Natural gas prices have been down for some time but oil has rebounded somewhat in recent weeks. Here’s a recent interview I did on the issue and how the prices of these important commodities impact New Mexico.
AED, “a private, nonprofit organization whose mission is to recruit business and industry, help local companies grow and generate quality job opportunities,” should be commended for its desire to improve the region’s economy. Unfortunately, if its roster of speakers is any indication, the organization isn’t aware of the most effective tools to boost entrepreneurship and create jobs.
Nearly the entire seminar was devoted to programs and tax credits offered by taxpayer-funded bureaucracies. AED officials Bob Walton and Dennis Houston raved about the state’s Job Training Incentive Program. Ronald Burke, of the New Mexico Manufacturing Extension Partnership, touted his group’s “strategic partnerships,” and detailed all the ways factories could obtain subsidized help. Genaro Montoya of Sandia National Laboratories described the way his employer and Los Alamos National Laboratory, via a state program, offer services to small employers. (He assured the audience that the initiative “is not in business to compete with the private sector.”) The Workforce Connection of Central New Mexico‘s Jerilynn Sans described her agency’s subsidies for worker training. John Brooks, of the New Mexico Finance Authority, instructed attendees to tell the state’s congressional delegation that NMFA needs “more money.” And Lenny Bean, of the Procurement Technical Assistance Program, whined that sequestration was “a virus” that had spread from D.C. to the Roundhouse, in the form of a failed capital-outlay bill.
Deregulation? Broad, deep tax reform/relief? Right to work? A repeal of the state’s “renewable portfolio standard? School choice? None were mentioned during the workshop.
New Mexico’s economic-development strategy isn’t working. Labor participation is low, job growth is weak, and the population is falling.
It’s time for something different.
Recently, I wrote an article for the Liberty Foundation’s national publication which I have posted below the chart relating to the cost of New Mexico’s Renewable Portfolio Standard. James Taylor of the free market Heartland Institute also visited Albuquerque recently and spoke about the high cost of government energy regulations. The presentation was covered by Rob Nikolewski of Watchdog.
Electricity production has become a hotly contested political issue. This is largely the result of powerful environmental pressure groups turning man-made global warming, or more recently “climate change,” into hot-button political topics.
The controversy began to manifest itself at the state level in the late 1990s when Nevada and Texas first adopted “Renewable Policy Standards” (RPSs). These laws require electricity supply companies to produce a specified fraction of their electricity from sources deemed “renewable,” such as wind, solar, and biofuels.
During the early 2000s, the adoption of RPSs spread to a number of other states. One of these was New Mexico, which initially adopted such standards in 2004. Today, according to the Database of State Incentives for Renewables and Efficiency (DSIRE), 29 states have legally mandated standards and 9 states have voluntary goals.
Not all RPSs are created equal. In fact, they tend to evolve somewhat dramatically over time. New Mexico’s RPS took its current form in 2007 when the Legislature and Gov. Bill Richardson amended the original RPS requirement that utilities get 10 percent of their electricity needs by 2011 from renewables. Under the 2007 law, utilities must use renewables to obtain 15 percent of their electricity by 2015. That requirement will grow to 20 percent by 2020 absent further legislatively enacted changes.
Also in 2007, New Mexico’s Public Regulation Commission (PRC) issued an order and rules requiring that Investor Owned Utilities (IOUs) meet the 20 percent by 2020 target through a “fully diversified renewable energy portfolio.”
This regulation micromanages how utilities meet the legislature’s standard, requiring at least:
• 30 percent of the RPS requirement be met using wind energy,
• 20 percent from solar power,
• 5 percent from other renewable energy technologies, and
• 1.5 percent from “distributed generation” renewable energy technologies for years 2011 through 2014, rising to 3% in 2015.
Renewables mandates drive up electricity prices, which is why they are mandates. If the renewable technologies required were cost effective, utilities would adopt them on their own. The combination, in 2007, of the legislature increasing the overall RPS and the new regulation further micromanaging utilities sparked a rise in New Mexico electricity prices.
The rapid increase in New Mexico electricity prices was both predicted and is likely to accelerate in the years ahead. According to a 2011 report by the Rio Grande Foundation and the American Tradition Institute, “Over the period of 2011 to 2020 these laws (New Mexico’s RPS) will cost New Mexicans an additional $2.3 billion over conventional power.” That price shock was predicted to be most pronounced in 2020 as the RPS is reaches the 20 percent level. According to the report, “consumers will pay $619 million more for power in 2020.”
PNM’s request includes the cost of new pollution controls and elimination of two units (half of total capacity) at its coal-fueled San Juan Generating Station near Farmington. This has nonetheless generated a great deal of controversy among environmental groups who want the facility completely and immediately shut down.
Camila Feibelman, executive director of the Sierra Club’s Rio Grande Chapter, told the PRC in recent testimony, “We agree with shutting down two units at the plant, but we’re concerned that PNM’s plan will still lock us into continued use of coal for another 30 years.”
Needless to say, the political battles over electricity at the state level are heated and they are just getting started. No matter what happens with the Obama Administration’s proposed federal “Clean Air” regulations, New Mexico and other states that have aggressive RPSs in place will continue to see electricity prices rise as the “low-hanging fruit” of relatively cheap and easy renewable generation is achieved and more costly, less economical renewable projects are embarked upon in order to fulfill those standards.
In other words, for rate payers in New Mexico and elsewhere, the pain from the state’s RPS will only get worse in the years ahead.
Governor Martinez is charging 243 state employees with taking “administrative leave” to vote on Election Day … and not voting.
According to the Albuquerque Journal, the accused “could face disciplinary action ranging from a reprimand and repaying the state to more serious sanctions, such as suspension.”
Kudos to the New Mexico State Personnel Office auditor who conducted the investigation. Government employees, all but free from the pressures of competition and customer scrutiny, need better oversight. Last week, KRQE revealed that a “Children, Youth and Families Department worker is under investigation after she was caught on camera speeding down a highway in a state car with two young kids in the backseat.”
Earlier this month, The Philadelphia Inquirer reported that New Jersey tracks hundreds of its employees, “gathering data from their cellphones about when they clock in, where they are at any given moment, what route they take to get there, how fast they drive, and whether they make unauthorized stops.” Field Force Manager, an application introduced by Verizon Wireless in 2006, is also used by municipalities in the Garden State.
Liberals generally don’t care for Wal Mart. In fact, egged on by the left-wing Green “Chamber of Commerce,” the Las Cruces City Council recently rejected a proposal to rezone some land for a Wal-Mart.
According to an editorial from the Las Cruces Sun-News, the City Council denied the re-zoning even though the change had been approved 6-0 by the Planning and Zoning Commission, and even though the nature of that part of town is clearly changing from farmland to growing neighborhoods in need of retail services.
So, Las Cruces is now too good for Wal Mart. Of course, Albuquerque’s City Council made a similar anti-Wal-Mart decision a few years back, so perhaps it is just a generally anti-business attitude that permeates this state and makes us poor? Nah, couldn’t be.
Elsewhere, however, labor unions are positively IN LOVE with Wal Mart. A to the story, the unions are asking the National Labor Relations Board to force Wal-Mart to reinstate employees at five stores, accusing the retailer of closing the locations to retaliate against workers for attempts to organize for better pay and benefits.
Wal-Mart Stores had announced that it was temporarily closing five stores in Texas, Oklahoma, Florida and California to fix plumbing issues.
Another story about the closed Wal Marts made it seem like the city of Pico Rivera, CA, would wither away if their now-closed Wal Mart doesn’t reopen. According to the LA Times, the Mayor Gregory Salcido said:
“It’s a severe blow to our community, certainly, with the local economy, the homes and families, in terms of those people that were counting on those paychecks.”
With 530 workers, the Wal-Mart store is the city’s second-biggest employer, topped only by the El Rancho Unified School District. Pico Rivera’s nearly 64,000 residents have a median household income of almost $57,000, about average for the county.
Salcido estimated that Pico Rivera receives about $1.4 million a year in tax revenue from the retailer, potentially 10% of the city’s sales tax revenue. City officials, he said, are trying to figure out how to deal with the lost revenue if the store remains closed for at least six months, as Wal-Mart Stores Inc. has announced.
Of course, the unions aren’t benevolently attempting to reopen the store to help the town of Pico Rivera. They believe that Wal Mart fired the workers for attempting to unionize.
Perhaps this would be an appropriate place to note that Wal Mart is indeed good for workers.
There is a battle under way in New Mexico over whether to be happy with the status quo or to enact free market reforms that will improve our state. Based on his efforts this session and his recent attack on me and my organization, it is clear that Sen. Michael Sanchez is in the former camp and I and my organization are in the other.
Sanchez seems to believe that he and his liberal allies will regain total control of New Mexico’s political system again soon and that this recent spate of political competitiveness is temporary. Unfortunately for Sanchez, increasing numbers of New Mexicans see that surrounding states with free market policies in place are generating jobs and prosperity for their citizens. They wonder why we can’t have the same here.
Young people wonder why they have to leave New Mexico to find a decent job. Parents wonder why they are forced to spend $11,000 per pupil annually (more than the US average according to the NEA) while their children attend schools that dramatically underperform those in other states.
Between January of 2009 and the end of 2014, Texas, a state that has “right to work” and lacks an income tax, grew its already robust employment base by 13 percent. New Mexico grew by just 1 percent. Each of New Mexico’s more economically-free neighbors generated far greater job growth during the same time frame. Our state has consistently underperformed its neighbors despite significant advantages in terms of federal investment and oil and gas resources.
The definition of insanity is often said to be “doing the same thing over and over and expecting a different result.” Sanchez’s “Ready to Work” plan was merely the same old big government policies that have led our state to the bottom of most good lists and the top of many bad ones. Despite decades of liberal control over our State’s public policies, New Mexico, according to the liberal Center for Budget and Policy Priorities, is the most unequal in the nation. (“Pulling Apart,” November of 2012)
Inequality wouldn’t be a problem if ours was a wealthy, growing state, but the public policies enacted by the Legislature over the years have made our state among the poorest.
My colleagues at the Rio Grande Foundation and I saw Sanchez’s “Ready to Work” plan (raise the minimum wage, increase the gas tax, more government spending) as misguided expansions of government. Interestingly, it appears that Sanchez’s fellow Senate Democrats were only lukewarm on the proposals as well.
The Senate passed only 9 of the 58 bills in their “Ready to Work” proposal. An astonishing 49 of their 58 “critical measures” never got to the Senate floor while 15 were never even scheduled for a hearing. Even a minimum wage hike proposed by Democrat Sen. Clemente Sanchez failed in Committee.
The House on the other hand, passed a variety of free market measures, many of which were based on my Foundation’s research. Aside from “right to work” these included school choice tax credits, alternative teacher certification and teacher licensure reforms, reduction in worker’s compensation for drunk/stoned workers, a regulatory framework for Uber/Lyft ride-sharing companies, and increased penalties for dealing food stamps.
None of these received floor votes in the Senate despite often receiving bi-partisan support in the House. And, while bi-partisan support for “right to work” was limited to one House Democrat, according to 2014 polling by Gallup 65 percent of Democrats nationwide support it. My organization’s ideas are common-sense and much-overdue reforms. Adherence to free market principles hasn’t made New Mexico poor, politicians’ embrace of big government has.
If Sanchez is so sure that reforms like “right to work” and school choice are unpopular and bad for New Mexico, he should have had the courage to put senators of both parties on the record by holding public votes. My suspicion is that more New Mexicans – and their representative – want change than Sanchez thinks.
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 reports that unemployment-insurance funds “are still clawing their way back to solvency,” with “many state officials and labor analysts … concerned about what will happen to jobless benefits once another economic downturn arrives.”
Last month, Carol Wight of the New Mexico Restaurant Association explained that New Mexico’s UI fund “is inadequate even though many employers’ premiums have more than tripled this year.” Between March 2008 and March 2014, the balance plunged from $557 million to $49 million. It’s recovered a bit in the last year, but a downward trajectory will return if layoffs intensify in the state’s oil-and-gas sector.
HB482 was drafted to address the UI challenge. It would have reduces a claimant’s benefit from 53.5 percent to 45 percent of the average wage earned, and reduced the “total wage factor formula” to the percentage used by Arizona and Colorado — which is still more generous than Utah and Texas.
But the bill failed, and not because of State Sen. Michael Sanchez (D-Belen). It was voted down, 39-25, in the GOP-controlled House of Representatives.
By Paul J. Gessing | Watchdog Opinion
They say it’s better to be lucky than good. Of course, it’s even better to be lucky and good! That is exactly what happened in New Mexico during the 2015 legislative session with regard to reforming the process of civil asset forfeiture.
To recap, during the 2015 legislative session, New Mexico’s deeply-divided Legislature unanimously supported significant reforms to the state’s civil asset forfeiture laws. That bill was signed by Gov. Susana Martinez, a former prosecutor. The new law now represents the “gold standard” in terms of state efforts to rein in the much-abused process of civil asset forfeiture. It does so in the following ways:
- A criminal conviction is required before property can be forfeited;
- Provides additional due process protections to property owners, such as codifying an “innocent owner” presumption;
- Places forfeiture proceeds in the general fund (as opposed to local law enforcement budgets);
- Requires additional reporting and transparency to allow better oversight of forfeiture process;
So, what conditions made New Mexico, a state not typically known for policy innovation, the model for civil asset forfeiture reform?
A unique, left/right coalition: The Rio Grande Foundation is New Mexico’s free market policy think tank of which I am the head. We typically work on economic policy issues and even drew the wrath of union supporters and liberals during a debate over “right to work” earlier in New Mexico’s 2015 legislative session, but gave plenty of cover to Republicans.
Our institutional support was fortified by Hal Stratton, a Rio Grande Foundation board member, former New Mexico attorney general, and former legislator who was involved in passing the bill setting up the state’s civil asset forfeiture program in the 1980s.
The national public interest law firm Institute for Justice assisted with model legislation and a great deal of technical and strategic support.
The American Civil Liberties Union and Drug Policy Alliance were the more traditional supporters of civil asset forfeiture reform. Both, despite being national groups, have significant operations in New Mexico, and were able to rally grassroots support and provided the lobbying muscle to get the asset forfeiture bill scheduled and passed despite a very small window of opportunity.
A field general with deep knowledge of the issue: Brad Cates left New Mexico in the 1980s to work as a federal prosecutor in Texas and eventually become director of the Justice Department’s Asset Forfeiture Office in Washington from 1985 to 1989. He knows the civil asset forfeiture system and its history front and back. It didn’t hurt that he was counsel to the House Judiciary Committee during the 2015 legislative session, and that the sponsor of the bill was Zach Cook, chairman of that committee. Cates put his knowledge of civil asset forfeiture and its many abuses and problems to work there.
A national groundswell with local angles: In November of 2014, the New York Times reported on remarks by Harry S. Connelly Jr., then city attorney of Las Cruces. Connelly made several outrageous remarks before a meeting of local police agencies on the issue of civil asset forfeiture including, “We could be czars. We could own the city. We could be in the real estate business.” Connelly described in detail in his remarks how police should target more expensive goods for seizure.
There was also the 2010 case of the Skinners, an African-American father and son from Chicago who were traveling to Las Vegas, Nev., to rehab a house owned by a family member and do some gambling. The men were harassed by police on their trip through New Mexico and eventually had their cash seized and were unceremoniously dropped off at the airport with only enough money to fly home to Chicago.
The ACLU of New Mexico represented the men and was able to get their money back while also generating significant publicity about the abusive process.
A governor with aspirations: New Mexico Gov. Susana Martinez, a former district attorney in Las Cruces, was likely not predisposed to sign civil asset forfeiture reform. She waited until the last moment to sign the bill, doing so without public fanfare or ceremony. Her signing statement contains more criticism than praise for the legislation. But she signed it.
Now, her state is a national leader in restoring 5th Amendment protections for its citizens.
Article printed from Watchdog.org: http://watchdog.org
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While some on the left claim that Gov. Martinez’s tax cutting strategy has “failed,” the reality is that the corporate income tax reductions enacted a few years ago are only partially phased in as seen in the above map provided by the Tax Foundation.
As the map clearly shows, New Mexico’s corporate income tax rates remain the highest in the region.
Of course Winthrop Quigley of the Albuquerque Journal is correct in noting that tax cuts alone, especially temporary gimmicks enacted by business-unfriendly New York, won’t turn around the economy by themselves. Quigley fails to discuss what regulatory reforms (like Right to Work) might be able to actually reform New Mexico in the absence of tax cuts, but just because tax cuts are not a panacea doesn’t mean they can’t help spur economic growth.
Join the Rio Grande Foundation For an Evening of
Discussion and Fellowship at Liberty on the Rocks!
“Liberty on the Rocks” is a no-host happy hour discussion and information-sharing session.
Liberty on the Rocks will be held at Scalo Northern Italian Grill which is located in Nob Hill at 3500 Central Avenue SE in Albuquerque. A private room has been reserved for this event. Liberty on the Rocks will take place on Thursday, April 23rd from 6:00 to 7:30PM.
There is no cost for this public event, but attendees are encouraged to have dinner or drinks. Registration is not required but is much appreciated. Click here to register online … it’s fast and it’s free!