The governor’s released her proposed budget for fiscal 2018, but veteran New Mexico policy wonks know that the Legislative Finance Committee’s fiscal recommendations are at least as important as the chief executive’s spending plan. It’s always interesting to see the priorities of revenucrats and approprocrats in Santa Fe, as well as their predictions about where the state’s economy and fiscal policy are headed. Of particular note in the LFC’s “Legislating for Results: Policy and Performance Analysis”:

* It appears that New Mexico has “finally … hit bottom for job losses in the mining sector,” with oil-and-gas employment stabilizing. But “other industry sectors are now faltering, resulting in total year-over-year job losses for September and October 2016.” Thus, while the economic forecast is weak, “the revenue forecast is even weaker.”

* The LFC is recommending “recurring appropriations from the general fund” of $6.052, assuming “$123.3 million in new revenue, additional spending reductions, or both.” Remember, though, that the general fund is just one portion of overall expenditures. Counting transportation spending, quasi-public entities, and federal monies, the true figure is roughly three times as much as the (widely quoted) sum for the general fund.

* The LFC wants $2 million “in recurring funding” for the “Job Training Incentive Program.” But in some good news for taxpayers, the committee’s recommendation “does not provide additional funding for Local Economic Development Act funds due to fund balances of $29 million as of November 2016.”

* “Available capital capacity in 2017 is at an all-time low, less than $65 million after solvency measures enacted in the 2016 legislative special session.” But state agencies and local governments have requested “$1.7 billion [emphasis added] for capital projects, including $588 million for water, transportation, quality of life (libraries, parks, senior centers, community and cultural centers, etc.), environment (utilities, landfills, clean energy, solid waste, etc.), and public safety.” In response, LFC staffers think legislators might want to “consider reviewing and reauthorizing inactive capital outlay projects.”

* The LFC continues to act as an advocate for, rather than an impartial analyst of, “early childhood education.” Ignoring the substantial evidence that preschool and related programs provide temporary benefits at best, the committee claims that “early care and education programs have been shown to increase school completion rates and each high school graduate, LFC and other studies show, produces benefits of $278 thousand for the graduate and $100 thousand for taxpayers and other beneficiaries, compared with a non-graduate.”

* Single-payer hasn’t yet been “achieved” in the state, but it’s almost halfway there. In fiscal 2018, more than “928 thousand New Mexicans” will be on Medicaid, which provides “comprehensive medical care, including hospitalization, doctor visits, pharmaceuticals, vision services, and dental services.” Nearly a “quarter of the recipients are newly enrolled adults who became eligible with the expansion of Medicaid under the Affordable Care Act.”

* Despite “public safety investments over the last five years,” the Land of Enchantment remains “among the most violent states in the nation, with the second highest rate of rape and fourth highest rate of aggravated assault.” (No mention of Albuquerque’s soaring murder rate.)

* “The constitutional mandate to balance expenditures with available revenues may require consideration of new revenue options.” Translation: Lawmakers should be looking at tax hikes. You’ve been warned!

New Mexico’s Legislature hasn’t even convened for 2017 but in Kentucky, the Legislature has passed and the Gov. has already signed “right to work” legislation making the Bluegrass State the 27th “right to work” state in the nation. As the article notes, Kentucky is also considering measures to roll back its “prevailing wage” law which artificially inflates the cost of public works projects.

Like New Mexico, Kentucky has traditionally been poor and lacking in economic freedom with abundant social ills. But Kentucky is embarking on a path opposite to the one New Mexico is pursuing and what Kentucky pursued in the past. As seen below, we at the Rio Grande Foundation have two full years of data indicating that “right to work” states create more jobs than do “forced unionism” states across the nation. We’ll see how this social experiment plays out. I have a funny feeling that Kentucky’s economy will leave New Mexico’s in the dust in the years ahead.

ALBUQUERQUE — With Santa Fe deeply divided between a Democrat-controlled legislature and a Republican-led executive branch, the potential for stagnation and stalemate is high as lawmakers convene for the 2017 session.

One issue that has generated support from across the political spectrum, won’t break the bank, and will result in both jobs and improved lives for thousands of New Mexicans is dental therapy.

The Rio Grande Foundation and Health Action New Mexico rarely see eye-to-eye, but on the issue of mid-level dental providers, both organizations are in lock-step support. Legislation will be put forth to address the issue by a bi-partisan group of legislators during the session.

The Rio Grande Foundation has released a new policy brief, “Enchanting, and Affordable, Smiles: Why Dental Therapy is Right for New Mexico.”

The paper, which was authored by Rio Grande Foundation Research Director Dowd Muska, details existing dental issues in New Mexico, including the lack of practitioners in rural communities. One Bloomberg analysis found that 40 percent of New Mexicans live in “dental deserts.” Also, the New Mexico Health Care Workforce Committee found that 18 of the state’s 33 counties have shortages of dentists.

Muska illustrates how the dental-therapy concept — which began in New Zealand — took root in Alaska, and then spread to other states, including Minnesota, Maine, and Vermont. This is a diverse group of states that, while generally in the northern part of the United States, like New Mexico, have large swaths of rural, underserved communities within their borders.

Furthermore, as Muska notes, Minnesota’s program has been in place for enough time to achieve results, including:

• reduced wait times, with 77 percent of “patients who reported it had taken at least two months to get a previous appointment … getting the current appointment in less than one month”

• decreased travel time for patients — for “93 percent of respondents, it took less than one hour to travel to the current dental appointment with the dental therapist, compared to 74 percent who traveled less than an hour to their last appointment”

In conclusion, dental therapy is a small but significant reform of New Mexico’s occupational-licensing laws that could have potentially large, positive impacts on the dental care received by our state’s rural population.

It was inevitable — and now it’s here.

Throughout the Republic, hiking taxes on gasoline is popular with both Democratic and Republican state legislators and governors. Falling for the “infrastructure” argument, pols claim that the levy increases are “needed” not merely to fix roads and bridges, but to foster “economic development.”

There’s not much truth in that assertion, but it’s not stopping two members of New Mexico’s House of Representatives from pushing potential gas-tax hikes. “Bobby” Gonzales (D-Ranchos De Taos) and Randal Crowder (R-Clovis) have sponsored HB 63.

Currently, only Class A and Class H counties, and the municipalities they contain, can impose local gasoline taxes. Fearing, no doubt, the wrath of voters — who tend to be drivers, too — pols in the dozens of jurisdictions that qualify have begged off, even though potential hikes are limited to 2¢.

Now, Gonzales and Crowder want to allow every county and municipality, with voter approval, to grab more gasoline-tax revenue. And they want to raise the cap, too — to 5¢. If both local governments where you live went to the limit, you’d be paying 59 percent more in taxes at the pump. (The state’s levy is 17¢.)

For years, the Foundation has been in the forefront of exposing gas-tax mania. Looks like there will be plenty of work for us on the issue in 2017. One thing we’re watching is Kentucky’s recent decision to repeal its prevailing-wage law. It’s sure to make taxpayers’ infrastructure dollars go farther in the Bluegrass State. Here at home, no prevailing-wage repeal has been drafted, but the reform bill sponsored by Rep. Bill Rehm (R-Albuquerque) is worth watching.

I was recently in Las Cruces and sat down with Fred Martino of KRWG TV to discuss some of the issues that Rio Grande Foundation is working on and some of the issues facing our State in the 2017 legislative session.

The interview is about 15 minutes and can be found here:

The Rhodium Group is out with its latest look at Chinese foreign direct investment in the U.S. The news was quite good, with Chinese companies investing “a record $45.6 billion in the US economy in 2016. This is triple the amount we recorded for 2015 and a tenfold increase of annual investment just five years ago.”

Unfortunately, no FDI made its way to New Mexico. As the map above shows, since 2000, Chinese investment here, in the form of acquisitions and greenfield construction, has been zilch.

The new bureaucrat hired to head up New Mexico’s “economic development” claims that the Land of Enchantment is “competing with neighboring states today.” We know that’s nonsense, but when it comes to Chinese FDI, it’s laughable. It’s not as if the region isn’t attractive. Texas nabbed investment of $7.1 billion. Oklahoma got $3.7 billion. Colorado ($343 million), Utah ($90 million), and Arizona ($50 million) are “in the game,” too. Energy was a major target of investment, obviously, but information and communications technology, entertainment, and health/biotech were part of the mix as well.

The Foundation has been tracking a national sample of economic-development projects for two years now, and right-to-work states consistently beat their forced-unionism competitors in drawing FDI. For now, Chinese investment is concentrated in the non-RTW Pacific Coast and Northeast. We suspect that will soon change, as Chinese investors discover what their counterparts in Germany, Canada, France, Australia, the UK, Italy, and Japan have known for decades — that states where union bosses don’t rule are good places to do business.

If New Mexico’s spaceport offers “the world an invitation to space,” no one’s RSVPing.

In 2016, the facility launched … nothing. No satellites placed in orbit. No tourists sent on one-of-a-kind journeys. Heck, even UP Aerospace wasn’t able to launch a single sounding rocket last year.

But rest assured, taxpayers, economic-development “visionaries” are doubling down. The Las Cruces Sun-News reports that construction “could start late spring or early summer of 2017” on a 24-mile route from the “Upham Exit of Interstate 25 north to Spaceport America.”

Instead of “investing” more in the spaceport, elected officials should be looking to unload the white elephant. While a new version of the bill hasn’t been drafted yet, let’s hope that legislation akin to 2015’s SB 267 reappears. Sponsored by Senator George Munoz (D-Gallup), the bill would have required the development of “a marketing plan that will advertise and promote the sale of Spaceport America to potential national and international buyers.”

In 2005, Virgin Galactic told The Wall Street Journal that it was hoping its first flight would “launch in late 2008 or early 2009.” Eight years later, the wait continues. Can someone please explain the sunk-cost fallacy to the spaceport’s defenders?

The Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development‘s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development‘s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

In December, of 11,030 projected jobs, 7,945 — 72 percent — were slated for right-to-work (RTW) states:

As for the sub-metrics the Foundation scrutinizes:

* Eight domestic companies based in non-RTW states announced investments in RTW states. Four announcements went the other way.

* RTW prevailed in foreign direct investment, too. Fifteen projects are headed to RTW states, with three to occur in a non-RTW state.

* One relocation crossed the RTW border — Leeds Look Listen, which offers “an unusual combination of high-end home sound systems and interior design services,” moved from New York to Idaho.

Marquee RTW investments included:

* Orbital ATK chose to expand its “Launch Vehicles Division operations into an additional facility” in Arizona (500 jobs)

* PL Developments, “a manufacturer, packager and distributor of pharmaceutical and consumer healthcare products,” invested $45 million to expand its campus in South Carolina (450 jobs)

* W.W. Grainger opened a “new operations and sales facility” In Texas (200 jobs)

Once again, no job-creating investments were announced for the Land of Enchantment. Let’s hope for better results in 2017….

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases from additional sources.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Non-border-crossing relocations were not counted, border-crossing relocations were.

In the wake of the 2016 election, there is a heated debate over the issue of “fake news.” Unfortunately, the Albuquerque Journal fell prey to this trend. They ran an AP story on December 31 that was chock full of misleading and inaccurate information on the minimum wage.

Everything in the story including the headline implied that minimum wages are “all gain and no pain.” Wages go up and there are zero negatives associated with laws mandating higher basic wages. It is a wonder then that the story didn’t question why certain New Mexico politicians are ONLY trying to raise New Mexico’s minimum wage to either $15 or $8.45 an hour.

The reality is that economic theory, logic, research, and real world experience have all found minimum wages to do exactly what any other arbitrary government-mandated price increase would do: reduce demand for that item.

Here in New Mexico with the nation’s second-highest unemployment rate, our state minimum wage is “only” $7.50 an hour, but Santa Fe is at $10.91, Albuquerque is $8.00 an hour, and Las Cruces is at $9.20 an hour.

Readers seemed to enjoy 2016’s top ten posts from the Foundation’s research director, so Errors of Enchantment thought another list might be fun. The following is a list of the year’s top ten enlightening and/or maddening and/or revealing quotes about public policy in the Land of Enchantment.

10. “As of our last valuation, PERA was projected to meet our goal of being 100% funded by 2043.”

Just 21 years ‘til solvency — what more could a taxpayer ask for?

9. “[T]he City Council supports the New Mexico State Legislature enacting legislation which requires comprehensive background checks for firearm sales and which strengthens the criminal background system.”

Municipal mission creep rolled on in 2016, with Las Cruces meddling in the gun-control issue.

8. “If I lived up there, I would get my children tested.”

The Environmental “Protection” agency committed its Gold King Mine boo-boo in 2015, but the legacy of the spill lived on in 2016.

7. “In fact, the study shows we’re losing ground.”

The Duke City, a high-tech metropolis? Even retiring Albuquerque Journal columnist Winthrop Quigley wasn’t buying it anymore.

6. “I haven’t seen it but I’ve heard it. I’ve had a rock thrown at me by one at night I think. And it certainly smelled. That’s because they have a very strong odor.”

Taxpayer-funded Bigfoot “research” — kudos to KRQE’s Larry Barker for this one.

5. “I’ve worked on a few films since up in Albuquerque, but those are few and far between.”

Brandon Carter, of Portales, got a gig on the critically acclaimed “Hell or High Water.” But his comment about finding further work doesn’t support the claims of New Mexico’s subsidize-Hollywood crowd.

4. “We’re doing this for 100 jobs and maybe some bragging rights around a name I don’t believe that’s worth it.”

Ben McAdams, the mayor of Salt Lake County, didn’t think much of the corporate-welfare package Utah was putting together for Facebook. Unfortunately, officials in New Mexico thought a sweetheart deal for billionaire Mark Zuckerberg was a terrific idea.

3. “The LFC survey found average wait times for the surveyed counties ranged from three weeks to nearly two months. The survey also found significantly fewer PCPs accepting new Medicaid patients than has been reported by the MCOs. The LFC’s review of Centennial Care MCO reports, combined with results from the LFC survey, lead to concerns that some Medicaid recipients in New Mexico may face barriers when they attempt to access the healthcare system.”

Aside from bankrupting the state, Medicaid offers lousy access to care, as an April report by the Legislative Finance Committee confirmed.

2. “We want to make it clear that the ACA has provided significant benefits to New Mexico. We compel you during your discussions to make sure that New Mexicans have viable options for affordable health care and that our state does not have the burden of taking on the uncompensated care costs for the under and uninsured.”

Governor Susana Martinez and John Franchini, the state’s insurance commissioner, pleading with U.S. Rep. Kevin McCarthy (R-CA) to preserve Obamacare? Well, no. When the story leaked that New Mexico’s chief executive was urging Congress to “use caution in replacing aspects of the Affordable Care Act,” her spokesman corrected the record: “She never saw the letter, doesn’t agree with it, and never would have signed it. Governor Martinez has made it crystal clear that she opposes Obamacare because it hurts small businesses and raises premiums on our families.”

1. “I am a millennial, and I will never ride rapid transit.”

Pretty much says it all about the impending boondoggle that is “Albuquerque Rapid Transit.”

Did we miss any quotes worth noting? Let us know.

The Rio Grande Foundation has been reporting on the Carlsbad Caverns elevator situation since this time last year.

Then, back in July, I abandoned plans to take my family down to the Caverns because of long lines resulting from the ongoing elevator problems.

Today, the Albuquerque Journal reports that the elevator situation is STILL not fixed.

Ironically, just the other day, despite a self-reported $12 billion maintenance backlog at the National Park Service alone, President Obama grabbed 1.6 million acres in the West for new national monuments. Adding federal lands to the estate costs money in terms of maintenance and makes revenue generation opportunities nearly impossible. Costly expansion while existing assets fall into disrepair is what government does, however.

The top priority for most Democrats in New Mexico’s Legislature in 2017 is HJR 1 which would tap the permanent fund to create a new system of universal pre-k. Unlike traditional legislation which requires the Governor’s signature, this one is would amend New Mexico’s Constitution. Martinez can’t stop it and no one can vote against it on “process” grounds as they might on say minimum wage or legalizing marijuana.

Unfortunately, New Mexico’s ability to effectively administer a high quality pre-K system must be called into question. The Albuquerque Journal just cited a report that ranked New Mexico’s federally-funded “Head Start” program dead last in the nation.

Then there is our existing school system which spends a lot for what can only be described as mediocre results.

Unfortunately, rather than implementing serious reforms (school choice being one) to improve existing schools, the rush is on to spend even more money. Ironically, even the man whose research forms the basis for pre-K advocates’ agenda, James Heckman, says that bad pre-K is worse than no pre-K.

As Heckman argued in a critique of a study decrying Tennessee’s poor pre-K performance, “Low quality programs produce weak and even sometimes harmful results.” Heckman’s research on the “success” of pre-K programs itself is highly questionable, but that’s another story.

What we do know is that New Mexico’s Head Start program is the worst in the nation (and Head Start itself is a boondoggle). New Mexico’s K-12 system performs near the bottom of all studies. Yet, we should spend hundreds of millions on a pre-K and that will solve our woes. Right.

The following letter to the editor appeared in the Albuquerque Journal on December 26, 2016. Whatever Mayor Berry’s political party, he has governed as a “progressive.”

It has become abundantly clear that Mayor (Richard) Berry’s legacy as mayor will include the transformation of Central using massive amounts of taxpayer dollars.

His latest taxpayer-financed “deal” – One Central – is a subsidy of $17.35 million, not including land, to construct a parking garage, apartments, a bowling alley and movie theater, among other possibilities. All of these are common throughout Albuquerque and don’t require taxpayer subsidies.

As Jerry Mosher, one of the parties involved in the project, noted, even with massive taxpayer subsidies, One Central is “pretty risky.” That’s because there is little market demand for the vision the mayor is trying to impose. But the Berry administration is happy to throw our money at it nonetheless.

Why? Perhaps enough tax dollars will make the mayor’s signature Albuquerque Rapid Transit project look successful. Or perhaps it is just a desire to destroy Central as it exists, including numerous small businesses, and rebuild it based on the preferences of City Hall.

What we do know is that the city faces a $6 million deficit. Some are already talking about the need for “revenue enhancements” even though the local gross-receipts tax has risen considerably in recent years and the metro area has fewer jobs than it did back in September 2008.

Unfortunately, under Republican leadership, Albuquerque has proven even more “progressive” than it was under Democrats.

PAUL J. GESSING, President

Rio Grande Foundation

Jerry Pacheco, the executive director of the New Mexico Small Business Development Centers Network‘s International Business Accelerator, is a consistent voice for free trade in the pages of the Albuquerque Journal.

His latest column is a must-read. Pacheco avers that America, under its new chief executive, “must decide whether we retreat as a leader in the international arena, and if we abdicate our role as the bastion of open markets and capitalism.”

Errors of Enchantment has previously explored the role trade is playing in New Mexico’s economy. It’s just about the only bright spot in an otherwise gruesome picture of job- and wealth-creation. But a comment in response to Pacheco’s piece offered an example of protectionists’ faulty thinking — and the kind of myth-perpetuation that hurts economic development in New Mexico.

According to the commenter: “Manufacturing creates real wealth. Service jobs condemn workers to a life of mediocrity at best.”

That’s a common belief, but it’s far from the truth. The service sector provides high-paying jobs to tens of millions of Americans. As the Foundation tracks the site-selection decisions made by businesses, as part of our analysis of the economic health of right-to-work states, we’ve been struck by how many investments fall outside the manufacturing sector. Plenty of newly minted jobs are not assembly-line positions. Logistics, research, and financial services are just a few of the industries supplying solid livelihoods to their workers.

In New Mexico, service positions can be very lucrative. While the median hourly wage in the Land of Enchantment is $15.54, the non-managerial jobs below are examples of work here that pays much more:

General Dentists: $78.38

Chemical Engineers: $55.85

Optometrists: $54.28

Mathematicians: $52.17

Information Security Analysts: $49.50

Aerospace Engineers: $48.49

Biomedical Engineers:$48.06

Personal Financial Advisors: $45.74

Computer and Information Research Scientists: $39.75

Petroleum Engineers: $39.34

Veterinarians: $38.16

Hydrologists: $37.01

Chemists: $34.90

Railroad Conductors and Yardmasters: $33.41

Logisticians: $33.29

But now back to trade. The nation was “the world’s largest services market, and remained the largest global cross-border exporter and importer of services in 2014.” America, Inc. has a surplus in services.

Real economic development doesn’t pursue the “right” kind of jobs. It lowers the burden of taxes and regulations so that the private sector can grow in every way — from agriculture to manufacturing to services. That’s the approach Donald Trump, and New Mexico’s governor and lawmakers, should take.

For the fourth year in a row, in 2017, the Foundation will be scrutinizing every bill drafted by legislators in Santa Fe. Our Freedom Index is a powerful tool to track whether legislators are voting for or against free markets and limited government.

Here’s the index for 2016. The 2017 version will be online soon. In the meantime, take a look at the 85 bills drafted so far.

SB 5 is an example of a bill that will be rated quite highly. Sponsored by Cliff Pirtle, a Republican from Roswell, it limits purchases made with food stamps to those authorized by “the special supplemental nutrition program for women, infants and children” — basically, fish, juice, eggs, cheese, peanut butter, tofu, cereal, milk, fruits, and vegetables — and meat. In a state where welfarism is rampant, the bill advances both personal responsibility and fiscal sanity.

HB 25 is a good example of lousy legislation. It requires that every “department, commission, council, board, committee, institution, legislative body, agency, government corporation or official of the executive, legislative or judicial branch of the government of the state” award at least a third of its contracts “regardless of whether those contracts were awarded pursuant to a competitive process, to resident businesses.” However well-intentioned, the bill’s sponsor, Sarah Maestas Barnes, a Republican from Albuquerque, shouldn’t be micromanaging the purchases of goods and services by entities of government. Taxpayers deserve the best deal for their dollars, and as “economic development,” quasi-autarky is profoundly unwise.

The Freedom Index is interactive — we supply our analysis, but comments, suggestions, and criticisms from the public are welcome. So whether you’re following a particular bill or a slate of legislation, let us know your thoughts. The session’s not far off, and with New Mexico’s moribund economy and miserable fiscal health, what legislators do next year will have significant, long-term impacts on liberty, opportunity, and prosperity in the state.

On an almost daily basis, Errors of Enchantment brings its readers facts, data, and analysis documenting the dire condition of liberty, opportunity, and prosperity in New Mexico — and suggestions for how to turn things around. But some entries stand out more than others. Herewith, the Foundation’s research director lists his favorite posts from 2016. Enjoy!

10. OEA Bucks for New Mexico’s DOA Economy

Can Pentagon funding help the state kick its addiction to Pentagon funding? The question came to mind after attending a “community meeting” of the “Defense Industry Adjustment Supply Chain Map and Portal Project.” We’re still waiting for evidence that the effort is yielding results for taxpayers….

9. Why Isn’t New Mexico a Manufacturing Powerhouse?

The fracking renaissance, according to the American Petroleum Institute, “is making U.S. manufacturers increasingly competitive, or even more competitive, than overseas rivals.” And there’s plenty of cheap natural gas in New Mexico. So why are manufacturing jobs here declining? (Since the post ran, employment in the sector has further dwindled.)

8. Hands Off My Mountain Dew, Javier

Javier Gonzales, Santa Fe’s mayor, has a lot on his plate. Crime, unaffordable housing, a lousy economy, and persistent budget woes plague the state capital. So what is The City Different’s mayor putting in his crosshairs? That’s right … soda.

7. New Mexico’s Real Budget Numbers

You hear a lot about the Land of Enchantment’s “General Fund,” but as this post revealed, total state spending is far, far higher than $6.2 billion.

6. Behavioral-Health Reform or Political Theater?

Substance abuse and mental illness are devastating problems in New Mexico. Too bad March’s “#NMspeaksCrisis Town Hall” was more interested in political posturing than exploring promising solutions to the behavioral-health crisis.

5. One Chart Says It All

More than a quarter of New Mexicans are on food stamps. The rolls have grown every month since April 2014. Seriously.

4. Subsidizing, and Targeting, the Mother Road

Taxpayers are providing funds to both support and threaten Route 66 history. Only in New Mexico.

3. What New Mexico’s Tax-Hikers Don’t Want You to Know

Yes, Bill Richardson cut the income tax, and Susana Martinez cut the corporate tax. But other taxes have been hiked — some, substantially — during the governors’ administrations.

2. Texas, Where Spaceports Are Real

“Spaceport America” remains empty, while launch sites proliferate in the Lone Star State. Look for that harsh reality to continue in 2017.

1. Celebrating New Mexico’s Potemkin Industry

Better Call Saul‘s Patrick Fabian, an admitted “knucklehead actor,” believes that New Mexico’s corporate-welfare giveaway to Hollywood is leading to “vibrant production” that’s making the state a “top-tier destination for entertainment.” Hogwash.

I respect the fact that reporters have opinions. We all know Winthrop Quigley of the ABQ Journal had some strong opinions. Milan Simonich of the Santa Few New Mexican has them as well.

He called the Foundation recently about our position on film subsidies and the fact that, especially given the dire budget situation, we would like to zero them out. Simonich then wrote a column in which he staunchly defended the film program and accused RGF of “shortchanging the program’s value with a simplistic argument.”

Our “simplistic argument” in business is what they call “the bottom line,” as the Film Office’s own 2014 report notes, “Film production activity has produced an estimated $0.43 in state and local taxes ($0.33 in state taxes and $0.10 in local taxes) for each dollar in production incentive granted.” So, film subsidies cost state taxpayers about $33 or so million for every $50 million spent on the program.

Numerous studies from the left, right, and center find that film subsides are a money-loser.

My response to Simonich which ran in the New Mexican can be found here.

The following piece appeared in the Albuquerque Journal on Wednesday, December 14, 2016.

A political earthquake happened in November. While most of the nation went right (Republicans control 69 of the nation’s 99 legislative bodies), New Mexico’s House, which had been under Republican control for the first time since the 1950s, flipped back to Democrat control.

While Democrats lost liberal Majority Leader Michael Sanchez, the new legislative leadership is, if anything, more liberal than past leaders. With Republican Susana Martinez in the governor’s mansion for two more years, compromise would seem hard to come by.

However, stalemate is not an option. There need to be some positive economic reforms in New Mexico.

The trick will be to find common ground. Democrats may try to achieve their goals through the constitutional amendment process, but those take time to be approved by voters. This 60-day legislative session is an opportunity to put forth innovative bipartisan reforms that can improve the economy.

One idea that might have some bipartisan legs is occupational licensing reform.

While conservatives going back to Milton Friedman have had serious concerns about the constant growth of licensing, President Obama’s administration issued a report “Occupational Licensing: A Framework for Policymakers” which decried the negative impact of too many licensing requirements and how those requirements disproportionately impact low-income workers.

It would seem that removing some licensing requirements or at least revamping the licensing process to make jobs more accessible to more people might be an area of bipartisan agreement with positive outcomes for jobs and economic growth.

Licensing reform should also be undertaken for those with criminal records. It can be difficult or impossible for people who have been involved in the criminal justice system to obtain required licensing under New Mexico law. We know that New Mexico has a serious crime problem, why let licensing laws stand in the way of those who have paid their debt to society and wish to find productive work?

One licensing-related issue that has already generated bipartisan support in New Mexico’s Legislature is the embrace of mid-level dental providers known as “dental therapists.” Particularly in rural areas of our state, dental care can be hard to come by. Dental therapists are licensed providers between dentists and hygienists. They can do basic procedures like fillings thus allowing dentists to focus their attention on more complicated procedures.

Minnesota is one of an increasing number of states that have embraced dental therapy. I had an opportunity to visit the state earlier this year and found dentists, dental therapists and patients all excited to share the positive impacts of this slight licensing reform.

The last issue to consider is, rather than simply raising taxes, which I’m confident is on the agenda for many Democrats, we need to have a deeper discussion about tax reform.

The gross receipts tax is both regressive (something Democrats claim they care about) and a jobs killer. Without a thriving oil and gas sector, it also isn’t generating the revenue that New Mexico has grown accustomed to. A recent Legislative Finance Committee noted a 30 percent drop-off in revenues from October 2015 to October 2016.

If New Mexico is going to get out of its current economic rut, squeezing that proverbial “blood from the turnip” by raising taxes isn’t the answer.

The next two years are going to be a real challenge for this state. The “easy” economic reforms like “right to work” are off the table due to shifting political winds. Stalemate between the legislature and governor is not an option. Hopefully some positive agreement can be reached for the sake of New Mexico.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Source: U.S. Bureau of Labor Statistics

Legislators, county commissioners, city councilors, school-board members — New Mexico’s big spenders are in full-bore panic over the state’s fiscal crisis.

But seen from another perspective, the revenue-expenditure gap offers a terrific opportunity. Now is the time to finally close the distance between earnings in the Land of Enchantment’s private and “public” sectors.

Nationally, the gap is cavernous. As the above chart indicates, the most recent edition of “Employer Costs for Employee Compensation,” published by the U.S. Bureau of Labors Statistics, found that while the hourly rate for private workers was $32.27, jobs in state and local government paid $45.93.

Most notably, the cost for benefits was 73 percent more ($16.87 vs. $9.75), and the “retirement and savings” category was nearly four times pricier ($4.98 vs. $1.25).

It’s important, of course, to look more granularly, and explore whether the national disparity exists in New Mexico. Errors of Enchantment isn’t aware of a single study that explored the compensation packages of private vs. local-government employees in New Mexico. (No surprise there.) But in 2014, the American Enterprise Institute examined “all 50 states according to how costly their public-employee compensation packages are relative to private-sector standards.” Metrics assessed included pay, benefits, and the value of job security. New Mexico’s bureaucrats earned a whopping 24 percent more than the folks who labor to pay their salaries — far and away the widest gap in our region.

Source: American Enterprise Institute

Bringing government compensation in the Land of Enchantment back down to earth has always been an issue of fairness. But in today’s tough budget climate, it’s absolutely essential, to avoid both economy-hobbling tax hikes and cuts to essential public services.

The Republican Party remains fractured. While unfortunate, there are always personality differences and strategic considerations that make political organization akin to herding cats. This is nothing new and can be overcome.

But one thing Republicans MUST agree on if they want to avoid being in the political wilderness for ANOTHER 52 years is opposing tax increases (as Gov. Martinez has consistently said). As Grover Norquist says, Republicans succumbing to the desire to raise taxes is like Coca Cola dropping all their quality controls and allowing a rat’s head to be found in one of their beverages. No one will buy your product if you abuse your brand and the Republican brand MUST mean not raising taxes, especially in New Mexico’s flailing economy.

If fundamental tax reform is indeed possible (and that means tossing out the entire gross receipts tax or squeezing out nearly ALL exemptions), Republicans should work to ensure that those reforms are as close to revenue-neutral as possible. In the absence of fundamental tax reform, Republicans must oppose raising taxes like the gas tax, income tax, attempts to impose Internet taxes, and any other attempt to collect NEW revenues on existing activity (taxing and regulating pot would NOT be a tax hike b/c it is currently illegal).

By way of publicly affirming their opposition to raising taxes, legislators (of both parties) should strongly consider signing the Americans for Tax Reform pledge. Think of it as a “Good Housekeeping” seal of approval.

The Opportunity Index is “a unique tool that provides a snapshot of the economic, educational and civic opportunities that are available to Americans at the state and county level.” Issued by Opportunity Nation, “a bipartisan, national coalition of more than 350 businesses, nonprofits, educational institutions and community leaders,” the latest version of the index placed New Mexico at rock bottom — 51st among the states and the District of Columbia. As the graphic above shows, the Land of Enchantment ranked well below the national averages for the subcategories of community, education, and economy.

But Opportunity Nation uses some rather curious criteria to determine its scores. Preschool (the percentage of three- and four-year-old children in “early education”) is one indicator, but there’s little reason to believe that it has a strong link to opportunity. Utah is an economic powerhouse, with solid job creation and a thriving middle class. Crime there is low, and family health is strong. But the state has no “public” preschool program, according to the National Institute for Early Education Research.

Postsecondary completion (the percentage of adults 25 and over with at least an associate degree) is another metric, but plenty of blue-collar jobs pay impressive wages in every corner of the country. In New Mexico, non-degreed work in the mining industry and oil-and-gas sector can be richly rewarding.

“Access to healthy food” is another dodgy indicator. What does the number of grocery stores and produce vendors per 10,000 residents have to do with making a buck and getting ahead?

What’s missing from the Opportunity Index is as important as what’s included. As one online commenter noted, “how easy it is to start and run a business in a given area and how easy it is to obtain capital for it” are “two fundamental items” that are nowhere to be found in Opportunity Nation’s methodology.

The Land of Enchantment has the highest jobless rate in the contiguous states, and its GDP is actually shrinking. The news is bad, and lately, it’s been getting worse. But when yet another rank-the-states analysis is issued, it’s important to explore who’s doing the judging, and how they reached their conclusions.

Think more grocery stores and a massive new subsidy for preschool will boost New Mexico’s “social and economic mobility”? Errors of Enchantment doesn’t, either.

December 14, 2016

For Immediate Release

TORONTO/ALBUQUERQUE—New Hampshire has the highest level of economic freedom among all U.S. states for the second year in a row, while New Mexico is tied for 46th place, finds a new report released today by the Fraser Institute and the Rio Grande Foundation, both independent, non-partisan public policy think-tanks.

The Live Free or Die state scored 8.3 out of 10 in this year’s report, which measures government spending, taxation and labor market restrictions using data from 2014, the most recent year of available data.

Among the four largest states, Florida was 2nd and Texas tied for 3rd. For the second year in a row New York was 50th and California was 49th.

“Americans have been voting with their feet against the ‘big government’ approach of New York and California. Florida and Texas have experienced more than two-and-a-half times faster population growth in recent years, and they’re among the freest states in the country,” said Dean Stansel, economics professor at Southern Methodist University and co-author of this year’s Economic Freedom of North America 2016.

Rounding out the top five are South Dakota (tied for 3rd) and Tennessee. Alaska, New Mexico and Hawaii rounded out the bottom five least free states. North Carolina vaulted up the rankings from 25th to 13th after a large income tax cut.

The report also has an all-government ranking system, which adds federal government policy and includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces.

Since 2004, the average score for U.S. states has fallen from 8.26 to 7.70 out of 10 in 2014, driven largely by changes at the federal level.

In the most-free states, the average per capita income in 2014 was 4.7 per cent above the national average compared to roughly 3.3 per cent below the national average in the least-free states.

“The link between economic freedom and prosperity is clear—people who live in states that support low taxation, limited government and flexible labor markets have higher living standards and greater economic opportunity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

The Economic Freedom of North America report, also co-authored by José Torra, is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.

The full report can be found here. A map illustrating the various levels of economic freedom via color coding can be seen below:

Kudos to Carmichael Dominguez, a city councilor, and Adam Johnson, finance director, for questioning the value of Santa Fe’s membership in the New Mexico Municipal League (NMML). Dominguez is performing “due diligence,” asking, “Hey, what’s the value of this? What’s the value to the city of Santa Fe?” Johnson told the Santa Fe New Mexican that the council wants to know if $75,000 in annual dues are “being well spent for initiatives affecting Santa Fe’s challenges.”

The issue of governments lobbying governments is long overdue for serious scrutiny by taxpayer advocates and fiscally responsible elected officials. Villages, towns, cities, school districts, counties, and “public” universities pay big bucks to influence policy at both the state and federal levels. Governors and lawmakers get in on the action as well, demanding that their concerns are recognized by Washington.

The NMML is one of hundreds of similar organizations that claim to represent local governments. Occasionally, the entities pursue policies that limit public spending, boost transparency, and foster accountability. But for the most part, they push for more subsidies and greater taxing authority. Promising reforms that constrain government and cut taxes aren’t of much interest.

Errors of Enchantment searched the NMML’s website for words and terms such as “privatization,” “competitive contracting,” “competitive sourcing,” and “contestability.”

Results yielded: zilch.

Not surprisingly, the NMML is a fan of the failed corporate-welfare scheme dubiously titled the “Local Economic Development Act,” defends the overly generous healthcare benefits showered on local-government employees, and is a steadfast supporter of the Roundhouse’s corrupt and expensive pork-bestowing mechanism known as “capital outlay.”

Sadly, the NMML has plenty of company. Last year, an investigation by New Mexico In Depth found that “New Mexico cities, counties, colleges and other public entities spent nearly $7.2 million in 2014 and 2015 to lobby the state and federal government.”

In the Land of Enchantment, and throughout the nation, if city councilors, school-district officials, county commissioners, and state lawmakers wish to influence higher levels of government, they should pay for it out of their own pockets. Not one thin dime of taxpayers’ earnings should be used to push for any public policy — be it liberal, conservative, centrist, populist, or libertarian.

Jefferson said it best: “To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”

New Mexico’s Lottery Scholarship was always supposed to be funded directly by lottery revenues. As is so often the case, that’s not how things have worked out. A few years ago legislators shifted $19 million in liquor excise taxes to support the scholarship program.

This was never good public policy, but with the budget situation facing the State, it is hard to see how this revenue shift can continue. Not surprisingly, the institutes of higher education themselves are eager to keep the additional revenue flowing to their bottom lines, but this simply points to the need for broader reforms, not more money.

As we’ve noted in this space before (and can be seen below), New Mexico is a big-spender when it comes to higher education. The issue is how to right-size higher ed in a way that maximizes what money is available. Shutting down branch campuses MAY be the most effective single strategy for right-sizing higher education, but restoring the original intent of the Lottery Scholarship may be one of the simplest.