The Eastern New Mexico News - Serving Clovis, Portales and the Surrounding Communities

By Steve Hansen
The Staff of The News 

Think tank: Economic performance needs improvement


Last updated 7/23/2022 at 11:27am

The president of the Rio Grande Foundation, a libertarian- and conservative-leaning think tank based in Albuquerque, delivered some sad news in statistics aboutNew Mexico’s economy but offered three steps that he said could start reversing New Mexico’s economic performance.

Paul Gessing, the foundation president and an occasional columnist for The News on Thursday summarized for the Clovis Rotary Club New Mexico’s situation and the measures he thinks the state should take.

He started by demonstrating with statistics just why he thinks New Mexico’s state and local governments play too great a role in the state’s economy.

New Mexico state and local government spending totals 26.7% of the state’s gross domestic product. In surrounding states, including Oklahoma, Utah, Texas, Colorado and Arizona, state and local government spending is less than 20% of GDP.

“It doesn’t matter if they’re red or blue,” he said, “none of them comes close to having state and local government funding at more than a quarter of GDP.

Further, he noted, New Mexico has the highest proportion of its workforce employed by the federal government with 6.08% of workers receiving federal paychecks.

New Mexico’s also depends on the federal government for 36.7% of its tax revenue, Gessing noted, and the oil and gas industry contributed $5.3 billion in taxes in 2021.

The state has little to show for these windfalls, however, Gessing noted.

New Mexico’s gross domestic product, the total of goods and services produced in the state, fell 4.7% between the last three months of 2021 and the first three months of 2022, Gessing said, the highest rate of decline among surrounding states. The U.S. Bureau of Economic Analysis data Gessing used showed New Mexico’s rate of decline was more than double the rate in Colorado and Texas..

New Mexico has the highest rate of unemployment (5.1%) of any state; the smallest portion of population in the workforce (consistently under 55% since March 2020, the beginning of the COVID-19 pandemic),the smallest in the Southwestern states; and the nation’s third-worst poverty rate with 18.2% of its population living in poverty.

He also noted that New Mexico continues to place at or near the bottom among U.S. states in child welfare measures that include economic well-being, education, health, and family and community factors, according to the annual Kids Count survey conducted by the Anna E. Casey Foundation.

Despite spending more per child on education, $12,973 last year, than surrounding states, Gessing noted, New Mexico students fell further behind in reading and math among fourth graders than nearly every other state, which Gessing attributed to the amount of time students spent out of class and the state’s shortcomings in broadband internet distribution.

Renaissance Learning, an education testing service, he said, showed New Mexico student reading scores declined 7% and math skills fell off by 8% during the pandemic.

The New Mexico Legislature in 2022, he said, mainly “worked for its own benefit” and handed out tax rebates but did not address any of the fundamental problems facing the state’s economic structure.

“Rebates are not going to change the New Mexico economy,” he said.

The legislature should instead focus on the three steps he proposed to turn the state’s economy around.

First, he said, the legislature must change laws so the governor is no longer allowed to declare emergencies alone. He said the governor’s health emergency measures during the COVID-19 pandemic hampered education and business but did not result in significant reductions in COVID-19 incidence and death rates.

He cited a National Bureau of Economic Research study that showed New Mexico as ranked seventh from the bottom in outcomes related to the COVID-19, using measures of economy, education and mortality.

Second, he called for “an overhaul of the state’s gross receipts tax and removal of disincentives and other obstacles to work.”

The gross receipts tax, he said, discourages big investments in the state and discourages individual contract work by directly taxing contractors’ income.

Instead, he said, “we need to incentivize people to work.”

Third, he said, the solution to the state’s lackluster education performance is to have “education dollars follow students,” in other words to allow public education funds to go to private schools as well as public to encourage competition among schools.

He said the lack of in-person learning opportunities in public schools during the pandemic influenced him to send his children to Catholic schools.

New Mexico, he said, has more older people moving in and more younger people moving out.

New Mexico’s economy needs to diversity, he said, and legislators should be focused on encouraging new industry by improving its business climate, using the three steps he outlined.


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