Two of the very worst bills before the New Mexico Legislature this session begin moving through their committees starting this Wednesday morning.

HB 37 is up in the House Tax Committee (find a list of members and emails here).

If adopted it would dramatically limit New Mexicans’ ability to deduct capital gains from the sale of homes, businesses, and stock. Under the current system, New Mexico taxpayers with capital gains income are able to deduct 40 percent of their net gain from their New Mexico taxable income. This is a positive feature of the state’s tax code as it promotes the creation of capital, which has been in short supply in the Land of Enchantment. HB 37 would limit a taxpayer’s net capital gains deduction to $2,500.

Businesses get into business to make money. New Mexico desperately needs a broader array of businesses to become economically-successful. There is absolutely no reason to adopt a tax hike of this kind, especially when New Mexico has such a massive surplus. 

Relevant committee emails below:

derrick.lente@nmlegis.gov,
Jason Harper <JasonHarperNM@gmail.com>,
Cynthia.Borrego@nmlegis.gov,
ambrose.castellano@nmlegis.gov,
Mark.Duncan@nmlegis.gov,
doreen.gallegos@nmlegis.gov,
joshua.hernandez@nmlegis.gov,
Larry Scott <lrscott52@gmail.com>,
Jim Townsend <jamesgtownsend@gmail.com>,
kristina.ortez@nmlegis.gov,
linda.serrato@nmlegis.gov

HB 6 is the other awful bill. This “paid leave”  bill (up in House Health and Human Services tomorrow members listed at link) would foist tax hikes on employees and employers alike (weather they want the program or not) to fund a paid leave scheme administered by the Department of Workforce Solutions.

Although no FIR is yet available for the bill this year, the analysis of last year’s version SB 11, expressed serious concerns about the viability of the fund. Such shortfalls would result in inevitable tax hikes on both workers and employers.

Relevant committee emails below:

Today and for the last few weeks filming has been taking place on the streets of downtown Albuquerque (blocking off several including Gold). Of course, we know this is Gov. MLG’s very favorite industry.

Those trucks are most definitely NOT electric though and there is also a generator at bottom middle (MLG is forcing EV’s on the rest of us over the span of a few short years). The film also involved driving a bunch of 1970’s era gas-guzzling vehicles down the road. You can see a photo of some of the cars below. Of course, we the taxpayers are footing the bill for all of this.

Over the weekend in the Albuquerque Journal ran this piece by a national, left-wing advocate for “progressive” taxation. He lauds New Mexico for making its tax code more “progressive” even though he appears to not know what the terms “progressive” and “regressive” mean when it comes to taxes.

According to none other than the IRS, a ” regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.” A sales tax (or GRT) would be “regressive” because it taxes everyone at the same rate.

The “progressive” author misguidedly states that “regressive,” means the more you make, the less you pay. There are few taxes like that and certainly no tax structures where you pay less overall tax if you make more money.

So, how do New Mexico’s “progressive” tax changes impact job creation or overall economic health or the attractiveness of our state to economic relocation? Could New Mexico (blessed with massive oil and gas surpluses) make its tax structure less “regressive” by reforming and reducing its gross receipts tax? What is the appropriate level of taxation? These questions are left unanswered.

The author DOES trash Arizona for having made their tax structure more regressive in recent years (by cutting taxes, of course). New Mexico seems to be moving toward a California-style tax structure (according to the author’s own study, California has THE most progressive tax code) which has also made the state an attractive place to move out of.  

On this week’s interview Paul talks to Zach Fort of the New Mexico Shooting Sports Association about Gov. Lujan Grisham’s plans to take away your guns during the 2024 legislative session. We know from this summer’s radical and anti-constitutional executive order that this Gov. is not a believer in gun rights or the 2nd Amendment. What are her and the Legislature’s plans and what can New Mexicans do to fight back?

Sometimes people surprise you. This is one such case. Recently, the Rio Grande Foundation was asked by our friends at Americans for Tax Reform to obtain a proclamation celebrating Ronald Reagan Day (Feb. 6, 2024) which would have been Reagan’s 113th birthday. We weren’t sure what we’d get from Gov. Lujan Grisham’s office, but were positively shocked to receive the proclamation below.

Not only is the proclamation well-done, but it specifically calls out Reagan’s political and economic success thanks to his conservative principles. It stands in stark contrast to the policies emanating from Washington and Santa Fe (to name just two).

Gov. Lujan Grisham is seemingly hell-bent on stopping school districts in New Mexico from operating on a four day week. She specifically called out these districts in her State of the State address as well and has put $100 million in her budget to ensure ALL New Mexico districts embrace a 5 day week. 

Just to be crystal clear, 4 day weeks don’t mean less time in school. New Mexico students have to be in their classrooms for a set amount of time.

Check out the quotes from this article from Missouri (where 4 day weeks are common and popular):

“I wish this was a story about how a rural school district is able to pay teachers $100,000 a year, and we’re paying them what they’re worth and that sort of thing, but we just don’t have that revenue,” he said.

Since they don’t have the money, Klinginsmith said their bargaining chip for keeping employees is time.

“We want to retain our best teachers and attract the best teachers and so the four-day school weeks has definitely helped us do that,” he said.

The district is currently in their fifth year using this method.

According to Klinginsmith, they have seen teacher retention immensely improve, but they’re not the only ones it’s benefitting.

Despite public opposition including 750 signatures from verified New Mexicans opposed to the Gov.’s latest proposal to foist EV charging stations on commercial and residential buildings, the Construction Industries Commission decided today to adopt the Gov.’s mandate. Mandating EV chargers and equipping them for future EV chargers will raise costs on new commercial and residential buildings.

The vote was 6-2. You can find the list of members here though we know that Dale Armstrong was one of the opponents, we don’t have the exact vote.

Here is a useful if highly biased take from an environmental group that supported the new codes.

Another study of New Mexico’s film subsidy program has been released. This one is by the Film Office itself (so we KNOW it is an honest assessment, lol). You can read one media report here.

Essentially, the Film Office report appears to be a response to the Legislative Finance Committee’s report which was released in September of 2023 and largely trashed film subsidies as being an inefficient economic development tool.

So, do you believe the study from an agency whose existence relies in part on the continued impression that it is economically-beneficial or do you believe a report published by the Legislature’s internal think tank? Obviously, the LFC report has more inherent credibility, but their report is also based on better, more tangible data.

The Film Office report relies heavily on hard-to-define terms like “direct, indirect, and induced economic impacts.” The LFC on the other hand directly compares the film incentive program against other economic development incentives. While we’d rather see the money used for tax reforms/reductions at least this is a tangible comparison.

The fact is that New Mexico’s film subsidies are economic losers. They require a revenue source like oil and gas to fund them. Study after study on film subsidies have come to similar conclusions, but sadly with the current Gov. and Legislature there is little likelihood of reining them in.

The session begins today. For starters Paul sits down with Carol Wight of the NM Restaurant Association to discuss a proposal for paid leave as well as plans to increase taxes on alcohol. You can watch that brief conversation here:

These are a few of the pre-filed bills that we are looking at with some additional links:

HB 41: Clean fuel standard; https://sourcenm.com/2024/01/12/lawmakers-add-new-clean-fuel-standards-to-environmental-improvement-act/

HB 37: Limits on NM’s capital gains deduction;

HB 48: increase royalty rates on oil and gas; https://capitalandmain.com/new-mexico-governor-kickstarts-effort-to-overhaul-oil-and-gas-regulation

NM to received $68 million to build an electric vehicle charging network. Details are scanty at this point, but the Gov. is very excited.

Hertz will sell off 20,000 EV’s and purchase gas cars instead.

Rail Runner ridership rebounded a bit in 2023, but it remains 22% below pre-pandemic levels. Will it ever achieve pre-pandemic levels or are we at the “new-normal.” What about other environmental solutions?

Even with the push to renewables NM’s Land Office gets a higher percentage of its revenues from oil and gas than before the current commissioner took over.

Albuquerque began its “free” bus program on January 1, 2022. The program is touted by transit advocates and leftists as a big success, but “free” buses have NOT had a discernable positive impact on bus ridership. As the chart below (compiled via public records requests) shows, the City’s bus system is nowhere near recovering from the COVID 19 pandemic and is unlikely to do so. The following are ridership numbers:

2016: 10,901,920
2017: 9,684,618
2018: 9,571,853
2019: 9,024,374
2020 5,097,090
2021 4,396,480
2022 5,998,565
2023: 6,276,509

In fact, as of 2023 ridership on Albuquerque’s buses is down by 30.4% relative to 2019, the last year before the COVID pandemic. That’s an even worse drop than the 22% drop experienced by the RailRunner over the same time frame.

The following column by RGF board member Julie Wright appeared in the Albuquerque Journal  on Saturday, January 13, 2024. It is in response to Judith Polich’s column in which she purported to clear up “EV disinformation.” 

Judith Polich’s columns can always be counted on for a slanted approach to the “climate crisis,” but her latest in which she purports to debunk “misinformation” on electric vehicles takes the cake. Her article is positively full of factual mistakes.

Polich claims that “EV’s have no emissions” but that is simply wrong. EV’s do not have tailpipe emissions, but they generate large amounts from their manufacture and especially all the materials (including rare earth) that go into the expensive batteries that make them go. Polich even admits her error in admitting that PNM is NOT using 100% “renewable” energy and won’t for more than a decade. And that’s if the ambitious energy transition goes smoothly.

But even “renewables” require battery backup, massive deployment of high-tension wires, and the manufacture and installation of solar panels or wind turbines. All of those activities currently and for the foreseeable future require traditional energy sources.

Polich does politely acknowledge the role of internal combustion vehicles in solving the horse manure problem. Undoubtedly, there were some holdouts, but internal combustion cars were clearly superior technology and have become dominant for more than 100 years. Government didn’t have to mandate their use (unlike the current situation with EV’s).

Speaking of subsidies, Polich notes that Biden’s infrastructure law purports to deploy 500,000 EV charging stations nationwide (at a cost of $7.5 billion to taxpayers). What she doesn’t note is that the law was passed in 2021 and the first charging station was just deployed in December.

Furthermore, EV’s are not new technology. In fact, EV’s and steam powered cars were commonplace at the time of Henry Ford. The internal combustion engine was better technology and it still is. In fact, the fuel efficiency of gas-powered cars gas powered cars has improved 35.4% in the Past 20 Years.

Air pollution from gas powered cars. According to the EPA, new gas-powered passenger vehicles are 98-99% cleaner for most tailpipe pollutants compared to the 1960s. Fuels are much cleaner—lead has been eliminated, and sulfur levels are more than 90% lower than they were prior to regulation. Efficiency continues to improve and even Polich and her personal choice of a gas hybrid provides further evidence for this.

Ultimately, electric vehicles may someday prove superior to gas cars, but even Polich tacitly admits that they aren’t close to replacing gas cars at this time. Those “opponents” Polich cites mostly oppose the mandates and massive subsidies being employed by Gov. Lujan Grisham and others to achieve their goal.

On this week’s interview Paul talks to Lori Coleman. Lori is a small-time miner in Southern, NM and the Florida mountains.

She owns Spanish Stirrup Rock Shop, LLC and the SS Stone Gallery in Luna County and Lincoln County, New Mexico.

She opposes plans by some politicians in New Mexico to make the region a 245,000 acre National Monument which Lori believes would have detrimental impacts on her business, access to the area, and the local economy.

Paul and Lori discuss serious issues with the process and how New Mexicans can push back against this land grab. One way is by adding your name to the linked petition.

Numerous studies (including from the CDC) have show definitively that masks are ineffective at stopping the spread of viruses like COVID 19. But, there was Gov. Lujan Grisham in the Roundhouse rolling out $68 million in subsidies from the Biden Administration for EV  charging stations while wearing a mask in January 2024. You can read more about these costly subsidies here.

It’s no secret that transit ridership collapsed With the return of government  workers to their offices in Santa Fe one might assume that ridership on the train would have returned to previous levels.

Sadly, it has not. 2023 ridership remains 21% below 2019’s pre-pandemic levels (which were in turn well below those levels achieved in the train’s early years). When NPR is calling transit ridership a “death spiral” due in part to the rise of remote work, ANY new investment in mass transit SHOULD be avoided and current ones should be reevaluated as well.

Shortly after taking office in 2019, New Mexico’s Democrat Commissioner of Public Lands created a new logo for her office in which she emphasized the role of her office in “renewable” energy. See that logo here.

Recently we posted in this space that “renewables” amounted to just 0.16% of the Land Office’s revenues, but even more ironic is the fact that (as can be seen from the chart and article below) oil and gas actually generate a higher overall percentage of the Land Office’s revenues than they did back in FY 2018 when Garcia Richard took over.

After years of phased-in rate hikes, raising New Mexico’s minimum wage doesn’t appear to be on the table for serious discussion in the 2024 session (you never know, however).  The rate was upped to $12 an hour on January 1, 2023. 

But, with rampant inflation and a dearth of available workers, this round of wage hikes has been relatively unnoticed. Making the situation more interesting is (as Stateline reports and quotes RGF’s president) that for relatively low-wage “hospitality” workers across the nation, wages have increased and have even increased faster than those for workers at the upper end of the wage scale. This has happened especially in states without high minimum wages.

Here’s a quote from the article:

The highest wage increases for hospitality workers were in Maine (up 41% over four years), New Jersey (35%), Florida (34%) and Virginia (33%). All are states with a higher minimum wage than the federal floor.

But increases were nearly as high, about 33%, in states without minimum wage boosts, including Idaho, Kentucky, New Hampshire, North Carolina and South Carolina.

Simply put, in an inflationary environment with a tight labor market wages are destined to rise.

On this week’s conversation Paul and Wally discuss the Foundation’s ongoing work regarding electric vehicle mandates in New Mexico. The Foundation has also been requesting public records from various governments regarding EV deployment and costs.

New Mexico’s 30-day legislative session is right around the corner. One of the big issues RGF will be working to oppose is tax hikes to create a system of paid family leave. Paul and Wally discuss issues with this proposal which was narrowly defeated last year as SB 11.

NM has another mammoth budget surplus ($3.4 billion) again which means there will be plenty of new spending. Sadly, neither the LFC nor the Gov.’s budgets have any tax reductions/reform or even rebates.

PNM’s merger has fallen through. Paul explains why RGF didn’t engage on either side.

There has been a sustained effort by left wing New Mexico legislators, Common Cause, and New Mexico Indepth (to name just two). Last session’s tax hike failed (partially due to mistakes made by the bill sponsors), but the advocates are back again and they are pushing a massive 25 cent PER DRINK increase.

The following data are from the Tax Foundation.

For starters, NM’s $6.06 per-gallon tax on distilled spirits is ranked 24th-highest nationally.

New Mexico’s 41 cent per gallon tax on beer is ranked 15th-highest nationally

Finally, New Mexico’s tax on wine of $1.70 per gallon is 5th-highest nationally.

As we have discussed in this space the Rio Grande Foundation has been requesting public records from several state institutions regarding the existence of EV chargers. Here is information from NM Highlands.

How many total EV Charging stations are at Highlands University’s various  campuses?

The university only has one EV at this time, and it is located on the main campus. It is a level 1 unit (the slowest type).

What was the cost of each unit?

The unit cost was $11,181.47.

According to a records request received from NMSU: “New Mexico State University does not have EV charging stations installed on our main campus or branch campuses.”

The following opinion piece appeared in the Las Cruces Sun-News on January 6, 2024.

With yet another massive budget surplus awaiting the New Mexico Legislature as they convene in Santa Fe for the 2024 30-day legislative session, this column should rightly be replete with ideas for how the Gov. and Legislature can use that surplus to diversify the State’s economy and bring New Mexico out of poverty. Alas, if we learned nothing from last year’s 2023 session, it is that even at a time of surplus, the Legislature can still harm our economy.

As the Legislature convened last year with a $3.6 billion surplus, the tax “omnibus” bill included provisions that would have raised the personal income tax, “sin” taxes on alcohol and tobacco, and would have raised capital gains and corporate income taxes as well. All tax hikes must come from somewhere and they always come out of the pockets of businesses and consumers. Gov. Lujan Grisham (thankfully) vetoed the tax hikes contained in last year’s “omnibus” bill.

With another massive surplus this year all tax hikes should be dead on arrival. Ideally, Lujan Grisham would simply tell the Legislature that New Mexico state government has plenty of money and that it needs to diversify its economy, not make it harder for businesses and citizens to do business here.

While the concept of “do no harm” prevails in the medical profession, it should apply as well to New Mexico’s current economic situation. Advocacy groups are lining up to push “Paid Family Leave” legislation like last year’s SB 11. The bill was sponsored by Sen. Mimi Stewart, D-Albuquerque and passed the Senate only to be narrowly killed in the House.

As proposed, paid family leave legislation would require employees to pay $5 for every $1,000 of income and employers with five or more employees would pay $4 for every $1,000 of income into a paid family leave “trust fund” administered through the Department of Workforce Solutions. When taking paid leave, the employee who makes more than minimum wage would not receive their entire salary but a percentage of it.

The first issue is that concerns have been raised about the viability of this fund. The Legislature’s own Fiscal Impact Report cites “potential fund insolvency risk.” Of course, it is hard to predict how many workers would use paid leave each year, but solvency is likely to be a serious issue as we have seen in funds set up by the government (Medicare and Social Security come to mind but are hardly alone).

The biggest question that must be asked is why all New Mexico workers (and their employers) should be forced into paying for a one-size-fits-all paid family leave plan. If this is such a great idea, the State has more than enough money to fund such a scheme.

After all, while paid leave will benefit those who use it, to those who don’t (and their employers) it is nothing but a tax increase (or wage reduction). This comes at a time when wages have not kept up with the rate of inflation.

But, the State of New Mexico has plenty of money! The solution is simple, rather than imposing more economically harmful regulations on average New Mexicans, if the Legislature wishes to make paid leave benefits a priority, they should set aside a portion of the oil and gas surplus to do it.

I wish we were having more substantive discussions in New Mexico about how to use this amazing surplus to lower tax burdens and diversify our economy. Sadly, that’s not what is happening. But, at the very least when it comes to taxes and proposals like paid leave, at a barre minimum the Legislature should “do no harm.”

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

In our ongoing efforts to shed light on issues relating to electric vehicles (EV) and EV charging stations at public facilities across New Mexico, here is the response from Western New Mexico University:

How many total EV charging stations are there at WNMU’s various campuses?

Western New Mexico University will have a total of four (4) EV charging stations at our Main Campus in Silver City, NM.  None of the chargers are operational at this time as final installation is set to be completed by this spring. There are no EV charging stations at any of our other sites.

What “level” are these stations (1, 2, or 3)?

The EV charging stations are level 3 (the fastest type).

What was the cost of each unit?

The cost of each unit, to include installation, is $101,682.91.  Of the project total cost ($406,731.64), $200,000 was covered by a donation from Freeport McMoRan.

With yet another mammoth budget surplus ($3.4 billion) facing New Mexico’s Legislature next week when it convenes for a 30 day session, there will be plenty of new spending. Sadly, neither the LFC nor the Gov.’s budgets  have any tax reductions/reform or even rebates.

The LFC is the slightly more reasonable budget with “only” a 5.9% annual increase. Unsurprisingly, MLG’s budget is more aggressive with a 10% annual increase.

Updated item: The LFC has $200 million for some kind of tax policy reforms and the Gov. has $500 million, but we have no idea what those set-asides will contain at this point. 

Since Lujan Grisham’s first term in office in 2018 (passing the FY 2019 budget) New Mexico’s budget has grown from $6.3 billion to (a proposed) $10.5 billion. That’s growth of 66.67% or 9% annually. During that time the State’s myriad “permanent” funds have grown dramatically, but taxpayers have received minimal tax relief and no significant reforms have been adopted.

The John Trever cartoon below highlights the situation nicely although Republicans have negligible power in the Legislature.

A coalition of environmental groups left-wing politicians is pushing for 245,000 acres in Luna County near Deming to be locked up as a “national monument.” Such a designation could negatively impact the livelihoods of thousands of local residents by severely limiting use of those lands.

Worse still, the process for declaration of national monuments allows the President of the United States to personally declare monuments with just a stroke of a pen. This is due to a broad interpretation of the Antiquities Act which was signed into law more than a century ago by President Teddy Roosevelt.

A group of local activists is distributing a petition against the monument via Change.org here. Please sign and share. All New Mexicans are welcome to add their names to the list of opponents.