Finally, the worst-kept secret in New Mexico is out of the bag nationally — Governor Richardson is running for President. Although the Rio Grande Foundation definitely has concerns about Richardson’s credentials as a fiscal conservative, not to mention his plan to expand Medicaid without needed refom, we do welcome the attention Richardson’s run will generate for New Mexico and — as the National Taxpayers Union points out — Richardson is more fiscally responsible than most of the Democrats who have announced for President.
If nothing else, hopefully Richardson will recognize that a run for the top office in the land will require he do something to improve New Mexico’s abysmal education system and to reform eminent domain.

On Wednesday, Albuquerque City Council Member Michael Cadigan (and Water Authority board member) and Bob Gay of New Mexico Utilities faced off in the west side edition of the Albuquerque Journal over whether it makes more sense for a government agency or a private company, to manage the provision of water services to a large portion of the west side of Albuquerque.
Having read both sides of the argument, it is plain to see that this is yet another case of a government agency forcibly attempting to crowd private providers out of the market. I’ll take Cadigan’s points one by one:
1) The Water Authority has agreed not to raise New Mexico Utilities’ (NMU) customers rates to pay for the acquisition. This is meaningless government doublespeak. The Authority could raise its existing customers’ rates; it could wait and then raise NMU customers’ rates to pay off debt; or, since it has access to government revenue sources, it could simply get the money from taxpayers by other means.
2) NMU has outgrown its water rights and will have to buy more. Again, this is meaningless. If there is a problem, it is a problem for NMU and provides no justification for the Water Authority to forcibly take over NMU.
3) NMU sells water for a profit and doesn’t have the incentive to conserve. Heaven forbid, someone tries to make a profit by giving customers what they want. When Cadigan and the Water Authority go to Santa Fe and demand that urban areas — not to mention 65% of New Mexico’s population — receives more than 10% of the state’s water, then he can complain about NMU’s business practices. Forcing 10% of New Mexicans to adopt draconian conservation measures is ridiculous when 90% of the water is used elsewhere.
4) NMU customers can’t take advantage of the Water Authority’s rebate program. Again, Cadigan and the Water Authority have control issues and simply want to be able to tell NMU how to run their business. I’d be interested to know if the Water Authority has ever sat down with NMU to figure out a way for the Water Authority to pay for these conservation subsidies?
5) The Water Authority has “improved” its service over the years. Once a government agency has control of the region’s entire water supply, what incentive do they have to keep improving…perhaps they decided to improve in the first place because they looked bad when compared with NMU?

I wonder how often this sort of thing happens in New Mexico. On second thought, the minimum wage issue is a perfect example of how the left professes to care about the “little guy,” but really doesn’t. Wal Mart can easily factor the cost of an increase in the minimum wage into its bottom line, but how about the mom and pop bookshops and the little stores run by recent immigrants?

New Mexico politicians and Governor Richardson in particular, should heed the unspoken advice of Speaker Pelosi: Mandating wage hikes reduces jobs for the unskilled and raises the cost of doing business. That is what Pelosi undoubtedly had in mind when she exempted American Samoa from recent minimum wage legislation on behalf of some tuna canners with headquarters located in her district.

Governor Bill Richardson delivered an ambitious State of the State address this afternoon: text available here. Among the many plans for your tax dollars and the money paid to the state by the oil and gas industries is a massive Medicaid expansion, a 7.4 percent hike in teacher salaries, and lots of new spending on solar and wind power. He did propose some modest tax cuts, but an 11 percent spending increase is the order of the day.
Conspicuously absent from the Governor’s remarks was any mention of eminent domain reform. Although he claims to be supportive of his task force’s findings on the issue, his failure to mention eminent domain during his speech is a troubling sign indeed for property rights activists.
There is no doubt that Richardson has an ambitious agenda. It will be an interesting session.

Rep. Tom Taylor of Farmington (the House Republicans’ floor leader) and Rep. Dan Foley of Farmington (the House minority whip) outlined their plans for the upcoming legislative session in today’s Albuquerque Journal. Specifically they explained what they plan to do with all the excess revenue flowing into the state’s coffers. The Rio Grande Foundation also outlined its hopes for the legislative session recently and there is a great deal of overlap when it comes to cutting taxes. We especially applaud the legislators for stating, “No one can say New Mexicans don’t already pay their share of taxes. New Mexico is one of the most heavily-taxed states in the nation.”
That said, there were a few concerns: First and foremost, the legislators state that New Mexico should “cut its sales tax.” While we encourage almost any tax cut, it is important to be accurate in our descriptions and New Mexico does not have a sales tax. In fact, as the Department of Revenue points out, we have a gross receipts tax which is far more encompassing and economically-harmful than a sales tax.
The legislatators also talk favorably of eliminating the state’s gas tax. While I suppose there would be no specific harm if this unlikely scenario were to occur, there are dozens of more economically-harmful taxes than the gas tax. More importantly, the gas tax is one of the few taxes that actually benefits those who actually pay it (through the construction of roads). Thus, we’d encourage Taylor and Foley — and the rest of the Legislature — to focus their efforts on reducing the gross receipts and income tax rates with some of this excess revenue. Done properly, tax cuts will spur New Mexico’s economy to the point that entreprenuers will no longer need special favors from the State to relocate here.

Given the lack of public disclosure of the project’s financing and the very nature of government-financed projects, the only surprising thing about this story is that it took so long to develop. As it turns out, Governor Richardson has overcommitted New Mexico taxpayers to funding the RailRunner based on the assumption that Congress was going to step in and foot $75 million of the bill. Raising the gas tax to pay for these “unexpected costs” would be a disaster. If lawmakers in Santa Fe had any guts, they’d kill this train before any more taxpayer dollars are wasted on what will undoubtedly be further cost overruns (not to mention at least $8 million in annual operating costs).

According to most political analysts and this Washington Post article, western states including New Mexico are moving towards the Democratic Party. While this could help Governor Richardson in his bid for the nation’s top office, there are differening opinions as to why the west is turning blue. Author Ryan Sager has written a book called “Elephant in the Room” in which he makes the case that the Republican Party lost the west by turning their backs on limited government. No matter what is really happening, it is a trend that will be interesting to track. If the west indeed does turn blue, New Mexico may be considered a trendsetter as it has been blue (as far as state politics are concerned) for many years.

Ron Paul, the constitutionalist-Republican Congressman from Texas has set up an exploratory committee for the purposes of running for President in 2008. Given the dearth of small-government types in either party that have announced for 2008, Dr. Paul’s candidacy is a welcome development. If nothing else, it will be interesting to what extent he can attain a platform to discuss his limited-government views. We at the Rio Grande Foundation certainly welcome a real debate over the role of government in our daily lives.

The water fight between the government-run Albuquerque Bernalillo County Water Utility Authority and the privately owned New Mexico Utilities Inc. is getting ugly. As the Rio Grande Foundation has previously pointed out, a government takeover of a private utility is a foolish step that will only result in higher water rates.
Having listened to Senator Ortiz y Pino discuss water policy at a recent legislative forum and hearing him say that 90% of New Mexico’s water is used for agriculture while only 10% is used for residential purposes, I realize once and for all that the proposed takeover has nothing to do with water or conservation and it has everything to do with power. A sad commentary on the government agencies that are supposedly there to serve us.

In my humble opinion, one of the few bright spots of President Bush’s Presidency has been the tax cuts that have reduced the burdened the federal government places on hard-working Americans. That is why it is very unnerving to hear that the Administration is now talking with Democrats about forcing more taxpayers and small businesses to pay a greater portion of their incomes to the federal government in the form of payroll taxes.
Such a policy would result in the largest tax hike in U.S. history and would do nothing to solve the severe problems assoociated with Social Security. Rather than passing a massive tax hike in the hopes of propping up a system that robs younger workers of their money, President Bush should focus on solutions that give individuals greater control over their financial futures.

In today’s Albuquerque Journal Rick Homans is claiming that he and the Richardson Administration have created new jobs. It is easy to see the results of government action when it creates government favors for particular interests whether they be movies, spaceports or what not. The people who get jobs as a result of the government favors are readily identifiable and happy about it.
But how about the jobs that have gone begging because we do not have a good tax and regulatory climate? Government does not create jobs. Unfortunately our bad economic climate makes it easier to dish out favors and then claim credit. Despite Homan’s claim about our low unemployment, New Mexico remains consistently above the nation and region over time when it comes to the rate of unemployment and the rate of labor force participation and below the nation and region when it comes to per capita personal income. And our situation will not improve relative to other states until we get out of the big-government, dishing-out-of-breaks to favored interests and get into lower tax rates, less regulation and equal tax treatment under the law.
BTW did you happen to notice an irony? While touting governments success on the opinion page, the front page contains news of the difficulty of making jobless claims to the government. A labor department spokesman is quoted as saying: “the call volume has increased dramatically compared to last year, although the number of new claims filed still remains at about 1,400 to 1,600 a week.

While snow slowly melts here in New Mexico, back east there is a heat wave going on and people are talking about global warming. Of course, just like warm winters and large snowstorms are nothing new, neither is talk about global climate change. In fact, as Jeff Jacoby points out, there have been apocalyptic forecasts of global weather change — whether that be heating or cooling — for more than 100 years.
While I am not a climate scientist, it is no coincidence that the people who want to grow government the most have also jumped at the chance to use global warming as a tool to further their agendas.
What is perhaps even more perplexing about the global warming issue is the role that apocalyptic fears have played in human society for thousands of years. There seems to be a desire on the part of many humans to be living in a “special” time, even if it means death and destruction for themselves and their species.

Richard Branson and his company, Virgin, may someday launch spacecraft from the New Mexico desert and yet, he can’t own an airline that flies within the United States because he’s a foreigner. Aside from the fact that such regulations are unfair, they are harmful to American travelers. Competition is reduced and the variety of services provided is constrained. In fact, a study by consulting firm Campbell-Hill Aviation Group argued that Virgin America would save travelers $786 million per year.
So, what special interest might be behind such a misguided policy….why, labor unions of course! How typical of the labor movement. Instead of welcoming competition and the new jobs that would be created by additional airlines, the labor unions would rather stifle competition and stick travelers with the bill. And they wonder why union membership is collapsing.

The Governor’s office sent out a press release this morning, “Governor Bill Richardson Appoints Linda Roebuck as
Behavioral Health Czar” that caught my attention. No, the Rio Grande Foundation hasn’t taken a particular interest in behavioral health and as far as we know, Ms. Roebuck is a fine person…the problem is the job title “Czar.” According to our friends at Wikipedia, Tsar (same meaning as Czar) means “is a contraction of the earlier tsesar, derived from the Roman title Caesar. Great, so now we have an “emperor” of behavioral health. Not only is the name derived from an imperial title, but if you’ve read any history you’d know that Russia’s Czar’s were not exactly a successful bunch and they eventually gave way to the Lenin and the Soviets…not exactly a great track record if you ask me.
My intention here is not to poke fun at Governor Richardson. After all, we have a federal “Drug Czar” and various groups are constantly lobbying for one czar or another. I just hope that before more czar’s are named that more people understand that we shouldn’t want a “czar” in the first place.

It is no secret that Governor Richardson plans to boost education spending dramatically in 2007. But will his big-spending ways have any positive impact on kids’ educational attainment? Not according to a recent study by the American Legislative Exchange Council. As Matt Warner explains “After two decades of failure and almost twice the price, it’s time to give parents the power of choice.”
Hopefully, Governor Richardson will throw his support behind some educational reforms that are likely to have a positive impact, like tax credits.

Thomas Sowell adds another fine article to his series on “dangerous obsesssion.”

Headline in Friday’s Albuquerque Journal:
“Gov. Details Plan to Cut Emissions”
HT: Robin

We have over 14 inches of snow in the East Mountains. Enjoy:

With Democrats in control of Congress, global warming is bound to become an even bigger issue in 2007. New Mexico, apparently, will be leading the way as Governor Richardson recently outlined his plan to strictly regulate industrial emissions of so-called “greenhouse gases.”
Given all the talk of limiting industrial and automotive emissions, I was surprised to learn that the real cause of global warming is not cars and factories after all, but cattle. This article by Mr. Peters appeared in the Albuquerque Journal on Thursday and I’m still not sure if the author was joking when he wrote that we should be mandating catalytic converters to be fitted to the rear-ends and mouths of cattle….
As if the catalytic converter idea isn’t nutty enough, Mr. Peters then advocated placing heavy taxes on beef and bans on the serving of meat products. It is close to New Year’s, but nowhere near April Fool’s day. I hope the author was joking, but if you think his rationale will never be employed to restrict your freedom, you are sorely mistaken.

Thomas Sowell does a great job of teaching us economics in four recent, short articles (one, two, three and four).
The articles explain sources of value and knowledge in human interaction and how values and knowledge translate into wages, prices and progress. I won’t attempt to summarize Sowell here, since he is one of the best economics teachers on the planet. If you are a bit puzzled about how economists think you should read them all carefully — he provides lots of examples of the functioning of markets and politics familiar to our daily lives.
Many of us think by casual observation that some prices or incomes are too high (low) or grossly unfair or unjust. Since most of us cannot make sense out of prices or incomes, he urges us not to make matters worse by “doing something” about what we cannot comprehend in the first place. For that reason he entitles his articles “dangerous obsession.”
Sowell is author of two superb books accessible to anyone who can read: Basic Economics and Applied Economcs. I highly recommend them.

Walter Williams can always be counted on to provide insightful analysis into current events and his economic acumen is second to none. While Rep. Charles Rangel is busy making the political case for restoring the military draft, Williams picks his arguments apart by clearly illustrating that the draft would only shift the financial burden of military operations from taxpayers onto the backs of our soldiers. Not exactly what Rangel intends, I’m sure.

So far I have not noticed any local mention of Saturday’s New York Times article featuring greedy, villainous, predatory payday lenders in New Mexico. At least that is the impression you get from reading the article that is not on the editorial page (“Seductively Easy, Payday Loans Often Snowball”):

While such lending is effectively banned in 11 states, including New York, through usury or other laws, it is flourishing in 39 others. The practice is unusually rampant and unregulated in New Mexico, where it has become a contentious political issue. The Center for Responsible Lending, a private consumer group, calculates that nationally payday loans totaled at least $28 billion in 2005, doubling in five years.
The loans are quick and easy. Customers are usually required to leave a predated personal check that the lender can cash on the next payday, two or four weeks later. They must show a pay stub or proof of regular income, like Social Security, but there is no credit check, which leads to some defaults but, more often, continued extension of the loan, with repeated fees.
In many states, including New Mexico, lenders also make no effort to see if customers have borrowed elsewhere, which is how Mr. Milford could take out so many loans at once. If they repay on time, borrowers pay fees ranging from $15 per $100 borrowed in some states to, in New Mexico, often $20 or more per $100, which translates into an annualized interest rate, for a two-week loan, of 520 percent or more.

I have no doubt that some of the borrowers get into the kind of trouble such as that of Mr. Milford of Gallop:

Mr. Milford is chronically broke because each month, in what he calls “my ritual,” he travels 30 miles to Gallup and visits 16 storefront money-lending shops. Mr. Milford, who is 59 and receives a civil service pension and veteran’s disability benefits, doles out some $1,500 monthly to the lenders just to cover the interest on what he had intended several years ago to be short-term “payday loans.”

But the article raises a lot of unanswered questions:
Specifically with regard to the situation of Mr. Milford’s seeming dilemma, why doesn’t he get a bank loan to extricate himself from his “ritual?” Someone with a stable income (civil service retirement and veteran’s disability payments) should easily qualify for such a loan. Why wouldn’t the reporter dig a little deeper? It looks like there may be something else going on here.
Did Mr. Milford and others like him encounter some kind of fraud on the part of the payday lender? Was there something about his side of the voluntary transaction that was misrepresented? After all, it is a government function to protect us from fraud.
Economists always want to know about the road not traveled. What would have been the consequences had Mr. Milford not gone in debt to the payday lender? What did he need the initial loan for in the first place? It seems to me that would be a logical question for the reporter to ask.
With regard to the bigger picture:
If some 90 plus percent of these borrowers are responsible and do not get into trouble, then why do we want to penalize them for the irresponsible behavior of New Mexicans like Mr. Milford? Would we rather have them bouncing a check for a much higher fee? Would we rather have their heat turned off. Would we rather have their car repossessed? Would we rather they enter the black market for loans when they are desperate?
If the rates charged by payday lenders are so outrageous, then why don’t entrepreneurs enter the market and charge lower rates? This would be a great opportunity for Diane Denish and her feel-good comrades to show their concern without having to legislate more New Mexico style government coercion. They say that payday loans should be capped at a 36 percent annual interest rate. That means she should be able to satisfy the demand for these loans for a fee of only one dollar and thirty-eight cents for a two-week loan of $100. That is quite a saving over the $15 to $20 (or “sometimes more”) currently charged by these lenders.
People tend to do much better when they make decisions for themselves even if, in retrospect, a mistake may have been made. The New York Times is obviously pushing for government to keep us from obtaining payday loans. They think the government knows better for us what we need (or don’t need) than we do.
To the contrary, prosperity results when government does not snowball, because people tend to make much better decisions for themselves (even accounting for all the mistakes we make).
Here is something that really annoys me about this whole thing:

He said the association supported “fair regulations,” including a cap on two-week fees in the range of $15 to $17 per $100, a level now mandated in several states, including Florida, Illinois and Minnesota. This translates into effective fees of about a dollar a day for those who repay on time, which he said was reasonable given the risks and costs of business.

That is a quote from Don Gayhardt, president of the Dollar Financial Corporation, which owns a national chain of lenders called Money Marts. Mr. Gayhardt is also a board member of the Community Financial Services Association of America, a trade group that represents about 60 percent of payday lenders. Mr. Gayhardts’ freedom to contract voluntarily is under attack. Yet, rather than defending his freedom, he kowtows to the seductive big-government snowballers by supporting “fair regulations” that amount to price controls.