When the special redistricting session got going in Santa Fe RGF and others were fairly sure that no substantive policies would be changed during the session. The session would spend millions of dollars in federal recovery dollars and draw up the new lines and go home.

That all changed when a group of doctors spoke out regarding a bill (HB 75), sponsored in that session by trial attorney and left-wing Democrat Damon Ely, which passed the Legislature in the 2021 session.

After much negotiation during the session, HB 75 AS PASSED was a “compromise” that raised certain limit on “damages” under New Mexico’s Medical Malpractice laws.  This write up from the New Mexico Medical Society gives a pretty good explanation of the issues and compromises worked out (and who benefitted from the effort in the first place…that’s trial attorneys, one of the Democratic Party’s most powerful members). Rio Grande Foundation gave it a “-3” out of a potential score of “-8″ in our Freedom Index.

Fast forward to the special session and suddenly some doctors were threatening to leave New Mexico by the end of the year due to the impact of the bill on their businesses. So, during the special session a bill was introduced and passed that pushes off implementation of much of the bill for 18 months. That’s some good news, but the fundamental problem with the law remains. The legislation’s harm has only been postponed.

As we reported recently, New Mexico’s performance on employment since COVID 19 began has been terrible. A new Wallethub report further illustrates that fact. As the map below shows, New Mexico saw the 50th-most “recovery” in joblessness over the past week.

And as the image below shows, New Mexico’s increase in unemployment since the start of COVID in early 2020 has been worse than all other states beside Delaware and Rhode Island.

(Albuquerque, NM) – The Rio Grande Foundation has filed a complaint with New Mexico Attorney General Hector Balderas under New Mexico’s Inspection of Public Records Act (IPRA) alleging that Governor Michelle Lujan Grisham has failed to disclose records relating to the governor’s attendance at the United Nations Climate Change Conference in Glasgow, Scotland.

In their official capacity, Governor Lujan Grisham and members of her administration attended the conference as representatives of New Mexico. The expenses incurred for travel, food, and lodging are subject to inspection by the public, whether the expenses were paid for with taxpayer funds or otherwise. If special interests funded this excursion, the public has a right to know.

The Foundation submitted a request for records on November 1, 2021 asking for all documents related to these costs. On November 16, 2021, the request was improperly denied. The request to inspect records was expanded and a revised request was submitted on November 18, 2021 and was wrongfully denied on November 23, 2021.

According to the Inspection of Public Records Act, “public records” means all documents, papers, letters, books, maps, tapes, photographs, recordings and other materials, regardless of physical form or characteristics, that are used, created, received, maintained or held by or on behalf of any public body and relate to public business, whether or not the records are required by law to be created or maintained.

Patrick Brenner, Vice President of the Rio Grande Foundation, said “We requested all receipts and documents associated with the administration’s attendance at this international conference. Governor Michelle Lujan Grisham has acknowledged that her attendance was in her official capacity as a representative of New Mexico. As such, the records related to transportation are subject to inspection, especially if they were paid for by a special interest or foreign entity. No disclosure of any in-kind contribution can be found in the latest campaign finance report. The administration’s continued devotion to anti-transparency is deeply disturbing and undermines the public trust.”

The Foundation maintains that the Office of the Governor has improperly and wrongly withheld documents that ought to have been made available for inspection by the public. We look forward to a swift response from the Attorney General.

The original complaint can be examined here: http://rgf.storytellersdigital.com/app/uploads/sites/2/2021/12/Combine-December-9-2021.pdf

This press release is available in PDF format here: https://errorsofenchantment.com/wp-content/uploads/2021/12/Press-Release-Attorney-General-Complaint_-Gov-MLG-Travel.pdf

On this week’s interview, Paul talks to Dean Stansel, PhD. Dean is a professor at the Bridwell Institute for Economic Freedom at Southern Methodist University in Dallas. He is the lead author of the Economic Freedom of North America Report for 2021 which is published by the Fraser Institute, a free market think tank based in Canada.

Paul and Dean discuss the meaning of economic freedom and its various components and why economic freedom is a good thing. They also discuss which states and even Canadian provinces and Mexican states are the freest. Finally and most notably, Dean and Paul discuss the report’s findings and New Mexico’s backsliding on economic freedom under Gov. Lujan Grisham.

Prior to being reelected, Mayor Tim Keller claimed, “I’m 10 times the mayor going forward than I was when they elected me to take this job in the first place because of what I’ve learned and what we’ve been through.”

Unfortunately, it seems that the homeless and crime situations are “10 times” what they were when Keller took office. Now that the runoff election is in the books, we know that Keller will no longer have a “rubber stamp” council, but he also won’t have a veto-proof group ready to take him on, it will really be up to the Mayor to do “10 times better” than he did in his abysmal first term.

Also, the following photos were taken on and around 2nd Street south of Coal in an area that Keller (unwisely) had pushed for a stadium. Keller claims to be an “environmentalist” and yet the physical environment of parts of our city look like the very worst of the Third World. The photos below were taken on December 7, 2021.

n a last-ditch effort, ABQ City Council’s liberals push through a big union giveaway in the form of a Project Labor Agreement. Is it even legal?

Runoff elections are today. Perhaps if they go well the ordinance can be repealed?

The redistricting special Session kicks off in Santa Fe with mandatory vaccines, metal detectors at the doors, and no guns. Also, Sen. Jacob Candelaria is now an Independent, but the good news is that they are focused on drawing lines and not much else.

After a brief drop, NM’s COVID case count has suddenly jumped again. 

MLG unveils the details of her plans to increase gas prices in the January legislative session. 

NM’s budget is more dependent than ever on oil prices. Here’s the data on oil production which has skyrocketed in recent years. 

This news story about “homeless” will make your blood boil. What ARE we paying taxes for anyway? 

More info on learning loss during the pandemic. 

The latest film subsidy report shows (again) that subsidies are a dud.

Acting VERY quickly and at the behest of some of New Mexico’s most entrenched and powerful special interests (labor unions), the Albuquerque City Council passed its own Project Labor Agreement (PLA) law on Monday evening.

The bill was formally introduced after the election on November 15 and was not heard by a city council committee ahead of December 6 vote.

The bill passed 6-3 with the leftists and lame-duck councilors all voting “YES.” The bill was sponsored by outgoing councilors Borrego and Sena with Davis, Benton, Gibson, and Peña supporting.

Assuming Mayor Keller signs it, the legislation would require union labor be hired for public works projects if any part of them are paid for by the city. One study found that such agreements increase construction costs by 13 percent. Numerous other studies show that such agreements are unfair to the 92% of workers who are NOT union members and they jack up construction costs for no benefit.

There MAY be legal challenges due to the way it was passed without the usual procedures being followed, but the easiest way to overturn the law is for a 6-3 “conservative” majority to repeal it outright.

Yet another report makes it abundantly clear that locking kids out of classrooms during the Pandemic has had an incredibly detrimental impact on student outcomes.

As we’ve noted repeatedly, New Mexico students lost more classroom time than students in all but 5 other states last year. The new report which is discussed in this Politico article is based on Performance on the iReady test administered nationally by Curriculum Associates.

Quoting from the piece, scores “plummeted for all students compared to the last time it was given before the health crisis began. Nearly three million students took the test both times. But achievement among children who attend schools with large proportions of Black and Latino students suffered the most, the data shows.”

“In reading, declines were nearly twice as steep for students at majority Latino schools as they were for children at majority white schools.”

A study OAK NM reported on just last week ALSO highlighted learning loss thanks to the abandonment of in-person learning. 

Starting today and for the next two weeks (hopefully JUST two weeks), the New Mexico Legislature will be in a special session to redraw New Mexico’s political boundaries for all manner of public offices.

The good news is that the session MOSTLY will focus on the task at hand which is to draw those political lines as opposed to passing a bunch of extraneous legislative priorities.

The most notable districts to be drawn involve the Legislature and members of Congress. Speaker Egolf said he’d work to eliminate Rep. Yvette Herrell from Congress, but considering this is a partisan process and Democrats are in charge of it all, they’ll likely work to make sure that they hold on to power in Santa Fe as well.

Of course, New Mexico is a “blue” state. It has been for some time legislatively and in the last decade or so it’s Congressional representation has shifted to the Democrats as well.

But, as we just saw in Virginia, no party has a “lock” on voters. Republicans can win if they provide a solid alternative to 90 years of failed Democrat policies. It also helps that Gov. MLG and Joe Biden are not especially popular. In other words, draw the lines. It will be partisan. It always has been. It is time to convince New Mexicans to change their state. It CAN happen.

In addition to redistricting, the Legislature will have a chance to allocate money from the American Rescue Plan Act (the Biden “stimulus” bill) which a coalition of GOP and Democrat legislators won the right to distribute (as opposed to MLG acting alone).

There WAS a redistricting commission and here are some of the options they provided, but the Legislature and Gov. (controlled by Democrats) ultimately draw the maps.

As if gasoline prices aren’t high enough already, Gov. Lujan Grisham and the Democrats have put forth draft legislation (you can provide comment on it NOW) that would further increase the price of gasoline.

The bill, available here is called the Clean Fuel Standard Act and it failed narrowly in the 2021 session. It is being reintroduced in 2022 and it is one of Lujan Grisham’s top priorities. If adopted, the legislation would lead to a 35 cent/gallon increase in gasoline prices. That’s based on the Environment Department’s statement that bill targets reductions “carbon intensity” of 20% by 2030 and 30% by 2040 from 2018 levels.”

The bill will be considered in the 2022 session no matter what and with a large number of “progressives” willing to blindly support Lujan Grisham it could easily pass, but the Environment Department IS collecting comments on the draft bill. We recommend something along the lines of “NO” or “Hell no” or perhaps something more nuanced as “Ethanol makes our air dirtier.” (feel free to review the EPA study linked).

As the article notes, “making ethanol and using it produces nitrous oxides in the atmosphere. Once there, nitrous oxides plus oxygen plus sunlight becomes ozone — a major pollutant.”

Please submit comments on the draft bill to cleanfuel.standard@state.nm.us by 5 p.m., Friday, December 10, 2021.

Lynne Andersen has been a fixture in Albuquerque politics for decades as the leader of NAIOP (more on that organization in the podcast).

Lynne is leaving the organization at the end of this year and Paul wanted to find out all about her lengthy history in New Mexico politics and how things have changed over the years. In addition to history, Paul and Lynne discuss development and economic issues in Albuquerque and how she sees things the industry and City changing in the future.

A new story in the Albuquerque Journal discusses the boom going on in New Mexico’s oil and gas industry.

According to the story, “In raw numbers, the industry generated almost $5.3 billion in revenue for state and local governments in the 2021 fiscal year – a 12% increase over 2020 and more than twice as much as in 2016.” Furthermore, “oil- and gas-derived income made up 35% of all general-fund revenue for the state budget last year.”

Ironically, while most of the Democrats quoted in the story want to keep cashing those checks, that is NOT a unanimous opinion among Democrats with 24 of them applauding Biden’s lease moratorium, fracking bans legislation being introduced, and articles like the following from Sen. Ortiz y Pino calling for an “end” to oil and gas in New Mexico.

In a sane world with a sane political party, the Democrats would be busily adopting economic policy reforms to make New Mexico’s economy more diversified regardless of oil and gas production. Instead we get a gusher of revenues, expanded government, and perpetual poverty.

The next time Gov. Lujan Grisham touts teacher pay raises and all of the new spending being funneled into New Mexico’s public education system,  be sure to remember this new study from the National Bureau of Economic Research which shows how keeping students out of the classroom negatively impacted student performance on test scores. The chart below really illustrates the point:

And, while New Mexico was not included in the study, the fact that, as the follow chart shows, New Mexico students lost more time in the classroom (due to our Governor’s policies) than all but six other states.

OAK NM had its own write up here.

On this week’s podcast, Paul and Wally begin with a discussion of NM’s COVID infection situation and the rise of the Omicron variant. Why is NM’s data so slow and how is the infection situation evolving?

Biden’s nominee to be Comptroller of Currency appears to be an actual communist or at least has communist sympathies.  

Remote learning due to COVID caused a drop in learning. How bad is it for New Mexico which already struggles?

Red states dominate jobs by state recovery since COVID. We crunched the jobs numbers on New Mexico ourselves and the numbers aren’t pretty.

Spurred by analysis by our friends in Texas who compared big red and blue states with each other, we compared these big red and blue states with New Mexico. The results are interesting.

A new report on New Mexico’s Film subsidy program actually provides further ammunition for critics.

RGF discusses New Mexico’s gross receipts tax and MLG’s small rate cut in the Las Cruces Sun News. 

Anyone who lives in and travels around Albuquerque sees the tents and shopping carts. Unfortunately, voters saw fit to give Tim Keller another four years as Mayor, but City Council MUST do everything in their power not to coddle and “help” the homeless, but to move them off of city property and enforce private property rights.

The “homeless” situation worsens day by day and the fact that this West Side family can no longer walk to school is a simple illustration that the City of Albuquerque is failing to provide even the most basic public services to its residents.

The story asserts that the “homeless” cannot be moved if they are on City property, but we know of no provision in City law that would prohibit their removal. If there is anything in ordinance, Council needs to make changing that top priority and Keller needs to be made to enforce the law.

Our friend Vance Ginn, Chief Economist at the Texas Public Policy Institute, recently compared his state of Texas and another prominent “red” state (Florida) with the biggest “blue” states of California and New York on a range of basic economic statistics.

You can see the data below which is loosely based on Ginn’s analysis linked above. The data are interesting to say the least.

New Mexico is definitely a “BLUE” state. It suffers from terrible workforce participation and unemployment rates and government consumes an outsized portion of our economy (even when compared with “blue” states).

Notably, New Mexico is also even less attractive as a moving destination than either big “blue” state. Ironically, New Mexico is the least “unequal” state as measured by the Top 10% income share and even New Mexico’s poverty rate isn’t “that” bad (compared with the other states) when the Census Bureau includes living costs and government benefits.

Notably, as it is heavily-reliant on oil and gas production and revenues, New Mexico’s economy is much more resource-driven than any of the other states studied.

When she came into office in 2019 one of her very first policy initiatives was to expand New Mexico’s 25% film subsidy (it’s a rebate, not a tax credit). No more annual spending caps and 25% became the baseline as subsidies rose as high as 35%.

And, despite ample data showing that the film subsidy is an economic loser, we get yet another study of the program which (despite much effort to portray otherwise) shows the program to be an economic loser.

The critical line comes from page 24 of the “study” highlighted below:

Why is this the critical point? Simply put, the State has to get the money it spends on film subsidies from somewhere and that requires economic activity. The fundamental flaw with so many economic analyses that attempt to justify government subsidies (spending) on behalf of economic development is that it fails to account for the amount of economic activity that must happen in order to generate $1.00 of tax revenue (this is not necessarily the case for tax breaks or exemptions that merely remove a tax on a business or industry and thus still have overall positive economic impacts).

From the perspective of simplicity, New Mexico’s GRT and income taxes are levied at the same rate ≅ 5%. Thus, New Mexico needs about $20 of economic activity in order to generate a single dollar of tax revenue.

So, taking data directly from the report (page 4), to break even on $1 of film subsidy spending New Mexico would need ≅ $20 times in more or less organic economic activity. Thus, to break even on $160 million in film credits issued, the State would require not the $854 million in direct economic output generated, rather it would need to generate $3.2 BILLION in economic output. 

The Legislative Finance Committee in 2019 acknowledged that the film subsidy program actually costs the State money. The following is from a post-session LFC slide presentation.

At the Rio Grande Foundation we have long been concerned about the negative impacts of Gov. Lujan Grisham’s policies (pre-COVID and especially during the pandemic). Numerous reports and analyses (such as Wallethub’s) have placed New Mexico at the very bottom when it comes to job creation (or destruction) during COVID.

So, we did our own analysis using Bureau of Labor Statistics data. As you can see below, New Mexico is unique among its neighbors in having lost jobs since COVID’s onset in March of 2020.

On a percentage basis, New Mexico has lost 2.35% of jobs since March 2020 while Utah has gained a robust 2.92%.

Check out the chart below which is from World O Meters. It shows the 7 day average of new COVID cases in New Mexico. The number of new cases peaked at 1,422 on November 23rd. That number has dropped steadily since and now stands at 1,080 as of November 29th.

Looking back at 2020 data, New Mexico saw a similar pattern with the Virus as it peaked on November 24th (at a much higher level) and dropped quickly from there. Clearly the Virus is seasonal, but numerous other factors have undoubtedly mitigated against the situation being AS bad in 2021 as it was in 2020.

Will the Omicron variant hit New Mexico and move us in the wrong direction? We don’t know. But, it appears that from an infection perspective New Mexico has turned the corner. We certainly hope so.

The following appeared in Las Cruces Sun-News on Sunday, November 28, 2021.

For many years the Rio Grande Foundation has pushed the Legislature to take steps to address fundamental problems with the State’s gross receipts tax. We’ve regularly labeled it New Mexico’s “original sin” of economic policy due to the tremendous harm it does to New Mexico’s economy.

And, while we support ANY effort to lower tax burdens on New Mexicans, the Gov.’s plan for a small .25 percentage point reduction in the State’s GRT burden hardly makes up for recent increases. With a $2 billion budget surplus looming this January and the Senate Finance Committee Chair saying the Legislature has “more money than they know what to do with,” it is time to really reform the GRT, not provide an election year sop to struggling businesses and families.

Currently, the City of Las Cruces GRT is 8.3125%. Back in 2010 that rate was “just” 7.0%. The Gov.’s reduction, if implemented, won’t even get the rate back to 8.0%. Las Cruces is not alone. GRT rates have risen dramatically over the last 20 years due to a combination of state and local policies.

But the most important problem with the GRT is its unfair treatment of small businesses. Accountants, bookkeepers, even medical professionals, and attorneys (and many others) all must charge this tax on top of the cost of their services. Alternatively, service providers located in other states do not have to charge the GRT. This makes New Mexico especially unattractive as a location for small businesses. And it is those small businesses that grow into tomorrow’s big businesses which can employee hundreds or even thousands of workers and boost state and local economies.

With the Legislature expected to convene in January with up to $2 billion in surplus revenues generated primarily from oil and gas, now is the time to focus on fundamental reform. According to the Gov. this tax cut will reduce revenues by $145 million annually. That’s a tiny fraction of the surplus. At a bare minimum proper GRT reform needs to eliminate the taxation of these business services. It will be easier to make the change when there is plenty of revenue available.

The GRT and much-needed reforms to it are not a partisan issue. Republican Jason Harper has introduced reform legislation in recent years with former Senate Finance Committee Chair, Democrat John Arthur Smith. More recently, powerful House Appropriations Committee Chair Democrat Rep. Patty Lundstrom told attendees of the New Mexico Oil and Gas Association (NMOGA) conference in October that “tax pyramiding” needed to be addressed by the Legislature in the upcoming session.

While taxing services is the fundamental problem with the GRT, there are others. Specifically, while the tax was originally conceived as being applied at VERY low rates and broadly, the political process has led to the current, sorry state of high rate, exemption-filled tax structure.

Special interests line up in Santa Fe to lobby for exemptions and deductions for their business or industry and the Legislature is more than happy to offer those exemptions. And, whether you support taxing groceries or not, the process of eliminating that tax has directly contributed to the massive rise in GRT rates in recent years.

In addition to addressing taxes on business inputs and services, the Legislature needs to put a stop to the special exemptions while also constraining the future ability of local governments to raise rates.

A tiny tax cut passed as we head into an election year with a massive budget service may or may not be good politics, but it certainly isn’t enough to address the fundamental problems with New Mexico’s GRT.

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

On this week’s podcast interview Paul interviews former New Mexico Congressman and Chairman of the Republican Party Steve Pearce. Joined on the interview are Ashley Soular and Mike Curtis also of the GOP.

Starting out, Paul and Steve discuss the role of political parties and the challenges they face in adhering to the myriad federal and state laws regulating them and their activity.

Then Paul and the group discuss the GOP’s new video series “Land of the Last” which highlights some of the major issues facing New Mexico brought on by nearly 100 years of single-party rule.

All of the videos made (to date) are posted below:

From Monday, Nov. 16, through Monday, Nov. 30 last year New Mexicans suffered under MLG’s “enhanced” lockdown which led to our own bread lines as people were forced to stand outside in the cold to get into grocery stores which were limited to 75 people indoors. The good news is that arguably the Virus appears to have peaked for THIS year in terms of infections.

New Mexico falls further behind in the latest economic freedom report.

Do New Mexico Democrats actually care about “progressive” taxation? Build Back Better is HARDLY “progressive.” 

Gov. MLG wants a tiny tax cut. Reducing GRT rates doesn’t solve the problem. Spaceport America has a generous tax exemption from the Legislature and is an example of the problem.

Who paid for MLG’s Scottish adventure and HOW exactly did she get there? 

The following appeared at KRWG on November 17, 2021.

Nearly any business owner in New Mexico will tell you that Michelle Lujan Grisham and her policies have been unfriendly to business. Setting aside the COVID lockdowns, since she took office in 2019, we’ve seen multiple tax hikes, numerous new regulations, and numerous policies that make it more costly and difficult to hire workers.

These policies aren’t just “anti-business,” taken as a whole they undermine economic freedom. A new study provides hard data that quantifies and highlights the negative impact of policies of Lujan Grisham and the Legislature (at least in 2019).

For starters, it is worth defining the term. Economic freedom is broadly speaking the ability to engage in voluntary economic transactions without unduly being hindered by government policies. This includes low, fair taxation, reasonable rules and regulations, and a limited government spending.

Not surprisingly, policies of economic freedom are strongly correlated with greater economic prosperity. In fact, according to the 2021 edition of the report, the freest 25% of states have personal incomes that are 7.5% higher than the national average while the 25% of least free states have personal incomes that are 1% less than the national average.

New Mexico has long lagged its neighbors and most of the nation in economic freedom having consistently been in the lowest quartile for years. Thus, it is not surprising that New Mexico is among the most impoverished states in the nation.

But, when Gov. Susana Martinez took office in 2011, New Mexico ranked 46th in economic freedom. Despite her having to deal with a hostile Legislature, that number improved to 42nd by the last year of her administration mostly due to her fiscal restraint.

But, when Lujan Grisham took over in 2019 along with a liberal Legislature the State saw a massive uptick in government spending, several tax hikes, new regulations, and numerous other policies that make New Mexico less economically-free. On the other hand, New Mexico’s neighbors are all among the most economically-free states in the nation. Texas, with no personal income tax and a pro-freedom labor laws like “Right to Work” ranks 4th overall.

While we don’t have the data on how economic freedom has fared in New Mexico in 2020 and 2021, we know that in general Gov. Lujan Grisham and the Legislature seem to look to California as their model. Alas, the State is one of the few ranked worse than New Mexico on economic freedom at 49th. Only New York performs worse.

The fact is that the policies passed in 2019 that caused New Mexico to slide in economic freedom have only been reinforced by others that further undermine economic freedom in 2020 and 2021.

With a $2 billion surplus, Gov. Lujan Grisham has proposed a miniscule reduction in the gross receipts tax (while leaving the grotesque pyramiding and loopholes intact). But, we can expect that an overwhelming majority of that surplus will go to even more government spending that will do nothing to actually improve New Mexico’s serious poverty challenges or overall economic outcomes.

It is time for New Mexico politicians (and voters) to prioritize economic freedom in turning our State around.

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

Democrats LOVE to talk about “progressive” taxation and taxing the rich. Whether it’s AOC’s dress or Rep. Javier Martinez’ relentless push for “tax equity,” Democrats, especially here in New Mexico love to talk about taxing the rich.

So, it may be surprising to find out that one of the biggest components of the “Build Back Better” legislation which just passed the US House (with the votes of Stansbury and Leger Fernandez, but NOT Herrell) is a big tax cut for THE RICH. Specifically, the bill allows wealthy taxpayers in high-cost states with high taxes (like California and New York) to take a federal tax deduction against state taxes.

Not surprisingly, relatively poor New Mexico is NOT a big beneficiary of SALT, yet both liberal Democrats support the bill and numerous other elected legislators (and both Sen. Heinrich and Lujan have pledged support. 

See the following chart from the Committee for a Responsible Federal Budget which compares the impact of SALT with a child care tax cred expansion contained in the bill. None other than socialist Sen. Bernie Sanders criticized the addition of the SALT deduction to the bill saying, “It sends a terrible, terrible message…You can’t be on the side of the wealthy and the powerful if you’re gonna really fight for working families.”