The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.

Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.

A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011

For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.

One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.

The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.

New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).

Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.

Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they  tend to make poor decisions. And all that brings New Mexico’s politicians to mind.

Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:

• Two additional tax brackets of 6.5 and 6.9 percent . New Mexico’s current top rate is 5.9 percent (already increased from the 4.9 percent rate charged during Bill Richardson’s days as governor) would have been further augmented by even higher rates with the 6.5 percent kicking in at $200,000 for married filers;
• Tax hikes on capital gains and corporate income;
• Higher taxes on tobacco and alcohol;
• Subsidies for electric-vehicle buyers, charging stations, and additional handouts for the already-heavily-subsidized film industry.

There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.

In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.

She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.

In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government.  Spending grew by another $1.2 billion in the latest budget  thanks to a 14 percent year-over-year increase.

As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.

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 Wallethub report has made the not-so-surprising finding that New Mexico has the worst illicit drug use problem in the nation. To anyone who has lived in or even visited one of New Mexico’s cities for even a short period of time, this is hardly surprising.

There are numerous ways to consider this finding, but at the Rio Grande Foundation we look at it through the lens of a Legislature which is considering ways to address New Mexico’s  “worst in the nation” deaths from alcohol.

If you don’t see the relationship between New Mexico’s illicit drug issue and its problem with legal drugs (alcohol) we can’t really help you. Clearly, New Mexicans face some fundamental problems that cause them to “self-medicate” using various mind altering substances, both legal and illegal.

What we’d point out is that the Legislature’s plans (in the past session) to increase alcohol taxation in order to “solve” the State’s alcohol problems is hardly a solution when one considers that the State ALSO suffers from serious issues with illegal drugs. Simply raising taxes is not going to change what are obviously some underlying issues in New Mexico.

A new US News & World Report ranking of “Best States” provides yet another sobering appraisal of New Mexico’s public policies (all of which impact the livability of a given state). While the report has been making its rounds on the Internet, we look at a study’s methodology to find out if the report has merit. This one does and it shows that New Mexico’s problems are politically-created.

Education is particularly bad and concerning as is crime. The economy is not great either. Our oil and gas industry provides economic stability which is our only “good” ranking. One oddity in terms of “natural environment” ranking, New Mexico does poorly on “air & water quality” but very well on “pollution.”

So, while not completely sound the rankings as a whole highlight a number of things that New Mexicans already intuitively understand.

This is the 500th episode of Tipping Point New Mexico. It is our 500th episode and we started in June 2018. Where will the next 500 episodes take us?

Wally and Paul discuss a so-called controversy ginned up by a lefty group in NM. They are annoyed NM gave a $100K contract to “diversify the NM economy away from oil and gas” to a conservative lobbying firm. On that note, Paul’s latest op-ed discusses New Mexico’s fundamentally flawed approach to economic development.

A work requirement for welfare programs worked in the 1990s and was included in Speaker McCarthy’s deficit reduction plan. Why not do it again (NM’s delegation is opposed)?

The conversation begins on changing Albuquerque’s system of government:

Another measuring stick illustrates how New Mexico’s “gusher” of revenues has continued and built up our deferred spending. 

MLG touts New Mexico’s low unemployment number, but the State’s job growth is mediocre since COVID. 

Environmental groups’ lawsuit seeks to end oil and gas extraction on federal lands.

Despite reports of being among the worst in the nation in terms of ozone pollution, it is good to remember that ozone pollution is falling in Albuquerque and the nation as a whole.

The Albuquerque Journal published an article on May 1 in which they touted the “success” of the State’s 10% solar system tax credit and lamented the fact that the program’s total cost to the State is capped at $12 million, a number that winds up being spent by the end of March in a typical year.

Unfortunately some solar customers miss out on the credit and wind up (heaven forbid) having to pay the entire cost of their solar system themselves. The Journal reporter (and headline writer) fails to find critics of the program and seems to believe that the ONLY problem with this excellent expenditure of our tax dollars is that the money runs out so quickly.

Numerous questions COULD be asked about whether adding so much solar to the grid is good for its stability or how this complicates efforts to keep the lights on, but those are never asked or answered. I feel for the people who purchased solar panels but missed out on their subsidy, but the reality is that subsidies for solar installations are ANOTHER regressive government program (they benefit the wealthy the most) that our supposedly “progressive” politicians support.

At least one lefty group is VERY upset that a $100,000 contract has been given to a lobbying firm that represents Chevron and ConocoPhillips. The grant is to develop a plan to diversify New Mexico “away from the state’s current dependence on oil and gas.”

The only people who should be outraged are New Mexico taxpayers for this abject waste of their money. Considering the benefits to oil and gas for our civilization New Mexicans should be very proud of the industry.

However, we at the Rio Grande Foundation could easily come up with a plan to move New Mexico away from oil and gas (and while we don’t take state funding, we could do it for much less than $100K).

• Reform the gross receipts tax to eliminate pyramiding;
• Adopt a Right to Work law and end our Davis-Bacon prevailing wage law;
• Use a portion of the $43 BILLION locked away in New Mexico’s permanent funds to transition away from having individual or corporate income taxes;
• In the interests of fiscal restraint eliminate all film subsidies and corporate welfare programs including LEDA and “green” subsidies;
• Enact a Colorado-style TABOR constitutional limit on spending and taxes.

Check out some highlights from our latest blog… Curious? See the full article here👇🏽👉🏽https://t.co/ESklTeDNyi#nmpol #nmleg pic.twitter.com/oMMYt6FVZe

— ProgressNow New Mexico (@ProgressNowNM) April 28, 2023

The following opinion piece appeared in Las Cruces Sun News and other papers recently.

In her message in which she explained her veto of large portions of the Legislature-passed tax bill, Gov. Lujan Grisham wrote, “Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole.”

She wrote this while the State of New Mexico sits on a $3.6 billion budget surplus thanks to oil and gas revenues (a boom that shows no signs of slowing down). She also signed a 14 percent budget increase which grew the size of government by $1.2 billion and included everything from increased film subsidies to $10 million for an abortion clinic primarily to serve Texans. Last year’s budget increase was over 13 percent as well.

The “tax reform” effort in Santa Fe got off to a bad start when the House didn’t seriously attempt to reform the unfair and job-killing “pyramiding” of the gross receipts tax. That “original sin” of New Mexico tax policy (reform of which was supported by the Gov.) should have been the Legislature’s top priority. It clearly was not, and it was never included in any version of the bill.

Worse, instead of just cutting taxes, both houses of the Legislature sadly included tax increases in versions of the bill including the final version. Raising taxes is inexcusable with a $3.6 billion budget surplus. Worse still, the tax hikes included anti-economic-growth policies like imposing two new top rates on personal income and increasing both capital gains and corporate income taxes.

Each of these tax hikes would have done great harm to our economy. The Gov. was right to veto them. Gov. Lujan Grisham’s tax policy agenda is hardly above reproach, however. The Legislature initially planned to reduce the GRT by 0.5 percentage points. This should not be mistaken for reform, but it is much better than nothing. Reducing the GRT also fits nicely with “progressive” economic policy goals as the GRT is a classic “regressive” tax meaning that poor pay a higher percentage of their incomes on it.

But, in the waning days of the session as the Gov. expressed concerns about the size of the tax package legislators adjusted the package by phasing-in the gross receipts tax reductions “to make room for” the film subsidies which had been added during the legislative process.

It would be hard to come up with worse tax policy than delaying broad-based tax relief to pile even more generous subsidies on top of those already given to a favored special interest (Hollywood).  Adding insult to injury these GRT rate reductions were vetoed by the Gov. while film subsidies were left intact.

The best that can be said for tax package is that New Mexicans will get one-time rebates and medical doctors will no longer be taxed on deductibles and copays.

Watching the many twists and turns of the tax bill in the 2023 session highlighted that New Mexico’s political leadership simply does not understand basic economics. Given their ignorance, it is no wonder New Mexico performs so poorly economically. And it’s not just the Gov.’s vetoes, but the Legislature’s approach which was misguided from the start.

Economically, the 2023 session was a big disappointment. But, unless something dramatic happens, the State will likely again be awash in oil and gas revenues when the 30-day session rolls around next January. Can the Legislature and Gov. come up with a real tax reduction plan that will diversify our economy and move New Mexico out of last place?

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

The (barely) Republican-controlled House passed Speaker McCarthy’s deficit reduction plan. Among the provisions it contains is a provision that limits childless, able-bodied adults ages 18 to 55 to receiving food stamps for only three months out of every three years unless they are employed at least 20 hours a week. The plan would also require certain adult Medicaid recipients to work, perform community service or participate in an employment program for at least 80 hours a month or earn a certain minimum monthly income.

New Mexico struggles more than nearly any other state when it comes to workforce participation. It is our strong belief that a lack of gainful work and productive activity among able-bodied adults leads to a lack of personal fulfillment and is one of the core reasons for our State’s elevated rate of social ills.

Bipartisan welfare reform worked in the 1990s to help reduce poverty. Sadly we have abandoned those basic principles. Sadly, New Mexico’s entire Democrat Congressional delegation opposes these basic requirements.

Once upon a time even Joe Biden supported work requirements for welfare.

In 1996, then-Senator Joe Biden spoke of the importance of work requirements for welfare recipients, stressing the need to “put them to work and make them want to go to work.”

What changed? pic.twitter.com/mEbK3PQUTJ

— RNC Research (@RNCResearch) April 30, 2023

At both the state and local levels there appears to be great frustration with the way government worked. In the Legislature a great deal of time was spent discussing whether to pay legislators, extend sessions, and pay additional staffers (among other ideas).

None of the proposals were adopted and the Rio Grande Foundation’s position was that changing the form of government won’t necessarily result in improved competence among the political classes or the voters who put politicians in office.

Now, we hear that City of Albuquerque voters MAY be asked to vote on a proposal to embrace a City Manager style of government. We don’t care much for Mayor Keller and “feel the pain” of the councilors putting this idea forth, but is a new system of government what Albuquerque needs? Just like the full-time Legislature, it’s hard to say.

According to a list from New York City, it’s a mixed bag when it comes to major cities and how they are managed (see list below). Just looking at the list below seems to favor the Council-Manager model (in terms of city governance), but like everyone else we’ll be watching this discussion unfold at least for now.

On this week’s conversation Paul sits down with Scott Appelman, founder and president of the Rainbow Ryders ballooning company which began in Albuquerque and works in several nearby cities. They discuss the economic impact of the industry on Albuquerque and New Mexico, challenges the industry faces, and why his company has been growing so quickly in other cities including the Phoenix area. We specifically address the potential for a New Mexico United Soccer stadium at Balloon Fiesta Park.

Driven by rapidly-increasing oil production in the Permian Basin, New Mexico’s strong revenue growth continues. The Albuquerque Journal recently ran a story highlighting the impact on the State’s Permanent Funds which have grown rapidly in recent years and are now valued at a combined $43 billion.

Sadly, these permanent funds amount to deferred government spending. Perhaps oil and gas will dry up as a source of revenues someday, but that shows no signs of happening anytime soon. Instead, we have a Gov. who shelves a small amount of tax reduction (while boosting spending by 14% in a single year) due to her supposed desire for fiscal responsibility.

The truth is that reducing New Mexico’s onerous tax burden NOW could generate economic growth NOW while diversifying our economy for the FUTURE so we won’t have to worry if/when oil and gas become less of a financial engine.

New Mexico Gov. Lujan Grisham has touted her role in New Mexico’s low unemployment rate, but when it comes to job creation, the State is hardly performing at a high rate. As the first chart below highlights New Mexico has seen a slight increase in the number of private sector jobs since COVID began, but at 1.25% our increase in private sector jobs is WAY down the list.

And, while New Mexico HAS regained jobs lost during COVID (unlike 12 states),  it took the State 35 weeks to regain the number of private jobs it had during the pre-COVID peak.

To the winner go the spoils. The budget recently passed by the New Mexico Legislature and signed by Gov. Lujan Grisham included 6% raises for most government workers. In normal times those are generous raises although to be fair for March of 2023 the annual inflation rate was a robust 5.0%.

But, if you are among Gov. Lujan Grisham’s core lieutenants in government you were hardly limited to 6 percent pay raises. Many within the Gov.’s inner circle received double-digit pay increases with some of them in excess of 20 or even 30%. The following handy chart is from the Santa Fe New Mexican.

Obviously we don’t think these big pay hikes are deserved and New Mexicans should be concerned about the Gov. rewarding her innermost circle for their loyalty.

Starting this evening and for a few weeks Rio Grande Foundation president Paul Gessing will be sitting down with host Diane Kinderwater for a series of conversations about the recently-completed New Mexico legislative session.

The shows last 30 minutes each and you can watch KCHF and find out more about the station and their schedule here. The station is available throughout New Mexico.

Monday April 24, 6:30pm

Tuesday, April 25, 10:30pm

Friday, April 28, 10:00am and 6:30pm

Tuesday, May 2, 10:30pm

Friday, May 5, 10:00am and 6:30pm

Monday, May 8, 6:30pm

Wednesday, May 10, 10:00am

A report from the Santa Fe New Mexican via the American Lung Association places Albuquerque and Eddy County as being among the worst areas in the nation for Ozone pollution. That may be true, but it is also worth noting that Ozone pollution continues to diminish across the nation and in Albuquerque (data were hard to come by for Eddy County).

Below is the chart for Albuquerque between 2000 and 2016 (presumably it has decreased further since then).

The Albuquerque trend line is reflected in national data (below):

Rio Grande Foundation has its hands full in New Mexico, but like ALL Americans should be, we are concerned about economic conditions in our nation and wish to see the federal government do a better job of restraining spending. The federal debt ceiling doesn’t provide much leverage for reformers, but Speaker Kevin McCArthy has put forward a common-sense plan for starting to rein in our out-of-control federal government. It would suspend the debt ceiling for one year in exchange for the following common sense fiscal (and reasonably popular) reforms:

1.  One percent cap on domestic spending
2.  No funding for 87,000 IRS agents
3.  Cancel the hundreds of billions of unspent Covid money (the green new deal)
4.  Repeal Biden student loan bailouts
5.  Enact Reins Act requiring federal regulatory agencies to get congressional approval for new regulations
6. Requiring more low-income Americans to work in order to receive government benefits, particularly food stamps and Medicaid.

McCarthy controls ONE house and narrowly at that. It is unlikely he’ll even get a majority of these items. But, it’s a plan and a reasonable one. So far the Biden Administration has offered nothing but more wasteful spending. This is not meant to absolve the Trump Administration and overspending by previous administrations, but to acknowledge that reductions MUST happen.

On this week’s conversation Paul talks to Mark Abramson the owner of Los Ranchos Gun Store. They discuss gun issues in New Mexico from the past session as well as the Gov.’s plans to attack gun rights in the 2024 session. Also, Mark and Paul discuss the efforts by gun sellers to organize under one organizational umbrella and fight back.

We are told by the Santa Fe New Mexican that Santa Fe’s public school district is expecting a “budget shortfall between $9 million and $13 million for fiscal year 2024.”

The article readily notes that this is the result of a falling student population and even notes that the District expects a decline of 250 students year-over-year. So, while there ARE certain fixed costs there are obviously other costs that can be reduced as student populations decline (as they have for years).

What is really notable is that the article notes the expected student population is 10,946 and the District’s budget is approximately $320 million.  Simple division gets us per-pupil spending of a robust $29,234 PER STUDENT. The number is up from the $25,000 per-pupil that Santa Fe schools were spending back in 2019/2020.

If you can’t educate children at over $29,000 per student you’re doing something wrong. Of course, it isn’t just Santa Fe. As the chart below highlights New Mexico public schools in general are losing students even while spending continues to grow. Perhaps they ALL are doing something wrong.

The Albuquerque Journal editorial today has a interesting discussion of Gov. Lujan Grisham’s line item vetoes of numerous provisions in the Legislature-passed tax bill. Numerous (leftists) from Sen. Heinrich to numerous letter-writers expressed various forms of “outrage” over the vetoes.

The editorial essentially answers its own question about the Gov.’s “right” to veto parts of the package as much of the bill was spending and had nothing to do with tax policy. Of the four provisions in the final package both the film subsidies and child tax credit are spending. So, under the law MLG could veto them.

The more interesting issue is the idea that Democrats in the Legislature and environmental groups suddenly claim to care about the Gov. potentially abusing her powers. This is nothing new as in 2021 MLG took it upon herself to spend COVID relief dollars resulting in a lawsuit by then Sen. Jacob Candelaria (a Democrat).

Of course, at the Rio Grande Foundation we have been pushing for three sessions in a row to simply give the Legislature a seat at the table in emergency declarations. Sadly, few Democrats in the Legislature were willing to cross the Gov. on such a basic issue of governance.

All of this only reinforces the somewhat cynical view that many on the left care only about getting their payoff out of Santa Fe. Process and principle are sadly lacking.

Few New Mexico politicians wish to recognize publicly just how much New Mexico taxpayers must pay in order to bring Hollywood film companies to the State. Few even admit that the subsidies represent spending of our tax dollars.

But, budgets have a way of clarifying the situation. The following is data taken directly from Gov. Lujan Grisham’s FY 2024 proposed budget. We will remain in FY 2023 until July 1 when the ADDITIONAL film subsidies passed in the recent legislative session kick in. While the Legislature’s Fiscal Impact Report claims the recent tax bill will have a “minimal, but negative” impact in FY 2024 (see below) the cost to taxpayers of those increased film subsidies will increase by an ADDITIONAL $61.5 million in FY 2025,  $75.9 million in FY 2026, and another $87.3 million by FY 2027.

With New Mexico’s corporate income tax revenue collections (before deducting film subsidies) hovering at $400 million or so annually, the Legislature could easily eliminate the corporate income tax (while making other needed tax reforms). Sadly, before the Gov.’s vetoes corporate income taxes were set to go up. Nonetheless, we get more than $100 million in subsidies for one chosen industry.

On the latest Tipping Point discussion Wally and Paul take on a number of fiscal issues:

Contrary to the views of NM politicians, lower taxes CAN result in higher revenues.

According to the latest Rich States Poor States report New Mexico sticks out relative to its neighbors (in a bad way). New Mexico’s economy isn’t in great shape, but according to a report from Pew the government has seen more tax revenues than any other state since January of 2020. Based on the recently passed budget in Santa Fe Paul put together a chart to illustrate just how quickly spending has grown.

New Mexico’s capital outlay process has always been corrupt, but the $10 million for an abortion clinic added to this year’s bill only highlighted the corruption.

Insanely Germany has shuttered its last 3 power plants (resulting in more coal and wood being burnt). Meanwhile the

Biden Administration is planning to force EV’s on Americans whether they want them or not.

Paul had a chance to talk to KOAT Channel 7 about the ongoing cost of the DOJ consent decree.  Folks in ABQ’s “International District” want a grocery store now that Wal Mart has closed but they vote for people who won’t get serious about crime.

The 9th Circuit Federal court of appeals gave supporters of gas stoves a victory when it ruled that cities like Berkley cannot impose their own bans. The opinion found the “Energy Policy and Conservation Act  expressly preempts State and local regulations concerning the energy use of many natural gas appliances, including those used in household and restaurant kitchens.”

The battle over “stove freedom” is hardly over of course. While local bans may not be constitutional, the Biden Administration (including but by no means limited to the US Department of Energy) continues to work to find ways to regulate and limit use of gas stoves. To that end the Rio Grande Foundation signed a national letter commenting (against) the DOE’s efforts to impose additional regulations on gas stoves.

You can read the entire comment and find out who else signed on here.

Susana Martinez’ last budget was $6.3 billion. Over the next five budgets (fueled in large part by growth in New Mexico’s oil and gas industry) state general fund spending rose an astonishing 52.38% to $9.6 billion. That comes to average spending growth of nearly 10.5%.

Do you feel that your own personal slice of New Mexico’s economy is benefiting from all that spending? Do you feel that average New Mexicans should see broad-based tax relief rather than bigger government?

Every year for the past 16 the “Rich States, Poor States” report has carefully examined s slew of economic data from all 50 states. This is a meaty report with lots of interesting data and even more can be found here.

A particularly notable chart (2nd below) from the report shows just how badly New Mexico lags its more free market oriented neighbors: Utah, Arizona, Colorado, and Texas. New Mexico (ranked 42nd overall) sticks out like a sore thumb.

New Mexico’s economic performance (as seen below) is propped up by the incredible growth of oil and gas in recent years.