Rep. Christine Chanler (D-Los Alamos) is Chair of the House Tax and Revenue Committee which makes some of the most important economic policies in New Mexico. She has pre-filed a bill in advance of the 2023 session (HB 25) which proposes to take New Mexico’s minimum wage from $12 an hour (it rose to that on January 1) to $16 an hour and index the wage rate to inflation.

Under state law the wage has already risen from $7.50 to $12 an hour since just 2019 (a 60% increase). Now, Chandler proposes to take the rate up ANOTHER 33 percent starting in 2024.

If enacted this bill would give New Mexico the highest minimum wage rate in the entire nation according to NCSL. That’s higher than California, New York, or any other high cost “blue” state despite New Mexico being a relatively low income, low cost of living state. Alas, the economic ignorance of New Mexico’s political class cannot be underestimated.

The 2023 legislative session will begin in just a few weeks. Legislators are positively giddy about all the money they will have to spend. With a 43 percent year-over-year surplus you can expect yet another expansion of New Mexico government at all levels.

As the data below shows, New Mexico’s FY 2023 budget (the one we are currently in) consumes vastly more of the State’s economy than our neighbors.    You can find the source data here as well as below the chart.

Broadband internet access is important in our increasingly connected world. We knew that BEFORE March 2020 and the start of COVID 19. But, government has a poor track record of delivering anything at a reasonable cost and broadband is no different.

Check out this from the Biden Administration regarding broadband projects on tribal lands.

One project offers broadband on the Ak-Chin Indian Community in Arizona to the tune of $3,080,698.37 in order to serve 255 households. That comes to $12,000 spent per household hookup.

Right here in New Mexico $3,742,991.00 is being spent on Santa Clara pueblo to connect 79 households, 15 Tribal offices, 2 Tribal businesses, and 3 so-called “community anchor institutions.” When all is said and done federal taxpayers will spend more than $3.7 million to connect 99 entities at a cost-per-hookup of $37,808.

As federal taxpayers we should all question whether this is a worthwhile use of tax dollars. After all, Elon Musk’s Starlink system is available in the region and at a tiny fraction of the cost. It will likely get much cheaper (and better) as time goes on.

Worse, powerful New Mexico legislators are actively considering pouring “surplus” revenues into broadband access. Government does a terrible job of providing these basic services.

MLG and the other winners from November were sworn in over the New Year’s weekend. We can discuss what she had to say and what 2023 has in store. She has also named a new health secretary from Oregon.

NM population drops in latest Census data.

Ten years on was NM’s Medicaid reform a failure? 

Rep. Jason Harper has released a one-pager on some reforms to NM’s gross receipts tax. Details are fuzzy, but Wally and Paul are optimistic.

In a new National Review column I highlight the ways in which Arizona and Mississippi have outperformed New Mexico without higher spending.

Sen. Heinrich had yet another opinion piece published on his pet issue of “electrification.” 

According to the latest Census figures New Mexico lost 3,333 people between July 2021 and July 2022. No big deal, right? New Mexico is blessed with great weather, is in a fast-growing area of the nation, and has massive revenues from its oil and gas industries and will be just fine, right?

Wrong, as has been the case for decades Americans are “voting with their feet” and following economic freedom.

Well, also according to the Census Bureau New Mexico lost population between July 2020 and July 2021.

Two years has the makings of a trend, but between 2010 and 2019, while New Mexico gained a modest number of people, the overall growth of New Mexico was not in line with the American Southwest, rather it was in line with established, slow-growth states like Kentucky.

You can see recent population information in the charts below:

The following appeared in National Review’s Capital Matters on December 28, 2022.

The National Assessment of Educational Progress (NAEP) is known as “the Nation’s Report Card.” Sadly, the most recent “report card” represented failure for many states, not the least of which is my home state of New Mexico, which came in dead-last in all categories studied: fourth-grade and eighth-grade reading and math.

Sadly, especially for New Mexico kids, the additional tax dollars being spent by the state’s education system have not moved the needle. If anything, the needle has moved in the wrong direction.

Let’s compare New Mexico with lower-spending, reform-minded states, such as Arizona and Mississippi. Arizona neighbors New Mexico and has a similar demographic profile, including large Native American communities and a large Hispanic population. Mississippi has poverty challenges similar to New Mexico’s and has also struggled with poor education outcomes for decades. A common saying in New Mexico for years was, “Thank God for Mississippi,” as it was often the only state doing worse than New Mexico on many lists of social well-being and economic outcomes.

Paul and Wally address the key public policy issues of 2022 and their impact of New Mexico plus a look at some key questions for 2023.

According to the latest data from the US Census Bureau (as reported in the Albuquerque Journal, New Mexico lost 3,333 people from July 2021 through July of this year. The country as a whole grew by roughly 1.25 million residents, an increase of 0.4%.

But what is truly concerning is that New Mexico continues to stick out in terms of population growth in its region and in the Mountain West as a whole. All of New Mexico’s neighbors gained population (Texas, Arizona, and Utah were among the 10 fastest-growing US states) overall.

While there are numerous factors (including weather) impacting where people live and move, there is no question that economic freedom (or the lack of it) plays a major role as well.

New Mexico has long been a bastion of big-government and non-freedom in the relatively free Mountain West. With a positively massive budget surplus will the Legislature and MLG make needed changes?

The following appeared in the Santa Fe New Mexican on December 24, 2022 and in numerous other news sources.

As the State’s Permian oil production boom continues in New Mexico the budget surpluses available to legislators each session grow as well. The latest announced budget surplus is $3.6 billion which is a positively mind-blowing 43 percent. This surplus is on top of already dramatic spending growth of 30 percent during the first four years of the Lujan Grisham Administration.

More spending growth this year is to be expected, but the capacity for government to continue expanding after years of rapid growth is somewhat limited by the ability of government to manage existing resources available to it. This is not surprising since New Mexico’s state and local government is already among the very largest in the nation.

But I’m not here to rail about the size of New Mexico government (at least not this time). Rather, I’m here to remind legislators of both parties that such massive surpluses present rare opportunities to lead our State to a better future.

Gov. Lujan Grisham has already proposed rebates of $750 or $1,500 for New Mexicans depending on marital status. Rebates are a bi-partisan idea, one supported in the recent campaign by her Republican opponent Mark Ronchetti, though details differed. To be clear the Rio Grande Foundation does not oppose tax rebates if they are not an excuse to (yet again) punt on long-overdue tax reform. Returning a portion of the budget surplus is not going to move New Mexico’s economy forward and diversify it in the same way as long-overdue tax reform would.

The same can be said for an idea that often garners bipartisan support in Santa Fe: that is bolstering various permanent and “rainy day” funds. Quite honestly, New Mexico has numerous big problems facing it. There is no better time to address these problems than right now. If policymakers use the surplus to diversify and improve the State’s economy in ways that will make it more competitive with its neighbors, the well-being of future New Mexicans won’t be so contingent on the vagaries of oil and gas.

New Mexico’s litany of current economic challenges includes:

• A low workforce participation rate that has historically lagged behind our neighbors and remains well below pre-pandemic levels and has even dropped in recent months;
• Poverty rates that are among the very highest in the nation;
• A medical provider shortage that, while driven in part by regulations is worsened by gross receipts taxation of medical practitioners including Medicaid services;
• Lack of economic diversity in a state that relies heavily on oil and gas for money and government (federal, state, and local) for employment opportunities;
• Water and other infrastructure issues.

These problems (and more) can at least partially be solved by using New Mexico’s financial largesse wisely. New Mexico policymakers have long focused on government-driven approaches to these problems. State and local government spends a very high percentage of the economy.

Majority Democrats have an opportunity to not only pump more funding into their priorities, but they could show that they are pro-business and interested in using oil and gas revenues to diversify the State economy for a time when the oil and gas industry isn’t as bullish.

Republicans, rather than leaving the bold ideas to Democrats, should offer their own serious reform ideas and bills in the upcoming session. Ideally, the minority GOP could influence Democrats toward a more pro-growth agenda. Worst case, in two years they can point to their detailed policy ideas and use them to challenge Democrats for failing to take advantage of this unique opportunity.

Regardless of your political affiliation or beliefs we all must realize that 43 percent budget surpluses don’t come around often. We can’t solve all of New Mexico’s problems even with this massive surplus, but with strategic moves like those outlined here we can certainly move the needle.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

A new report from the Legislative Finance Committee highlights the challenges New Mexico’s Medicaid population faces in actually accessing health care. The report plainly states that, “Medicaid enrollees do not have adequate access to timely healthcare.”

This is no surprise going back to the ObamaCare days when the distinction between expanded “coverage” and actual “access to care” was made clear by opponents and muddled by supporters.

The City of Albuquerque’s “zero-fare” experiment with its bus system continues to bear fruit. According to the latest news report the City’s Transit Department is suspending bus routes due to a lack of drivers.

This has been the “logical” progression from rapidly declining ridership (even pre-COVID) to “free” buses which started in 2022. To be fair, the Transit Department is by no means the only public or private entity desperate to find workers, but no fewer than “nine bus drivers who quit this year cited the program” according the Journal.

The City’s bus system is incredibly expensive and has declined in popularity as other transportation options like ride-sharing have become more popular, but the City shows no signs of reevaluating the overall system and activists hellbent on defending “free” bus fares despite these issues. Albuquerque’s bus system costs approximately $14.46 per ride when all costs are factored in.

It was always a long-shot with New Mexico’s hostile political climate, but the effort (led primarily by the City of Farmington) to embark upon a carbon capture project that would save San Juan Generating Station while preserving its electricity generation capabilities for New Mexico, has been abandoned.

PNM was never interested in the plan and neither were MLG or the so-called environmental groups who oppose fossil fuels regardless of their CO2 emission impact. Farmington (a minority stakeholder in the plant) had a strong economic interest in keeping the plant open.

According to the Farmington Daily-Times, Duckett wrote. “Unfortunately, profit and the (Energy Transition Act)  have taken precedence over the livelihoods of real people and families.  It is with a heavy heart that we withdraw from the arbitration efforts and Carbon Capture Project at SJGS.”

Evidently PNM and other plant owners had already begun to dismantle key parts of the facility during decommissioning which would have been necessary to reopen the facility for use with carbon capture technology.

With PNM having expressed concerns about keeping the lights on throughout its service area this summer it would have been nice to have San Juan’s baseload power, but anti-fossil fuel sentiment reigns even if the vast majority of CO2 would be captured.

On this week’s conversation Paul talks to Mackenzie Bishop, the co-founder and co-owner of Abrazo Homes a home builder based in the Albuquerque area.

In this wide-ranging conversation Paul and Mackenzie discuss the myriad forces acting on the housing market from the Federal Reserve to supply chain issues and local crime and permitting issues. With “rent control” and other policies being considered in the upcoming legislative session this is an especially timely conversation.

Recently we posted on this site that a consultant recently told the Legislature the State is too reliant on fossil fuels. Duh!

That’s fine as far as it goes, but sadly (as the article was updated online) we learned that this consultant has some VERY BAD ADVICE for the Legislature in how to address the problem. Here’s their advice which sounds disturbingly like “diversifying revenues” and nothing like “diversifying the economy”:

• Reforming the personal income tax structure and eliminating the capital gains deduction from these income taxes;
• Reinstituting an estate tax;
• Increasing the gasoline tax rate;
• Broadening the gross receipts tax base;
• Continuing to expand excise taxes.

Simply put, these are ALL terrible ideas and represent major tax hikes. Reforming the income tax and broadening the GRT base have merit ONLY if that means lowering tax rates and reducing those burdens.

Sadly, it appears that at least Rep. Christine Chandler, D-Los Alamos, the committee chairwoman, buys what the consultants are selling. She said “it will be important for the state to find other revenue sources to supplement oil and gas, otherwise New Mexico will find itself in a world of hurt.”

According to the Santa Fe New Mexican an analyst (from a consulting firm) recently told the Legislature that New Mexico is too dependent on revenues from fossil fuels (mostly the State’s oil and gas industries).

According to the analyst “This boom is bound to fade, with market fluctuations and changes in energy policies, leading to as much as $26 billion less in fossil fuel revenue in the next 15 years than the state’s yearly forecasts suggest.”

Hopefully this analyst was doing some pro bono work and was not being paid by the Legislature because we at the Rio Grande Foundation have been offering the same advice for YEARS. While the analyst is undoubtedly correct insofar as an economic downturn or a sustained move away from oil and gas could impact the State’s revenues, the reality is that this is a production-driven boom and until the world no longer needs oil and gas, New Mexico’s most important economic product will remain a foundation of its economy.

The issue, of course, is that New Mexico’s political classes have failed to enact long-overdue tax and regulatory reforms that result in a better business climate. Certainly the Rio Grande Foundation will push for these much-needed reforms, but sadly the Democrats who control the Legislature and Gov. are not advocates for reform.

The map and chart below are from a 2018 Bloomberg report on states and their relative economic diversity. It is no surprise that New Mexico was at the very bottom.

The Rio Grande Foundation recently led a diverse coalition of 19 state policy think tanks in submitting comments in opposition to the Federal Railroad Administration’s (FRA) proposed Train Crew Size Safety Requirements Rule (Docket Number FRA–2021–0032;RIN 2130–AC88). You can find the comments here.

As employers across the nation struggle to find enough employees, the Biden Administration wishes to impose a 2 person crew size mandate on railroads. In 2016, the FRA stated that it could not “provide reliable or conclusive statistical data to suggest whether one–person crew operations are generally safer or less safe than multiple–person crew operations.” And, in 2019, the FRA concluded that, “Accident/incident data does not support a train crew staffing regulation.”

As the letter states:

The proposed rule also ignores technological advances in rail safety made in recent years, including Positive Train Control (PTC). PTC is now operating on tens of thousands of miles of rail line across the country, tracking speed restrictions on a given portion of track, as well as signals and communications, while preventing human error. PTC’s safety advances make it unnecessary for two crew members to be present in the cab of the train.

This proposed rule fails to account for these technological innovations, as well as the safety record of many railroads, including thousands of Amtrak and commuter passenger trains that operate with only one crew member in the train cab.

In the 2022 session New Mexico’s Democrat majority passed HB 132 which placed a 36% rate cap on “consumer loans.” Even in an inflationary environment, to middle and upper class people a 36% interest rate is not particularly attractive. Those people have collateral and other means of obtaining cash in a pinch. The Rio Grande Foundation continues to oppose this cap.

The same cannot be said for many poor New Mexicans who live paycheck to paycheck and are one emergency away from losing a job or car. While the legislation has passed, the New Mexican piece does a reasonable job of showing both sides of the debate.

Jobs in the industry are being lost as one unnamed employee says, “It’s kind of sucky that it’s happening, it’s closed our competitors’ stores, and of course we can no longer lend after Dec. 31st, so eventually my job will be gone once we do our collections and stuff like that. A lot of my old peers and co-workers have already lost their employment due to this new change.”

Quoting further from the article:

Curt Cook, who operates Navajo Trading Co. in Farmington, which stopped offering installment loans about a month ago, agreed.

“Any place where it’s required that [borrowers] have a certain credit, certain assets and things like that to qualify — well, they don’t. That’s why they’re with me,” he said.

Killing jobs AND cutting off banking opportunities for low-income New Mexicans is hardly good public policy. Worse, policymakers who supported the ban really haven’t offered any serious solutions.

The Legislature will have a positively mind-blowing $3.6 billion budget surplus. What is that by comparison?

The PED has also made its budgetary request which, while not a huge increase, highlights the ineffectiveness of boosting spending with no reforms. After producing terrible results in the latest NAEP test the PED and Legislature are considering “dumbing down” education standards:

Among the bills to be considered in the Legislature this year is “net zero.” Energy expert Alex Epstein has thoughts.

Pulling back on ABQ’s “free” buses won’t be easy. 

As Fauci retires and Twitter owner Elon Musk stokes debate over Fauci’s record it is worth noting what he got wrong during his “leadership” of US health policy in the COVID pandemic.

The Biden Administration has made its contempt for the so-called “gig” economy clear. The Administration has proposed multiple rules which would force those workers into “employee” status even though being an Uber driver (for example) simply doesn’t fit nicely into that type of employment status.

The Rio Grande Foundation provided public comment in opposition to the following two Biden Administration rules which would force workers into these unnecessary and absurd boxes. You can click on our comments below:

1. National Labor Relations Board RIN 3142-AA21, “Standard for Determining Joint-Employer Status.” Comments Due December 7, 2022.

2. Department of Labor, Wage and Hour Division, RIN 1235-AAA3, “Employee or Independent Contractor Classification Under the Fair Labor Standards Act,”
Comments Due December 14, 2022.

Millions of workers nationwide enjoy the freedom of the “gig” economy while also providing useful services to even larger numbers of Americans. The Biden Administration’s attacks would be harmful to workers and American consumers alike.

According to the latest news reports New Mexico has a mind-blowing $3.6 billion budget surplus available to it when the Legislature convenes in January. This is, of course, derived largely from a production-driven boom in New Mexico’s oil and gas industry. Between now and January we and others will have plenty of time to discuss potential uses for the money. For now we’d like to simply help people grapple with the sheer size of this surplus.

1. The budget surplus alone is a mind-blowing 43% of the current $8.4 billion budget which is in itself a 30% bigger budget than when Susana Martinez left office.
2. The budget surplus alone is virtually the same size as the FY23 (current year) K-12 budget ($3.8 billion) which is a 41% increase over 5 years.
3. The budget surplus is more than 7X the State’s “public safety” budget and 3.5X the entire higher education budget.
4. The State could ELIMINATE the entire gross receipts tax ($3.047 billion) for FY 2024 and still have nearly $600 million left over.
5. The State could ELIMINATE ALL personal and corporate income taxes ($2.107 billion for FY 2024 and still have $1.5 billion left over.

What WILL happen is anybody’s guess. With New Mexico’s continued economic struggles there are plenty of opportunities for the type of pro-growth tax reform the State sorely needs.

As a quick reminder, New Mexico’s state and local spending is already tops in the nation according to the website US Government Spending:

On this week’s interview Paul talks to Sandra Whisler, MD and Howard Gogel, MD about New Mexico’s medical provider shortage. This is the second conversation Paul has had with medical professionals regarding the serious issues New Mexico is having with attracting and retaining medical professionals.

New Mexico’s GOP re-ups with Steve Pearce as Chair. Also, Paul offers a few more thoughts on voter turnout during the last election. 

The PRC picks 9 candidates for Gov. MLG to pick from. RGF adjunct Kenneth Costello was NOT among the finalists. Paul and Wally discuss.

Wal Mart joins RGF in their innovative use of “StoryFile” technology.

New Mexico is following the “Voices” playbook, but to what end? 

A new study tallies up the cost of COVID learning loss to $900 billion in lost income.

It’s back to the office on January 1 for state employees.

NM’s workforce participation rate has not only NOT recovered from before COVID, it has actually dropped since June.  

At the Rio Grande Foundation we continue to report on and discuss New Mexico’s worst-in-the-nation NAEP scores, all while massively increasing education spending. Sadly, the initial reaction in the Legislature and Public Education Department seems to be to reduce standards rather than making long-overdue changes to the education system.

For starters, there is legislation being drafted to eliminate Algebra II as a requirement and reduce the minimum number of class-unit credits needed for graduation. Currently New Mexico is among the 20 states that require Algebra II for graduation.

Replacing Algebra II with a course on real-world statistics isn’t necessarily a bad idea, but we certainly would question the reduction in overall class credits. Notably, according to the Santa Fe New Mexican, “The state Council of University Presidents has cautioned in recent years that a reduction in high school class requirements, including algebra, could adversely affect college readiness and increase the need for remedial studies.” Given the Gov.’s “free college” it would seem that this may be yet another effort to push high school education onto the backs of New Mexico’s colleges and universities. 

And then there is the the PED’s recent decision to eliminate the need to pass a standardized test in order to graduate. Standardized tests are not perfect, but they provide a basic understanding of what students should be able to do upon graduation. Eliminating the test only further undermines the relevance of graduation rates which are easily inflated and reinforces the need for a high-quality national test like the NAEP.

Gov. Michelle Lujan Grisham didn’t offer many specifics about her plans for a second term during the campaign, but she has actively supported such legislation and will likely do so in the 2023 session. 

Energy analyst Alex Epstein has thoughts:

Reject Net Zero, Embrace Energy Freedom

“Net zero by 2050” policies would be apocalyptically destructive if fully implemented and *have already been catastrophically destructive* when barely implemented.

They should be totally rejected in favor of energy freedom policies.

🧵👇

— Alex Epstein (@AlexEpstein) December 7, 2022

Epstein is definitely worth a follow on social media and he sends regular emails. Furthermore on the issue of “net-zero” Epstein argues:

In practice “net zero” means: rapidly eliminate most fossil fuel use.

“Net zero by 2050” policies include:

• • Escalating restrictions or bans of fossil fuel development
  • Escalating restrictions or bans of fossil fuel use
  • Mandates of alternatives
  • Subsidies for alternatives
  • (Often) hostility to development
  • (Often) hostility to nuclear

Even left-wing environmental groups and their supporters believe “net-zero” is a way to placate current political trends while punting “actual” action into the future.