No politician relishes the job facing New Mexico’s leadership in the months ahead. Facing massive budget deficits and the prospect of an election-year special session in an unpredictable and unsettled political season is no elected official’s anyone’s idea of fun.

Like most problems, New Mexico’s budget woes did not sneak up on us overnight. Decades of over-spending combined with tax and regulatory environments that make our State relatively unattractive as a place for doing business caused undue reliance on federal spending and extractive industries like oil and gas.

Economic realities have recently impacted both areas, exposing this.

The current situation could have been avoided with the enactment of pro-growth economic policies, but that didn’t happen. The task now is to balance the budget while minimizing the harm to our future economic prospects. Once the budget is balanced, perhaps the Legislature, especially the Senate, will embrace pro-growth policies.

The good news is that Gov. Martinez has made it clear that she won’t raise taxes. The last thing our businesses and hard-working New Mexicans need is higher taxes. According to the Kaiser Family Foundation in FY 2014 New Mexico spent $7,767 per-person. Among our neighbors, Colorado was the next-highest at $5,853. Texas spent $4,086 or just over half the amount spent by New Mexico. Clearly there is room in the budget to cut.

The other good news is that Rio Grande Foundation has pored over the budget and found enough cuts for policymakers to avoid tax hikes without harming its economic future.

The bad news is that some are already digging in to protect their preferred programs. Senate Democrats have already put education spending – 57 percent of the general fund budget – “off the table.” For their part, several leaders of the business community have urged the preservation of “economic development” spending.

The truth is that closing the budget gap will require compromise. Here are a few of the potential cuts laid out in the new RGF report:

• LEDA: $55 million; LEDA is classic “corporate welfare.” Worse, it is ineffective. Earlier this year, the Legislative Finance Committee (LFC) reported that “the state does not receive sufficient reporting from businesses using … LEDA … funds to properly evaluate” the program. Thus, “it is impossible to determine relative effectiveness and cost-efficiency” of it. Other dubious “corporate welfare” programs could add to the savings.

• Film subsidies: $50 million; There has never been a justification for spending $50 million annually to subsidize Hollywood studios. Massive deficits should mean massive cuts or elimination. Recently, Alaska and Michigan killed their programs while Louisiana downsized dramatically.

• Higher education: $30 million; Student populations are down by more than 8 percent, but the number of branch campuses continues rising. Reducing their number is an easy starting point. Cutting back on taxpayer subsidies for athletic programs (more than $4 million at UNM alone) must be considered as well.

• Personnel: $165 million; a 2014 study by the American Enterprise Institute found a 24 percent advantage for New Mexico government employees when total compensation, including the value of job security, was scrutinized. A 10 percent reduction in the total cost of state-employee compensation is a reasonable goal. This could be achieved by reducing the size of the workforce, by reducing compensation packages, or both.

• K-12: $252 million; at $9,012, New Mexico spends more on K-12 per-student than Utah ($6,555), Arizona, ($7,208), Oklahoma ($7,672), Texas ($8,299), and Colorado ($8,647).

The most promising tactic for immediate savings to is to renegotiate the collective-bargaining agreements that excessively compensate teachers and administrators, especially through an unfair and broken pension system that incentivizes longevity over quality. Expanding school choice is another way to save money and cut costs.

Absent a “miracle” rebound in oil and natural gas prices, New Mexico’s budget faces long-term “structural” deficits. Gimmicks and tax hikes will not solve the problem. We’d all like to see a thriving private sector and voters will decide this November between two very different visions of New Mexico. In the meantime, we need to do some substantial pruning of the budget in order to avoid raising taxes that further make New Mexico uncompetitive with her neighbors.

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

The Pew Research Center’s Stateline is lamenting the fact that 13 states “and many localities continue to tax the sale of groceries, even though the taxes disproportionately hurt the poor and may affect the quality, variety and even the amount of food they can afford to put on the table.”

But New Mexico offers an instructive lesson in the “progressivity” of exempting groceries — i.e., cut or eliminate a levy somewhere, and the foregone revenue will be obtained someplace else.

On January 1, 2005, sales of food at grocery stores were made exempt from the state’s GRT. But to compensate, the tax’s rate was raised on other purchases. And a few years ago, local governments were allowed to impose GRT hikes, to produce revenue that the state would no longer provide.

Such “hold harmless” hikes have been implanted all over New Mexico. Last week, the Silver City Town Council passed a “notice of intent ordinance” to hike its GRT. Mayor Ken Ladner explained that the action was “necessary so that the town can position itself so that it can move quickly to enact the hold harmless gross receipts tax if a special session of the legislature results in the elimination of the planned revenues upon which the town created its budget. If that unfortunate action does occur, the town needs to be able to adopt this ordinance instituting the tax before September 30 of this year in order for it to be effective on January 1, 2017.”

In 2013, Dick Minzner, a former secretary of the New Mexico Taxation and Revenue Department, and Brian McDonald, a former director of UNM’s Bureau of Business and Economic Research, concluded that the effect of the food-tax exemption “has been the opposite of that intended.” Why? By providing “only limited benefit to the poorest … of our households, combined with a tax increase on all other purchases, [it] probably made our tax system more regressive by most measures.”

Give Stateline’s Elaine S. Povich credit for balance. She interviewed the Tax Foundation’s Scott Drenkard, who noted that states “might be looking at getting rid of sales tax on groceries, but groceries are between a sixth and a seventh of all consumption. If you want to raise the same amount of money you might have to increase the [general] sales tax by a full percentage point.”

There are no free lunches in tax policy.

San Juan College High School commenced operations on Monday, with its first class of 80 students.

A partnership between the Aztec, Bloomfield, Central Consolidated and Farmington school districts, SJCHS grads will earn a high school degree and “up to sixty transferable college credits.” Students will have access to campus resources, including the library, computer lab, and tutoring center, and “will have the option to participate in appropriate San Juan College student clubs, activities and organizations.”

Unfortunately, while 80 students “seeking a non-traditional high school experience” are about to start a new adventure, 43 won’t. The Farmington Daily Times reported that demand exceeded available slots, so a lottery had to be held to determine who was picked for enrollment.

Will SJCHS live it up to its promise of equipping graduates “for success in higher education and grow them into contributing members of society”?

Who knows? But that’s the point. School choice, in all its forms, is a recognition that one-size-fits all education doesn’t work. By cracking open an ossified system, and permitting experimentation, options can proliferate — including the opportunity for some high school students to benefit from learning on a college campus.

Best of luck to SJCHS. New Mexico needs more — many more — experiments like it.

Happy National Employee Freedom Week!

A “national effort to inform union employees about the freedoms they have to opt out of union membership and let them make the decision that’s best for them,” National Employee Freedom Week is sponsored by “a coalition of national, state and local organizations dedicated to employee freedom.” The week’s founding organizations are the Nevada Policy Research Institute and Association of American Educators. Many state-level think tanks, including the Rio Grande Foundation, participate.

Employees in “organized” workplaces are often told that they must join the union and pay full dues in order to keep their jobs. It’s not true — several U.S. Supreme Court decisions have recognized the right to decline union membership. In addition, workers covered by collective-bargaining agreements cannot be required to pay more than the portion of their dues that fund legitimate union activities, such as contract administration and grievance adjudication. (In right-to-work states, such “agency fees” are not permitted.)

Here’s a helpful link for New Mexico’s private-sector workers who want the specifics on employee freedom. The National Right to Work Legal Defense Foundation has a guide for state- and local-government workers here.

Additionally, polling on two questions relating to unionism is being released today: For National Employee Freedom Week, 2016, union members were asked two questions about employee freedom. In addition to asking if union members would like to opt out of their union, NEFW also looked at the support for “Workers Choice” reforms, which would allow employees who opt out to negotiate directly with their employer.

Question 1: If it were possible to opt out of membership in a labor union without losing your job or any other penalty, would you do it?

Nationally, respondents said:

Yes: 28.7

No: 71.3

Question 2: If employees opt out of union membership and stop paying dues or fees to the union, should they instead represent themselves in negotiations with their employer?

In New Mexico, respondents said:

Yes: 54.7

No: 45.3

Wendell Cox has released his latest look at which states Americans are moving to — and from. Using IRS data, which offer “probably the best approximation of domestic migration available,” the demographer found that from 2013 to 2014, Texas and Florida were still superstars. Low/no taxes and reasonable regulations continued to attract both residents and investments to the states. Where Big Government rules — e.g., New York, Illinois, New Jersey — populations and economies stagnated, or even withered.

Big states tend to be either big losers or big gainers in migration. So Cox’s most useful metric is the “state attraction ratio,” which divides “out-migration by in-migration (stated in out-migrants per 100 in-migrants).”

Sadly, New Mexico ranked eighth on the list of states people fled. The Land of Enchantment wasn’t as bad as New York or Illinois, but it ranked among consistent laggards such as Rhode Island, Pennsylvania, and Massachusetts. In its region, New Mexico was at rock-bottom. Four of its five neighbors attracted more residents than the drove out. (Surprisingly, Utah’s ratio fell just below 100.)

Great weather. Nice people. Fine food. Fascinating culture/history. A low cost of living. On the surface, at least, New Mexico should be a growth powerhouse. Yet it remains trapped in a seemingly never-ending economic mire. Isn’t it time for some significant policy course-corrections?

Proponents of the mandatory sick leave ordinance are touting the benefits of yet another new local government mandate. The City’s elevated minimum wage is apparently not luring Millennials to town. Now, mandatory sick leave is being put on the ballot for consideration this fall.

The economic issues faced by this City/State are the result of too few jobs. Low wages are the result of plentiful low-skilled labor. Both data and anecdotes bear this out.

New Mexico’s unemployment is 6.2 percent, second-highest in the nation (as of June). Earlier this year, 10,000 people applied for 290 jobs at the Cheesecake Factory (a chain restaurant).  Piling more rules and regulations upon businesses and job creators will result in fewer jobs for young people.

A new study using data from Connecticut backs up that claim. Connecticut adopted mandatory sick leave in 2012. The report by Dr. Thomas Ahn of the University of Kentucky is the first to examine multiple years of Census Bureau data (2012-2014) on the impact of Connecticut’s first-in-the-nation state paid sick leave law.

To isolate the effects of the paid sick leave law, Dr. Ahn compares Connecticut to the five surrounding New England states, and controls for other relevant economic factors that might be responsible for changes in employment.

Dr. Ahn finds that the fraction of employees working at companies with paid sick leave benefits rises from virtually zero at ages 18 to 20 to about 70 percent for workers in their mid-30s and above. He thus expects a new benefit mandate to have the greatest potential for negative impact on younger employees, who are less likely to have the benefit currently.

Among his findings:

Younger employees in Connecticut aged 20-34 saw a 24-hour reduction in annual hours worked. For a part-time employee in the service industry, that’s the equivalent of roughly one lost week of work per year. These employees lost $850 per year in annual income, the equivalent of 3.5 fewer pre-tax paychecks for someone working part-time at the state’s minimum wage.

There are also other consequences to consider: In forthcoming research, Dr. Ahn and his colleague Dr. Aaron Yelowitz find that recent paid sick leave policies in the United States have increased employee absenteeism by 1.2 days per year. Notably, these absences do not tend to occur in times of the most severe influenza outbreaks—suggesting that employees may be using the benefit even when they’re not sick.

There is no doubt that sick leave is a nice benefit to have. However, a one-size-fits-all mandate imposed from the date of hire is the wrong approach. After all, businesses are clearly willing to offer sick leave as a benefit especially as workers gain skills and time in the workforce.

This mandate is not flexible. It will make jobs and job experience further out of reach for young people, especially those in part-time jobs working their way through college. Tracking will be a nightmare as will be the potential legal issues it thrusts upon employers. Ultimately, another mandate is exactly what this community needs if the goal is to push more young people and businesses into Texas and out 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

There can be no doubt that New Mexico’s construction industry faces some serious public policy challenges. The Associated Builders and Contractors, for example, ranked New Mexico 51st (behind even Washington, DC) on policies affecting the industry. The scorecard included such “bread and butter” RGF ideas like “right to work” and Davis-Bacon “prevailing wage” repeal.

Interestingly enough (albeit unsurprisingly to us), New Mexico suffers from high levels of unemployment in construction per this chart from June 2016. Both charts and additional commentary can be found here.

To be fair, Alabama has a higher rate in June, but this is a snapshot, the real kicker comes in the subsequent chart in which we find that New Mexico’s second-highest unemployment rate of June 2016 represents a VAST improvement over the same time last year:

In addition to “right to work” and “prevailing wage” there are permitting, land-use, and a whole host of other factors that make construction more difficult in New Mexico than it has to be. It would be nice if policymakers focused on ways to address the issue.

New Mexico’s taxpayers didn’t need more lousy fiscal news, but they got it, courtesy the Associated Press. Yesterday, reporter Morgan Lee revealed that the state’s “two major public pension funds have missed targets for investment returns for a second straight year, likely pushing up unfunded liabilities that can extend the time it takes to meet obligations to public employees if benefits and contributions remain unchanged.”

The New Mexico Public Employees Retirement Association “achieved” a return on investments of “less than 1 percent for the fiscal year ending in June.” The Educational Retirement Board fared somewhat better, at 2.6 percent. Both are far cries from the funds’ long-term targets, which surpass 7 percent.

Sheesh. Last month, PERA’s boss gushed that due to recent reforms adopted by the legislature and Governor Martinez, the fund will “meet our goal of being 100% funded by 2043.” That certainly won’t be the case, if ROI remains so weak.

Yesterday, at a summit sponsored by the National Conference of State Legislatures, the Rockefeller Institute’s Don Boyd and Yimeng Yin Pension disclosed that pension underfunding, as a percent of state- and local-government taxes, is at a “near record”:

In New Mexico and elsewhere, more must be done to relieve taxpayers’ pension obligations. While alterations to existing systems are fraught with political peril, at the very least, new hires should be offered 401(k) plans. As an Oregon resident recently wrote in The Wall Street Journal, “Why government employees need a defined-benefit pension plan while the taxpayers who fund their benefits are required to survive on defined-contribution plans has always puzzled me. Government employees should be required to fund their own retirement plans with defined contributions like the rest of us. Maybe gaining an understanding of the real economy that supports them would be a corollary benefit.”

In a sense, New Mexico’s liberals are correct: The state’s budget does have a revenue problem.

“Progressives” see tax hikes on corporations and “the rich” as the “solution” to deficits. But their prescription is unwise for all sorts of reasons — not the least of which is the damage it will do to New Mexico’s economic competitiveness.

But there is a salutary way for more revenue to contribute to closing current and future budget gaps. A Texas-style, rapidly growing economy would fill the state’s coffers in short order.

The Land of Enchantment’s longstanding economic slump has produced anemic overall tax revenue. As an example, let’s look narrowly, at the levy placed on incomes. It is second only to the GRT as an in-state revenue-generator. Amazingly, in the 2015 fiscal year, the income tax yielded less revenue than it did eight years earlier:

Critics of the income-tax cuts phased in during the administration of ex-Governor Bill Richardson gleefully place the blame for slow/no revenue growth on the rate reductions he touted as “our way of declaring to the world that New Mexico is open for business.” But it’s a facile analysis. Between 2003 and 2008, revenue from the income tax rose by 50 percent, while inflation was just 10 percent.

It was the horrors of Great Recession that reversed the revenue trend. It’s tough to believe, but there are fewer people employed in New Mexico today than there were in 2008, and the jobs that are being created don’t pay impressive wages. Turn that trend around — i.e., immediately implement an effective economic-development strategy — and the revenue will flow, once again.

ALBUQUERQUE — It is no secret that New Mexico faces serious budget challenges. Senate Finance Committee Chairman John Arthur Smith called the budget situation “a crisis” and noted that the State is facing a deficit of more than $150 million for the budget year that ended June 30 and faces a gulf of up to $500 million for the current fiscal year.

That means that New Mexico’s elected officials face the unpleasant task of making serious budget cuts in an election year. To assist in that effort, the Rio Grande Foundation has compiled a list of budget cuts that would enable policymakers to achieve needed savings. The paper, “What to Cut Solutions to New Mexico’s Budget Crisis” is available at the Rio Grande Foundation’s website www.riograndefoundation.org.

Said Rio Grande Foundation president Paul Gessing, the study’s lead author, “To her credit, Gov. Martinez has clearly stated that she opposes tax hikes. We applaud her strong leadership on the tax issue which also makes having a solid plan with specific budget cuts an imperative.”

Here are some of the specific ideas outlined in the new brief:

• LEDA: $55 million; LEDA is classic “corporate welfare.” Worse, it is ineffective. Earlier this year, the Legislative Finance Committee (LFC) reported that “the state does not receive sufficient reporting from businesses using … LEDA … funds to properly evaluate” the program. Thus, “it is impossible to determine relative effectiveness and cost-efficiency” of it. Other dubious “corporate welfare” programs could add to the savings.

• Film subsidies: $50 million; There has never been a justification for spending $50 million annually to subsidize Hollywood studios. Massive deficits should mean massive cuts or elimination. Recently, Alaska and Michigan killed their programs while Louisiana downsized dramatically.

• Higher education: $30 million; Student populations are down by more than 8 percent, but the number of branch campuses continues rising. Reducing their number is an easy starting point. Cutting back on taxpayer subsidies for athletic programs (more than $4 million at UNM alone) must be considered as well.

• Personnel: $165 million; a 2014 study by the American Enterprise Institute found a 24 percent advantage for New Mexico government employees when total compensation, including the value of job security, was scrutinized. A 10 percent reduction in the total cost of state-employee compensation is a reasonable goal. This could be achieved by reducing the size of the workforce, by reducing compensation packages, or both.

• K-12: $252 million; at $9,012, New Mexico spends more on K-12 per-student than Utah ($6,555), Arizona, ($7,208), Oklahoma ($7,672), Texas ($8,299), and Colorado ($8,647).

The most promising tactic for immediate savings to is to renegotiate the collective-bargaining agreements that excessively compensate teachers and administrators, especially through an unfair and broken pension system that incentivizes longevity over quality. Expanding school choice is another way to save money and cut costs.

In conclusion Gessing said, “Cutting the budget is never fun. New Mexico needs a larger, healthier private sector built on sound public policies like economic deregulation, tax reform, educational choice, and a sound legal system.”

Proponents of the mandatory sick leave ordinance (as is typically the case with feel-good policies like the minimum wage) are touting the benefits of yet another new government mandate. Unfortunately, as a new study using data from Connecticut which adopted mandatory sick leave in 2012, the reality is that mandatory sick leave will hurt young workers (who area already leaving New Mexico).

The report, by Dr. Thomas Ahn of the University of Kentucky, is the first to examine multiple years of Census Bureau data (2012-2014) on the impact of Connecticut’s first-in-the-nation state paid sick leave law. To isolate the effects of the paid sick leave law, Dr. Ahn compares Connecticut to the five surrounding New England states, and controls for other relevant economic factors that might be responsible for changes in employment.

Dr. Ahn finds that the fraction of employees working at companies with paid sick leave benefits rises from virtually zero at ages 18 to 20 to about 70 percent for workers in their mid-30s and above. He thus expects a new benefit mandate to have the greatest potential for negative impact on younger employees, who are less likely to have the benefit currently.

Among his findings:

Younger employees in Connecticut aged 20-34 saw a 24-hour reduction in annual hours worked. For a part-time employee in the service industry, that’s the equivalent of roughly one lost week of work per year. These employees lost $850 per year in annual income, the equivalent of 3.5 fewer pre-tax paychecks for someone working part-time at the state’s minimum wage.

There are also other consequences to consider: In forthcoming research, Dr. Ahn and his colleague Dr. Aaron Yelowitz find that recent paid sick leave policies in the United States have increased employee absenteeism by 1.2 days per year. Notably, these absences do not tend to occur in times of the most severe influenza outbreaks—suggesting that employees may be using the benefit even when they’re not sick.

This month, the Southeastern New Mexico Economic Development District is hosting six “capital outlay application workshops.” Dave Venable, the organization’s president, told the Alamogordo Daily News that the events “will go over all the details on how to do the capital outplay applications and talk about making sure the infrastructure improvement plan is also completed for counties, cities, villages and municipalities.”

Interesting timing, given the drop in oil-and-gas revenue that is plaguing the state’s fiscal health. Severance taxes, which fund Santa Fe’s sleazy capital-outlay process, aren’t generating the kind of money they did just a few years ago. The 2017 legislative session is sure to be disappointing for local governments seeking pork — er, “critical community infrastructure.”

Meanwhile, The Wall Street Journal observes that infrastructure spending by local and state governments across the country is dropping, with bond issuances falling “to levels not seen in the past 20 years.” Low interest rates haven’t been able to compensate for sluggish revenue and taxpayer resistance. In addition, “Many struggling legislatures and city halls are instead focusing on underfunded employee pensions and rising Medicaid costs.”

So the picture isn’t pretty for fans of infrastructure spending. But that’s not necessarily a bad thing. Powerful interests publicize the nation’s infrastructure “crisis,” but taxpayers need to be skeptical. As the Cato Institute’s Randal O’Toole recently noted, the number of structurally deficient bridges in the U.S. has “steadily declined … even as the number of highway bridges has grown,” and the “average roughness of [highway] pavement has steadily improved.”

As for the Land of Enchantment, the latest version of the Reason Foundation’s report on the condition of state highways found that New Mexico ranked “7th in the nation in highway performance and cost-effectiveness.” Its best performance was in “maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th) and rural arterial pavement condition (6th).”

When the infrastructure lobby isn’t peddling its crisis meme, it’s pushing public-project spending as a powerful tool to promote economic growth. But again, skepticism is warranted. Last year the Andrew M. Warner, an economist at the International Monetary Fund, told the Journal, “When you flip the infrastructure switch, the light doesn’t necessarily turn on. The returns are a long way from being automatic.”

In New Mexico and elsewhere, infrastructure is vital, and government’s role is essential. But taxpayer spending on roads, bridges, sewers, and the like must make financial sense. To the extent possible, it must be purged of politics. And its value in job- and wealth-creation must be subjected to strict scrutiny.

They’re the twin pillars of corporate welfare in New Mexico, and the “business” community wants them preserved.

Last week, the “Greater Albuquerque Chamber of Commerce and Albuquerque Economic Development … with 30 additional economic development organizations and Chambers of Commerce throughout New Mexico” wrote a letter asking “Senate Finance Committee and House Appropriations and Finance Committee members to keep LEDA (Local Economic Development Act) and JTIP (Job Training Incentive Program) funding intact as the state considers its budget challenges.”

LEDA, often called New Mexico’s “closing fund,” distributes subsidies for infrastructure in sums that can run into the millions of dollars. Its current “total unencumbered funding level” is $55.4 million, and such a relatively large pot of revenue could make a sizable contribution to sealing the budget breaches for the current and just-ended fiscal year.

LEDA has a legion of fans, but the reality of the program isn’t so rosy. The Legislative Finance Committee (LFC) has found that “the state does not receive sufficient reporting from businesses using … Local Economic Development Act … funds to properly evaluate” the program. Thus, “it is impossible to determine [its] relative effectiveness and cost-efficiency.” (What does LEDA think it is, the Legislative Lottery Scholarship Program?)

JTIP, with a fiscal 2017 appropriation of $6 million, “funds classroom and on-the-job training for newly-created jobs in expanding or relocating businesses for up to 6 months.” While the program is a treasured tool for New Mexico’s economic-development bureaucrats, there is no evidence that it makes meaningful, lasting contributions to job- and wealth-creation in the state.  As reported by the LFC, the Economic Development Department has pursued “less reporting and oversight for JTIP by asking to reduce the performance measures for JTIP from four to two. The agency wanted to stop reporting the average hourly wage of jobs funded through JTIP and discontinue reporting the percent of employees whose wages were subsidized by JTIP still employed in New Mexico after one year. However, these are critical measures to ensure jobs funded are not low or minimum wage positions and that the workforce the state is training remains employed and in the state after the training. If a majority of funds are used to fund poorly paid positions and those employees then leave the state to find better job opportunities, it would be a clear signal JTIP is not serving its intended purpose.”

New Mexico’s business lobby has shown a lot of guts in recent years, through its advocacy for a right-to-work law. It’s a position that has surely drawn the intense ire of union bosses and the considerable number of local, state, and federal politicians who kowtow to Big Labor. But last week’s letter offers a reminder that old habits can be hard to break. Corporate welfare is not true “economic development,” but the “New Mexico Coalition for Jobs” stubbornly refuses to abandon government policies that pick winners and losers in the marketplace. Fairness issues aside, it’s not at all clear that LEDA and JTIP provide much “return on investment” to taxpayers. The programs should not be preserved — they should be among the first items chopped to balance the state’s books.

We don’t yet know the date, but a special session will soon be called to tackle New Mexico’s budget woes. The fiscal year that ended June 30 fell into the red, and the current fiscal year is facing a deficit of hundreds of millions of dollars.

One stat that’s sure to be heard again and again during the special session was recently cited by the Albuquerque Journal — “the state’s $6.2 billion budget.”

Technically, that amount is correct. But it describes just one portion of New Mexico’s total expenditures, namely, the General Fund. Described by the Legislative Finance Committee as “the primary state fund from which the ongoing expenses of state government are paid,” the General Fund derives its revenue from the GRT, income tax, energy levies, investments, and miscellaneous sources, such as tribal casinos, license fees, and “reversions of unspent funds from state agencies.”

To see how much loot the General Fund fails to include, consider another amount: $19.1 billion. That’s the all-in figure for 2015’s state expenditures, which include transportation, subsidies from Washington, and quasi-public entities.

Here’s a look at the last dozen years of total spending, courtesy the state’s comprehensive annual financial reports:

Expenditures in the 12-year period rose by an inflation-adjusted 46.5 percent. In contrast, population growth was just 9.8 percent.

The bottom line? New Mexico spends far, far more when every dollar is accounted for — not just the bucks that fall within the General Fund. Something to remember, when politicians and activists wail about “cuts” to “essential public services.”

Errors of Enchantment avoids politics — the Rio Grande Foundation is a nonpartisan, tax-exempt research organization — and won’t tell you how to cast your vote for New Mexico’s next secretary of state.

But yesterday, an article in The Santa Fe New Mexican on the race caught our attention. It highlights the need for voters to be aware of the ideological leanings of benign-sounding organizations active in lobbying and elections.

Noting that “no fewer than 17 of the officers and leaders of the League of Women Voters in chapters around the state are solidly and openly backing my opponent,” Nora Espinoza, the GOP’s nominee for secretary of state, has refused the group’s invitations to appear at public forums with her opponent, Democrat Maggie Toulouse Oliver.

League officials have donated “more than $8,000” to Oliver, Espinoza said — a “substantial amount for an office that is administrative in nature, and from members of an organization that touts itself as being ‘nonpartisan.’”

Predictably, the league’s president denounced the GOP candidate’s comments as an “offensive, untrue, intentional misrepresentation and a flimsy excuse for not participating in our candidate forums.”

But the record is pretty clear. The league is committed to an undeniably — many would say radically — liberal agenda. Last year, the Capital Research Center published a useful primer on the organization’s history and record. Founded in 1920, when women won the right to vote nationally, the league quickly involved itself in lobbying. (It supported the creation of the United Nations, and was heavily involved in the civil-rights movement.) In our era, it “has been a steady voice for legislation to deal with climate change, establish stricter gun control and environmental legislation, and make the Affordable Care Act (Obamacare) the law of the land.”

Espinoza has a personal reason to eschew involvement with the league. Reporter Steve Terrell wrote that earlier this year, the “League of Women Voters openly opposed a bill sponsored by Espinoza that would have required voters to present photo identification at polling places.”

So nationally and in New Mexico, the league doesn’t represent women. It speaks for left-wing women. Nothing wrong with free speech, of course. But for citizens, taxpayers, and voters, truth in advertising matters. It’s easy for unsophisticated observers to get snookered by liberal organizations that cleverly craft an image of moderation. (New Mexico Voices for Children is another example of a mom-and-apple-pie-named entity. It advocates for Big Government “solutions” to New Mexico’s many socioeconomic woes.) The League of Women Voters has every right to participate in the political process. But the lobbying group shouldn’t be shocked and offended when a politician opposed to its agenda refuses to lend credibility to the organization, and says “thanks, but no thanks.”

ALBUQUERQUE — Tax-free shopping for “back to school” is getting under way and both students and teachers can see summers’ end from here.

But what kind of schools will those students head back to? New Mexico Executive Order 2006-

001, signed by Governor Bill Richardson, requires public buildings over 15,000 square feet in size to receive Leadership in Energy and Environment Design (LEED) certification from the U.S. Green Building Council (USGBC).

The executive order claims LEED standards deliver “utility bill savings,” arguing “emphasis should be placed on the ‘life cycle costs’ of a public building rather than solely on its initial capital costs.” Is this true or is LEED a costly use of scarce school construction resources for little or no energy savings?

The Rio Grande Foundation’s Todd Myers answers that question in his new policy brief, “New Mexico’s LEED Standards for School Construction: Not Green, not Cost-effective,” which provides detailed analysis of school energy consumption in both the Albuquerque and Santa Fe school districts.

Myers argues that LEED’s energy savings must be substantial in order to make up for added costs.  After looking at schools across the country, he argues, “LEED Gold – the second – highest rating – costs about 10 percent more in construction costs than traditional schools.

He cites Santa Fe as a model, noting that “they have built extremely efficient schools without the ‘green’ certification.”

Albuquerque’s Public Schools’ experience is more typical with 2015 showing that “when compared to other elementary schools in Albuquerque, green elementary schools on average are slightly more energy efficient but are unlikely to save enough money over the lifespan of the buildings to make the ‘green’ investments and certification worthwhile.”

The experience of schools across the country demonstrates that district facilities directors are often adept at finding cost-effective ways to reduce energy use, based on the particular buildings they manage. Requiring them to meet a formulaic, one-size-fits-all “green” approach, however, often leads them in the wrong direction, by increasing costs without returning savings.

“Ultimately,” Myers concludes, “for taxpayers, students and the environment – the real-world data shows that New Mexico’s green schools fall well short of their energy-saving promises.”

“Efficiency is about more than a press release and a plaque on the wall.”

Hefty budget deficits aren’t keeping New Mexico from conducting its annual “Back to School Tax Free Holiday.” Starting Friday, and running through Sunday, “collection of gross receipts tax on sales of qualifying items” will be suspended.

On its website, the Taxation and Revenue Department gushes that the holiday is “nothing short of a bonanza” for those with “school-age children.” Purchases that qualify for the perk include clothing and shoes priced less than $100, “desktop, laptop, tablets or notebook computers” cheaper than $1,000, and school supplies “for use in standard, general-education classrooms” costing less than $30.

The modern era of sales-tax holidays began in 1997, when New York attempted to reclaim business being lost to nearby states with less burdensome levies. Since then, dozens have states have launched similar initiatives, exempting everything from clothing to computers, disaster-preparedness equipment to “Energy Star” products.

As it does every year, the Tax Foundation has issued a blistering assault on sales-tax holidays, calling them “unjustifiable government distortions” that fail to provide “any significant boost to the economy.” Authors Scott Drenkard and Joseph Henchman write that the events merely shift the timing of the purchase of goods, and thus have no stimulative value. In addition, if stores raise their prices in anticipation of the holidays, the value to consumers is weakened. Finally, compliance is no fun for stores. In response to a 2015 survey by the Massachusetts Retailers Association, one vendor outlined its objection: “The sales tax holiday has created more problems than benefits for us. Business is nonexistent three weeks before and two weeks after. As a result, five weeks of business are crammed into two days, and the total amount of sales does not come close to five normal weeks of summer business.”

It’s rare to get the right and left to agree on any public policy, but both sides have serious reservations about sales-tax holidays. The limited-government community seeks consumption taxes that are broadly applied, with low rates all year ’round. “Progressives” decry the revenue losses that the holidays produce — money that is not available for more “public investments.”

So how about a right-left alliance, aimed at permanently killing the useless gimmick that is New Mexico’s annual GRT holiday?

In this morning’s edition, the Albuquerque Journal joined the chorus of voices calling for Airbnb and other room-renting services to pay lodging taxes: “While private homeowners should not have to abide by the full collection of regulations inflicted on public business sites, the idea of collecting the same taxes innkeepers pay to promote the hospitality business has merit.”

Under Section 3-38-15 NMSA 1978, the state allows local governments to “impose by ordinance an occupancy tax for revenues on lodging.” Regardless of the size of the municipality or county applying the levy and the rate chosen, a sizable chunk of the revenue generated must be spent on “advertising, publicizing and promoting tourist-related attractions, facilities and events.”

Wait a second. Shouldn’t the tourism industry spend its own money, as it best see fits, to market New Mexico’s scenery, history, culture, and cuisine to the world?

It’s a question that goes unasked, and not just in the Land of Enchantment. Government at all levels has involved itself in tourism for decades. Elected officials don’t feel any need to impose taxes to promote health clubs or car dealerships or hardrock mining, but tourism is somehow thought to be … different.

Balderdash. The lodging tax, and the activities it funds, have difficult-to-document “benefits” to the public, and tourism promotion fails to meet the standard for essential government services.

Of course taxes should be applied in a nondiscriminatory fashion. Whether you’re a homeowner or a giant corporation, if you’re in the lodging business, you should be subject to the lodging tax. But delving beyond the issue of fairness reveals some disturbing questions about the “need” for the levy. A strong case can be made that it shouldn’t exist at all.

This month, the Las Cruces City Council assessed the early impact of the city’s 35 percent minimum wage increase, the first phase of which took effect in January 2015.

Its verdict: The wage hike has not had a negative effect on the Las Cruces economy. Proponents who led the heated 2014 fight to pass the controversial measure greeted the news as evidence that it has been a success. But a closer look at how the council staff came to its conclusion suggests that any celebrations should be put on hold.

The council’s assessment was based on municipal-level changes in sales tax receipts, property sales, and overall employment levels in 2015 versus 2014. But these metrics are too broad to be affected by the small slice of the population affected by the wage hike. (The city manager estimated that less than 1 percent of the city’s payroll comes from minimum wage earners.) These employees’ ability to impact overall consumer spending, property sales and employment levels is negligible at best.

To accurately judge the impact of Las Cruces’ minimum wage increase – or any minimum wage increase – you must start by looking at the employment conditions among industries or employees that are directly affected by them. That means, for example, looking at how the restaurant and hospitality industries are faring in an affected city or state. (In empirical studies, economists often compare data from locales with a wage hike to those without, while controlling for relevant economic conditions.)

The 2015 government data that has been released for these industries are preliminary and include the population of the entire Las Cruces metro area. For a clearer picture of the minimum wage’s impact, residents must wait for additional detail and a more robust empirical analysis. Nevertheless, the early numbers are not promising, and certainly don’t justify the City Council’s rose-colored claims that a hike has had no impact.

For example, data released by the Census Bureau show that the net number of restaurants in the Las Cruces metro area declined by 2.7 percent in 2015. The net number of hotels in the area fell by 10 percent for the year as well.

There was a 9 percent employment drop at grocery stores, another big starter wage employer, in the year. And employment at gas stations fell in 2015 for the first time since 2009, after steadily increasing in each of the prior years.

The anecdotal evidence also suggests it is too soon to say the wage hike hasn’t had a negative impact. Greg Johns, co-owner of two Daddy O’s Car Wash operations in Las Cruces, told the Sun-News the wage hike caused him to abandon plans to open a new location in the city that would have employed 30 people. Instead, Johns decided to expand in El Paso.

And Lorenzo’s restaurant on University Avenue was forced to cut three jobs, shorten hours, and limit its employees’ meal items because of the costs associated with the wage hike.

These aren’t jobs that Las Cruces can afford to lose. Young residents in the area currently face an average 23 percent unemployment rate.

Minimum wage increases of the level pursued by Las Cruces rarely — if ever — affect the broader economy. This is a straw man put forth by proponents to easily attack. The bulk of economic research concludes, however, that wage hikes do reduce job opportunities for young and less-skilled jobseekers. A recent summary of all recent minimum wage research published last year by the San Francisco Federal Reserve confirms these job losses may be greater than originally thought.

Ultimately, it is too soon to determine the true effects of the Las Cruces wage hike. The City Council even admitted this in its assessment. The fact that it still came to the rosy conclusion it did suggests a political rather than economic motive.

Gessing is president of the Rio Grande Foundation. Saltsman is research director at the Employment Policies Institute in Washington, D.C.

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 June, just 57.5 percent of jobs were to be created in right-to-work (RTW) states — the lowest share since we began our monitoring in January 2015. But in July, the worker-freedom advantage returned in a big way. Of 13,906 projected jobs, 11,688 — 84.1 percent — were slated for RTW states:

In the three sub-metrics the Foundation scrutinizes, RTW maintained its impressive dominance.

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

RTW prevailed in foreign direct investment, too. Sixteen projects are headed to RTW states, with four to occur in non-RTW states.

Two relocations will cross the barrier from non-RTW to RTW, with none headed from RTW to non-RTW.

While New Mexico’s economic-development bureaucrats dream of “Spaceport America” spurring a spacefaring “industry cluster” in the Land of Enchantment, firms in the sector continue to invest elsewhere. In July, Lockheed Martin picked Florida to “advance its role in spacecraft manufacturing,” bringing 300 jobs to Titusville. France-based Thales selected the Sunshine State for two investments. It plans to hire 327 workers in Melbourne and 173 employees in Orlando. In Mississippi, Aerojet Rocketdyne plans to expand its Center of Excellence for Large Liquid Rocket Engine Assembly by 70 positions.

Other marquee RTW investments included German manufacturer Gerhardi Kuntstofftechnik’s choice of Alabama for its first U.S.-based plant (235 jobs) and the decision by Eurotranciatura, a Spanish-Italian joint venture, to expand its factory in Tennessee (170 jobs).

Methodological specifics:

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

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

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

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

OASIS is a great organization that puts on a variety of classes for older folks and “seasoned citizens.” If you want to find out more information and useful data to understand economic issues facing our nation, state, and community, sign up now for an OASIS class this Tuesday, August 2. The class will go from 1:00 to 2:30pm.

You can sign up here. It is class 11.

The “syllabus” notes and location are as follows:

New Mexico never quite made it out of the Great Recession of 2008. Our economy faces numerous challenges including high unemployment, low workforce participation, high government indebtedness, and low graduation rates. Paul Gessing believes the solution requires a transformation in New Mexico’s economy — away from reliance on federal spending and toward a larger private sector economy. He shares details on how a healthy dose of free market policies can turn our state around.

American Square Shopping Center
3301 Menaul Blvd NE, Suite 18
Albuquerque 87107 NM

We are just west of Carlisle NE in the building facing the American Home Furniture store.

(Albuquerque) — The Rio Grande Foundation today joined more than 100 organizations across the United States and around the world hosting events to honor the life and work of Milton Friedman, a Nobel Laureate who is widely recognized as one of the most influential economists of the last century and the father of the modern educational choice movement.

This was the 10^th and final celebration of Friedman Legacy Day, which was established following Friedman’s death in 2006 as a way to remember his incomparable contributions to modern free market and economic theory.

Our speaker will be Bill Peacock, Director of the Center for Economic Freedom, with the Texas Public Policy Foundation. Peacock’s talk is entitled “When Free to Choose why do so many people choose Texas?” Specifically Peacock will discuss specific policies and cultural traits that allow Texas to be such a magnet for jobs and economic growth, what can New Mexico learn from Texas, and threats to Texas’ success.

Location:  Room 2401, UNM Law School which is located at:

1117 Stanford Dr NE, Albuquerque, NM 87106;

When: July 28, 2016, 6:00pm to 7:30pm;

Cost: Event is free and open to the public; Register by clicking here.

Said Rio Grande Foundation president Paul Gessing, “We have been pleased to participate in ‘Friedman Day’ celebrations for each of the ten years during which they were held. Friedman’s legacy is worth remembering and forms the basis for the Foundation’s mission.”

Rio Grande Foundation’s event was co-sponsored by the Friedman Foundation for Educational Choice, a national nonprofit organization founded by Dr. Friedman and his wife, Rose. Per their wishes, the Friedman Foundation will be changing its name today to reflect the future of the organization while maintaining the Friedmans’ intellectual legacy of educational choice.

The City of Albuquerque has trotted out a new page in which they claim to “bust some myths” about their precious Albuquerque Rapid Transit.  The new report was covered by KOB TV.

Unfortunately, the City is being very selective in its approach and is manipulating language in an attempt to deflect valid criticisms of ART opponents. The following is a response to many of the alleged “myths” supposedly being “busted” by the City. In reality, they put words in the mouths of critics or simply misrepresent their concerns.

Myth: Parking spots on Central Avenue will be reduced or eliminated because of ART

According to the group “Make ART Smart,” 194 parking spots will be eliminated due to ART. The City has not specifically addressed that number. Replacing spots along the road with a Park and Ride at EXPO NM will don nothing at all in terms of businesses. That part of Central does not want for parking, it is primarily in Nob Hill and near Old Town where the concerns are and parking problems exist. They admit to spots being lost there.

Myth:
We will cut down all the trees on Central Avenue because of ART
Again, reference the information from Make ART Smart which claims 217 trees will be cut down. If that is wrong, why? It sounds like the City is planning to cut down a bunch of mature trees and replace them with saplings. That is not a great tradeoff and it shows how the City is attempting to manipulate language to its ends.

Myth:
The removal of left turns along the route will hurt businesses and create safety problems.
They have zero data to back them up both in terms of the safety situation and on the economic situation relating to local businesses. They are merely asserting things that have no basis in fact.

The example from Guadalajara is meaningless. The city has been talking about Cleveland for years and now they want to talk about Guadalajara?

Myth:
ART will make Central Avenue less pedestrian friendly.

If the goal is to make Central more pedestrian friendly, that can be done without spending all this extra money on ART. Central is already the most pedestrian friendly area in town with the possible exceptions of Old Town and parts of downtown. They are trying to change the subject.

Myth:
Traffic will be reduced to one lane throughout the entire project and traffic will be unbearable.
They are setting up a straw-man. Vehicle traffic will be reduced and congestion will be worsened due to ART. Their own data say this. Again, they are trying to change the argument.

Myth
The project only has a 19-year shelf life

As noted in their own arguments, ART is not about transportation, it is about redevelopment. No one knows what our transportation system will look like in 20 years, including the City’s planning department. Big, expensive transit projects like the Rail Runner and Washington, DC’s METRO are seeing ridership plummet as new technologies like ride-sharing come online. Self-driving cars could be next. The shelf-life for ART could be even shorter than 20 years.

Myth
This project is going to destroy historic districts and lose the historic ambience of the corridor

The entire goal of this project as stated earlier is to “redevelop” Central. The bus is just the primary tool being used by the City to do that. Central is unique and has evolved over time, but this bus will DOMINATE Central in a way that will fundamentally change its character and in ways that other bus systems do not.

Myth:
Businesses will close along Central Avenue.

As noted, businesses have and will continue to open and close along Central, but massive construction projects and both temporary and long-term traffic congestion are not going to help matters for businesses along the route. Central, like the rest of Albuquerque, would benefit from stronger leadership on the economic issues at both City Hall and in Santa Fe.

Myth:
The city lied on its application for the categorical exclusion about there being no opposition to the project.

It is impossible to prove the City “lied,” but according to recent polling data, 86% of ABQ voters are aware of the project and oppose it by a 2-1 basis. The City’s voters are overwhelmingly opposed to ART and this was not reflected in the City’s filings.

Conclusion: With all of the serious issues facing our City, even reasonable supporters of ART should consider three things:

1. This is not the highest priority right now. Economic growth and crime should be.
2. This project in its current form does not have the support of voters or most businesses along Central and should be reconsidered or seriously altered based on community input.
3. This project would never be built were it not for the lure of “free” federal dollars which Washington continues to dole out despite being more than $19 trillion in debt.

Frequently, we at the Rio Grande Foundation share critiques with self-identified left-liberals relating to problems in the economy. For example, there is no doubt that poverty and a lack of good-paying jobs is a problem (perhaps THE problem) in New Mexico. It is reflected throughout the “Kids Count” report that is co-produced by the left-wing NM Voices for Children and the Annie E. Casey Foundation. By our count, no fewer than six of the 16 variables included in their own report were directly related to poverty and a lack of jobs.

If jobs and the economy are so critical to getting families out of poverty, why would Voices support Obama Administration policies that CLEARLY AND DIRECTLY would kill good-paying jobs for relatively low-skilled workers in New Mexico? You’ve got me, but I think it has a lot to do with just supporting big-government policies and politicians regardless of their impact. Voices signed on to a recent letter with several other left-wing groups in support of the Obama Administration’s moratorium on coal leases on federal lands. Other left-wing non-environmental groups or individuals include New Mexico Center for Law and Poverty and one sole political candidate for New Mexico’s Senate Jeff Steinborn.

According to data from the BLM, as of 2013, there are four producing coal mines in New Mexico, two on federally-managed lands and two on mainly private lands. Coal mining and coal mine reclamation provide over 2,800 jobs and payroll of about $246 million. Of course, the left LOVES tax revenue for all their social spending, but would apparently rather not accept the millions of tax dollars generated by coal in New Mexico. Instead, they undoubtedly would rather just tax the ever-shrinking pool of “rich” people in New Mexico.

Those are high-paying jobs available to workers who have attained relatively low levels of education. The average job in the coal industry in New Mexico pays over $90,000 annually while the average job in New Mexico pays less than $40,000.