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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PAUL J. GESSING, President

Rio Grande Foundation

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

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

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

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

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

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

General Dentists: $78.38

Chemical Engineers: $55.85

Optometrists: $54.28

Mathematicians: $52.17

Information Security Analysts: $49.50

Aerospace Engineers: $48.49

Biomedical Engineers:$48.06

Personal Financial Advisors: $45.74

Computer and Information Research Scientists: $39.75

Petroleum Engineers: $39.34

Veterinarians: $38.16

Hydrologists: $37.01

Chemists: $34.90

Railroad Conductors and Yardmasters: $33.41

Logisticians: $33.29

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

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

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

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

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

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

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

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

10. OEA Bucks for New Mexico’s DOA Economy

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

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

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

8. Hands Off My Mountain Dew, Javier

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

7. New Mexico’s Real Budget Numbers

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

6. Behavioral-Health Reform or Political Theater?

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

5. One Chart Says It All

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

4. Subsidizing, and Targeting, the Mother Road

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

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

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

2. Texas, Where Spaceports Are Real

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

1. Celebrating New Mexico’s Potemkin Industry

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: U.S. Bureau of Labor Statistics

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

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

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

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

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

Source: American Enterprise Institute

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

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

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

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

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

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

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

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

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

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

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

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

December 14, 2016

For Immediate Release

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Results yielded: zilch.

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

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

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

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

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

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

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

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.