On January 1, 2022 the City of Albuquerque began what it calls a “pilot program” offering “free” bus fares for all riders. The program cost an additional $3 million above and beyond the usual cost of the City’s bus system.

Not surprisingly (given national trends in transit ridership), the number of people riding Albuquerque buses remains well below pre-pandemic levels. In fact, even with “free” fares in place ridership was 33 percent lower than it was in 2019.

Ridership numbers were a bit higher than the pandemic years of 2020 and 2021, but the trend line remains negative for Albuquerque’s bus system regardless of the “new” ART system and zero-fares.

There is absolutely nothing wrong with celebrating Martin Luther King and his legacy. In fact, we applaud the City of Albuquerque and State of New Mexico for it. But, in a world in which customer service mattered to the City would it really make sense for the City’s community centers to be closed Saturday through Monday? The centers are already closed every Sunday, but for them to be closed both on Saturday AND Monday in observance of the Holiday when kids are at home and looking for things to do is just crazy.

You can bet that private businesses which actually have a financial interest in serving their customers will be open. It would be nice if taxpayer-funded activities for youth at least made some effort.

On this week’s interview show Paul talks to Rep. Ryan Lane (R-Aztec) the incoming House Minority Leader in the New Mexico Legislature. Paul and Ryan talk about what made Ryan get into politics and what he and the minority Republicans hope to accomplish during the impending 2023 legislative session. Specifically, they discuss New Mexico’s massive surplus as well as New Mexico’s emergency statutes which have been used by Gov. Lujan Grisham. for nearly three years.

Like few governors in the history of the United States, New Mexico Gov. Lujan Grisham has benefited from extremely favorable budgetary conditions.  With New Mexico oil production having more than quintupled just since she took office (and showing no signs of slowing) the State has seen massive revenue growth.

If ever there was a state with the means to break free from its moorings at the bottom of all the good lists and the top of all the bad ones, this would be the time. Instead, Gov. Lujan Grisham’s budget is more of the same: massive spending growth and (potentially) some modest tax reforms. It’s not that everything is bad, but it is clear that MLG doesn’t have “the vision thing.” 

At $9.4 billion the budget represents 12 percent spending growth. That’s on top of major increases in recent years.

The plan includes $750 rebates for single filers and $1,500 for joint filers and would total $1 billion. We have discussed the pros and cons of rebates here.

The Gov. has even proposed $500 million in tax relief, in part through cuts in some income tax rates and lower statewide gross receipts taxes on sales and services. The Rio Grande Foundation has consistently pushed for GRT reform rather than small rate reductions. Sadly, it seems that no matter how much money they have available Lujan Grisham and the Democrats just don’t have an interest in reforming New Mexico’s broken tax code.

Tax cuts and even rebates are nice. More spending is inevitable given the numbers. Sadly, none of this will “move the needle”  on New Mexico’s serious economic and social challenges and thus represents a mostly lost opportunity.

Back in April of 2022 the Legislative Finance Committee issued a report stating that due to a drop in enrollment at the District from 89,163 students in 2012-2013 to 71,119 in the current (2022-2023) school year that the district should “rightsize” its physical assets.  That’s a 20% decline over the decade.

Well, the District has submitted its plan to the Board. It’s not surprising that the plan is underwhelming. No layoffs are included nor would any facilities be shut down and sold off. Some would be repurposed with a portion of those being made into pre-K facilities with the passage of Amendment 1.

We share Board Vice President Peggy Muller-Aragón’s belief that “some communities — like on the West Side of the city, where her district is — may benefit from selling schools.”

“If we sold some of those schools … it would bring a possibility of building new neighborhoods in areas where there isn’t space for new neighborhoods,” she said. “We all know how housing is really lacking in our city.” Selling schools and redeveloping them would also have the impact of bringing them onto the property tax rolls and reducing costs of owning and managing so many properties.

However, with massive oil and gas budget surpluses and voters having approved plans to tap the permanent fund for even more spending, the incentive to make hard decisions simply isn’t there. Interestingly, New Mexico’s public schools were among the few states in the West to lose students in public schools beteen 2009 and 2020).

With the announcement earlier this week by the Biden Administration that it was considering banning gas stoves, the public was helpfully reminded by our friends at National Review’s Capital Matters (a publication RGF president Paul Gessing writes for regularly) that he had flagged this issue way back in August 2021.

Wrote Dominic Pino, “With the news that the Biden administration is considering stricter regulation of gas stoves over health and environmental concerns, it’s worth remembering this Capital Matters piece from Paul Gessing in August 2021.

And, while the push to ban gas stoves by Sen. Heinrich and the Biden Administration relies on studies which claim serious health problems associated with gas stoves. The folks at Junkscience.com have debunked one of the prominent anti-gas studies. Here is one quote from the debunking:

The claim that gas stoves are responsible for 12% of childhood asthma – an epidemioogic concept called “attributable risk” – is entirely bogus because epidemiological studies can only be used to associated exposures with disease.

Paul was called “prescient” by one national publication for his analysis regarding natural gas in appliances.

Paul and Wally really enjoyed this recent cartoon in the Albuquerque Journal.

Proposals will be considered in the upcoming session. Should the New Mexico Legislature be “professionalized?” 

A powerful Democrat legislator wants to make New Mexico’s minimum wage $16 an hour AND index it to inflation (HB 25).

MLG backs down (at least for now) on getting government employees back to the office.

A new report highlights New Mexico’s poor ROI from higher education. 

Broadband or government boondoggle? 

John Trever of the Journal always has a perceptive take on the political situation in New Mexico. His latest cartoon from Sunday is as usual spot-on.

A new and highly detailed report from Preston Cooper at The Foundation for Research on Equal Opportunity takes a close look at ROI (return on investment) for higher education degrees in each of the 50 states.

The author defines ROI as the amount a student can expect to gain financially from each individual degree. ROI compares the main financial benefit of college — the increase in lifetime income attributable to the degree — to the costs, including tuition and foregone earnings.

It will come as no surprise to readers in this space that New Mexico is among the very worst states in terms of ROI. When adjusted for state spending on higher education (New Mexico spends a lot) New Mexico drops to dead last:

The author points to an emphasis (or lack thereof) on “high value” majors as one important variable (having a lot of low-value majors is also a factor in the negative).

Strength of the job market graduates are moving into is another.

Cost of a college degree including state spending (New Mexico spends a lot and that number is going to grow significantly in the years to come) as well as spending by students and their families  is another variable.

There is a lot in the full report. One bright spot is that the best ROI degrees in New Mexico are various nursing degrees at University of New Mexico.

Bills (mostly amending the NM Constitution) are going to be considered in the upcoming legislative session on whether  to change certain aspects of the Legislature. Ideas include:

• Paying members some kind of salary;
• Extending the length of sessions beyond the current 30/60 days;
• Hiring more paid professional staff.

In summary of the arguments supporting the idea, the Santa Fe New Mexican editorializes, “A professional Legislature, with lawmakers from all walks of life with staff help, would produce better governing.”

We couldn’t agree more that the New Mexico Legislature does a poor job of governing, but voters could change that situation quite easily and they haven’t.   That being said while we’re skeptical about paying them (more) and the merits of longer sessions, anything to shake up the current situation is worth discussing.

Ideally, the legislative pension would be on the chopping block for elimination in favor of increased pay for work done in the here and now.

Ironically enough the New Mexican (a liberal editorial board) uses the COVID 19 situation to justify a more “professional” Legislature but actually highlights our view. They editorialize, “Coronavirus-related emergency orders, for example, came from the governor. There was little consultation with the Legislature — it wasn’t in session most of the pandemic, and emergency action had to be taken. The law authorizing the governor to act in a public health crisis or other emergency didn’t foresee a crisis lasting years rather than days, either.”

On this week’s show Paul talks to Robert Hockaday about his company’s efforts to turn animal waste created in New Mexico’s agriculture industry into a variety of economically-valuable products (everything from fertilizer to CO2).

The Tucumcari Bio-Energy Company would seem to be a win-win for New Mexico’s economy and the environment. What are the obstacles to success? Check out this fascinating conversation.

In the wake of an LFC report stating that New Mexico taxpayers are spending $18 million annually on unused office space, Gov. Lujan Grisham (after the election) decided to require that all state employees return to their offices by the star of 2023.

According to news reports, however, the Gov. has rescinded that requirement. Employees will be required to return NEXT month at the start of February. This is another case of poor leadership from the Gov. COVID (and remote work) has been going on for nearly 3 years now. The Gov. and her team should have figured out who needs to be in the office 5 days a week and who doesn’t (and how to manage them effectively) by now.

Could some state buildings be shuttered and sold off? Should the locations of gov’t buildings be shifted to reduce commute times? How can we make sure remote employees are actually doing their work?

These aren’t easy questions, but they should have been answered long ago. RGF’s Paul Gessing appeared in a story on KOAT Channel 7 to discuss the issue. You can find his segment here and below and the first portion here.

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.