Recently, Albuquerque became the fourth city in the nation to impose its own local minimum wage, following the lead of Santa Fe despite the well-documented harm to The City Different’s low-skilled workers. Before we can begin to measure the effects of this mandate on the state’s largest economy, Governor Richardson is set on imposing this scheme on the entire state, and the state Legislature has been happy to comply.
For a glimpse of what this policy holds for New Mexico’s future, all we need do is look to our neighbors to the west. Arizona’s state-wide minimum wage of $6.75 per hour has been in effect for just six weeks, but already the negative, yet foreseen consequences are beginning to show themselves: “cutting hours, instituting hiring freezes and laying off employees,” preventing inexperienced and low-skilled workers from gaining the experience and skills they need to move up in the labor market and earn higher wages.
Some of us learn this lesson the hard way. For me, the 1996 increase in the Federal minimum wage meant fewer hours flipping burgers at Dairy Queen in high school, the evening shift trimmed from three cooks to two. And some of us never learn–it wasn’t the minimum wage that kept a young Bill Richardson from being drafted to play professional baseball. But hey, he’s doing “what’s right for the working men and women who drive our economy.” Even if that means putting them out of work.

Governor Richardson wants to enact some form of universal health coverage in New Mexico by 2008. The justifications for this, latest expansion of government have been discussed ad nauseum in the media and by politicians, but what are the alternatives to socialized medicine?
President Bush’s proposal to alter the tax incentives associated with health care to make it more affordable to those who do not receive health care from their employers would be a good start. How about state reforms? The fact is that if Richardson — or any state politician — were really serious about reforming health care, they would start peeling back mandates. New Mexico mandates 45 different procedures (eight more than the national average) be included in health care coverage, thus driving health care costs up tremendously.
It would be a political challenge to take on the special interests that have fought so hard for their own particular mandate, but if health care costs are ever going to come down, mandates need to be reduced significantly or even eliminated.

The Rio Grande Foundation is not alone in looking out for the interests of limited government and taxpayers. Albuquerque’s grassroots taxpayer advocacy organization — which goes by the moniker SWAT (stop wasting albuquerque taxes — is getting national attention as well.
While there will undoubtedly be battles to fight between now and June, the SWAT activists (and any others who may be interested in learning about the fight for limited government) will be heading to Washington for a “nuts and bolts” conference held by the National Taxpayers Union.
Once the activists get back from Washington with new information and weapons in the fight against higher taxes, Mayor Chavez and the tax-and-spenders on City Council better watch out!

Just in case you regularly check our blog and not our website — or the Journal and Tribune — the Rio Grande Foundation took on some of the misperceptions and problems associated with New Mexico’s gross receipts tax on the pages of the Tribune. In a commentary published in the Journal’s Business Outlook section, Dr. Messenheimer tackled some ongoing issues in the oil and gas industry and how New Mexico will have a significant impact on those issues in Congress and with Bill Richardson as Governor.

Instead of being threatened by global warming as seems to be the consensus nowadays, polar bears are being threatened by a recent cold snap in Iceland. Apparently, the hapless bears have walked across ice that has made its way to Iceland — an unusual occurance due to recent cold weather — and when they arrive they threaten the townspeople and are often killed. I’m sure global warming has something to do with this recent turn of events.

While school choice seems not to be on Governor Richardson’s or the Legisalture’s agenda this year in New Mexico, our neigbhors in Utah are moving forward with a plan to give poor children vouchers. New Mexico’s neighbors to the northwest are not the only ones that have been actively expanding educational choice — Arizona has been a leader nationwide in the area of education reform.

Recently, the Washington-based Heritage Foundation released its 2007 Index of Economic Freedom. This popular study analyzes the freedoms that exist or do not exist in countries around the world and ranks them.
Not surprisingly, the United States fares relatively well (4th worldwide) and freer countries are wealthier than those that restrict freedom. Perhaps the most relevant aspect of this study for New Mexicans is the fact that Hong Kong — an island with few resources, but a great deal of economic freedom — is much wealthier than Cuba, another island nation, but with greater natural resources.
The fact is that economic freedom, not natural resources — Iran, Venezuela, and Nigeria each have rich oil supplies — make countries wealthy. New Mexico, while blessed with natural resources, is not as economically-free as other states and is also poorer.

Ethanol is all the rage nowadays. President Bush and Governor Richardson, both of whom are obsessed with finding “renewable” sources of energy will, if they stick to their ambitious plans,will more than likely rely on ethanol for a significant portion of that energy.
Jerry Taylor and Peter Van Doren of the Cato Institute deconstruct the supposed benefits of ethanol here. Did you know that ethanol really isn’t entirely “renewable?” How about the fact that it doesn’t actually reduce greenhouse gases?
Also, given all the debate we’ve had over illegal immigration from Mexico, one might think that the Minutemen might want to take an anti-ethanol position what with US ethanol consumption causing tortilla prices in Mexico to skyrocket (and other unrest).

This just in: the US Senate has voted to raise the minimum wage to $7.25 an hour. The only kicker is that the Senate version, unlike the House version, contains some tax breaks and other benefits for small businesses and others that will be disproportionately (and negatively) impacted by the higher mandated wage.
Assuming that this legislation is passed and passed quickly — I doubt it will take more than a week or two — it will be interesting to see whether New Mexico’s Legislature decides to go along with Governor Richardson’s demand for a $7.50 an hour wage. It would certainly make sense to simply go along with the new federal wage rate, but sometimes things just don’t make sense here in New Mexico.

Bill Richardson has a lot invested in the Spaceport that has been proposed for southern New Mexico. That’s why he traveled to Las Cruces recently to make the pitch that voters should raise taxes to fund the project. As shaky as the economics of the spaceport really are — did you know that Richard Branson just signed an agreement to use a Swedish spaceport? — residents of Doña Ana County and throughout Southern New Mexico have to wonder if their tax money will be wasted. After all, New Mexico’s spaceport will be competing with those in several other states and countries to serve a market for private space travel that doesn’t even exist yet.
Bill Richardson is by no means the only politician who thinks he knows better how to spend your money than you do, but his energy, power, and ambition (along with a distinct misunderstanding of economics) make him an ardent and rather effective supporter of big government.

Reporters affiliated with both major Albuquerque newspapers picked up on my have picked up on my recent National Review Online article on Richardson’s spending record. The Albuquerque Journal and Tribune have both highlighted the story in recent days.
Richardson’s record will provide the Foundation with some great fodder as he runs for the nation’s highest office. If Big Bill (or any other politician) wants kudos instead of brickbats, broad tax cuts, school choice, and the restoration and maintenance of New Mexicans’ Constitutional liberties would be a great place to start.

In case you missed the Rio Grande Foundation’s most recent commentary, I discussed Governor Richardson’s record in a recent article on National Review Online. Richardson’s run for the White House is a great opportunity for the Foundation and for those concerned about the very real political and economic problems facing New Mexico to expose them and discuss them on a national stage. These problems — high taxes, poor educational performance, and poverty — are not new. Richardson didn’t cause them, but he could be doing more to resolve them. I just hope that our efforts are more productive than the Republican Party’s calling Richardson a “carnie huckster.”
The Foundation remains steadfastly non-partisan, yet our state’s politcal culture would benefit greatly from a more robust debate — as opposed to name-calling — between the two parties.

Our good friend Troy Williamson over at Educate New Mexico had a nice piece in the Albuquerque Tribune yesterday. For some reason, rather than fighting education choice tooth and nail, it appears that the education establishment in Agua Fria actually supports giving students and parents educational choices. I’m not sure if the best thing to do is to not talk about this shining example lest the NEA send try to stop it, but who knows, whatever is in the water that has caused this cooperation in Agua Fria might actually spread to other parts of the state. Let’s hope it does!

Here at the Rio Grande Foundation, we talk a lot about tax policy and the fact that New Mexico’s policies tend to be relatively unfriendly to entreprenuers and business activity in general. Unfortunately, while New Mexico trails its neighbors in most economic indicators, the average person often does not make the connection between overall economic conditions and tax policy. In at least one instance, that is changing.
As the Albuquerque Journal reported this week, the Legislature is now considering whether to exempt concert tickets from New Mexico’s gross receipts tax. The reason for the potential tax cut? The number of concerts being held at the Pan American Center in Las Cruces has declined by 60 percent since Texas ended its tax on most events. Thus, while New Mexico may be charging only a dollar or more per ticket in taxes, for a concert promoter, that can be $25,000 in forgone profit on $500,000 in ticket sales.
Some might say that even $25,000 is not much money for a “rich” promoter, but a good businessman would be a fool to pass up $25,000. So, is eliminating the ticket tax a good idea? Maybe, or maybe not. The point is that every time we raise taxes — or forego opportunities to cut them — businesses and consumers make real-world decisions as far as where they want to spend their money. This has had a serious impact in stunting economic growth in New Mexico.

The Rio Grande Foundation will be releasing a new paper in a matter of days that thoroughly analyzes New Mexico’s gross receipts tax and both the economic and political issues associated with dramatically broadening the tax base as New Mexico has done. Our first take on the issue was done for a national audience in the publication Human Events .
With state legislative sessions starting up around the country, other states are looking to generate ever more revenue, especially if it can be done without appearing to raise taxes. Broadening the tax base can do just that by going after those who are “unfairly” escaping certain consumption taxes (ie. services).
Be on the lookout for upcoming work on this important topic from the Rio Grande Foundation.

It looks like the first good thing to come out of the Bush Administration in the long term will be his proposal on health care. Basically, he is removing some of the incentives inherent in today’s employer-sponsored system and giving incentives to those who must purchase their own insurance because they are unemployed, their employer doesn’t offer health coverage, or some other reason.
While the health care proposal is a step in the right direction, it unfortunately appears likely that Bush will also be making some sweeping proposals to address the purported issue of global warming. The worst part is that Bush is falling into the big-government trap set for him by the environmentalists if he raises fuel-economy standards for automobiles, plans even greater subsidies for renewable energy sources, and places draconian controls on emissions at utility plants and other big polluters.
If Bush instead looked for market-base proposals such as those to increase the gas tax while offsetting other taxes, he might get some support from limited government types.

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.