The Rio Grande Foundation has long noted that many of the highest income states (California, New York, Connecticut as examples) are “blue” states that have embraced big-government economic policies, but still have ample private sector business communities. Some, like California’s tech sector remain strong while many East Coast manufacturing hubs are losing ground.

On the other hand there are many “red” states that have lower living costs and are growing faster than their “blue” rivals both economically and population-wise.

There were a handful of states like New Mexico and West Virginia that were both poor and “blue” (when state policies were considered) but in November of 2014, West Virginia’s Legislature flipped to Republican. And, while the State continues to have a Democrat in the Governor’s mansion, the Legislature can override most vetoes with a mere majority. Thus, West Virginia went Right to Work, repealed its Davis-Bacon “prevailing wage” law, and generally moved the State in a more business-friendly direction (these policies took effect in July of 2015). New Mexico, on the other hand, moved back towards its traditional embrace of big-government policies in the 2016 election and saw myriad tax and minimum wage hike proposals moved through. While these were vetoed by the Governor, she is a “lame duck” and, if anything, New Mexico is poised to lurch further to the left in the near future. West Virginia which went 68 for Trump shows no signs of doing so.

What has that meant for economic conditions on the ground? I’ll let you, dear reader, parse that for yourself:

Bernalillo County Commissioner Wayne Johnson had an excellent opinion piece in the Albuquerque Journal today detailing the misadventures and bad information the Democratic majority is using to push for higher taxes.

Of course, we are also in the middle of an increasingly-dramatic standoff over tax hikes passed in the Legislature that are forcing further adjustments in State government.

All of this comes at a time when New Mexico’s economy is in bad shape with highest-in-the-nation unemployment. But many seem to believe that higher taxes simply won’t impact the economy in any negative way.

Economists, even liberal ones, tend to agree that tax hikes indeed stifle economic activity. In fact, Christina Romer, formerly head of President Obama’s Council of Economic Advisors, has written in some detail on the issue of tax hikes and economic growth. Her conclusion from a 2010 study, “Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly three percent. The effect is highly statistically significant.”

Source: Kaiser Family Foundation (Utah and New Mexico data for 2015; Colorado, Oklahoma, and Texas data for 2014, Arizona data for 2013)

Suggestion for a gutsy candidate looking to become the next governor: Pledge that by the end of your administration, fewer than 50 percent of the Land of Enchantment’s newborns will come into the world on the taxpayer’s dime.

The news that New Mexico has more of its babies born on Medicaid than all other states won’t surprise anyone who’s been paying attention. (Several of our neighbors, as the graph above shows, fare substantially better.) But it does illustrate the extend to which welfarism is a way of life in the Land of Enchantment. And with a dismal economy, now marked by the worst unemployment rate in the nation, Medicaid’s share of births is likely to grow.

Not too long ago, we were told by the usual suspects — Winthrop Quigley, Lee Reynis, New Mexico Voices for Children — that Medicaid expansion would “pay for itself.” Serious policy analysts knew that claim was nonsense, and our well-justified skepticism has been confirmed again and again.

But fiscal policy aside, the human toll of Medicaid expansion must not be overlooked. Brought into the world on welfare, it’s a near-certainty that many of the state’s Medicaid babies will grow up, and remain, trapped in the dungeon of dependency. Is there a courageous candidate willing to admit as much, publicly — and commit to taking the steps needed to turn the trend around?

Bernalillo County is coming after your wallets – again. The latest money grab is for a 3/16ths percent increase in the gross receipts tax. Since 2000, the local GRT burden has jumped from 5.8125 percent to 7.3125 percent. This latest proposal would bring the tax rate to 7.5 percent.

That’s a 29 percent overall increase in the GRT since 2000. The Bernalillo County Commission will vote at the end of March to move the local GRT rate to 7.5 percent; it was 7.0 percent as recently as 2015.

The local tax hikes are bad enough, but the Legislature is attempting to pile on its own tax increases, including a 10-cent-per-gallon hike in the gas tax. Both the gross receipts tax and the gas tax are “regressive,” meaning they impose a heavier burden on poor and low-income people in our state. Despite this reality, the political left in our state seems all too willing to raise taxes.

This leads us to the county commissioners who are pushing for the tax hikes. Democrats Maggie Hart-Stebbins, Debbie O’Malley and Steven Michael Quezada have all voted to support the 3/16th GRT increase. They have the authority to take more of our hard-earned money without first coming to the voters for permission.

Such an aggressive move would be ironic, especially for Hart-Stebbins and O’Malley, considering that both supported placing a nonbinding question on the November ballot relating to Albuquerque Rapid Transit. To be clear, we at the Rio Grande Foundation joined the commissioners in supporting the ART ballot measure because we strongly believe that voters should have the final say on major decisions being made with their tax dollars.

Now that these commissioners are looking to take more money out of our pockets via a GRT increase, one would expect that a ballot measure would be in order for the sake of consistency, if nothing else. Whether to raise gross receipts taxes to 7.5 percent in Bernalillo County seems like a question you’d want to hear from the voters on this fall.

In Colorado, a state that has consistently outperformed New Mexico economically for many years, every tax increase must be voted on by the people under their constitution. Unfortunately, our Legislature hasn’t seen fit to adopt a similar provision, but the majority on the County Commission seems to like voter input – at least when it fits their agenda. This would be an opportunity to take the lead on engaging voters.

This state – and the Albuquerque metro is no different – has been buffeted by bad economic news for the better part of a decade. Raising taxes is not going to help matters. I hope a majority on the commission opposes this tax hike on moral and economic grounds. But if they truly wish to push the matter forward, I hope they’ll give voters the final say.

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

We’ll take good news about New Mexico’s 2017 legislative session any way we can get it, and the passage of HB 341, however modest its likely impact, is good news.

Prior to a few days ago, Errors of Enchantment had no idea what eyebrow threading was. But we quickly got up to speed, learning that the process involves a beautician using “a cotton thread to open and close loops around … facial hair, removing it at its follicles.” Threading traces its origin to ancient Asia, and is becoming increasing popular in America.

You know where this story is headed. Recent years have seen bureaucrats target eyebrow-threaders for violating regulations pertaining to cosmetology.

Arizona, Texas, Louisiana — in state after state, threading entrepreneurs have had to resort to legal action to free themselves from training and certification mandates that rarely pertain to their craft. As an Institute for Justice attorney told The Washington Free Beacon: “Eyebrow threading is a simple technique that uses just a single strand of cotton thread and nothing else. The government cannot force threaders to quit work and waste time and money learning cosmetology techniques that threaders do not use. That’s not just wrong; it’s unconstitutional.”

So here’s an “attaboy” to the 53 representatives and 27 senators who voted for HB 341, which exempts “persons providing only eyebrow-threading services” from the state’s Barbers and Cosmetologists Act as of June 16 of this year. It’s a step, however small, toward reality-based occupational licensing — something both the left and the right have united behind. (A 2015 report from Barack Obama’s Department of the Treasury, Council of Economic Advisers, and Department of Labor noted that “by making it harder to enter a profession, licensing can … reduce employment opportunities and lower wages for excluded workers, and increase costs for consumers.”)

In 2012, the Institute for Justice found that New Mexico was “the ninth most broadly and onerously licensed state with the 12th most burdensome licensing laws.” Yet despite the benefits that HB 341 will surely bring, legislators, almost unanimously, approved HB 295, which extended the sunset dates for a number of dubious licensing bureaucracies, including the Board of Acupuncture and Oriental Medicine, the Private Investigations Advisory Board, and the Interior Design Board. Lots more work remains, it appears, to educate lawmakers about needless occupational red tape.

An explosion of eyebrow-threading shops won’t turn around the Land of Enchantment’s dismal economy, but liberating the profession from unnecessary regulations is to be commended.

Gird for battle, New Mexico revenucrats. Some in D.C. are looking to clip a little bit of your cash.

Earlier today, the Judiciary Committee of the U.S. House of Representatives held a markup of H.R. 1393, the Mobile Workforce State Income Tax Simplification Act of 2017. Chairman Bob Goodlatte (R-VA) is a fan of the legislation, calling it “a clear, uniform framework for when states may tax nonresident employees who travel to the taxing state to perform work.” Fans of bipartisanship and “getting along” and “No Labels” — we’re looking at you, Bob Perls — will be pleased to learn that many in the congressional minority, including Sen. Sherrod Brown (D-OH), are supporters. He sees it as a “simple fix” that will “make filing taxes easier for workers who travel while also cutting burdensome red tape on businesses.”

The problem being addressed, as explained by the Mobile Workforce Coalition, is that states “have inconsistent, varying standards and requirements for employees to file personal income tax returns when traveling to a nonresident state for temporary work periods, and for employers to withhold income tax on employees who travel outside of their state of residence for temporary work periods. Employees who travel outside of their states of residence for business purposes are subject to onerous administrative burdens because they may be legally required to file an income tax return in every other state into which they traveled, even if they were only there for one day. Employers are required to incur extraordinary expenses in their efforts to comply with the states’ widely divergent withholding requirements for employees’ travel to nonresident states for temporary work periods. And in some cases, requirements for employees and employers aren’t the same.”

Half of income-tax states force employers to withhold from nonresident employees’ wages when the workers travel into the state for a single day. (See the map above.) At 15 days, New Mexico’s withholding law isn’t as draconian as Colorado’s mandate, which kicks in immediately. But there’s certainly room for improvement. Texas, of course, has no income tax to comply with. Arizona’s minimum is 60 days. Oklahoma’s standard is $300 or more per calendar quarter — not much of a perk, since that equates to an hourly rate of about a buck and a half an hour for a workweek of 40 hours.

The bill marked up today “provides for a uniform, fair, and easily administered law and helps to ensure that the correct amount of tax is withheld and paid to the states without the undue burden that the current system places on employees and employers. The Act provides a uniform 30-day threshold before the liability attaches and withholding is required. After 30 days, existing state laws will apply. Consistent with current law, the Act provides that an employee’s earnings are subject to full tax in his or her state of residence. Further, an employee’s earnings would be subject to income tax in the state(s) in which the employee is present and performing duties for more than 30 days during the calendar year.”

The Tax Foundation notes that just about everyone, “except some state tax administrators, supports this legislation.” Fedpols from around the nation, and both parties, have signed on as sponsors and supporters. But the list doesn’t include any member of New Mexico’s House delegation. And neither Tom Udall nor Martin Heinrich have endorsed the Senate version of H.R. 1393. Why not?

While Santa Fe has yet to adopt a budget for the state’s upcoming fiscal year, another expenditure plan — the White House’s multi-trillion-dollar list of what it wants to spend in the new federal fiscal year — was released last week.

For a glimpse at how dependent New Mexico is on D.C., look no further than the press release U.S. Sen. Martin Heinrich issued in response. The fedpol hysterically asserted that the budget did not reflect “our core values and principles,” and “would be devastating for New Mexico.”

Heinrich picked a curious item to place at the top of his litany of complaints. His first gripe was the president’s proposal to eliminate funding for the Department of Housing and Urban Development’s Community Development Block Grant. The senator’s love for the program notwithstanding, it’s a well-documented disaster. The Reason Foundation’s Victor Nava noted that “waste, fraud, and corruption [are] continually seen” with CDBG projects. The Cato Institute documented “a history of financial abuse and dubious … spending,” including a marina, renovations to a ski chalet, a shooting range, an off-track-betting facility, and “a festival to celebrate a shopping center.” There’s no shortage of documentation to justify CDBG’s richly deserved death: inspector general audits, reports from the Government Accountability Office, state investigations, exposés by the print and broadcast media.

Heinrich couldn’t be bothered to notice, but there’s a prime example of CDBG chicanery right here in his “home” state. In November, KRQE reported that the City of Albuquerque was asked to give Washington back “nearly a million dollars,” due to a “multitude of issues” regarding its handling of programs that received HUD funds. The bureaucracy now considers Albuquerque a “high risk” for grants, meaning that if reforms aren’t made, federal housing officials might freeze the city’s “ability to draw down from its HUD accounts.”

Heinrich’s tale of woe starts poorly, and gets worse. Energy subsidies, goodies from the Department of Education, the Community Services Block Grant, Amtrak, “public lands,” AmeriCorps — the shrieking is intense, because the chief executive “is not committed to the success of hard working families and our rural communities.”

In addition to checking in on waste and mismanagement of federal funds in New Mexico, the state’s junior senator should also click here. He’ll learn that the national debt, not counting unfunded pension and healthcare liabilities, is just shy of $20 trillion.

There are things to like and dislike about the president’s budget proposal, but no one can deny that the river of revenue flowing from D.C. to the Land of Enchantment will one day run dry. Isn’t it best to accept reality sooner rather than later, and begin implementing policies to ensure that New Mexico can stand on its own?

New Mexico’s dumpster-fire legislative session ended Saturday with no budget agreement between lawmakers and the governor and no noteworthy bills that promise to improve the Land of Enchantment’s dire economic/fiscal health.

But on the bright side, some truly awful pieces of legislation were not passed. Among the bullets dodged:

* Several bills, including HB 117 and SB 344, sought to hike income-tax rates.

* Multiple minimum-wage bills, including HB 27 and HB 67, would have raised the mandate to a jaw-dropping (and hyper-job-destroying) $15.00. An increase that was adopted hikes the minimum wage to $9.00 on April 1, 2018, with a lower, temporary rate allowed for trainee employees. It could be vetoed by the governor.

* HJR 2, the “brainchild” of Rep. Bill McCamley (D-Mesilla Park), would have squandered $7 billion from the Land Grant Permanent Fund on “infrastructure and energy projects,” as well as “clean energy and water technologies” and “early childhood services.”

* The charter-school moratorium, spearheaded by Rep. Christine Trujillo (D-Albuquerque), would have squashed all applications for the important school-choice option through January 1, 2020.

* SB 42, SB 54, SB 102, and SJR 7 attempted to disenfranchise New Mexico’s residents in presidential contests by awarding the state’s Electoral College votes to the winner of the national popular vote.

Yes, the 2017 session was a disaster. But hey, it could have been worse….

We knew the 2017 legislative session was going to be a tough one for individual liberty and free markets. While most of the country moved right, New Mexico lurched far to the left in the 2016 election.

And, with the highest unemployment rate in the nation, poor economic growth, and a budget shortfall, the conditions were ripe for an acrimonious 2017 session. We were not disappointed.

The good news: although we knew going into the session that no big reforms like “right to work, school choice, or “prevailing wage” repeal were going to make it through, the question was whether the Gov. would hold firm against higher taxes and raising the minimum wage. To date, she has indeed held firm vetoing tax hikes and economically-harmful minimum wage hikes.

Also, the Legislature (despite being firmly under Democrat control) was unwilling to tap the “permanent fund” for pre-K and more spending.

In summary, no major damage was sustained.

The bad news: Since Gov. Martinez is vetoing $350 million in tax hikes, that means the budget will be out of balance and that the Legislature is moving towards yet another special session. With Democrat legislators desperately wanting to raise taxes and Gov. Martinez holding firm against raising taxes, there are only a few potential outcomes:

1) Democrats fold and agree to budget cuts;
2) Some previously-unknown or untapped source of money is found to fill the budget gap;
3) Republican legislators fold and vote to override Gov. Martinez’s veto. Such a move could destroy the Republican Party “brand” in New Mexico for years to come;
4) Gov. Martinez folds and agrees to raise taxes (another move that could inflict terrible harm on the Republican Party for years;
5) A government shutdown the ultimate results of which are unclear but really boil down to the first three items on this list.

These are fraught times. New Mexico’s economy faces unprecedented challenges and the conservative movement faces existential challenges. Democrats have the proverbial wind behind them and feel it is only a matter of time until they hold all levers of power. If conservatives don’t stand firm, they risk becoming totally irrelevant in this State.

Contact your legislators, especially if they are a Republican and tell them not to raise taxes. Make sure they know that you are watching!

Also, support the Rio Grande Foundation which is providing clear data to show that New Mexico’s problem is bloated government, not inadequate revenue.

A reminder: find out how your legislators are voting on freedom and which bills voted on this session would have the biggest impact on freedom at our Freedom Index.

Click here for registration form.

Grover Norquist is president of Americans for Tax Reform (ATR), a taxpayer advocacy group he founded in 1985 at President Reagan’s request. ATR works to limit the size and cost of government and opposes higher taxes at the federal, state, and local levels and supports tax reform that moves towards taxing consumed income one time at one rate.

ATR organizes the Taxpayer Protection Pledge, which asks all candidates for federal and state office to commit themselves in writing to the American people to oppose all net tax increases. In the 115th Congress, 212 House members and 45 Senators have taken the pledge.

Grover is one of the most influential voices for free markets and limited government in Washington. What agreements will President Donald Trump and Congress come to on the all-important issues of healthcare and tax reform? How good/bad will these reforms be for taxpayers and the U.S. economy?

• Location:  Marriott Pyramid located at: 5151 San Francisco Rd NE, Albuquerque, NM  87109.
• When:  Monday, April 10, 2017, 12:00 noon to 1:00pm.
• Cost:  Seating is limited and can be purchased at the discounted price of $30 until Wednesday, April 5, 2017; $40 after that.

More about Grover Norquist: He chairs the Washington, DC-based Wednesday Meeting, a weekly gathering of more than 150 elected officials, political activists, and movement leaders. The meeting started in 1993 and takes place in ATR’s conference room. There are now 60 similar center-right meetings in 48 states including New Mexico.

He also:

• Serves on the board of directors of the National Rifle Association of America, the American Conservative Union, the Parental Rights Organization and Center for the National Interest (formerly The Nixon Center.)
• Serves as a Contributing Editor to the American Spectator Magazine.
• Serves as president of the American Society of Competitiveness.
• Authored four books: Rock the House; Leave Us Alone – Getting the Government’s Hands Off Our Money, Our Guns, Our Lives; Debacle: Obama’s War on Jobs and Growth and What We Can Do Now to Regain Our Future (with co-author John Lott) and End the IRS Before it Ends Us – How to Restore a Low Tax, High Growth, Wealthy America – published April 7, 2015.

Click here for registration form.

Was having a “discussion” on Twitter with two of New Mexico’s leading union officials. Both men strongly support Mayor Javier Gonzales’ plans to impose a 2 cent/ounce tax on sugary drinks sold in “The City Different.”

In doing some research on the issue I noticed that the Teamsters Union in Philadelphia was among the leading OPPONENTS of that City’s 1.5 cent/ounce tax on soda and sugary drinks. The following Tweets outline the exchange with Jon Hendry, head of the New Mexico Federation of Labor, AFL/CiO:

So, as I gather from Hendry’s comments, if Santa Fe’s bottler were unionized, his position might be the exact opposite of what he holds now. It would indeed be interesting if Santa Fe’s Coke distributor were unionized. Perhaps Mayor Gonzales wouldn’t even be undertaking this plan against a political ally?

There are all kinds of alternative scenarios, but the fact is that the unions have real political muscle and the way those muscles are used is less about political principle and ideology than it is about grasping self-interest. Easy for us think tank folk to lose sight of.

Otero County‘s pretty cool. White Sands National Monument, the Flickinger Center for Performing Arts, the New Mexico Museum of Space History (really cool), the Alamogordo Museum of History, Oliver Lee Memorial State Park, the Sacramento Mountains, Holloman Air Force Base — it’s an interesting place, and has contributed quite a lot to the Land of Enchantment’s culture and history.

But in sponsoring “a contest with students from all over Otero County to create a logo that represents the county in a more modern light,” the county’s commissioners have done something all “public servants” in the state should notice.

No offense to the artist, but Otero County’s current logo, depicted above, is kind of lame. So commissioners have asked Alamogordo Public Schools, New Mexico State University-Alamogordo, private-school pupils, and the homeschooled to design an update “a little bit more fresh and more updated to represent the county better.”

That’s quite a contrast to the approach Santa Fe County took in 2016. It “set aside nearly $100,000 to replace its logo,” paying nearly half of the sum to “GumCo, a creative agency in Salt Lake City, and … Southwest Planning & Marketing of Santa Fe, which conducted surveys and focus groups.”

But the new look was “met with underwhelming enthusiasm” by commissioners late last year, and a decision on the logo was postponed until January. What was the final outcome? We don’t know — no information is available online, and Errors of Enchantment contacted the county, but has received no response.

No, volunteers can’t do undercover police work, enforce zoning rules, adjudicate complex criminal/civil cases, and maintain official records. But there are abundant opportunities for members of the community to pitch in elsewhere, and in so doing render many local-government appropriations unnecessary.

In 2016, four out of five members of New Mexico’s congressional delegation had little, if any, regard for “the fiscal interests of American taxpayers.”

That’s the conclusion of the Council for Citizens Against Government Waste, which has released its 2016 congressional ratings. The organization “scored 65 votes in the House of Representatives and 16 votes in the Senate.” No fedpol in the former earned a perfect 100, but four senators won the title of “Taxpayer Super Hero,” including a senator just to our west: Arizona’s Jeff Flake.

New Mexico’s senators, both Democrats, each scored a 13, and were thus labeled “Hostile.” Two members of the House, Democrats Ben Ray Luján and Michelle Lujan Grisham, performed even more abysmally, scoring in the single digits. (That’s down in Nancy Pelosi territory.)

U.S. Rep. Steve Pearce, a Republican whose district comprises the southern half of the Land of Enchantment, was found to be a Taxpayer Hero. He scored an impressive 91.

CAGW looked at legislation covering everything from redundant catfish regulations to the banning of Internet-access taxes, Puerto Rico’s insolvency to Obamacare. Here’s the full list of bills that were scored.

Clearly, when it comes to “important tax, spending, transparency, and accountability measures,” New Mexico’s delegation has plenty of room for improvement.

As the 2017 legislative session heads toward a conclusion absent any significant economic reforms, but having passed several tax hikes that may be vetoed by Governor Martinez, the State’s economic picture continues to darken.

After months of hovering near the top of the national ranking of states with the highest unemployment rates, New Mexico “broke through” in January rising to 6.7%. The contrast is even more stark when New Mexico is compared against its more economically-free and successful neighbors, especially Colorado which does not have “right to work” (as do our other neighbors), but has Constitutional tax and spending protections, no Davis-Bacon prevailing wage law, and has legalized and taxes marijuana.

Making New Mexico’s high unemployment rate even worse is the fact that, as the Albuquerque Journal noted recently, the proportion of New Mexicans working relative to the population is the lowest its been since the Bureau of Labor Statistics started measuring back in 1976.

A version of the op-ed below ran in The Los Alamos Monitor on March 12.

What makes a tax “good” or “bad?” Fairness is often in the eye of the beholder. Should the wealthy pay more, as a percentage of their income? If so, a tax is said to be “progressive,” with the best example being the federal income tax.

On the other hand, if applied at the same rate regardless of income, a tax is said to be “regressive,” since less-affluent households pay a higher share of their income. A tax that is both applied at the same rate and applied to those goods disproportionately purchased by the poor is particularly regressive.

These issues are critical to several tax changes under discussion in the Land of Enchantment. Liberal groups, with New Mexico Voices for Children leading the charge, have been adamant in opposing the re-imposition of the gross receipts tax on groceries as a component of broader tax reform. While the proposed shift fits the technical definition of regressive, food-stamp benefits, currently claimed by a distressing 26 percent of the state’s population, reduce the sting significantly.

That is not to argue that groceries should be taxed, but rather that the merits of the measure must be judged against various alternatives. In fact, there are several proposals moving through the legislature — and other governing bodies in this state — that are equally regressive and more economically harmful. Yet when it comes to these taxes, our friends on the left are silent. Or even supportive.

Let’s start with the gasoline tax. Legislation raising the tax from 17 cents to 27 cents passed the New Mexico Senate, and it’s likely to pass the House of Representatives. The increase represents a stunning 63 percent hike, and its regressively isn’t in question. (And it’s worth noting that the poor often drive older, less-fuel-efficient cars. Ownership of hybrids and fully electric vehicles is not common among households of modest means.) But liberals don’t seem to care. At least we haven’t heard from them.

Another tax hike making its way through the legislature is a 33 percent increase in the levy imposed on automobile purchases. While not as regressive as the gasoline tax, a rise in the motor vehicle excise tax is no benefit to people on the fringes of the work force, who need affordable, reliable transportation to seek all available employment opportunities.

Finally, a bill moving through the legislature makes a breathtakingly massive boost to the tax on tobacco products. The rate on cigarettes would nearly double, from $1.66 per pack to $3.16 per pack — a 90 percent hike. Again, the levy is imposed at one rate regardless of income level. Since the poor disproportionately smoke, the tax hike will hit them much harder than middle- and upper-income consumers.

Even worse, the “anti-smoking” bill imposes, for the first time, taxes on e-cigarettes and vaping technology, tools that have been used by millions of people to quit cigarettes. While data from the U.S. is hard to come by, researchers at University College London have estimated that 891,000 people have used one of the devices when trying to kick the habit. Since vaping has been repeatedly found to be healthier than smoking, taxing it is likely to worsen health outcomes for many, a disproportionate number of them poor.

All this talk of raising taxes on New Mexicans would be understandable if the budget were truly “cut to the bone,” as some assert. But state government spends more as a percentage of economic output than any of our neighbors, and all but a few states nationwide.

Taxpayers subsidize the movie industry, tourism-related businesses, an outrageously bloated higher-education system, and out-of-control spending on K-12 schools. Yet neither liberal groups nor the hard-left politicians in command of the legislature have made any contribution to the effort to right-size state government.

This hypocrisy is doing great harm to our state, especially the working poor.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director for the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on the principles of limited government, economic freedom and individual responsibility.

Source: 2016 Annual Report, New Mexico Department of Transportation

At least we’re not alone.

Santa Fe’s solons are scheming to increase the state’s gasoline tax, in part to raise additional revenue for transportation. To our north, a bipartisan cabal of Colorado state pols wants more moolah “for transportation infrastructure funding purposes,” and the group has drafted a bill to ask voters for a sales-tax hike — from 2.9 percent to 3.52 percent — that “would start in January 2018 and remain in place for 20 years.”

The Rio Grande Foundation has warned, again and again, that there are many ways to boost spending on New Mexico’s roads, highways, and bridges that do not involve raising taxes. Repealing the state’s anti-taxpayer prevailing-wage mandate is an easy way to make all infrastructure dollars go further. Shifting 100 percent of the revenue raised by the excise tax placed on motor-vehicle sales to transportation is another promising reform. And walking away from the Rail Runner, however painful, will stop throwing good money after bad.

In Colorado, the Independence Institute has launched an effort to stop their state’s potential tax hike. Calling the measure the “Fix Our Damn Roads” initiative, the organization’s president called the proposal “a re-allocation of existing … spending to roads.”

The initiative’s language charges that “Colorado’s elected officials have decreased funding for road and bridge construction, maintenance and repair by 9 percent over the last decade,” and decries the diversion of funds “that should have gone to roads pursuant to state law” to “programs outside the core responsibility of state government, such as, inter-city bus services (duplicating many services of the Regional Transportation District and unfairly competing with private sector transit providers), resort town housing, duplicative education programs, subsidies for large out-of-state businesses and automatic raises for state officials.”

“Fix Our Damn Roads” would pay for $2.5 billion worth of “road and bridge expansion, construction, maintenance and repair” with revenue anticipation notes.

As the chart above indicates, the major, indigenous sources of New Mexico’s “road fund” haven’t seen much growth in the past dozen years. And federal funding, which contributes nearly half of all “transportation” spending, is an highly unreliable revenue stream.

So it’s time — long past time, really — to prioritize. Ditch the regulations that drive up infrastructure costs. Allocate transportation dollars more appropriately. And follow the “Fix Our Damn Roads” approach of stopping expenditures on projects that return little (or no) value to the taxpayer.

Smart, not more, transportation spending is the answer. While there’s not much chance of a “Fix Our Damn Roads”-style solution being enacted in New Mexico anytime soon, we’ll keep watching our neighbor to the north, and report on the initiative’s progress.

There are several solid reasons why New Mexico should not raise taxes this legislative session. An economy that hasn’t climbed its way out of the Great Recession and a political establishment that won’t pursue a thorough right-sizing of state government lead the pack.

But keeping an eye on the competition is another justification for no new taxes. As the American Legislative Exchange Council (ALEC) puts it, a “large volume of academic literature finds taxes negatively affect economic growth.” In a country where picking up and bolting for lower-tax jurisdictions is relatively simple, states that enjoy thriving economies get that simple truth.

ALEC’s annual “Tax Cut Roundup” is out, and the organization found that in 2016, nine states “provided substantial tax relief for their citizens.” The best of the best included:

* Arizona, which eliminated the sales tax placed on electricity and natural gas purchased by manufacturers and hiked its bonus depreciation schedule to 100 percent of the federal allowance

* Mississippi, which “passed what may be the largest tax cut in state history,” including lower income taxes and a phase-out of the “business franchise tax on investments in business property and capital”

* North Carolina, which made 2016 “another year of substantial tax relief,” dropping the rates for both its income and corporate taxes

* Tennessee, which adopted a full zeroing-out of its tax on dividend and interest income and put a final end to its death tax

* Florida, which continued cutting taxes “for the fourth consecutive year” by making permanent the sales-tax exemption for manufacturing equipment and reducing “the ‘required local effort’ property taxes for schools”

ALEC notes that “more than half the states have cut taxes over the last five years.” And there’s sure to be more tax-cutting in 2017, including, possibly, Ohio, Florida, Idaho, Minnesota, Wisconsin, Texas, and Iowa.

So where does that leave the Land of Enchantment? With Santa Fe’s revenue-grubbers pushing tax hikes on gasoline, “smoking,” and motor-vehicle purchases (as well as a constitutionally shaky extension of the GRT to sales from beyond-borders vendors), New Mexico is headed in the wrong direction, and offering individuals and entrepreneurs one more reason to leave — or avoid — the state.

Here at the Rio Grande Foundation we stick to New Mexico policies, especially the economy. Of course, the state of the economy greatly impacts New Mexico although we tend to lag the national economy in most areas. We don’t expect the 2017 legislative session to do much positive although tax hikes and minimum wage increases could have negative impacts.

So, barring a massive run-up in oil and gas prices, New Mexico’s most likely path out of recession is a strong national economy. This brings us to President Trump. Like him or not (and we have concerns about his trade, spending, and now health care policies),  the first month’s worth of economic data are in and the stock market boomlet that we’ve seen since the election is trickling down from Wall Street to Main Street.

Check out some of this data from this US News & World Report article (which relies upon data from payroll processor ADP):

Happy International School Meals Day!

Yes, that’s a thing.

“Managed” by “Children in Scotland,” ISMD “is a unique campaign with the aim of raising awareness of good nutrition for all children regardless of their circumstances.” Federal “agriculture” bureaucrat Yibo Wood writes that the day raises “awareness of nutritious school meals and their importance to the health of our kids,” gushing that “nearly every country provides some form of school meal for about 368 million children each school day worldwide, including more than 30 million children here in the U.S. through USDA’s National School Lunch Program.” ISMD, she claims, “brings the world a little closer, helping kids understand the importance of healthy nutrition to a healthy future.”

Here in New Mexico, one school district recently decided to take a pass on federally funded meals for the young ‘uns. Los Alamos Public Schools is planning to “cut ties with the National School Lunch Program by next school year.” Local donors — imagine that — will provide grub. The shift, according to the district’s food-services manager, “just gives us the opportunity to give some larger portions and be a little bit more creative with our menu.”

While the federal school-lunch program is sacred to the left, the subsidy is long overdue for some serious scrutiny. As The Heartland Institute’s Teresa Mull explained last month in The Hill, “Feeding a child is the fundamental duty of a parent.” (If moms and/or dads are unable to provide a decent breakfast and pack a nutritious lunch for their kids, what else aren’t they providing? Isn’t it time to get family services involved?)

The Heritage Foundation’s Darren Bakst and Rachel Sheffield add that the program’s “community eligibility provision” incentivizes “schools to give students free meals regardless of whether or not they come from low-income homes.” It’s an outrageous policy — one that wastes scare funds and “imposes a wealth transfer, taking hard-earned money from lower-income taxpayers and using it to subsidize higher-income families who have no need for such welfare.”

According to the latest data from the National Center for Education Statistics, in New Mexico, a colossal 67.6 percent of government-school students are eligible for free or reduced-price lunches. (Only Mississippi, at 70.6 percent, is higher.) Let’s hope that more districts follow Los Alamos’s lead, and question the “wisdom” of “partnering” with the feds for school meals.

With all of the bad legislation coming out of the Legislature in Santa Fe, HB 228 (“Right to Try” by Rep. Rebecca Dow) is one of the few bills that would expand freedom in the 2017 session. This opinion piece ran in today’s paper.

Source: “PADDs 1 and 3 Transportation Fuels Markets,” U.S. Energy Information Administration, February 2016

In news that must surely come as a shocking surprise to the Trump administration, Bloomberg reports that last year, Mexico “relied on U.S. gasoline … for nearly 50 percent of its total consumption as refineries operated by state-owned oil giant Petroleos Mexicanos … malfunctioned.” In the final month of 2016, the country “imported a record high of 1.2 million barrels a day of U.S. fuels.”

How many of those barrels were imported from New Mexico’s refineries? Zero.

While the Land of Enchantment produces over 400,000 barrels per day of crude (more than double the figure for 2010), its refining capacity is just 127,500 barrels per day. And the state’s two refineries — one in Gallup, one in Artesia — don’t ship a single barrel of petroleum products south.

As the the map above depicts, infrastructure is an issue. New Mexico’s pipelines don’t do exports. Given Bloomberg’s finding that “the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia,” that’s a distressing reality.

The U.S. is experiencing a bit of a refinery boom. Four new facilities came online in 2015 — three in Texas, one in North Dakota. And Raven Petroleum is building a $500 million refinery east of Laredo that’s geared toward exports to Mexico.

Given its own reservoir of crude, as well as its proximity to other oil-producing states, New Mexico could be a refining powerhouse. So why isn’t it? Regulations, taxes, eco-hysteria-driven NIMBYism, a lack of a right-to-work law? Something for the state’s well-compensated advocates for “economic development” to ponder.

In today’s Albuquerque Journal, Democrat Sen. Howie Morales made his case for higher taxes on tobacco and e-cigarettes. We at RGF share Gov. Martinez’s concerns about any and all tax hikes, but that’s not really the point of this post.

Rather, Morales justified his tax hike, in part, by noting that a near-doubling of the tax “means there will be thousands of fewer smokers in the future.” He went on to say that “making smoking more expensive would save the lives of 7,000 New Mexicans,” presumably by reducing demand.

The idea that artificial price increases reduce demand is a basic tenet of economics, but just a few days ago Morales’ colleague Sen. Clemente Sanchez argued in the Albuquerque Journal that raising the minimum wage would “stimulate the economy and job creation.”

So, which is it? Do government-mandated price increases reduce demand for a good (as basic economics and logic imply) or do they somehow increase demand? You can’t have it both ways Senators!

Higher education is a mess. Here in New Mexico it is clearly unsustainable as a line-item in the budget and nationally the cost is growing faster than almost any important good purchased by large numbers of people:

Enter Praxis which essentially moves to replace the costly (in both time and money) traditional college diploma with an apprenticeship program. The program (started by a libertarian young man named Isaac Morehouse), touts an average starting salary at a real job of $50K annually and a 98% placement rate all after 9 months in the program.

Morehouse recently appeared on Tucker Carlson’s show on Fox News to discuss the program:

At a time when the New Mexico Legislature seems hell-bent on making life more difficult for businesses and entrepreneurs, Praxis is a reminder that sometimes the best way to deal with bloated, expensive, and inefficient government is to just go around them.
 

Source: Site Selection, March 2017

Site Selection is out with its annual look at capital investment in the states. The publication, using information obtained from the Conway Projects Database, tabulates projects that cost at least $1 million, create 20 or more jobs, and take up a minimum of 20,000 square feet.

Don’t bother sitting down for this: Texas’s chief executive took “his third Governor’s Cup,” and “the Lone Star State’s fifth consecutive such Cup.” At 642 projects, the contest wasn’t even close.

But states vary considerably in population, so Site Selection provides a helpful look at investments per capita. Surprisingly, New Mexico did not rank at rock bottom. The Land of Enchantment did, however, tumble into the bottom 15 states, excluding Alaska and Hawaii. We’re in lousy company — e.g., Delaware, Connecticut, New York. And every state that borders New Mexico fared better. (See graph above.) Note that energy-rich (and right-to-work) Texas and Oklahoma secured the most investments in the Southwest.

Like the Rio Grande Foundation’s ongoing analysis of job-creation in right-to-work vs. compulsory-unionism states, Site Selection‘s data are particularly valuable, because they track real-world investment. Surveys of CEOs and projections of the future have their place, but it’s tough to argue with facts.

Think the legislation emerging from Santa Fe in the final weeks of the session — more regulations, higher takes — will improve New Mexico’s capital-investment performance in 2017? Errors of Enchantment doesn’t, either.