Utah.

When one person says something it is can often be dismissed as a simple statement of their opinion. When two people make the exact same statement and they happen to both be state legislators who are intimately involved in setting transportation policies in New Mexico, it becomes a talking point.
This became apparent recently as I have listened to both Rep. Patricia Lundstrom, Vice Chair of the House Transportation Committee, and Sen. Diane Snyder of the Senate’s Transportation Committee, argue that on a national basis, gas taxes and gas prices are not correlated. The argument would then presumably follow that if raising the gas tax doesn’t increase prices at the pump, then New Mexico should increase its gas tax to resolve the its Railrunner-induced transportation crisis.
Of course, as anyone who understands basic economics would know, the legislators’ argument does not hold water. First and foremost, with 20 different gasoline formulations imposed by the federal government, clearly we are not dealing with one national market, but many separate markets for gasoline. Also, geography is important.
Not surprisingly, relatively isolated states like Hawaii and Alaska (despite low tax rates and the presence of oil), increase the price of gas. In fact, Hawaii is the most expensive and Alaska is second-highest right now.
In reality, despite the formulary issue, once you factor in geography, gas taxes do indeed seem to correlate with higher prices at the pump. An updated list of gas prices is maintained by AAA and a list of states and their gas taxes can be found here.
Not surprisingly, gas in Washington, with its 34 cent gas tax is about a dime more costly than gas in Oregon with its 24 cent per gallon tax. While prices at the pump in New Mexico trend somewhat higher than nearby states with the same tax rate, this is more likely a factor of having a relatively sparse population (see Montana as an example) than other factors.
Undoubtedly, pricing gas across state lines is not a perfect science, but I can assure you that if New Mexico increases its gas tax, prices at the pump will increase by a corresponding amount.

Just a few days ago, I wrote about a few of the worst provisions contained in the Energy Bill. Now, come to find out that tucked away in this waste of paper was a measure that will force the traditional incandescent light bulb off the market by 2012.
So, by 2012, Americans will be forced to buy expensive light bulbs which contain mercury, a toxic element the environmentalists have criticized President Bush for not regulating aggressively enough.
Let me get the logic here: Power plants are bad because they put mercury into the atmosphere, but mercury in our light bulbs is okay even though it vaporizes at room temperature and literally destroys our body in high concentrations!
Of course, mercury is a side issue here. The real issue is the supposed warming of our planet. Too bad for the alarmists that 2007 saw global cooling, some are arguing that another ice age may be imminent, and some 400 climate scientists are disputing man-made warming.

The Rio Grande Foundation recently hosted Trish Wilger, Executive Director of the school choice organization Iowa ACE. Iowa’s education tax credit program was signed in 2006 by then-Democratic Governor Tom Vilsack.
During her time in New Mexico, Wilger and I met with legislators in an effort to educate them on the issue of education tax credits and how they might help students in our state. Listen to the interview by KUNM‘s Steve Shadley here.

On Sunday, the Albuquerque Journal editorialized in favor of (subscription needed) the Senate-passed Energy Bill, calling it “Smarter Energy Policy.” The Bill, which stripped out tax hikes on the oil and gas industry and requirements that utilities generate 15 percent of their power from renewable sources by 2020, may be “smarter” than the House version which contained those provisions, but it is not really a smart bill at all.
Specifically, there is no “Merry Christmas” for motorists as a result of new fuel economy mandates. After all, if Americans wanted smaller, more fuel-efficient cars, they’d buy them right now. Efficiency has increased steadily over time and there is no magic formula for jumping average fuel economy to 35 gallons by 2020. For the record, I drive a standard shift Ford Focus and it is no skin off my nose, but the federal government should not be sticking their nose into our car purchasing decisions!
Even more problematic than the automobile efficiency provision is the mandate that 36 billion gallons of “renewable fuel” come from some source other than corn by 2022. The Journal congratulates Congress for passing a mandate that won’t drive food costs up, but what exactly are we going to use for our cars? We already know that corn-based ethanol is not great for the environment, will the next best option really be any more efficient than corn?

Pam Hyde, New Mexico’s Secretary of Human Services, wrote about Governor Richardson’s health care proposal in today’s Albuquerque Journal. The headline of the article “Health Plan no Burden on Business” summarizes Hyde’s argument nicely. Unfortunately, it doesn’t hold water.
Hyde states that because some employers offer their employees health care as a benefit that forcing businesses that do not offer coverage and thus would be forced under Richardson’s proposal to pay into a special fund. Somehow, this is supposed to be good for business because it “evens the playing field” between those businesses that do and those that do not offer health insurance.
Hyde apparently believes that paying for an employee’s health care should be yet another cost of doing business in New Mexico, even if that worker is part time. That is not “evening the playing field,” it is a new tax that will chase businesses out of the state and make New Mexico even more unattractive to entrepreneurs.

The federal government has announced the early launch of USASpending.org, an online portal to help you find out how your federal tax dollars are being spent. The website ensures that information about all federal grant and contract spending above $25,000 is published online for ordinary citizens to review.
This is a monumental achievement for transparency in government. You now have the ability to go online and look at nitty-gritty details about where more than $700 billion of our tax money is going. You can search by recipient name, by agency, even by location down to the city level.
I did a few searches by Congressional District and noticed that in New Mexico, districts one and three are among the top 25 districts in terms of receiving money over the past nine years. District two on the other hand, doesn’t appear until 155th place….still above average though.
Getting this database was a huge accomplishment for taxpayer advocates and supporters of transparent government. Getting a similar effort up and running in New Mexico would be a good thing as well.

Although we haven’t always agreed with him (we don’t always agree with anyone), Sen. Domenici made a powerful case in the USA Today against the proposed Renewable Energy Standard contained in energy legislation moving through Congress. As Domenici writes, “Not only would this one-size-fits-all mandate punish those living in states without sufficient natural resources, it would likely fail to bring more renewable electricity on line.”
Domenici is right, Congress should stay out of the energy standard game. Although we’re not big fans of such regulations at the state level, at least they are in keeping with concepts of federalism and competition among the states.

The Albuquerque Journal recently ran a front page story (subscription required) on the 20th anniversary of the completion of Paseo del Norte. There is a lot of interesting information in the article, especially for those who were too young to remember or were not around for the debate over the road.
One of the most interesting parts of the story was that the cost of constructing the section from Coors to 2nd Street totaled $46 million in 1987. Adjusting for inflation, that figure would be $85 million for a section of road that now carries 85,400 cars daily. This number is nearly triple the number of daily trips that were taken on the road back in 1987 and significantly higher than the original estimate of 59,000 daily trips that were originally estimated. In terms of usage, Paseo del Norte has been a rousing success and we should all thank former Governor Toney Anaya and former Highway Department Head and current legislator Larry Larrañaga for their foresight in getting the road constructed.
Of course, as we have pointed out in the past, there is no free market in transportation, so it is somewhat difficult to discern which projects make sense and which do not. Nonetheless, let’s compare Paseo del Norte with the Rail Runner in terms of cost efficiency.
Paseo del Norte carries 85,400 cars daily at a cost of $85 million. Given the fact that Paseo del Norte is driven on 365 days a year, the cost of the road was $2.73 per motorist in 2006. Since the section of road is approximately 3 miles long, the cost is about $1 per motorist mile. Of course, Paseo del Norte has been in use for 20 years, but in comparing it to the Rail Runner, we have to keep the comparison the same.
How about the Rail Runner? The Rail Runner is not yet complete, but when it is, the system will cover 117 miles. Currently, 2,000 people take the train daily on the weekdays (260 days a year). Once the train reaches Santa Fe, ridership totals may double to 4,000 as the length of the route approximately doubles, but there is no way to know how many riders the system will attract.
Total construction cost of the train will be at least $400 million with an annual operating cost of approximately $18 million to be borne by New Mexico taxpayers.
Assuming that the average Rail Runner passenger travels half of the system’s 117 mile length (a generous assumption to say the least), the current annual cost per passenger mile for the Rail Runner is $13.86 or nearly 14 times the cost to travel a similar distance on Paseo del Norte.
While this assumption may be skewed in favor of the Rail Runner, I wanted to be as fair as possible to the train. That said, there is no doubt that if government is to be concerned with moving people and not attempting to mold their behavior in order to make them better people, roads are the vastly more efficient transportation choice. As suc, the focus of New Mexico policymakers should be on roads, not transit.

Anyone who has taken a close look at Bill Richardson’s plan to reform health care in New Mexico or the national health care system can see that our supposedly “market Democrat” Governor abandons all reliance on the marketplace when it comes to health care. That said, I was surprised to see that Richardson recently spoke in favor of abolishing health savings accounts.
His arguments, that “They (HSA’s) are a step backward” and that “They put working families at risk because most families cannot afford to pay the … out of pocket costs” strike me as bizarre and uninformed. Now, HSA’s are not the silver bullet for health care reform, but I don’t really see how giving health care consumers more control over their care would be seen as a step backward or how they put families at risk.
More likely, it seems that Richardson doesn’t like market-based approaches to health care because they make his efforts to put such decisions in the hands of government officials more difficult. That is unfortunate.

Michael New, a professor from the University of Alabama and an expert on tax and spending limits testified with me before the Legislative Finance Committee recently. An article by Dr. New recently appeared in the Las Cruces Sun-News making the case for Constitutional limits on taxes and spending in New Mexico.

Last summer’s energy bill was loaded down with counterproductive measures that would have raised energy prices. Fortunately for consumers, that bill was never enacted. However, the House is now trying to resurrect that bill’s approach with a somewhat scaled-back version that includes new fuel economy standards for cars and trucks, a greatly expanded ethanol mandate, and new renewable standards for electricity. This bill would still raise prices for families and businesses, slowing the American economy overall.
Fuel Economy Standards for Cars and Trucks
The new bill contains a sharp increase in the federally mandated corporate average fuel economy (CAFE) standards. Under this proposal, each manufacturer’s fleet of passenger vehicles would have to average 35 miles per gallon by 2020, a roughly 40 percent increase over current standards for cars and trucks.
In theory, consumers can save at the pump by being made to switch to more efficient vehicles, and at the same time reduce greenhouse gas emissions and oil imports. But doing so will raise sticker prices, and the costs could more than negate the energy savings.
Federally mandated smaller vehicles also raise the consumer choice issue. Washington is acting as if fuel efficient cars and trucks are currently unavailable, but in truth a variety of such models are already on the market for those who want them, including a growing number of hybrids. They fit the needs of some people but not others. Does the American car-buying public–from soccer moms to seniors–really want or need Washington stepping in and forcing smaller vehicles on everyone?
More Ethanol
The bill goes above and beyond the current renewable fuels standard with an expanded mandate that will cost Americans at the pump, at the supermarket, and at tax time.
The 2005 energy bill required that agricultural-based renewable fuels, mostly ethanol made from corn, be mixed into the gasoline supply. The mandate has raised the cost of driving, because mixing ethanol into the gasoline supply reduces fuel economy. Ironically, the increase in fuel economy standards in the bill will be partially negated by the expanded use of less-efficient ethanol.
Ethanol has also failed to deliver on its promise to appreciably reduce greenhouse gas emissions and dependence on oil imports.
At the same time, the diversion of corn to ethanol plants has led to higher corn prices, in turn leading to higher prices for food items such as corn-fed meat and daily products. Current ethanol usage is much lower than that envisioned in the current bill, but an Iowa State University study estimates that food prices have already increased by $47 annually per capita, or $14 billion overall.
The new bill seeks to increase the current mandate nearly five-fold–from 7.5 billion gallons by 2012 to 36 billion by 2022. Meeting this expanded mandate will require not only much more corn-based ethanol but also other renewable fuels that are even more expensive. The bill specifies that 21 billion gallons of the total be cellulosic ethanol, even though this energy source is just a few steps beyond the drawing board at this time. It is unknown whether it can be produced in such quantities and at what cost.
Under the new standards, the price increases for food and fuel, which are expected to be significant under the current, smaller mandate, would likely skyrocket.
The bill may also include hefty penalties for refiners that are unable to comply with the mandate–a real possibility, especially given how unproven cellulosic ethanol is at this point. These penalties would act as a gas tax, further raising the price at the pump.
In addition, the large government subsidies for renewables, including a 51-cent-per-gallon tax credit, would rise commensurate with the mandate. The agricultural subsidies to corn growers would also expand with the increase in acres planted. Further, the handouts necessary to launch the cellulosic ethanol industry would also be significant. These costs, to be borne by taxpayers, could soon reach tens of billions of dollars annually. In effect, taxpayers would be paying hundreds of dollars per household for the privilege of higher fuel and food prices.
Renewable Portfolio Standards
The bill also mandates that 15 percent of electricity be generated from so-called renewable sources–chiefly wind power but also solar and others. In order to comply, utilities generating electricity from natural gas, coal, and nuclear power would have to diversify into these environmentally correct alternatives.
As with renewable fuels, the only reason why renewable electricity needs to be mandated in the first place is that these alternatives are far too expensive to compete otherwise. In effect, Washington is forcing costlier energy options on the public. This is particularly true for certain states, especially those in the Southeast, where the conditions are not conducive to wind power. Moreover, these sources of electricity are intermittent and unreliable and thus pose problems beyond the added costs. And like ethanol, renewable sources of electricity enjoy substantial tax breaks; thus, the mandate will cost Americans both as taxpayers and as ratepayers.
About half the states have recently adopted their own renewable portfolio standards (such as California, New York, and Texas), and others have opted not to have them. Simply put, these sources of energy make more sense in some states than in others. There is no good reason for the federal government to step in with a costly, one-size-fits-all measure.
Missing: Any Real Steps Toward Affordable Energy
Conspicuously absent from the bill is any effort to increase the supply of the proven energy sources that America relies upon. An energy bill that helps consumers would streamline or eliminate the many laws and regulations that restrict access to domestic oil and natural gas, both offshore and onshore, but no such measures are included. The bill also does nothing to untangle the red tape that has slowed everything from refinery expansions to new nuclear plants.
Original article available here.

The unfolding drama over TIDD’s and the subsidization of so-called “green field” development got even more interesting yesterday as Albuquerque Mayor Marty Chavez released his veto of Councilor Cadigan’s bill that would limit TIDD to use in existing areas of the City. The text of the veto can be found here.
While the Foundation is skeptical of TIDD, especially for new development, an interesting story caught my attention in yesterday’s Albuquerque Journal (subscription required). It turns out that Councilor Cadigan would like to see the Albuquerque-Bernalillo Water Authority — an organization that is almost completely unaccountable to the public — play a bigger role in putting the brakes on local development. This is obviously a bad idea as the Journal pointed out in a subsequent editorial. According to the Journal, the water board should stick to providing water for area residents and not get into development questions. We wholeheartedly agree.
Unfortunately, while TIDD would seem to be unnecessary, it looks like both the pro and con sides of the argument have their proverbial hands in the coercion cookie jar. The pro-TIDD side wants development (preferably so-called “smart growth”) and is willing to force the rest of us to subsidize their wishes. Some on the anti-TIDD side including Cadigan seem to want to stop all growth and have latched onto the TIDD issue as a means of throwing a wrench into things.
It would seem obvious that Mesa del Sol and Suncal could would thrive on their own merits if they were allowed to develop in ways demanded by the market, but contrary to environmentalist claims, most Americans don’t want to live in new urbanist “paradise.” Thus, the companies engaged in developing these areas appear to want subsidies in order to hedge their bets against failure.
What a mess! I wish we could all get back to the free market!

The Cato Institute has published an outstanding new paper (link is to executive summary) on the potential for education tax credits to provide greater choice in public education. Among other points, the paper argues that tax credits enjoy practical, legal, and political advantages over school vouchers. Tax credits, not vouchers, are a viable option here in New Mexico for many of the reasons outlined above and for that reason they are a top priority of the Rio Grande Foundation and other advocates of increased educational opportunity.