The Rio Grande Foundation has clear and specific views on economic policy. We support concepts like “right to work,” school choice, and others that reduce government’s role in the economy and in picking winners and losers. There are valid critiques of any and all policy recommendations, but in a recent debate at NMPolitics.net RGF president Paul Gessing provided a detailed response to one naysayer.

Like so many New Mexicans, Art Terrazas grew up and was educated in New Mexico, but left the state for better opportunities elsewhere. From his perch in the D.C. area, home to 5 of the nation’s 6 wealthiest counties, Terrazas recently criticized several ideas put forth by the Rio Grande Foundation.

His critiques don’t hold up under scrutiny and his only actual policy recommendation, pre-K expansion, is already under way in New Mexico (the permanent fund hasn’t been tapped as some would like, but spending has grown dramatically under Gov. Martinez). Pre-k investment has also been tried with mixed results by the federal government (Head Start), and implemented in several states with mixed results.

What does Mr. Terrazas have to say about our particular ideas? Let’s start with “right to work.” For starters, “right to work” is hardly anti-union. Rather, workers should be able to choose to be part of a union and pay dues or be able to opt out.

Americans are flocking to “right to work” states. Between 2010 and 2016, states with “right to work” laws saw population growth of 6.2 percent, while states without them grew by 3.3 percent.

Terrazas asserts that California is among the “healthiest economies” nationwide. It is true that California has a strong technology sector and a private sector that New Mexico sorely lacks, but there has also been an ongoing exodus from California in recent years. It is hardly a model for other states to emulate, let alone New Mexico.

Prevailing wage (Davis-Bacon) repeal is another issue Terrazas takes issue with. I believe that construction workers on schools and roads should be paid based on market conditions. Terrazas believes that unions should collaborate with government to set wages. I think we’d be better off with more and better roads and schools built at a reasonable cost. Terrazas believes that one group of workers should be shielded from economic conditions at the expense of the rest of us (taxpayers) and our children.

This pattern of choosing special interests over taxpayers and market forces is what has made New Mexico poor in the first place.

When it comes to school choice, Mr. Terrazas really illustrates his ignorance of market processes. He highlights the limited number of private schools in Las Cruces as an obstacle to choice, but fails to realize that if parents and students are empowered to choose the school they prefer options will arise to fill that demand. And, since schools of choice must compete to serve their customers, those schools will face pressure to improve quality and student outcomes.

Terrazas talks a big game about “needing to try new ideas,” but the reality is that the Rio Grande Foundation is looking at what works elsewhere and is attempting to apply it to New Mexico.

Fast-growing Texas, Arizona and Utah are surrounding states that have “right to work” laws in place. Texas has no income tax while Colorado’s Constitution strictly limits spending growth. Surplus dollars are returned to the taxpayers and all tax hikes are voted on.

In the area of education, Arizona has long been a leader in school choice, getting better results at a much lower cost than New Mexico. Even more exciting is Arizona’s recent adoption of a cutting-edge school choice concept called “Education Savings Accounts.”

This new program will allow parents to withdraw their children from public district or charter schools and receive a deposit of public funds into government-authorized savings accounts. That money can then be used to pay for private school tuition and fees, online learning programs, private tutoring, community college costs, higher education expenses and other approved learning services and materials.

I think it will be a huge success that further separates Arizona from New Mexico in terms of educational outcomes. Unfortunately, New Mexico’s sole form of school choice (charter schools) is under attack in the Legislature. A moratorium bill barely failed on the House floor, with a few Democrats joining Republicans to stop it.

I suspect that if Terrazas actually put forth his own reform plan, it would be nothing more than a grab-bag of tired, left-wing ideas that have been tried and failed. I’d love to be proven wrong and I’d love to debate those ideas with him.

It is time for dramatic change in New Mexico. The Rio Grande Foundation may not have all the answers, but I’d sure like to see New Mexico try a few of them before it’s too late.

Paul Gessing is the president of New Mexico’s Rio Grande Foundation, 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.

The debate over APS’ budget and whether they are spending their money in the highest and best service of their students is white hot. We at the Rio Grande Foundation consider this discussion long-overdue and important particularly given the likelihood of ongoing budget challenges in New Mexico.

It is very difficult to directly compare APS’ spending to that of districts outside New Mexico (school funding differs dramatically by state), but both the Census Bureau and the National Education Association have some information that we believe sheds considerable light on the issues, especially since APS accounts for such a large portion of the State’s student population.

Dowd Muska outlined some specific reform ideas recently.

We do know that according to the US Census Bureau, New Mexico schools spend a lot on administration relative to other states:

We also know that New Mexico schools spend a good deal per-pupil more than surrounding states:

Lastly, according to the NEA’s 2016 “Rankings and Estimates,” report (chart H-19), New Mexico’s capital spending is at the high end of national averages ranking 6th-highest in the nation (5th if you eliminate Washington, DC) in terms of capital spending per student:

APS’ role in all of this is up for discussion and debate. We strongly believe that APS has room to cut in some of these areas (as do other districts in New Mexico), but we are pleased to be having this long-overdue discussion and encourage Gov. Martinez to stick to her guns.

Source: “Clean Energy Momentum: Ranking State Progress,” Union of Concerned Scientists

When a far-left, eco-hysterical organization says you’re not measuring up when it comes to “driving clean energy,” that’s good news for ratepayers and taxpayers.

So New Mexicans can take comfort in the fact that their state is not a high achiever on politically correct power, “vehicle electrification,” and cutting carbon-dioxide “pollution.”

“Clean Energy Momentum: Ranking State Progress,” issued by the Union of Concerned Scientists, names California as the top state making “clean energy happen.” Other “winners” include Vermont, Hawaii, Oregon, and Iowa.

The analysis suffers from the usual flaws one finds when greens examine energy issues. It touts the addition of solar and wind facilities, without mentioning their unimpressive capacity factors, risk to birds and bats, and massive taxpayer subsidies. It extols the growth of electric automobiles, while ignoring the fact that “fossil” fuels still power more than 99 percent of the U.S. vehicle fleet. It accepts the data supplied by green-power “trade associations” without question. It perpetuates wildly overblown claims about the linkage between asthma and conventional power plants. And despite the supposedly dire threat posed by carbon dioxide, it makes no note of the role nuclear power plays in avoiding emissions.

Fortunately for the Land of Enchantment, the state ranks in the top ten in only one of the analysis’s 12 metrics. New Mexico scores fairly high in solar and wind employment per capita — #7 for the former, #10 for the latter. But that’s it. It’s not a star in “renewable” electricity generation or growth. It’s not much for electric-vehicle adoption. And it has not set an “economy-wide target” to reduce carbon-dioxide emissions to 2005 levels.

“Clean Energy Momentum” offers a solid overview of eco-oriented virtue signalling, but it’s bad economics, bad engineering, and yes, bad science. New Mexicans should feel pride, not shame, over failing to win the UCS’s praise.

Source: Labor Market Review, New Mexico Department of Workforce Solutions, March 31, 2017

Southern New Mexico graduation rates continue to rise, from 49 percent in 2007 to 80 percent last year. However, so do unemployment rates for the area, from 4.5 percent in February 2007 to 7.6 percent in February of this year.

A skilled and robust workforce should lead to lower employment, but why hasn’t that been the case in Doña Ana County?

That’s a very good question, and Jason Gibbs, of the Las Cruces Sun-News, should be commended for asking it.

But the problem runs far deeper than the unemployment situation in Las Cruces. The statewide graduation rate has risen in the last decade, too. And since February 2007, the number of students enrolled in government-run universities has grown, despite insignificant population growth in the Land of Enchantment. If more education makes a state more economically competitive, why does the state suffer from lousy job growth and the worst unemployment rate in the nation?

While the education establishment’s powerful, and well-funded, lobbying machine touts its activities as key to “economic development,” reality is far more complex. Transportation infrastructure, tax rates, the existence of a right-to-work law, energy prices, regulations — a state’s attractiveness to executives, investors, entrepreneurs, and innovators is a function of many factors.

In the Foundation’s ongoing analysis of RTW vs. non-RTW states, we’ve noticed that many places that don’t score particularly well on educational attainment/achievement (e.g., South Carolina, Tennessee, Indiana, Texas) are among the best job-creators. Nevada’s another interesting example. No state was smacked harder by the Great Recession. But while not known for stellar scholastic achievement, the Silver State has vanquished its horrific peak unemployment rate of 13.7 percent, dropping to the national figure today. (And the Tahoe Reno Industrial Center, the largest industrial park in America, continues to lure companies.) A low cost of doing business, no income tax, no corporate tax, and a RTW law have surely played major roles in Nevada’s stunning comeback.

As for states that are hip-deep in all types of degrees, it’s easy to find economic basket cases. Connecticut, Illinois, and New Jersey are desperate to reverse outmigration and job stagnation, despite highly educated populations.

The bottom line? Education alone can’t get it done. (Richard Vedder’s work on the subject is more than convincing.) New Mexico needs to look elsewhere to boost economic development.

There has been a lot of criticism of Gov. Martinez in the wake of her use of the veto pen in the wake of the 2017 legislative session. Tough economic times are not fun and New Mexico (unlike most other states in the union) remains in the midst of tough times.

Democrats in the Legislature recently spoke out saying “enough is enough” referring to budget cuts and there have been increasing calls for the Legislature to override certain vetoes.

On can argue the merits or demerits of many of the dozens of vetoes, but the big ones on the budget and tax hikes are rightfully getting the most attention. Those vetoes are the only thing standing between us and even worse economic conditions than we face now.

By any measure, New Mexico government spends more, often much more, than its more economically-successful neighbors. Yet, as a recent Wallethub report noted, New Mexicans get a poor return on their investment. Before raising taxes, it is time to make our government work better for its citizens and taxpayers.

But, if we want to preserve the level of government services we have, we need to grow the economy in order to pay for it. The Legislature has repeatedly refused to loosen regulations that would grow the economy.

• Right to Work is an idea that, in the world of state policy, has spread rapidly in recent years with Michigan, Indiana, Wisconsin, West Virginia, Kentucky, and Missouri all embracing it in just the last few years;

• There is a lot of talk in Santa Fe about reforming the broken capitol outlay process, but repealing New Mexico’s “prevailing wage” law would free up about 20 percent of state public works dollars for other uses or for additional job creation (and better schools, bridges, and roads);

• School choice won’t have a large initial impact on the economy (same with the left’s pet project pre-K), but work force quality is undeniably an issue in our State. A better trained workforce produced by a choice-driven school system will do wonders for our State long-term and will give thousands of New Mexicans the tools they need to get out of poverty.

Each of these proposals were introduced in and moved through the New Mexico House when it was under Republican control. Unfortunately, each of these (and more) freedom-enhancing legislative ideas got nowhere when Democrats under Democrats.

So, New Mexico faces slow or no economic growth, high unemployment, budget deficits, and few prospects for turning this around outside of a miracle in the oil patch. One may quibble with many of Gov. Martinez’s moves and even her lack of a clear vision for New Mexico, but big-spending Democrats want to hit the accelerator as New Mexico heads towards the economic cliff. At least Martinez is scrambling to hit the brakes.

It is laughable that Democrats blame the Governor (or even the free market ideas of the Rio Grande Foundation as Santa Fe Mayor Javier Gonzales did recently). New Mexico is consistently ranked among the least economically free states in the Union. Our ideas have never been tried in any serious way in New Mexico.

For better or worse, New Mexico will soon realize the reality of “Stein’s Law”: If something cannot go on forever, it will stop.

New Mexico cannot continue to rely so heavily on federal largesse and mineral revenue. It must develop a strong private sector independent of government. This takes time, an educated/motivated workforce, and a favorable business climate. Governor Martinez did her best to stop dozens of policies that would have done great damage to our already poor business climate this session.

One can argue about the Gov.’s leadership style or her ability and willingness to compromise with Democrats, but without her veto pen this session, New Mexico’s already poor economic conditions would be much, much worse.

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

Wisconsin, once a bastion of “progressivism,” continues to make policy shifts that would enrage “Fighting Bob” La Follette.

On Monday, Governor Scott Walker signed Senate Bill 3. The legislation bans government from adopting project labor agreements. That means public-sector entities soliciting bids for construction can no longer “enter into, adhere to, or enforce any agreement that requires, as a condition of employment, that the bidder or bidder’s employees become or remain members of, or be affiliated with, a labor organization or pay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value, to a labor organization or a labor organization’s health, welfare, retirement, or other benefit plan or program.”

According to Walker: “Accountable government means ensuring our taxpayers receive quality service. By forbidding state and local governments from requiring contractors to enter into agreements with labor organizations, we’re promoting healthy competition between contractors. At the end of the day, this means the contractor ultimately chosen for the project is the one that has demonstrated excellent service and will work at good value for Wisconsin taxpayers.”

It’s a pipe dream, given the current makeup of the legislature, but it would be nice to see such a ban enacted in New Mexico. As the sign above, outside the Loma Colorado Main Library in Rio Rancho, indicates, the Land of Enchantment is far from immune from the union-rewarding sweetheart deals.

As the New Mexico chapter of Associated Builders and Contractors noted, PLAs “increase construction costs by as much as 20 percent,” and discriminate against the vast majority of the state’s contractors, which are not unionized. Lawmakers who claim to be concerned about the fiscal crises facing government at all levels in our state should follow Wisconsin’s lead.

Public-employee compensation reforms, repealing most of the state’s prevailing-wage mandate, a right-to-work law, and now, a PLA ban? The Badger State continues to move forward on key fiscal/economic innovations. Can New Mexico make the same claim?

Albuquerque Public Schools has drawn plenty of criticism — and rightfully so — for threatening to scrap middle-school sports.

The cut is estimated to save $600,000. That’s a hefty sum to the average citizen, but it represents just 0.04 percent of the district’s billion-dollar-plus budget. Leaving aside the issue of lobbying/PR, there’s no question that such savings could be easily obtained by competitive contracting.

The Mackinac Center for Public Policy, which studies free-market solutions to public problems in Michigan, conducts an annual survey to explore government-school sourcing of food, custodial, and transportation services. In its latest poll, the think tank found that 70.1 percent of districts hire private vendors to provide at least one of the services.

APS has a lot to learn from Michigan. Take transportation. The district has “a series of contracts with providers in the private sector,” but also has its “own bus operations.” In 2015, it “was obligated to take over the bus routes of three of its providers that ceased operations during the fiscal year.” Getting those routes back in the hands of contractors would surely yield savings from the $19.3 million transportation budget.

As for food services, APS spends $50.8 million on 19 “delivery vehicles” that haul “prepared and bulk foods from Central Kitchen to over 140 school sites every day, with most making two trips to each location.” Obtaining just a little more than 1 percent savings from that expense would cover the cost of middle-school sports.

Finally, the Maintenance & Operations Department, tasked with creating “an environment conducive to student achievement and success by providing safe, clean, comfortable, aesthetic, and purposeful indoor and outdoor learning spaces throughout the District in meeting the needs of the education process,” has a $40.3 million budget. Outsourcing the bureaucracy’s duties should be the easiest of the three noninstructional services to “marketize.”

If APS exists to provide education to students in an efficient, accountable manner, then competitive contracting is a no-brainer. If the district exists to offer livelihoods to unionized, politically active employees, then it should ignore outsourcing options and keep doing what it’s doing.

UPDATE: The original chart displayed in this post contained data that made APS’ spending look even more out of line with spending in other school districts. This is because of a discrepancy over total spending vs. operational spending.. APS annual spending exceeds other large New Mexico school districts (we are waiting for full data from Santa Fe) and, most notably, neighboring Rio Rancho. We apologize for the error.

When compared to other major school districts throughout New Mexico, Albuquerque Public schools are very well-funded and should face increased demands for efficiency. “That’s the conclusion of a Rio Grande Foundation analysis of the overall budgets of a few of New Mexico’s larger school districts,” said Foundation President Paul Gessing.

“Our methodology was extremely simple,” said Mr. Gessing, “We found the annual budget and divided it by total student enrollment.” For Albuquerque Public Schools, that meant dividing the $1.34 billion found on page 44 of the APS budget by enrollment of 84,138 as found on page 32 of the same document. This yielded annual per-pupil spending approaching $16,000 annually.

Said Gessing, $16,000 annual spending per-pupil is far higher than the national average (which is closer to $11,000 per-student) and, per the Foundation’s analysis using data from a few districts throughout the State, far more per pupil than other districts.

Concluded Gessing, “The decision by APS to eliminate middle school athletics is hardly driven by budget cuts or the State’s difficult situation. Rather, it smacks of retribution and political posturing by New Mexico’s largest and biggest-spending school district. The term ‘Washington Monument Syndrome’ certainly applies to APS’ tactics.”

ALBUQUERQUE, April 17 — The “No Way Santa Fe” education initiative, a project of the Rio Grande Foundation, released an issue brief today that exposes the fallacies behind Mayor Javier Gonzales’s proposed tax on sugary drinks.

On May 2, Santa Feans will vote on the Sugar-Sweetened Beverage Tax Ordinance (SSBTO), which imposes an excise tax of 2¢ per fluid ounce of “sugar-sweetened beverage products that are distributed in the city.” Supporters claim that the new tax will improve health and raise desperately needed revenue for preschool programs in The City Different.

Unfortunately, research by the Foundation, New Mexico’s free-market think tank, has found these assertions to be hollow. “A Sour Bill for Taxpayers: The Case Against Santa Fe’s Sugar-Sweetened Beverage Tax Ordinance” is a six-page policy analysis that outlines the case against the SSBTO.

“The more we examined the mayor’s tax-and-spend scheme, the more the justifications offered for his proposal crumbled,” said Paul Gessing, president of the Rio Grande Foundation. “The SSBTO is poor public-health policy, and it seeks to create a revenue stream for programs that are already well-funded.”

For example, poorer households will be disproportionately impacted by the SSBTO. A recent report by the U.S. Department of Agriculture found that top grocery purchase by households benefiting from food stamps is soft drinks. Even Bernie Sanders, no opponent of heavy taxation has admitted that a sweetened-beverage levy “targets the poor and the middle class.”

In addition, scapegoating the beverage industry is likely to yield paltry public-health benefits. Sante Fe, like the rest of the nation, has an obesity problem, but taxing sugar-sweetened beverages is unlikely to have much impact. Just 7 percent of caloric intake is derived from sugary drinks, and U.S. soda consumption has been declining for over a decade. The SSBTO will do nothing to reduce consumption on pizza, candy, snack chips, and alcoholic beverages. Neither will it promote exercise, despite research that has revealed that a sedentary lifestyle is actually more dangerous than obesity.

Finally, there is no evidence that preschool programs in Santa Fe are underfunded. The opposite is true.

“Our research has shown that spending on preschool programs in Santa Fe is actually ballooning,” said D. Dowd Muska, the Foundation’s research director. “Contrary to the apocalyptic rhetoric of the SSBTO’s supporters, state funding made available to early childhood education has grown by 179 percent in the last few years, despite declining enrollment.”

“A Sour Bill for Taxpayers: The Case Against Santa Fe’s Sugar-Sweetened Beverage Tax Ordinance” is available at No Way Santa Fe’s website, www.nowaysantafe.com. For more information about the Foundation’s voter-education campaign, contact Paul Gessing at (505) 264-6090 or pgressing@riograndefoundation.org.

Its federal funding is in doubt, the “loan program” promised to business owners suffering from its construction is a bust, and drivers are incensed over the congestion it’s creating. But yes, there’s more bad news for “Albuquerque Rapid Transit.”

The invaluable transportation scholar Randal O’Toole notes that in 2016, despite all the nonsense about Millennials preferring urban living and eschewing driving, overall “transit” ridership in the U.S. fell. Bus usage, most relevant to the ART debate, dropped by 4.1 percent.

Interestingly, the data O’Toole cites — compiled by the American Public Transportation Association — do not include the latest ridership numbers from the City of Albuquerque Transit Department. Not only are the figures from the final quarter of 2016 nonexistent, the data for the third quarter are AWOL as well. Curious. (Errors of Enchantment has asked the city about the missing stats. We’ll update this post if we get a reply, but don’t hold your breath.)

As O’Toole explains, the transit-industrial complex is sure to explain lower ridership on government-run buses and trains by citing cheap gasoline prices and rising incomes. But regardless of the causes, “low-income commuters are buying cars and higher-income travelers are making a choice not to use transit. In the face of these choices, transit agencies that want to spend hundreds of millions or billions on fixed-guideway transit, either rail or dedicated bus lanes, are wasting peoples’ money.”

Source: “Big Government Policies that Hurt the Poor and How to Address Them,” Heritage Foundation

Twenty-five Democratic members of New Mexico’s House of Representatives have issued a boilerplate denunciation of the governor, charging that she’s “decided that government must continue to fail” and assaulting her obtuse “tax cuts and loopholes for the wealthy and well-connected.”

Preening over their legislative priorities — restoring “funding to our schools,” assuring “our local communities that we are ready to be their partner in creating neighborhoods and businesses where people can feel proud” — the pols pledged that any special session will see them “fight for our kids and our seniors.”

Whatever. Bernie-style rhetoric surely works in deep-blue districts, but here in the real world, some data-driven, specific policy recommendations would have been nice. Fortunately, the Heritage Foundation has produced just such a list: “Big Government Policies that Hurt the Poor and How to Address Them.”

Written by 12 scholars from a number of disciplines, the report notes that “public investment” shibboleths aside, “in many cases, government policy can make it more difficult for those striving to make ends meet.” So it recommends a plethora of federal and state reforms to benefit “those in need” via “curtailing cronyism, eliminating unnecessary regulations, and eliminating other government interventions that needlessly drive up prices.”

Several of the suggestions would be particularly useful in New Mexico, including:

* Avoid sweetened-beverage taxes, which “disproportionately hurt the poor.” (HB 430 would have banned municipalities from placing excise taxes on “food or beverages.” It was DOA in Santa Fe.)

* Don’t raise the minimum wage, since the mandate kills jobs and makes it “more difficult for workers to move into higher-paying positions.” (Two minimum-wage bills, including one to hike it by 23.3 percent, made it to the governor’s desk. To her credit, both were vetoed.)

* Restore some sanity to licensing regulations, given that private entities “can, and already do, certify individuals to practice many occupations, signaling to consumers that they are qualified without the need for government-issued occupational licensing.” Progress on this issue was all but nonexistent during the session, with only eyebrow-threaders getting freed from licensure.

* Scrap “smart growth,” which “is a pleasant name given to an unpleasant planning philosophy that seeks to promote high-density development, and through a centralized approach, determine where — and how — people should live in their communities.” Planning run amok isn’t as bad in New Mexico as it is in other states, but it’s still a liability, and Santa Fe usually assists, rather than retards, the practice.

Read Heritage’s full report here. It’s a handy primer for policymakers looking for effective, low-cost tools to boost New Mexicans of modest means.

Source: “Cyberstates 2017,” Computing Technology Industry Association

Memo to business journalists working on the STEM beat in New Mexico: Cover the facts, not the hype.

The state’s media regularly report anecdotes about a tech firm starting up and/or hiring a few staffers. But the overall picture isn’t so bright.

CompTIA, “the world’s leading technology association,” is out with the 18th edition of “Cyberstates,” which “quantifies the size and scope of the tech sector and the tech workforce across multiple vectors.” How’s the Land of Enchantment doing? As the chart above indicates, not so great. Employment is trending slightly downward. But the results look even grimmer, when compared to the nation. Despite a weak recovery from the Great Recession, U.S. tech employment has risen since 2010, with software leading the way, at 7.6 percent growth. IT services/custom software is up 4.8 percent, and engineering services, R&D, and testing has grown by 2.7 percent.

What about the neighbors? Colorado leads the region, with 7.8 percent of its workforce in tech and positive job growth. Fans of federal “investment” are sure to note the presence of the National Renewable Energy Laboratory is a “catalyst” for STEM work in the Centennial State. But how can they explain Utah’s performance? It has no national labs, and not a single federally funded research and development center. Yet tech employment in the state represents 6.4 percent of its workforce — a share that surpasses New Mexico’s 5.9 percent.

“Cyberstates” offers as bracing shot of reality, and should be required reading for reporters, editors, and producers who all too frequently fall for the “tech is booming in New Mexico” spin. However successful the grab-STEM-pork-from-D.C. approach was in the past, it’s not working anymore. New Mexico needs a new economic-development strategy to encourage the growth of tech firms and jobs here.

The Rio Grande Foundation, New Mexico’s only free market think tank, launched the “No Way Santa Fe” public education initiative today to inform Santa Fe residents about the negative impacts of Mayor Javier Gonzales’ proposed tax on sugary drinks.

The “No Way Santa Fe” initiative will use a variety of methods to educate New Mexicans about what Mayor Gonzales’ tax will really do to their pocket books, the regressive nature of his tax and the harm it will do Santa Fe businesses.

“Mayor Javier Gonzales may think Santa Feans will fall for his tax-and-spend scheme, but he will soon find the city different as most residents are opposed to regressive taxes that target the poor and middle-class,” Paul Gessing, president of the Rio Grande Foundation, said.

The ballot measure which will be voted on May 2 (with early voting starting on April 12) would levy a tax of 2 cents per ounce on “sugary” drinks. Proceeds would be used to create a new city-wide bureaucracy to administer “pre-k” programs.

The Rio Grande Foundation released a report in January that detailed the public deception campaign Mayor Gonzales used to push his tax scheme through the city council.

“Rarely have so many issues of concern to supporters of limited-government aligned themselves in one ballot question,” Gessing said.

He also noted that proposed tax is:

• Bad tax policy that unfairly targets the consumers of legal products for heavy and regressive taxation (borne disproportionately on poor and middle-class consumers);
• Bad criminal justice policy that will result in the creation of an illegal market in ‘smuggled’ soda;
• Bad social policy as it taxes sugary drinks at a far-higher rate than New Mexico taxes beer (a product which has similar calorie content and numerous alcohol-related issues as well);
• Bad education policy as the effectiveness of pre-K programs nationwide is doubtful, with the new funding mechanism expected to decline in the future.

Similar taxes have been decried from across the political spectrum including by then-Presidential candidate Bernie Sanders who said, “At a time of massive income and wealth inequality, it should be the people on top who see an increase in their taxes, not low-income and working people.”

The Teamsters Union in Philadelphia has also led the opposition to that city’s tax.

The Rio Grande Foundation has long advocated for lowering New Mexico’s tax on beer (the excise tax on beer is 41 cents/gallon, among  the nation’s highest). The RGF supported lowering the tax to 8 cents/gallon and opposed recent efforts to raise the tax. 

The point is, we take taxes on beer seriously and oppose placing undue tax burdens on alcohol consumers.

Enter the City of Santa Fe with its 2 cents/ounce soda tax proposal which, if adopted by voters on May 2nd, would burden drinkers of soda and other sugary drinks with a tax more than six times higher than New Mexico’s already-high tax on beer.

As seen below, when it comes to calories, there is no excuse for treating beer more gently than soda. Throw in DWI and other problems associated with alcoholism and it is positively inexcusable to charge such high tax rates on soda relative to beer (again, we are not advocating for higher taxes on beer, wine, or liquor).

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 March, of 14,157 projected jobs, 11,510 — 81.3 percent — were slated for right-to-work (RTW) states:

As for the sub-metrics the Foundation scrutinizes:

* Fifteen domestic companies based in non-RTW states announced investments in RTW states. Just one announcement went the other way.

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

Marquee RTW investments included:

* UPS upgraded a Texas warehouse into a “regional hub” (1,400 jobs)

* Gartner, “a global information technology research and advisory company” based in Connecticut, will expand its facility in Florida to house new “positions in sales, client service, research, finance, and more” (600 jobs)

* HARIBO, the Germany-based confectioner, picked Wisconsin for its “first North American manufacturing facility” (400 jobs)

* Biomerics decided to remain in Utah to construct a new, $38.5 million headquarters (380 jobs)

* Japan-based NTK Precision Axle Corporation chose Indiana for “a new manufacturing facility” (200 jobs)

* Bidell Gas Compression, a subsidiary of Canada’s Total Energy Services, announced that it will locate its “first United States manufacturing operation” in West Virginia, to “fabricate, sell, lease and service natural gas compression equipment to customers operating throughout North America and internationally” (130 jobs)

* General Electric, in the process of moving its headquarters from Connecticut to Massachusetts, expanded its MRI “components production operations” in South Carolina (100 new jobs)

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.

The governor has yet to sign HB 266, a curious development for legislation that passed the House of Representatives 61-0 and the Senate 30-8.

The bill, as described by the Legislative Finance Committee, “removes an exemption from the occupancy tax for short-term rentals (less than 30 days) by a vendor that does not offer at least three rooms within or attached to a taxable premises for lodging or at least three other premises for lodging or a combination of these within the taxing jurisdiction,” apparently in an attempt to “remove an unanticipated tax exemption for homeowners who rent rooms through third-party websites and applications.”

In other words, the bill is aimed at Airbnb.

Errors of Enchantment has explored the state’s lodging tax before, explaining that local governments are tasked with using the revenue it generates for “advertising, publicizing and promoting tourist-related attractions, facilities and events.”

But leaving the corporatism issue — i.e., local governments shouldn’t be in the tourism-promotion business — aside, HB 266 deserves the governor’s skepticism for a simple reason: It doesn’t cut the lodging tax’s rate.

Business is “booming in New Mexico” for Airbnb, the Albuquerque Journal reported earlier this year, with around 2,300 “active” Airbnb hosts, who “recorded 119,900 guest arrivals in 2016,” more than 100 percent growth over 2015.

So here’s an inconvenient question for HB 266’s advocates: With all those new, tax-paying entities funneling money into the lodging tax’s revenue stream, why not cut the rate? The bill doesn’t do that, of course, despite the gusher of new funds it could create.

If the Land of Enchantment must have a lodging tax, why not reduce its maximum rate of 5 percent, and make the state’s hospitality industry a bit more competitive?

Update (April 7): The governor has vetoed HB 266, stating that “tourism in our state is flourishing, and the prevalence of short-term property rentals helps bring more and more people to see what New Mexico has to offer.”

On May 2nd (with early voting beginning April 12),a special election will be held solely for Santa Fe Mayor Javier Gonzales’ highest-in-the-nation 2 cent-per-ounce beverage tax on drinks with added sugar. Voters across the nation have rejected similar taxes 43 times over the past several years, but it’s been a long and winding road since the issue in Santa Fe has reared its head leaving many to ask how we got here.

October 12, 2016: Santa Fe Mayor Javier Gonzales introduces a resolution calling for the city to “to explore active ways of reducing sugar intake among Santa Fe’s residents and the benefits that would result.”

October 19, 2016: On this blog, the Rio Grande Foundation quickly calls the mayor out for “mission creep” and suggested a crusade against sugar doesn’t belong on his to-do list.

October 21, 2016: Mayor Gonzales denies he is working on a tax, telling T.S. Last of the Albuquerque Journal:  “This doesn’t lay the groundwork for anything but a healthier community.”

October 29, 2016: In a piece published in the Santa Fe New Mexican, RGF Research Director Dowd Muska warns readers: “don’t buy the mayor’s claim.” Taxing soda, after all, has become an idée fixe for the left’s unsleeping army of lifestyle police.

November 10, 2016: Mayor Gonzales proves us right, announces a proposal to impose a highest-in-the-nation (tied with Boulder, Colorado) two-cent-per-ounce beverage tax a long list of beverages.

January 25, 2017: The Rio Grande Foundation issues a report that found Mayor Gonzales misled the public about his intention to impose a beverage tax from the start. He and his staff had already been planning a beverage for weeks when he denied it to the Albuquerque Journal.

March 8, 2017: The Santa Fe City Council votes to hold a special election, at a cost to the city of up to $95,000, to decide on the issue.

The Albuquerque Coalition for a Healthy Economy (a broad-based coalition of business and free market groups) filed a lawsuit in State District Court today due to the Healthy Workforce Ordinance. Among the legal concerns expressed by the coalition were “logrolling,” requirements to provide workers paid sick leave who work as few as 56 hours, absurd requirements relating to legal fees, and onerous requirements on notification and record-keeping.

Lastly, the ballot measure which will be voted on in October attempts to tie the hands of future lawmakers in ways that are clearly illegal.

The Rio Grande Foundation has been opposed to government requirements to mandate paid sick leave since day one.

With New Mexico facing the nation’s highest unemployment rate, the last thing businesses or workers need is yet another set of government mandates that impose costs on businesses that will be passed along to consumers in the form of higher costs and to workers in the form of reduced flexibility in work arrangements and even fewer jobs being available.

Already, Bernalillo County has recently raised taxes, State lawmakers have been pushing for higher taxes, and the City of Albuquerque could be facing additional tax hikes due to its own budget woes. More regulations on businesses are the last thing Albuquerque needs.

“Spaceport America” has lost another potential client to a rival.

Earlier this week, Vector Space Systems, “a micro satellite space launch company comprised of new-space and enterprise software industry veterans from SpaceX, Virgin Galactic, McDonnell Douglas, Sea Launch and VMware,” signed an agreement with Spaceport Camden to “conduct a sub-orbital flight test of Vector’s full-scale launch vehicle, the Vector-R, as early as this summer.”

Last year, California-based Vector picked Arizona for its new manufacturing facility. Now it plans to send staffers flying over New Mexico on their way to test rockets in southeast Georgia.

The Land of Enchantment’s taxpayers are accustomed to Spaceport America falling on its face, but in this case, the defeat is particularly bitter.

Spaceport Camden, you see, doesn’t exist.

The site, which The Atlanta Journal-Constitution described in 2015 as “pine stands and coastal swamps where wild boars, armadillos and rattlesnakes roam,” has no infrastructure. The feds haven’t issued an operator license. And eco-activists, as well as local homeowners, are fighting the proposed spaceport.

In contrast, Spaceport America has “unique geographic benefits,” “basic operational infrastructure such as an airfield, launch pads, hangars, emergency response capabilities, 24/7 security, utilities and roadways,” and is “capable of accommodating the activities of both vertical and horizontal takeoff space launch vehicles, serving as the base for pre-flight and post-flight activities, and providing a tourism experience for interested visitors and spectators.”

Nice, but evidently, not enough. Vector prefers to test its launch vehicle in Georgia. Think New Mexico’s economic-development bureaucrats are interested in finding out why?

The latest news from the Santa Fe soda tax front is that full-strength (ie. sweetened) soda has been removed from the City Hall vending machine. Only diet and zero-sugar options are available.

Interestingly, while advocates on both sides refused to comment, Sandra Wechsler, campaign manager for Pre-K for Santa Fe, a group working in support of the tax, said the mayor’s proposal is “already working.”

That is an interesting take because a big part of soda tax involves the creation of an expensive new pre-K system. If people stop buying soda (at least at the traditional grocery store as opposed to online, for example), there won’t be money available for the Mayor’s expensive new pre-K program.

If your goal is to force certain vendors to replace sugary soda drinks with diet drinks, then the effort is indeed “already working,” but people could be getting those drinks elsewhere or drinking equally-sugary but untaxed drinks. However, if your goal is to generate enough revenue from selling sugary drinks to create a new government program, you have a VERY long way to go.

The deadline to register to vote in this election is April 3rd. You can register online.

Early Voting: April 12-April 28

Office of the City Clerk, Room 215, City Hall, 200 Lincoln Avenue
Genoveva Chavez Community Center, 3221 Rodeo Road

Election Day voting: May 2 (7am-7pm)

Montezuma Lodge, 431 Paseo de Peralta
St. John the Baptist Catholic Church, 1301 Osage Avenue
St. John’s United Methodist Church, 1200 Old Pecos Trail
Christian Life Church, 121 Siringo Road
Sweeney Elementary School, 4100 S. Meadows Road
Southside Library, 6599 Jaguar Drive
Kearny Elementary School, 901 Avenida de las Campanas
Genoveva Chavez Community Center, 3221 Rodeo Road

Given the type of folks in charge of New Mexico’s two legislative chambers, there was no doubt that this year’s session would not produce sweeping economic-development initiatives based on liberating labor and capital to grow jobs and wealth in the Land of Enchantment.

But while right-to-work was dead on arrival in Santa Fe, that’s no reason for New Mexico’s local governments to fear ending compulsory unionism within their jurisdictions.

Under legislation passed over Harry Truman’s veto, states have the ability to enact laws to bar “organized labor” from compelling workers to cough up dues or “agency fees” to keep their jobs. But with progress blocked in Frankfort, in 2014, Kentucky counties began passing their own RTW ordinances. Legal squabbling inevitably ensued, with Big Labor targeting Hardin County over its 8-1 vote to go RTW. As the state’s AFL-CIO chief put the left’s conventional wisdom, RTW could only be enacted “at the state level.”

In early 2016, U.S. District Judge David J. Hale ruled against the county. But in November, his decision was overturned by a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit. Written by Judge David W. McKeague, the opinion found that “political subdivisions are components of the State, within the State, that exercise governmental power of the State” — ergo, local RTW ordinances are allowed.

The issue is likely to be settled by the U.S. Supreme Court one day, since it is being contested in Illinois as well. (Lincolnshire, a suburb of Chicago, went RTW in 2015, and it falls under the Seventh Circuit.) But McKeague presented some compelling arguments for “local RTW,” including two noteworthy precedents that would be tough for justices to overlook:

* “The principle is well settled that local governmental units are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them . . . in its absolute discretion. The exclusion of political subdivisions cannot be inferred from the express authorization to the ‘States’ because political subdivisions are components of the very entity the statute empowers.”

– Wisconsin Public Intervenor v. Mortier (1991)

* “Absent a clear statement to the contrary, Congress’ reference to the ‘regulatory authority of a State’ should be read to preserve, not preempt, the traditional prerogative of the States to delegate their authority to their constituent parts.”

– City of Columbus v. Ours Garage and Wrecker Service (2002)

Local-government officials throughout New Mexico should seriously consider adopting their own RTW measures. As research by the Rio Grande Foundation and many other organizations shows, banning compulsory unionism is a strong economic-development tool. And with the highest unemployment rate in the nation, the need for labor freedom in our state is more urgent than ever.

Tom Udall and Martin Heinrich claim that it “fails to bring clean energy jobs to our rural communities, ignores the impacts that extreme weather will have on our economy and our national security, and does not decrease our reliance on foreign oil.”

Ed Markey believes that it’s “an attack on science, on climate, on the clean energy revolution.”

And the Sierra Club wails that it will “only deepen our dependence on fuels that pollute our air, water and climate while making our kids sicker.”

The White House’s “Executive Order on Promoting Energy Independence and Economic Growth,” which the chief executive says will spark “a new era in American energy and production and job creation,” has the eco-extremism lobby pitching a collective fit. But the measures the document includes — including suspension of major portions of the “Clean Power Plan,” the lifting of Barack Obama’s ban on coal-leasing activities on federal land, and nixing of the review of the “social cost” of carbon — are spectacularly good news for New Mexico.

Source: annual reports, New Mexico Energy, Minerals and Natural Resources Department

Coal-mining employment in the Land of Enchantment dropped by 24.2 percent between 2012 and 2015, and it’s a near-certainty that the numbers were down last year, too. The president’s policy reversal may not bring coal back to what it was before the era of fracking-driven cheap natural gas, but it will stanch the bleeding.

Source: Quarterly Census of Employment and Wages, New Mexico Department of Workforce Solutions

As for oil and gas in New Mexico, jobs in the sector tumbled by 17.9 percent between the fourth quarter of 2014 and the third quarter of 2016. A price uptick has employment looking up, but regulatory relief from Washington will surely help.

With stunning air-quality improvement in recent decades, and energy-related carbon dioxide emissions for the first six months of 2016 the lowest since 1991, the Obama administration’s regulatory assault on coal, oil, and natural gas was wholly unnecessary. Ignore the “green” crowd’s cartoonish hysteria. The White House’s pro-energy agenda is good news for a state that hasn’t had much to smile about for quite some time.