Recently, RGF president Paul Gessing had the opportunity to discuss the 2020 election results with Bob Clark on 770 KKOB radio. Then he sat down with Bob Gore of the East Mountain Conservatives also to discussing the results.
Links to both are posted below:
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The Rio Grande Foundation signed this opinion piece along with numerous other business groups. The Sick leave ordinance is being introduced at the ABQ City Council meeting on Monday, November 9, 2020.
Back in July, Darin Sand, vice president for development at Goodman Realty, told the Albuquerque Journal “We are diversifying and looking to other cities and states in terms of future investments, and I think that’s smart … because of the political environment here.”
He was one of several local business owners who expressed concerns about their ability to do business in Albuquerque in the article, “ABQ businesses manifest financial ruin.” The story highlighted in stark detail the impacts of the economic lockdown. It also showed ways in which state and local economic policies make life difficult for local businesses.
Yet the Albuquerque City Council will be bringing up the issue of a paid sick leave mandate. This comes on top of a minimum wage increase passed in 2019 by the N.M. Legislature that will take the city’s lowest wage from $9.35 an hour to $10.50 an hour starting in January. That’s a 12% increase.
Not many local businesses have achieved 12% growth this year. In fact, the list of local business closures in recent months, due mostly to COVID-19, is long and growing fast. Does the City Council really want to hasten the demise of even more of the stores and restaurants that make our city and state unique?
Albuquerque voters rejected a paid sick leave mandate in 2017. And the City Council rightly decided to put off the issue back in June of this year. It is hard to see what has changed that would merit the imposition of yet another increase in the costs of doing business.
If anything, with the state’s economic lockdown dragging on and Albuquerque’s unemployment rate elevated, the state of most small businesses is even more precarious than it was this summer. A widely-acknowledged trend to arise from the COVID 19 pandemic is that many big corporations are doing fine or even better than before, while small businesses are struggling. Numerous local businesses have yet to reopen at all since March, and yet the City Council is considering imposing additional costs and regulations on them.
The ongoing COVID situation should not be an excuse to impose more costs on local businesses. At the beginning of the outbreak Congress passed the Families First Coronavirus Response Act (FFCRA), which requires employers with less than 500 employees to provide paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. This paid leave is then paid back to the employer by the federal government. This is effective through Dec. 31 and likely to be extended with the next federal relief package.
It is, of course, small, family businesses that will be most negatively impacted by another costly policy. That’s because unlike big corporations, each new mandate makes doing business incrementally harder as they have less cushion and are not diversified in numerous areas of the country.
Valuing small business is why we’ll all celebrate Small Business Saturday later this month. While many of us have enjoyed the ability to have products and services delivered during this pandemic, it is also worth noting that Amazon doesn’t sponsor many youth baseball and soccer teams around town.
While businesses in Albuquerque face numerous difficulties, we do value our workers and want them to be healthy. In fact, workers often stick with small businesses because they more resemble a family. We know COVID-19 has impacted all of us, not just our bottom lines, but our friends, families and employees. We’ve heard “We’re all in this together.” If that is truly the case, now is definitely not the time for Albuquerque’s City Council to put more regulations on struggling local businesses.
On this week’s podcast, Paul interviews James Taylor, president of the Heartland Institute. Based in Chicago, IL, Heartland’s mission is to discover, develop, and promote free-market solutions to social and economic problems, but it is most known for its work on energy and climate issues.
Taylor joins the podcast to discuss Joe Biden’s energy policies and specifically his attacks on “fracking” and the oil and gas industries in general and how those policies would actually harm the environment. Taylor and Gessing discuss Biden’s version of the “Green New Deal” as well as efforts in California and New Mexico to move away from gasoline-powered vehicles.
As I write this the dust STILL has not settled from the 2020 election, but here are a few thoughts:
Like everyone else out there we at the Rio Grande Foundation remain keenly interested in the results of the election. We too are disappointed that so many New Mexicans looked at the policies that have been in place in New Mexico for 90 years (to awful effect) and said, “More please!”
It has not always been thus, or, at least some prominent New Mexico business people took VERY principled free market positions. I know after reading the excellent recent Albuquerque Journal story about home builder Dale Bellamah (whose name lives on in street names across the City of Albuquerque) that I’ll take note when I see his name on street signs around town.
Here are some great quotes from the story about him which illustrate the values that helped Mr. Bellamah achieve great things.
He scoffed at government interference when it came to business. He opposed putting a cap on the price of goods and enacting rations proposed by President Harry S. Truman in 1947. He argued the measures were “contrary to the American way of living and destroys free enterprise.”
Two years later he fought against a proposed bill that would establish a low-cost housing program in response to a shortage of homes. He said it was a step toward “breeding a nation of irresponsibles” and the bureaucratic fumbling would end up costing taxpayers more money.
But Bellamah did care about the working man and the plight of the poor. He left his entire estate, estimated between $30 million and $50 million, to a charity foundation he established a few years before his death.
Notably, Bellamah wasn’t born with a “silver spoon” in his mouth. In fact, according to the Journal article”His mother died when he was 12. By then his father was invalid and could not work, so Bellamah was forced to find employment.”
There are plenty of great business leaders in New Mexico and Albuquerque today, but the political winds and social pressure cause them to keep quiet.
How many students were enrolled in New Mexico’s public education system after the first 40 days of the 2020-2021 school year? That is a critical number for determining funding for New Mexico’s public school funding. Also, in the midst of dramatic changes due to the COVID 19 pandemic, this information is especially relevant for understanding how families are reacting to “virtual” and “hybrid” learning policies that are being imposed statewide.
Schools completed the 40 day threshhold back in mid/early October, but, when RGF requested the information from the Public Education Department we received the following letter which basically said, “wait until mid-December.”
The virus continues to spread in New Mexico. Paul and Wally look at the numbers. Gov. MLG doesn’t attend the pre-election press conference. Paul and Wally assume a big lockdown is coming post-election. Paul shares details on his family’s Halloween celebrations.
Paul has a conversation about the election with Al Jazeera.
Paul talks about the Gov.’s COVID response in ABQ Journal.
Paul and Wally offer their pre-election predictions for President, Senate, House, overall control of the US Senate, and NM Legislature.
Gov. MLG proposes a tourism stimulus package for the upcoming session. What could this involve?
National economic data show strong rebound. Will those numbers continue to improve or decline with the spike in the virus?
ABQ City Council (again) to consider mandatory paid sick leave. ABQ Chamber Terri Cole has some strong and welcome words on the issue.
PNM to get out of Four Corners coal plant as well as San Juan. Now “coal free” by 2024. Navajo Nation will purchase the plant and may frustrate environmentalist efforts to shutter the facility.
While everyone is focused on the election we at the Rio Grande Foundation are (yet again) gearing up to fight the issue that simply will not die: mandatory paid sick leave. Read about the latest plan here.
The plan has been put forth by Councilors Lan Sena and Pat Davis. At first it would apply to employers with 10 or more employees. Smaller companies would face the mandate starting in 2022.
At the Rio Grande Foundation we have long been critical of such mandates and their negative impact on small businesses, but it is truly mind-boggling that this idea is being pushed at a time when many businesses remain shuttered entirely (and have been since March). Other businesses remain partially open or open at only 25%.
We were extremely pleased to see the following comments from Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce in the aforementioned Albuquerque Journal article, “Many businesses are barely clinging to life as it is due to the pandemic, and a new mandate could be devastating.
“Small businesses need help, not regulation and relief, not higher costs.” Finally, Cole argued that, “Using the pandemic as a reason to mandate paid sick leave is ‘grasping, unserious and disappointing.’”
RGF has been critical of Gov. Lujan Grisham’s big-government economic policies from day one. What we never planned on was a global pandemic that has resulted in unprecedented power being concentrated in New Mexico’s executive office OR the use of that power to pick winners and losers in the State’s economy.
Needless to say, we have been critical of the Gov.’s approach to the Virus AND her willingness to shut down or drastically limit entire industries. The New Mexico media (along with the courts and Legislature) have given the Gov. tremendous leeway in her actions. The Albuquerque Journal article by Dan Boyd in which I am quoted at least DOES give critics a platform and asks some important questions, but the article both labels the Gov.’s response “science based” AND (in the print story) allows the Gov. to claim “I’m going to continue to be a truth-teller).
The fact is that the Virus is NOW spreading out of control while New Mexico remains economically and socially closed (and has been for nearly 8 months) to an extent not found in many other states at this time. My quotes from the Journal article are as follows:
Paul Gessing, president of the Albuquerque-based Rio Grande Foundation, a think tank that favors limited government and open markets, said he believes many New Mexicans have started to tune out the governor’s message.
“The economy has not been as much of a focus for the governor as I think it should have been,” said Gessing.
He also said it’s not realistic to ask New Mexicans to stay home for an extended period.
“I think people are reasonable and are doing their best,” said Gessing, who acknowledged the danger posed by the virus while arguing most people infected make a full recovery.
And, while Halloween was definitely different this year, as the parent of young children, we were not going to miss out on trick-or-treating. So, as you can see from the first photo (taken at an indoor church-sponsored event prior to Halloween) the Gessings are NOT anti-mask. 
And, we (like many) rejected the Gov.’s “stay home” approach and came up with innovative, COVID-safe ways to embrace Trick or Treating in a safe manner. 
In this unique and timely episode, Paul sits down with two experts on utilities to discuss the purchase of PNM by Avangrid and the impact the push for “renewables” is having on electricity prices and grid stability in New Mexico.
Larry Behrens runs Power the Future NM which advocates for pro-energy policies. Larry’s group has been critical of the Energy Transition Act.
Dax Contreras was an energy trader for five years working for PNM. Dax’s job was to keep the lights on for PNM customers across New Mexico by purchasing (and selling) power to customers across the Western United States.
The following are charts directly from New Mexico’s state page on the New York Times COVID 19 tracking page on October 28. The main takeaways are that New Mexico is in the worst position it has been in terms of the spread of the virus, but, at least so far the number of deaths has not spiraled upward (there has been an uptick to be sure). We will see if that continues or if the situation deteriorates even further.
What is plain to see is that the Gov.’s strategy for stopping the spread has either failed to stop the spread of the Virus OR enough people are tired of them to the point that they are disregarding them (and thus spreading the Virus). Perhaps both are true.
Interestingly and somewhat surprisingly given the her recent statement that this is “the most serious emergency that New Mexico has ever faced,” Gov. Lujan Grisham who has had regular updates will apparently NOT do so this week. Instead David Scrase will be joined by a few other medical professionals on Thursday afternoon.
Just in time for the election, the Rio Grande Foundation’s Tipping Point New Mexico is now available in yet another format: television!
In addition to the audio podcast, the show is available in Albuquerque on Saturdays from 1:15pm to 2pm on Saturdays on the Rock of Talk AM 1600 or FM 93.7.
Also, the show is available Thursdays at 5:00 PM on HII 88-9 FM Cloudcroft, 100.5 FM Alamogordo, and KEDU 102.3 FM Ruidoso.
On October 26 and 27 of 2020 New Mexico (including RGF’s home town Albuquerque) received a big snow storm which dumped about 10 inches of snow on the area. Snow is one of many weather phenomena that impact electricity demand (and production, especially when so-called “renewables” are involved).
And, while PNM is currently required to achieve a 20% renewable standard (a requirement that we estimate will cost the State economy $444 million this year alone) and has plans to achieve 100% by 2045, the real-time tracker available on PNM’s website shows that PNM is a long way from relying on unreliable energy sources.
As of 4:30pm on the 27th (several hours after the snow stopped falling) PNM was getting just 9% of its electricity from “renewable” sources. Results vary depending on demand and weather, but 9% is a paltry number.
The Gov. has some new COVID orders. While Paul and Wally both acknowledge that these are more focused on problem areas than her previous orders were, the Gov. has backed herself into a corner in addressing the Virus. Spread is FAR worse than it has been at any other time of this crisis.
To that end, the Catholic Church (Archdiocese of Santa Fe) canceled services moving forward on its own. As we near Halloween what about other important events including Christmas and the State Legislature? The good news is Virus deaths haven’t jumped at least yet.
Avangrid has reached a deal to purchase PNM. Paul and Wally discuss and note that Thursday’s podcast will discuss this in-depth.
According to Wallethub New Mexico’s unemployment rate remains among the least recovered among US states. New Mexico’s September unemployment rate was also higher than any of the State’s neighbors.
In the final presidential debate, Joe Biden said “We are going to transition away from oil and gas. Stop subsidizing the industry.” Wally and Paul discuss the second part of that statement.
Finally, Paul and Wally both voted this past week. They discuss how they avoided the long lines some experienced and who they voted for in the presidential election.
We truly do feel for UNM (and NMSU’s) sports programs, especially those (like UNM football) who have been living in limbo because of the Gov.’s orders. Of course, that “limbo” (and the likely loss of fan attendance revenues for Lobo basketball) isn’t going to do much for the athletics budget looking forward.
But, UNM is generally both too powerful and too unaccountable and the decision to essentially forgive the debts incurred by the athletics department by folding them into the overall UNM budget is unfortunate.
Amazingly, the University has (according to the Journal) “At the end of the 2020 fiscal year, the university had about $346 million in plant fund reserves.” This is the fund out of which the deficit will be paid.
While reducing athletics isn’t enough to make UNM a “lean and mean” entity, folding money-losing “extras” into the overall budget is a way to undermine accountability, a point that we made when a similar move was made with the City of Albuquerque’s golf courses.
The following appeared in the Sun News on October 25 and several other papers and media outlets.
A recent report from the Pew Center determined that New Mexico had the fourth highest volatility in tax revenue collection over the past 20 years. Unsurprisingly, the study cited reliance on oil and gas revenues as the likely cause of this volatility. What the study didn’t consider was the fact that New Mexico’s misguided economic policies actually reinforce our reliance on oil revenues.
Over the years New Mexico has developed mechanisms like the “rainy day fund” and permanent funds (these are two different things) to help smooth the ups and downs inherently associated with rising and falling oil and gas prices and production.
It has been well-documented that New Mexico has risen to be the 3rd-largest oil producing state in the nation. We often forget that Texas remains the largest oil producer at more than six times the amount produced here in New Mexico, yet Texas, as the report noted, “ranked close to the middle of states for overall revenue volatility.”
Why is that? Simply put, Texas is less reliant on oil and gas than is New Mexico as a percentage of its overall budget. Again, according to Pew, “severance tax accounted for 7.5% of Texas’ total tax collections over the past decade.” That is a far more comfortable position to be in than New Mexico’s reliance for 40% of its budget from oil and gas.
These are all pretty widely-agreed upon facts among New Mexico policymakers and thought leaders. This is where things get tricky.
Democrats, especially their more “progressive” wing (now dominant in the Legislature) seem ready to eliminate oil and gas entirely without much in the way of a plan for how to fund New Mexico government. Long-time “progressive” Albuquerque-based Senator Jerry Ortiz y Pino argued in an op-ed this year that New Mexico should “go cold turkey” to stop our “addiction” to oil and gas. Gov. Lujan Grisham recently echoed those sentiments in a webcast with the US Climate Alliance, saying “New Mexico should transition out of fossil fuels.”
Those sound like nice goals to many environmentalists, but aside from raising taxes on a massive scale, how do you fund State government? That question is left unanswered.
According to NMSU professor Jim Peach, New Mexico faces not one, but two threats: 1) the short-term effects of reduced revenues and slower economic growth from the lockdown; 2) the longer-term challenge of replacing oil as a funding mechanism for state government.
Rather than killing the oil industry (or seeing revenues from it decline rapidly due to depressed demand) and then frantically looking to find a replacement, the Gov. and Legislature need to use the 2021 session to enact long-overdue reforms like GRT reform that CAN make us more competitive. Texas has no income tax and is a “right to work” state. It is known to be business-friendly and consistently scores well in state rankings on such issues. New Mexico, on the other hand, is rightly perceived as being rather hostile to business. And, the gross receipts tax is unfair and riddled with breaks for special-interests.
One issue that is sure to come up in 2021 is tax hikes. Professor Peach and others have mentioned them with an air of inevitability. Tempting as they may be, tax hikes will make us even less competitive with Texas and other states as a destination for jobs and economic growth. Given the gulf between New Mexico and Texas in terms of economic competitiveness it is no surprise that the Federation of Tax Administrators ranks New Mexico as having the 7th-heaviest tax burden while Texas is among the lowest at 47th.
Ironically, if New Mexico were to streamline government, truly make the state attractive for business, and thus diversify its economy, like Texas, New Mexico’s economy and tax revenues wouldn’t be as volatile. Unfortunately, we have a very long way to go to make that happen.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
The latest Wallethub report on how state unemployment rates are recovering is out. New Mexico remains among the least-recovered states as the graphic below shows:
In other news, according to an October 16 report from the Legislative Finance Committee that we obtained, Gross receipts tax collections in New Mexico were down $31.6 million in August compared to the same month last year, according to preliminary data from the Taxation and Revenue Department.
Furthermore, total fiscal-year-to-date GRT collections through August were down $30.3 million from the same period a year ago, or 6.3 percent.
Basically, it appears that the combined effects of the Governors lockdowns, their increased intensity, and the lack another round of federal stimulus are having serious, negative impacts on New Mexico’s economy. How long will this last? We have no idea.
You may have heard by now that PNM (pending PRC approval) has been purchased by the Spanish utility Avangrid. According to the Albuquerque Journal article detailing the purchase, Avangrid paid 19.3% above the PNM share price.
The following “check” was used by RGF president Paul Gessing as a prop in a 2019 hearing on the Energy Transition Act. It remains relevant as ever, but perhaps should be paid to the order of Avangrid now. 
We don’t know exactly what this all means, but we DO know the following:
The latest unemployment rates for states are out (full list can be found here). New Mexico remains in the top 10 with a rate (9.4%) that is higher than all of its neighbors.
The Rio Grande Foundation continues its effort to get Gov. Lujan Grisham to forego her salary until New Mexico drops out of the worst 10 unemployment rates among US states.
On this week’s discussion podcast, Paul and Wally discuss the rising number of COVID19 infections in New Mexico. The Gov. has planned a press conference later today. Paul argues that this rise is a result of the Gov.’s failed lockdown strategy and he expects more shutdowns.
While the number of cases has grown rapidly, the number of deaths has not…at least not yet. Paul argues that this may be due to more effective treatment techniques and suggests a mitigation strategy may be better than a lockdown strategy. He also notes that while hospitals are full, according to UNMH COVID-positive patients represented less than 10% of overall patient cases.
In economic-related news:
NM unemployment rate is among the slowest in the nation to recover
And, according to the Legislative Finance Committee, job losses are dominated by a few major sectors of New Mexico’s economy while government has seen minimal losses.
Finally, Paul and Wally discuss the constitutional amendments on the ballot as well as the bond issues. Reminder: get out to vote!
In the best of times (pre-COVID19) New Mexico has not done enough to overcome its serious inherent challenges in improving student outcomes. That has become an even bigger challenge with the emphasis on “virtual” learning by the State and districts like APS and Las Cruces (to name two big ones).
The Center for Education Reform is a national education reform organization that advocates across the board for “choice” as well as teacher quality and innovation. In the group’s “Parent Power Index” New Mexico (as usual) under-performs its neighbors. Notably, Arizona, which obtains better results form similarly at-risk students for less money, is the top-ranked state in the nation. You can find the entire, interactive index below. 
In the same vein, the Center for Education Reform created a separate report card that just considers and ranks all 50 states based on their charter school laws environments. Again, Arizona takes the top slot while New Mexico ranks as a low-C in the rankings.
The fact is that New Mexico inherently has challenges in improving educational outcomes. Spending more money hasn’t achieved success. It would be nice if the Gov. or the Legislature defied their allies in the unions and focused on improving the State’s charter law and expanding school choice.
According to a recent Pew Center report New Mexico has very volatile tax revenues when compared to other states. That report was discussed in some detail in this Center Square story. New Mexico had the fourth highest volatility in tax revenue collection over the past 20 years.
What can be done? At the Rio Grande Foundation we have argued regularly for economic diversification through the introduction of more economic freedom, but Democrats who control the Legislature and Governor’s mansions have stood steadfastly against serious economic reforms including, but not limited to, gross receipts tax reform.
The following chart taken from the Pew chart directly shows that NM has the greatest volatility among its neighbors.
Some recent presentations by New Mexico’s Legislative Finance Committee (see chart below) truly show how we are NOT all in this together during the Gov.’s COVID 19 lockdown.
While an overwhelming majority of government workers (a huge sector of New Mexico’s economy relative to other states) are doing just fine, many areas of the private sector have been devastated by the Gov.’s lockdown policies. New Mexico’s oil and gas industry and its leisure/hospitality (tourism) are down massively while others are also way down in terms of employment. The full report is linked above while the relevant chart is below:
As Gov. MLG prepares further lockdown measures for New Mexico’s economy, a new Wallethub report shows that New Mexico (which is already poor and suffers from relatively elevated unemployment) is not recovering from the COVID 19 economic interruption as fast as other states.
In fact, since the start of 2020 NM is as seen the 2nd-worst recovery in unemployment claims since January.
The following shows NM’s performance on unemployment last week vs the same week in 2019.
Given the Gov.’s approach to the Virus and increasing spread (but not deaths), we expect further restrictions on New Mexico’s economy to be imposed this afternoon in addition to what she’s already done this week.
