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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: U.S. Bureau of Labor Statistics

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

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

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

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

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

Source: American Enterprise Institute

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

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

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

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

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

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

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

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

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

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

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

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

December 14, 2016

For Immediate Release

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Results yielded: zilch.

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

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

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

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

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

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

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

The op-ed below appeared in the Farmington Daily Times on December 11th.

New Mexico’s economy has fewer jobs today than it did in early 2008. As employment grows nationally, it’s shrinking in the Land of Enchantment. Our jobless rate is now the highest in the contiguous states. Incomes are stagnant, the food-stamp rolls have risen for 29 months in a row, and Millennials continue to flee for abundant opportunities elsewhere.

Sounds like a spectacularly bad time to raise taxes, doesn’t it?

Not to New Mexico’s Big Government lobby.

When the legislature convenes for a 60-day session next month, the state’s liberal establishment will be pushing to raise taxes on everything from gasoline to personal income, alcohol to corporate profits, electronic cigarettes to capital gains. Only “revenue enhancement,” the narrative holds, can solve New Mexico’s persistent budget deficits.

The left’s campaign for tax hikes is founded on rate cuts adopted by Governor Susana Martinez, a Republican, and her predecessor, Democrat Bill Richardson. In 2007, Forbes praised the latter as a “tax cutter” who “whacked New Mexico’s top income-tax rate by 40 percent and capital gains by 50 percent.” In 2013, as part of a legislative package that she claimed would be “good for New Mexico’s economy,” the former signed a phased-in reduction of the top corporate-tax rate, from 7.6 percent to 5.9 percent.

Bill Jordan, of the ultra-liberal New Mexico Voices for Children, believes the state’s in a fiscal crisis “because we cut taxes in the hopes that it would bring wealthy people and profitable corporations to New Mexico, which would create jobs. We lost that bet.” But Jordan, and his ideological allies, have incomplete memories. Taking a broader view, it becomes quite clear that while some taxes have been cut during the Richardson-Martinez era, others have been hiked.

The gross receipts tax (GRT) is the dominant revenue-raising mechanism at both the state, county, and municipal levels of government. The state’s GRT has risen by just 2.5 percent since 2003, when Richardson was inaugurated. But during the same period, local governments have engaged in an orgy of GRT-hiking. In Albuquerque, the levy’s burden has risen by 25.8 percent. In Santa Fe, the increase has been 24.3 percent. But among major municipalities, none can top Las Cruces, which has seen its GRT rise by 27.9 percent. Other cities and towns with big hikes include Alamogordo (26.7 percent), Clovis (26.5 percent), Farmington (25.8 percent), and Silver City (23.1 percent).

The tax-corporations-more crowd should remember that the GRT is a kind of “super sales tax.” It doesn’t solely impact transactions involving final consumption. Business that sell to businesses are affected, too, causing “pyramiding,” which the Tax Foundation describes as taxes piling “on top of one another as [a] good or service moves through production.” It’s likely that many of the enterprises that benefitted from Governor Martinez’s pursuit of lower corporate taxes would gladly make the trade for lower GRT rates. And as economist and former state revenue official Thomas Clifford put it, “The likelihood is high that most of the ultimate burden of [GRT pyramiding] is borne by New Mexico households, a hidden tax with regressive implications.”

The levy placed on property is another issue that New Mexico’s tax-hikers would like to ignore. The statewide mill rate has risen by 21.1 percent since 2003. In many communities, property-tax bills have gotten far more expensive. For example, the inflation-adjusted revenue Las Cruces extracted from its total tax levy rose by 128 percent between 2003 and 2015 — a boost far in excess of population growth.

It’s certainly true that by themselves, lower individual and corporate taxes have not generated much job- and wealth-creation in New Mexico. But conveniently neglecting the substantial increases in GRT rates and property taxes does not produce a healthy debate over the state’s dire fiscal condition.

Look at all the taxes that individuals, families, and business pay in New Mexico, and it’s clear that the relief adopted under the present and former governor has proven largely illusory. Add that harsh reality to a state economy that’s arguably the worst in the nation, and the case for hiking taxes during the 2017 legislative session vanishes.

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

The center-left Brookings Institute (a Washington-based think tank) has a new report available which details on a state-by-state basis how fast economic growth has grown relative to carbon emissions.

The full array of state-by-state charts is available at the link above while New Mexico’s chart is below. The gist of the chart is that New Mexico’s REAL GDP grew from the baseline of 100 in the year 2000 to 123.3 (23.3%) while carbon emitted due to the State’s economic activity fell from a baseline of 100 to 86.8 (a drop of 13.2%).

In other words, from a carbon “efficiency” standpoint, over the past 16 years, New Mexicans are engaging in more economic activity while carbon emissions are declining. We rank 18th-best in this according to Brookings. This decoupling SHOULD be good news for those who actually want to see wealth/prosperity AND who are concerned about the environmental impact of CO2 emissions.

Yesterday, “New Mexico’s largest electric utility asked state regulators … for an average system rate increase of 14 percent — two months after the most recent increase showed up on consumer bills.”

The request is hardly good news for a state with a crumbling economy. But the good news, especially in an era of endless deficits, is that a no-cost solution is available. Deregulation, when implemented properly, remains a powerful tool for power affordability.

That’s what a large majority of Nevada’s voters decided one month ago today. More than seven in ten favored Question 3, which requires the “Legislature to provide by law for the establishment of an open, competitive retail electric energy market that prohibits the granting of monopolies and exclusive franchises for the generation of electricity.”

In a pro-Question 3 op-ed in the Las Vegas Sun, John Hanger, former head of the Pennsylvania Department of Environmental Protection and a onetime member of the Keystone State’s public utility commission, described the benefits:

After 20 years of allowing customers to choose their generation supplier and competitive power markets with appropriate oversight, customers in the Philadelphia and Pittsburgh regions are paying much less for power generation than they were in 1996. In real or inflation-adjusted dollars, those residential customers are paying about 50 percent less. And Pennsylvania’s statewide average electricity price is at the national average as opposed to well above it.

Thanks to competition for customers, power plants don’t earn revenues for their owners unless they operate, unlike during the monopoly era, when ratepayers typically paid for power plants even when they did not operate. As a result, power plants today are much more efficient and burn much less fuel to produce the same amount of power. The pressure to run more efficiently means they pollute less.

Errors of Enchantment has argued before that it’s time for New Mexico to revisit the Electric Utility Restructuring Act, which was passed in 1999 but repealed four years later. (In 2003, the Foundation presciently warned that the retreat from competition portended “nothing but high prices in the long run.”) As the charts below indicate, the price of juice in the Land of Enchantment is somewhat competitive for industrial customers, but is second-worst for commercial enterprises and most expensive for homeowners.

Stephen Moore (who spoke at an RGF luncheon a few years back) has an interesting article called Blue State Depression. In his article, Moore contrasts the economies of the “bluest” states and the “reddest” states in America.

For starters, notes Moore:

Of the 10 blue states that Hillary Clinton won by the largest percentage margins — California, Massachusetts, Vermont, Hawaii, Maryland, New York, Illinois, Rhode Island, New Jersey, and Connecticut — every single one of them lost domestic migration (excluding immigration) over the last 10 years (2004-14). Nearly 2.75 million more Americans left California and New York than entered these states.

Now let’s look at the 10 states that had the largest percentage vote for Donald Trump. Everyone of them — Wyoming, West Virginia, Oklahoma, North Dakota, Kentucky, Tennessee, South Dakota, and Idaho — was a net population gainer.

Where does that leave New Mexico? Well, as usual, The Land of Enchantment doesn’t quite fit in. Aside from California and Hawaii, the “bluest” states according to Moore are all relatively high income, high cost, industrialized states with populations centers in the North (read cold weather). New Mexico is a poor western state with plenty of sunshine and great weather. Thus, our population is not falling, but growth is much slower than it is in any mountain state.

We DO have one big thing in common with the rest of those “blue” states: our sluggish economy. In fact, New Mexico is in the unique position of being a poor blue state that never industrialized, certainly not like those Northern states. And, unlike even some of those “blue” states, New Mexico actually got more blue this election by reverting to total Democrat control of the Legislature.

There’s an enormous pile of required reading for legislators making the trip to Santa Fe for the 2017 session. But “No Recovery: An Analysis of Long-Term U.S. Productivity Decline” should be near the top.

“[P]repared by Gallup to celebrate the 30th anniversary of the U.S. Council on Competitiveness,” the report argues that “America is dangerously running on empty,” with “productivity growth … in a serious multi-decade-long slump.”

Written by economist Jonathan Rothwell, “No Recovery” finds that the healthcare, housing, and education sectors “account for 36% of national spending and could hold the key to reversing this structural productivity decline and reinvigorating American growth and high-value job creation.” But red tape imposed by state and local governments, not just Washington’s regulatory madness, constrain such a rebound.

For example, 41 states, including New Mexico, have adopted the “implied-contract” doctrine for “almost any employer-employee relationship,” which mandates “termination only for cause.” Land-use control is another villain, with “zoning boards and planning agencies” having “almost complete discretion over what gets built where.” (In 2015, Albuquerque’s planning director told reporter Dan McKay: “Nobody has a true sense of what’s allowed and what’s not allowed. It’s not very predictable. … I had developers calling and saying, ‘I will never do a development in your city again.’”) And occupational-licensing overkill, a New Mexico specialty, boosts “costs for primary healthcare and dental care services.”

While our neighbors are, for the most part, thriving, Big Government is strangling New Mexico’s entrepreneurs, workers, and families. Deregulation of the state’s healthcare, housing, and education sectors is imperative. Legislators, read up.

Just 1 percent of New Mexico’s oil is produced on tribal lands. For natural gas, the figure 3 is percent.

That’s why a recent Reuters report offers hope for economic development on pueblos and reservations, as well as New Mexico’s struggling oil-and-gas industry.

Two advisors to the president-elect told the news service that they’re pushing to free Indian resource development “from what they call a suffocating federal bureaucracy.” U.S. Rep. Markwayne Mullin (R-OK), a co-chair of Donald Trump’s Native American Affairs Coalition, is seeking to “take tribal land away from public treatment,” and predicts that doing so will enjoy “broad support around Indian country.” Mark Fox, chairman of the Three Affiliated Tribes in North Dakota, voiced a common complaint: “The time it takes to go from lease to production is three times longer on trust lands than on private land.”

Congressional auditors have repeatedly documented the extent of the frustration. Last year, the Government Accountability Office found that the Bureau of Indian Affairs‘s “management shortcomings and other factors” hobble tribes’ energy development. Specifically, the agency

does not have the data it needs to verify ownership of some Indian oil and gas resources, easily identify resources available for lease, or identify where leases are in effect, as called for in Secretarial Order 3215 and internal guidance. BIA also faces staff limitations and does not have a documented process or the data needed to track its review and response times, as called for in implementation guidance for Executive Order 13604, and therefore it cannot ensure transparency in its review of energy-related documents. These shortcomings can increase costs and project development times, resulting in missed development opportunities, lost revenue, and jeopardized viability of projects.

At a Santa Fe hearing on Indian energy development held in October, U.S. Rep. Rob Bishop (R-UT) noted that the “issue at its core deals with human dignity, self-determination and opportunity. Unfortunately, nearly every aspect of energy development on tribal lands is influenced or controlled by the federal government, a policy stemming from old notions that Indian tribes are incapable of or unwilling to manage their resources.”

With prices of both oil and natural gas on the rise, there’s no better time to empower native communities to expand energy development.

According to the latest article about New Mexico’s dire budget situation, Dan Secrist, vice president of the Communication Workers of America union said, “cutting any more will mean the curtailment of services.” Certainly, spending less money will get “less government,” but perhaps less government isn’t such a bad thing, especially when your state is spending at far higher levels than its neighbors:

The Rio Grande Foundation published a detailed list of budget cuts. A few of those (like “across the board” cuts to higher education) were at least addressed in the October special session, but there is plenty of wasteful and unnecessary spending still available:

Cut funding on Eliminate Local Economic Development Act: $55.4 million;

Eliminate Film Production Tax Credit: $50 million;

Eliminate Tourism Department: $16.9 million;

Get rid of Job Training Incentive Program: $6 million;

Reduce unproven preschool program: $52 million

Close higher education branch campuses: $10s of millions depending on closings;

Finally, from a separate brief dealing with the issue, Reform long-term-care insurance issues within Medicaid $100 million.

Here we go again.

New Mexico’s “economic development” brain trust has formed “GrowBio,” to “identify and advance actionable strategies to grow biotechnology businesses in New Mexico to benefit the state’s economy by creating new and high-paying jobs to improve the lives of New Mexicans.”

Dr. Richard Larson, executive vice chancellor at the University of New Mexico Health Sciences Center, told the Albuquerque Journal that the state has “already created the foundations for a strong bioscience industry,” and is now “at the stage where the state and private sector must work together on policies and incentives to move a lot more discoveries from lab to market to help biotechnology startups grow and thrive.”

If the state has a “burgeoning biotechnology industry,” as the Journal claimed, that would come as news to the Biotechnology Innovation Organization, “the world’s largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations.” In a report issued earlier this year, BIO found that between 2012 and 2014, the number of bioscience firms in New Mexico rose by only 0.5 percent. The number of jobs in the industry fell by 6.9 percent — a sharp contrast to the Land of Enchantment’s neighbors:

Source: “The Value of Bioscience Innovation in Growing Jobs and Improving Quality of Life 2016,” Biotechnology Innovation Organization

Biotech would indeed be a good industry to expand in New Mexico. Compensation is generous and the potential for growth is vast. But “more tax credits for out-of-state investors and funds set aside in the state budget” won’t get the job done. Neither will a “bioscience authority that would establish connections between the innovation community and sources of capital to fund bioscience startups” and a “head of bioscience” for the New Mexico Economic Development Department.

Only sweeping, and high-impact, economic-development policy shifts will attract the kinds of businesses and industries that are needed to rescue New Mexico from its dire economic/fiscal condition. The central-planning approach has been tried. It doesn’t work.

While the national election largely went in favor of Republicans, New Mexico reverted back towards Democratic control of the Legislature. With the exception of a few years of slight Republican majorities in the Senate during the 1980s, Democrats have had an iron-lock on the Legislature since 1954.

So, now that Democrats have re-taken the House, will we see another 52 years of Democrats controlling the Roundhouse? Good question.  The following chart from Rob Nikolewski, formerly the New Mexico Watchdog, would seem to indicate that Democrats are continuing to lose registration while Republicans are holding steady and DTS are growing.

If voting patterns hold along those lines, Republicans in New Mexico should not fret. They will remain competitive and possibly become more competitive in the future. However, there has long been anecdotal evidence for the registered Democrat who sometimes or always votes for Republicans. Perhaps that dynamic is changing? It is hard to say.

There is no doubt that Republicans in New Mexico face uphill battles to get into and remain in office. It has certainly not reached the point of irrelevance as has California’s GOP.

What we do know is that Republican Mayor RJ Berry will likely be replaced by a Democrat in 2017 (Republicans have a big challenge due to changes in the runoff process alone, let alone Berry’s policies). And, in 2018, the Republicans will have to pick up three seats in order to create a tie in the House in an off-year election. And then there is the race for Governor. If Tom Udall runs as is widely speculated, he will be very difficult for the GOP to defeat.

In summary, while the party registration data seem to be moving in their direction, the political situation on the ground is quickly moving in the other direction.

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 November, of 16,780 projected jobs, 13,556 — 80.8 percent — were slated for right-to-work (RTW) states:

As for the sub-metrics the Foundation scrutinizes:

* Ten domestic companies based in non-RTW states announced investments in RTW states. Just two announcements went the other way.

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

Marquee RTW investments included:

* Lucid Motors, “a luxury mobility company applying innovative engineering, design and technology to define a new class of premium electric vehicle,” picked Arizona for its manufacturing facility (2,000 jobs)

* Citing “the advantages Arizona offers to businesses in terms of operating costs, light regulation and low taxes,” ADP announced a new operations center in Tempe (1,500 jobs)

* CSRA, an IT firm, dedicated its Integrated Technology Center (800 jobs) and announced it was building a Customer Engagement Center (300 jobs), both in Louisiana

* Credit One Bank chose to build a new, expanded headquarters in Nevada (500 jobs)

Once again, no investments were announced for the Land of Enchantment.

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.

At the Rio Grande Foundation we TRY to be positive. Sure, we point out problems, but we also put forth positive reforms that could make a difference for New Mexico’s struggling economy. But challenges are growing and I don’t see policymakers stepping up.

For example, construction is a major economic factor. The Associated Builders and Contractors have ranked New Mexico’s construction climate 50th in the nation. As bad as that is, it is made all the more painful by the fact that in Colorado they are complaining about TOO LOW rates of unemployment in construction while New Mexico’s rate is the 2nd-highest in the nation, FOUR TIMES the rate of Colorado.

But if there are any guarantees about the liberal takeover of the New Mexico Legislature, opposition to “right to work” and repeal of New Mexico’s “prevailing wage” laws may be the most ironclad “non-starters” in Santa Fe these days.

High unemployment means few jobs and few people paying taxes. The positively shocking outcome of that is, as the Legislative Finance Committee noted in its November newsletter: there was a 30 percent drop in general fund balances between October 2015 and October 2016.

Check out the chart below which shows how New Mexico’s revenue situation has worsened dramatically since January of 2016. That is of course when oil prices began their steep decline, but we at the Rio Grande Foundation have been talking for years about our State’s over-reliance on the federal government and oil and gas industries.

The Democrats who recently took over in Santa Fe are eager to raise taxes, but you can’t squeeze blood from a turnip. The productive folks that have remained in New Mexico will just accelerate their migration out of state.

Earlier today, U.S. Sen. James Lankford (R-OK) appeared at a Cato Institute event in Washington. “Cutting Wasteful Spending in the Trump Administration” also featured Citizens Against Government Waste‘s Thomas A. Schatz, the Heritage Foundation‘s Justin Bogie, and Cato’s Chris Edwards.

Unlike last year’s “Wastebook: The Farce Awakens,” a survey of waste, fraud, and abuse compiled by U.S. Sen. Jeff Flake (R-AZ), the latest volume of Lankford’s “Federal Fumbles: 100 Ways the Government Dropped the Ball” doesn’t include a specific fiscal atrocity based in New Mexico. But there are plenty of examples that touch upon public policy in the Land of Enchantment:

● Medicaid, the welfare program that could soon “cover” half of New Mexico’s population, provides “an unlimited supply of federal money” but “no consequences to … state budgets.” As such, it suffers from a severe improper-payment crisis. The Government Accountability Office recently found “enrollees with fake Social Security numbers and payments to people who should not be enrolled because they are either enrolled in another state, are in jail, did not provide accurate information to prove they qualify, or were deceased.”

● The Obama administration has halted “all new coal-mining leases on federal lands.” It’s one of the president’s “seemingly endless list of climate regulations, including the costly Clean Power Plan.”

● The EPA has issued new controls to regulate methane in the oil-and-gas sector. But the industry “is not even the primary producer of … emissions and the main increase around the globe does not even come from the U.S.”

But Lankford’s depressing document offers some hope, such as:

● Along with U.S. Rep. Steve Russell (R-OK), the senator is sponsoring legislation to zero out the Essential Air Service, which receives “federal funding despite studies illustrating that the subsidized flights are often sparsely utilized at a cost of more than $500 per passenger.”

● The U.S. Department of Energy’s National Nuclear Security Administration (NNSA) “has been on the GAO’s [high-risk] list for 25 years, primarily due to inefficient program operations that have cost American taxpayers billions more than they should.” To address the problem, “this year’s Energy and Water appropriations bill … includes language asking NNSA to conduct a review of all projects greater than $750 million.”

Read Lankford’s deep dive into federal dysfunction here.

The Rio Grande Foundation takes a backseat to no one in having a skeptical approach to government regulations. Broadly speaking, it is our view that unnecessary and ill-conceived government regulations are killing New Mexico’s economy and have constrained the US economy as well.

So, it is definitely in the category of “man bites dog” that there is an issue in Carlsbad for which the Rio Grande Foundation believes that necessary regulations may be skirted. The issue involves a proposed potash mine 13 miles Southeast of Carlsbad. The mine would developed by the Mosaic Company. Issues at a Mosaic mine in Florida prompted Governor Rick Scott of Florida to enact sweeping policy changes after the company’s activities created a massive sinkhole leading to 215 million gallons of radioactive water being dumped into the state’s aquifer.

Folks in Carlsbad know better than most how problems can develop from poor siting of mines and discharge points. A potential sinkhole is located at the City’s “South Y” along Highway US 285. The Carlsbad I&W Brine Well operated at the current location almost continuously from 1979 to July 2008, but the mine was forced to close after its process of injecting fresh water into the ground to dissolve the salt and extract brine caused a liquid-filled underground cavern to form.

New Mexico taxpayers face costs ranging from $15 and $25 million to permanently fix the problem.

Now, Mosaic, under a potential agreement with New Mexico’s Environment Dept., is planning on discharging 7.5 million gallons of brine-water a day which comes with the potential of contaminating neighboring drinking, recreational, and agricultural water. The discharge location had been approved by State regulators, but the company has asked to move the site without further study or analysis of the new location.

It’s worth noting that in the wake of recent Mosaic mining activity in Florida and Louisiana the company felt obligated to commit $630 million to pay for closures and remediation projects at certain facilities after the EPA found them in violation of state and federal laws.

Eddy County officials and state regulators must act more responsibly on behalf of the citizens of southern New Mexico to ensure Florida’s misfortunes don’t become New Mexico’s problem.

No one wants economic development to happen in New Mexico more than we do at the Rio Grande Foundation, but we also don’t want to act in haste or desperation in ways that have negative repercussions for New Mexico taxpayers or the environment.

The Associated Builders and Contractors‘ new “Merit Shop Scorecard” just came out and the news is not particularly good for New Mexico. The 2015 placed us dead last (51 out of 51, behind the District of Columbia). We’ve moved up this year, but only to 50th (we beat out Illinois).

See a map illustrating the results below:

Among the ways New Mexico laws fall short are lack of “right to work” and having a “prevailing wage” mandate. Unfortunately, recent changes to New Mexico’s Legislature make it unlikely that anything will be done to address those two issues.

Not surprisingly, New Mexico’s construction industry suffers from the second-highest unemployment rate in the nation. The “good” news is that nearby Colorado has the lowest construction unemployment rate in the nation.

If there’s an image that should be ingrained in the minds of New Mexico’s governor and legislators, it’s the one above. It depicts the number of individuals on the state’s Supplemental Nutrition Assistance Program, more commonly known as “food stamps.”

Since April 2014, the number of SNAP beneficiaries has risen, every single month.

Every. Single. Month.

Nationally, “American businesses have added 15.5 million jobs since February 2010 … the longest streak of overall job growth on record.” The unemployment rate is down to 4.9 percent, and the Dow Jones Industrial Average has soared past 19,000.

But in the Land of Enchantment, the unemployment rate is the highest in the contiguous states, and 26 percent of the population is on food stamps.

In two weeks, legislation for the 2017 legislative session will begin to be prefiled. With no serious alterations in public policies, implemented awfully quickly, New Mexico’s economic, fiscal, and welfare woes are sure to continue.

We are still waiting for the food stamp-induced economic stimulus.

During the special legislative session which was held in October, a push was made to “do something” to apply New Mexico’s gross receipts tax to sales of goods shipped into New Mexico via online vendors. Although the analysis provided by the Legislature is unclear as to exactly HOW GRT would be collected on Internet sales, the intent is clearly there. The provision was rejected by the Republican House, but will undoubtedly return now that Democrats have control of both houses.

I was quoted along with several legislators and others with knowledge of the issue in this article by Andrew Oxford at the Santa Fe New Mexican.

Unfortunately for legislators looking to boost New Mexico’s bottom line, collecting taxes by online vendors is not as easy as it sounds. As I wrote back in 2000 for the National Taxpayers Union, there is nothing exempting Internet sales from taxation. Rather, it is the 1992 Supreme Court decision in Quill which exempts out of state vendors (lacking a physical presence in a state) from that state’s demands to collect and remit taxes to them.

Congress could act to force small businesses to collect these taxes, but a Republican-controlled Congress is not likely to do something that hasn’t been done in nearly two decades including eight years of Democrat control. Looks like legislators will have to look elsewhere for revenue…or, maybe even make some tough decisions to streamline government.

Did you have empty chairs at your Thanksgiving dinner table? We all know people, especially young ones, who have left New Mexico for greener economic pastures. Our States poor business climate is forcing our people out.

Unfortunately, policymakers failed to push through needed policy reforms like “right to work” and school choice in the last few years. Now, with Santa Fe “progressives” now in control of the Legislature, things aren’t going to get any easier. Instead, tax hikes and more spending will be aggressively pushed in Santa Fe.

But, there is hope. Hopefully President-elect Trump’s pro-energy/anti-ObamaCare policies will bring greater economic growth to the United States as a whole, thus helping New Mexico’s economy. A Trump Supreme Court nominee could have great, positive impacts.

No matter what the future holds, you know that the Rio Grande Foundation will be there fighting the ideological battles and making the case for free markets, limited government, and individual freedom.

On this “Giving Tuesday,” I hope you’ll support the charities that you value, but know that it is the free market that can solve most of our woes, especially here in New Mexico.

Click here now to support the Rio Grande Foundation! There is no better way to support freedom in New Mexico.

The Rio Grande Foundation is a 501c3 charitable organization which means that donations to us can be deducted from your 2016 taxes. I hope you’ll support the organization that works to solve the most important problems facing our State. Thank you!

Some day soon, I want young people to be able to find economic opportunities right here in New Mexico so they don’t have to move to economically-freer places like Texas, Utah, or Colorado.

Sincerely,

Paul Gessing
President of the Rio Grande Foundation