On this week’s Tipping Point conversation Paul talks to GOP Secretary of State candidate Audrey Trujillo.

Paul and Audrey discuss the role of Secretary of State in New Mexico and what the occupant of that position can/should do with and without the Legislature. They discuss the Secretary’s role in elections and preventing election fraud, address recent elections in 2020 and the primary election in 2020, and her plans to improve election integrity.

Finally, Audrey and Paul talk about other parts of the Secretary’s job and how it can make New Mexico more attractive as a place to do business.

American politicians from President Biden on down to Sen. Martin Heinrich and Gov. Lujan Grisham and many in the New Mexico Legislature are positively obsessed with “renewable” energy. They all pledge massive subsidies, mandates, and all manner of policies for the “transition” regardless of economic impact or the futility of actually moving the needle on CO2 emissions.

The following chart highlights just how small wind and solar are on a global energy use basis. You can see them on the chart which is better than prior to 2010, but to claim that wind and solar will result in the end of traditional energy sources is simply ridiculous and there is nothing that we can do about it barring total economic destruction. Even a crash shift to nuclear power would take decades to pull off.

And then there is China. China is already (far and away) the global leader in CO2 emissions, but China continues to expand its coal powered energy production as the July 20, 2022 article describes. 

New Mexico is certainly consistent when it comes to K-12 education performance. A new study from Wallethub places the State’s education system 51st overall. The map below shows the overall ranking, but the bubble chart below is more important because it highlights the fundamental problem of New Mexico’s education system: moderate spending for abysmal results.

As seen below, New Mexico spending ranks 28th overall, but performance ranks 51st. Clearly, New Mexico’s spending on education hasn’t moved the needle on results. It is time for bold, innovative reforms. We recommend school choice, but there are many ways to do better without spending more.

RGF president Paul Gessing traveled to Clovis, NM recently to discuss the State’s economy and education systems and what can be done to improve them. You can see the slides from the powerpoint presentation here and if you are part of a civic group that would like to hear a similar message, please don’t hesitate to reach out to us at: info@riograndefoundation.org to schedule something.

Paul’s remarks were well covered by the Eastern New Mexico News.

The following chart is from American Enterprise Institute economist Mark Perry.  Perry periodically puts together charts like this one showing how the costs for various commonly-purchased items evolve over time.

While inflation is driven by money printing and an increase in the money supply government causes inflation as well. Notably, the items highlighted below are ones in which government plays a major role. The others are ones in which government does not play much of a role.

Interestingly, in recent months there has been an uptick in the prices of new cars as is readily apparent on the chart. That is an area the government of New Mexico has taken more interest in recently with adoption of the Gov.’s “Clean Car Rule.”

Limiting government involvement in the economy is another way to reduce inflation.

Governor candidate Mark Ronchetti has released his economic plan. Paul and Wally discuss.

RGF was quoted extensively for a national article (along with NM legislators) about how the war on energy could impact New Mexico’s budget.

The latest unemployment numbers are out and despite dropping again, New Mexico’s rate remains the highest as it has been for the last 7 months.

ABQ Journal catches on to New Mexico’s abysmal workforce participation rates, increase in disability blamed.

New data from GOP national highlights trend toward job creation in red states:

COVID is spreading once again. While it is hard to put much faith in case data, deaths in NM have risen significantly in recent weeks.

Deb Haaland may be in some trouble as her net worth is likely NOT zero.

A national investment website Seeking Alpha believes PNM/Avangrid merger will happen.

Finally, ABQ Mayor Tim Keller has announced that the homeless encampment at Coronado Park will be “closed” in August. Paul and Wally discuss.

New Mexico is often forgotten about by the national media. Our poor, “blue,” majority-minority, small population, oil rich state is often overlooked in the broader national media narrative.

However, National Review recently had an article which relied heavily on quotes from the Rio Grande Foundation as well as Rep. Larry Scott and included an analysis of what could happen if/when national and state level environmental policies begin to take hold.

The Energy Transition Act remains a dagger pointed at New Mexico’s economy as soon as summer of 2023, but Democrat politicians at the state and national level could do untold damage to New Mexico’s economy and State budget if their anti-energy ideas are implemented.

New Mexico’s GOP gubernatorial candidate Mark Ronchetti recently released his economic plan. This comes on top of his recently-released rebate plan which is also included in this broader economic document (and is discussed in the link above).

You can find his full economic plan here and we’ll discuss the highlights from the RGF perspective below:

• The plan addresses New Mexico’s income tax structure with single filers having no tax burden up to $10,000 and married couples paying zero income tax on up to $20,000 of personal income. Currently the code is extremely compressed with most taxpayers paying 4.9% on much of their incomes, but under Ronchetti’s plan the 4.9% rate wouldn’t kick in until individuals make $80,000 or couples make $160,000.

• On the GRT, Ronchetti wants to eliminate tax pyramiding, eliminate GRT on “micro-businesses,” and reduce gross receipts tax rates every year. He also wants to end gross receipts taxation of rural doctors. Those are all ideas we have extensively discussed at Rio Grande Foundation and are much-needed.

• Furthermore, Ronchetti’s plan includes some kind of limits on annual government spending growth and demands voter approval of local GRT increases.
• Finally, Ronchetti’s  includes a serious discussion about getting New Mexicans back to work. Not only does New Mexico have the nation’s highest unemployment rate (as it has for 7 months in a row), but we have terrible workforce participation rates. 

There ARE some compromises. We’d like to see New Mexico’s top income tax rate dropped. If 4.9% was good enough for Bill Richardson, it should be good enough for us now. But, this is a good starting point. It is a plan that will need significant Democrat support in the Legislature at least if it is to be adopted within the first two years of a Ronchetti Administration.

COVID 19 has wrought numerous changes and accelerated the ongoing shift in jobs and economic growth to jurisdictions with pro-market policies. Powerful unions tend to fight against free markets.  The following chart highlights how jobs have continued to move from forced-unionism (non-right to work) states and to those that allow people to opt out of paying unions dues as a precondition of employment.

New Mexico is NOT a Right to Work state.

At the Rio Grande Foundation we are rarely surprised when New Mexico performs poorly in national ratings of our State’s “free market” policies (or lack thereof) or even “pro-business” policies.

The latest such report to make national headlines is the “CNBC Best States for Business.” New Mexico is ranked a dismal 46th.

Just because a report finds what we already believe (that New Mexico is not a business-friendly destination) doesn’t mean we don’t want to take a closer look at the results. So, here are some thoughts on the methodolgy:

1) The most important variable is “workforce.” New Mexico does not have a well-prepared workforce, but somehow is ranked a respectable 25.

2) Infrastructure is important, but is it really at the very top of the list right behind workforce? Regardless, while New Mexico has decent roads and rail, midwestern states like Illinois which is NOT business friendly will benefit. New Mexico is 39th.

3) Cost of doing business: New Mexico is a generally low-cost place ranking 29th overall. Our business taxes are high and utility costs are rising due in part to MLG’s energy policies like the Energy Transition Act.

4) New Mexico’s economy remains poor. Surprisingly CNBC ranks us 42nd, but with the highest unemployment rate and a weak private sector outside of oil and gas and the federal government New Mexico’s economy is not in great shape.

5) There are several additional variables in the report. Ironically “business friendliness” only garners 8% of the overall points highlighting one of the major issues we have with this report.  On the education variable the big problem is that the report “consider(s) the number of colleges and universities in each state as well as long-term trends in state support for higher education.” Funding is a terrible number to use in any report card when results, especially in K-12, should be paramount.

Overall this is a decent report that gets many things right, but it often glosses over the biggest policy failures in New Mexico and other states while boosting others (especially in the Midwest) that are not business friendly.

Speaker: Prerak Shah of Gibson, Dunn & Crutcher. Previously, Mr. Shah has served Acting U.S. Attorney for the Northern District of Texas, Chief of Staff for Senator Ted Cruz, and Chief Counsel for the Senate Judiciary Committee.

Click  here to register. Registrations are being handled by the Federalist Society, but this IS a joint event.

When it comes to economic development New Mexico politicians have for years avoided making the prudent and effective moves of reducing taxes and making them sensible and transparent. Instead, the Legislature and others have usually tried big-spending schemes, often involving generous subsidies, to benefit specific groups or businesses.

Taxpayer support for Spaceport has long been a concern of the Rio Grande Foundation. The fact that by any legitimate accounting the $250 million taxpayers have spent on the Spaceport has not led to a successful commercial space venture is just the latest of many failed subsidization policies.

Alas, while the lead tenant at Spaceport America remains non-committal on commercial space tourism launches, the company recently announced that it will be manufacturing its spacecraft…in neighboring (business friendly) Arizona. Alas, despite being the site of launches planned sometime in the future at our taxpayer-financed facility, New Mexico won’t benefit from the manufacture of the craft being launched. Here’s the Virgin Galactic press release.

On this week’s conversation Paul sits down with New Mexico real estate owner Doug Peterson. Doug will be moderating a panel discussion on crime issues on Thursday, July 14.  Through his Peterson Properties company Doug owns and manages large amounts of commercial real estate in and around the Albuquerque area. He has been active in calling attention to lax crime enforcement and the serious homeless problem facing his community. Doug and Paul discuss how the problem has evolved over time, whether the data support assumptions that crime has worsened in Albuquerque, and the various politicians and their impact on the situation.

After a few years of back and forth through the regulatory process, the US Nuclear Regulatory Commission has approved Holtec International’s plans to store spent nuclear fuel in far-southeast New Mexico.

The Rio Grande Foundation provided public comments in support of this effort and commented in various news outlets on the issue. Nuclear MUST be among the solutions for our energy needs. It is zero carbon and “green.” New Mexico can again be part of the solution and we welcome the jobs and economic growth this facility will provide.

The following appeared in the Albuquerque Journal on July 14, 2022.

Superintendent Scott Elder recently called this the “hardest year we’ve ever been through” due in largely to the need to reduce the number of staffed positions, including teachers, at Albuquerque Public Schools.

Change is hard, especially for large bureaucracies like New Mexico’s largest school district. But change is necessary at APS. That’s not just the Rio Grande Foundation’s view; it is the conclusion of the Legislative Finance Committee’s recent report on APS, which shows a district awash in money but bleeding students.

Many families, like my own, have left APS. Many families felt betrayed by Gov. Michelle Lujan Grisham’s COVID school closings, which cost students a year of classroom time and a great deal of academic and social progress. The governor’s decision to shutter the schools will have lasting, negative impacts on our children that are only now starting to be accounted for. Many families with the resources to do so left the district or even the state. Many aren’t coming back.

To maximize the beneficial use of the district’s resources, the LFC recommends “right-sizing” the district’s “footprint,” including eliminating teaching and other positions as well as reducing the number of facilities including school buildings to reflect a shrinking student population. This trend began before COVID but has accelerated since.

The LFC’s numerous other recommendations need to be implemented. I do believe the current school board wants to allocate resources in ways that make sense for the district and its 71,000 students.

But the APS Board of Education doesn’t fully control the district’s budget; the Legislature and governor do. And, with money flowing into the state at unprecedented levels, the political incentives in Santa Fe are aligned to pour more money into the system. When money is plentiful, politicians are loath to make difficult and often unpopular decisions to redeploy resources. Sadly, the LFC can write reports, but until politicians in Santa Fe act, things won’t improve.

It is time to put to bed the myth of “underfunded” local schools. With the recent adoption of the district’s $1.93 billion budget divided over 71,000 students, APS will be set to spend a whopping $27,000 per student in fiscal 2023.

In addition to “right-sizing,” APS needs to implement innovative approaches to simultaneously improving educational outcomes. Alas, this governor and Legislature have chosen to keep power and money centralized in Santa Fe rather than fully empowering local leaders or, heaven forbid, parents, to decide what makes the most sense for themselves and their families.

While the local school board has limited power over serious reforms, they can be advocates for charter schools and work to expand that important form of school choice. Expanding intra-district choice is an additional way to expand educational freedom.

But real education reform in New Mexico must come from the top. Republican gubernatorial candidate Mark Ronchetti has stated clearly that he wants to bring school choice to our state by having money follow the students. Poll after poll shows Americans agree with him, a trend that also has accelerated since COVID. Parents and families should be able to use their education funds to pursue options that work for them, not the bureaucrats in Santa Fe.

Change won’t happen overnight. As a starting point we need a governor who will stand up to those who want to keep the failed status quo and just spend more money. Even a reform-minded governor can’t do it alone as real school choice needs buy-in from the Legislature. So, right-sizing and reforming APS – including but by no means limited to school choice – will requires cooperation and buy-in from many different groups of elected officials. We have a lot of work to do for our children, but now is the time to begin.

New Mexico’s race for governor is, by all accounts, going to be extremely close.   Generally-speaking the two candidates have VERY different visions for New Mexico, but on one thing their policies have a bit of overlap: rebating money from New Mexico’s booming oil and gas industry.

While having previously raised taxes despite record revenues, incumbent Gov. MLG called a special session of the Legislature to pass rebates of up to $1,500 for “New Mexicans.” The quotes are due to the fact that there is a pot of money specifically set aside in the Gov.’s rebate package for those who didn’t file tax returns which could include illegal immigrants.

Ronchetti’s plan is different from MLG’s in a few big ways: it would be only for New Mexicans (although details are unclear as to enforcement), it would potentially bigger with families with children benefitting the most providing up to $2,000 to a family of four (including children), and it would be a regular annual occurrence as long as revenues hold up.

Amusingly, particularly considering the similarities between MLG’s rebates this year and Ronchetti’s plan, a spokesperson for MLG called Ronchetti’s plan “fiscally irresponsible socialist scheme” in the Albuquerque Journal. 

Here are our takeaways on the Ronchetti plan:

1. Putting money back in New Mexicans’ pockets is far superior to further increasing the size of New Mexico’s already bloated state government (and that includes the various permanent funds);
2. Reforming New Mexico’s broken and anti-business gross receipts tax and THEN working to reduce or eliminate the income tax must be the top reform priorities, but there is nothing wrong with doing all of them;
3. One challenge with rebates is that they don’t necessarily reward work. New Mexico still faces a huge gap in terms of its workforce participation rates. Government checks can negatively impact efforts to get more people to work.

The state-by-state economic data are in for the first quarter. New Mexico’s numbers are not pretty.

There was an interim committee hearing recently about tax policy.

Legislators also discussed user fees for electric vehicles as a way of getting them to pay for road use. Last week the governor unveiled two new electric vehicle charging stations in Socorro, which will use $10 million in state funds along with $38 million in federal infrastructure for a network of electric vehicle charging stations to be located every 50 miles along New Mexico’s interstates. Paul was recently on a road trip with his family. He has the latest gas prices and the lack of Electric vehicles on the road.

MLG’s campaign fibbed about a supposed beneficiary of “free college.” KOAT 7 called her on it.

Mark Ronchetti outraises incumbent Michelle Lujan Grisham $1.2m to $755k in first post-primary financial report.

The latest RailRunner data are out and while ridership is better than when it was shut down entirely, it is still WAY down from the peak. 

The Albuquerque Journal beat us to the punch with an article detailing the latest ridership numbers (and a few potential scheduling changes).

See the latest info below left. Of course ridership WOULD be up because the train was shut down for much of 2021 due to COVID. So, while the train has been open for all of the last calendar year (June 2021 through June 2022) ridership is only 319,635. That compares with 1,240,518 riders in 2010 when the train was shiny and new.

Gov. MLG took it upon herself (after the Legislature rejected it) to cut fares to $2.50 for an entire day of riding, but don’t look for the Rail Runner’s ridership numbers to improve anytime soon.

But, abject failure is hardly enough to deter left-wing legislators like Sen. Bill Soules of Las Cruces who says he plans to reintroduce legislation (see tweet below) in the upcoming session that would create a “high speed” rail route from Chihuahua to Denver.

The US has always had a “different” approach to health care.  Left-wing critics call it “free market,” but nearly half of all health care spending in the US is by the federal government. Even the non-government share is largely from third-party sources for which individual customers do not pay directly.

This shift has not happened overnight as over time the shift toward government and third party health insurance has been dramatic. Unfortunately, this has had real impacts as the chart below highlights with an explosion in administration and a relatively small increase in the number of physicians.

The following article by Dan McKay of the Albuquerque Journal provides a bit of hope regarding the potential for GRT reform and provides an impetus to offer some thoughts on the GRT and how to reform it.

First of all, kudos to Ismael Torres, chief economist for the Legislative Finance Committee, for his candid and spot-on remarks on the GRT. According to McKay, he said, “the complexity of the gross receipts tax system, the high tax rate and the taxation on business-to-business transactions contribute to the poor evaluation (of NM’s tax structure).

“The real anchor for New Mexico’s taxes tends to be the gross receipts tax.” It isn’t complicated, but he’s spot-on. And, “He added that the gross receipts tax is also regressive, hitting lower income families harder than others because they spend a higher share of their income on consumption.”

Torres is thee for three.

Even liberal Rep. Antonio “Moe” Maestas, D-Albuquerque, gets it right on the grocery tax issue saying, “Unwise as it may have been to exempt some food from the gross receipts tax, it’s been impossible to build support for taxing it again.”

He’s right. Not only that, but Republicans (many of whom support reinstating the grocery tax as part of a broader tax reform) need to give it a rest. In other words, focus on eliminating taxes on business-to-business services and making the GRT less economically-harmful (while focusing on eliminating loopholes and generally lowering rates) and quit obsessing over taxing groceries.

Among the new laws that took effect on July 1, 2022 was Gov. Lujan Grisham’s plan (adopted by the Legislature in 2022’s 30 day session) to make college tuition “free” to most college students in New Mexico through the use of general fund tax dollars.

Oddly, Gov. Lujan Grisham’s campaign began touting a student who benefited from “free” college to complete her nursing degree. The problem is that the ad was cut and aired before the new law even took effect and the idea that a student could have benefited from the program and become a nurse was impossible.

Fortunately, KOAT TV Channel 7 took a closer look at things and called “BS” on the Gov.’s phony ad. Check out the story below:

Vindicated!! I can’t believe the “higher education” secretary can lie so openly when confronted but poor thing, she has to. Here’s your rating for journalism in NM:
Chacon- Filet
Cardinale- Rib Eye
Dan Boyd- potted meat mixed with rotten sardines #FireMLG#LiarsLoseElections pic.twitter.com/VqxFjq0I3y

— FreespeechRefugee (@1Aspeechrefugee) July 6, 2022

On this week’s podcast conversation Wally and Paul discuss New laws that kick in as of July 1 in New Mexico including a slight gross receipts tax reduction, near-elimination of the Social Security tax, and military pensions tax, but also the new mandatory paid sick leave.

Long a leader in education reform, Arizona has just embraced universal Education Savings Accounts. Speaking of education, a new report finds no learning loss in Sweden where schools remained open. Contrasting starkly with New Mexico where schools remained closed for over a year:

Paul and Wally discuss the latest SCOTUS rulings in West Virginia vs. EPA.

Despite having the nation’s highest unemployment rate, a new national report finds that businesses in New Mexico are high on the list of those having trouble finding workers.

Sen. Heinrich’s (and Biden’s) morally dubious effort to repeal solar panel tariffs.

Finally, Paul is on the road for a family trip. He discusses the lack of Tesla’s and other electric vehicles on America’s open roads.

According to a new report from the Bureau of Economic Analysis, New Mexico’s GDP in the first quarter of 2022 dropped much faster than the US rate and nearly double the rate of its fast-growing neighbors.

The US GDP shrank by 1.69% in the first quarter, but New Mexico’s shrank by an awful 4.7% (that’s especially awful considering New Mexico’s ongoing oil and gas boom). Most US states saw significant GDP declines, but only Wyoming, North Dakota, Alaska, and West Virginia saw steeper declines than New Mexico.

It is hard to tell which is worse, the Biden Administration’s overall economy which has led to declining growth when the US should be in a post-COVID boom or Michelle Lujan Grisham’s which has led to New Mexico’s awful results in spite of the strong oil and gas industry.

The latest state unemployment data for May, 2022, show (once again) that New Mexico has the nation’s highest unemployment rate at 5.1%.

That is not a surprise given New Mexico’s long-term problems with workforce participation and job creation, but a new report from Wallethub claims that New Mexico businesses are having problems (relative to employers in other states) finding workers. According to the new report, New Mexico businesses are 23rd in terms of the number of job openings.

With a high number of workers on the sidelines both in terms of unemployment AND workforce participation, what could be the problem? New Mexico has always struggled to get workers into the workforce, but since COVID the situation has deteriorated even further. Click here on the map below for the full Wallethub report.

Getting more New Mexicans back into paying jobs is a complicated challenge that could involve some combination of lower taxes, fewer/lower welfare payments, and improved education/training for jobs that actually exist (as opposed to blindly paying for college).