New Mexico
New Report Shows How To Boost New Mexico’s Economy
Backpacker at the top of Sandia Peak in New Mexico. USA.
New Mexico is not known as an economic powerhouse. Despite being one of the sunniest states in the country, its population has hardly grown over the last decade. Meanwhile, the populations of its biggest neighbors—Arizona, Texas, and Colorado—have grown rapidly. Economic growth in the region follows a similar pattern, with New Mexico’s growth trailing its neighbors. In a new report, author’s Matthew Mitchell and Paul Gessing link New Mexico’s weak economy to its lack of economic freedom.
New Mexico is the fourth sunniest state in the country. It has cooler summers than Phoenix and warmer winters than Denver. Research shows that people are attracted to places with nice weather, yet New Mexico’s population only grew by 1% from 2013 to 2022. Meanwhile, Arizona’s grew by 12%, Colorado’s by 11%, and Texas’s by 14%. Employment growth, real GDP growth, and income growth all follow the same pattern (see figure below), with New Mexico trailing its neighbors over this period.
Income growth in the Southwest
New Mexico’s favorable weather should be a plus, yet there is something holding the state back. In their new report, Mitchell and Gessing make a convincing case that a lack of economic freedom is keeping New Mexico from experiencing the same success as its neighbors.
Economic freedom is the degree to which individuals are allowed to make their own economic choices. Choices about where to work and on what terms, and how to invest their time and money. Places that allow more economic decisions to made by individuals have more economic freedom.
Dozens of studies show that places with more economic freedom, whether it be countries, states, or cities, tend to have better economic outcomes, including more job growth, higher incomes, less poverty, and more business creation. New Hampshire is the freest state according to the latest edition of the Fraser Institute’s Economic Freedom of North America index, while New Mexico ranks 47th, well behind Arizona (32), Colorado (14), and Texas (5).
Even worse, New Mexico is the only state where economic freedom declined over the last 40 years. Yes, you read that right—in every state but New Mexico, economic freedom increased from 1981 to 2022 (the latest available data).
New Mexico’s lack of economic freedom is contributing to its poor economic performance. As the report notes, if New Mexico increased economic freedom by 10% to a level like that of Maine (which is not that free at 38th overall) its per capita GDP could increase by as much as 5%, or about $10,000 for a family of four. This is a non-trivial increase in output that requires relatively modest policy changes.
A state’s overall economic freedom score is composed of scores from three areas—government spending, taxation, and labor market regulation. New Mexico ranks 49th in government spending, 36th in taxation, and 49th in labor market regulation. Each of these scores is the lowest in the Southwest, as shown in the figure below.
Economic Freedom scores in the Southwest
One of the first things New Mexico should do to increase economic freedom is lower its taxes. It has the highest top marginal income tax rate in the region at 5.9%, more than double Arizona’s 2.5% flat rate. Texas has no personal income tax. It also has the region’s highest corporate income tax rate, also at 5.9%. Worse, its corporate income tax is not indexed to inflation. This means more and more companies will pay the higher rate as inflation pushes their income over the minimum threshold, despite their profits not being higher when inflation is accounted for.
New Mexico policymakers should lower their top personal and corporate income tax rates to make them more competitive with their neighbors. A lower, flat rate like Arizona’s 2.5% rate would incentivize work and investment. New Mexico can also afford a lower rate since the state’s oil and gas industry is bringing in billions of dollars in tax revenue each year. The report notes that New Mexico has had a run of $3.5 billion surpluses in recent years.
Policymakers in New Mexico should also make it easier for people to work. Mitchell and Gessing point out that New Mexico has some of the most onerous occupational licensing regulations in the country. The state places a particularly large burden on occupations that often serve as an entry into the labor market. For example, HVAC contractors and sheet metal workers are required to spend four years in training before they can obtain a license. Drywall installers must train for three years before they can get a license. Barriers like these make it difficult for younger and less experienced workers to earn a living and support a family. Reducing these and other unnecessary licensing regulations would improve New Mexico’s economic freedom score and increase opportunity for the state’s residents.
New Mexico’s economy is lagging its neighbors and has for years, but it does not have to be this way. New Mexico policymakers can improve the state’s economy by lowering tax rates and reducing barriers to work. Such changes would increase economic freedom in New Mexico, and increasing economic freedom is a proven path to prosperity.
New Mexico
NMDOT and Santa Ana Pueblo break ground on $2.4M intersection project
The project is aimed at making it easier for drivers to turn in and out of the pueblo.
SANTA ANA PUEBLO — Construction is set to start next month on a road project designed to help drivers turn in and out of the Santa Ana Pueblo.
The Santa Ana Pueblo and the New Mexico Department of Transportation broke ground yesterday at New Mexico State Road 313 and Dove Road.
The Santa Ana Pueblo governor said they’ve been working on plans for that intersection for a decade now. The whole project is expected to cost $2.4 million.
New Mexico
Water managers push for funding to remove invasive plants from the bosque
NEW MEXICO (KRQE) — It’s a major problem, sucking up lots of water from the Rio Grande. Now, some water managers are asking lawmakers to get serious about ripping invasive plants from the bosque by spending millions. An “out of control bosque” is how the head of the Middle Rio Grande Conservancy District (MRGCD) describes the areas around the river in central New Mexico, and he said it’s time for a generational project to take on the problem.
Not everything green in the middle valley’s bosque is helping New Mexico’s water supply, with a newer study highlighting how the Rio Grande’s riparian species are taking just as much water as surrounding farms. In fact, they’re actually consuming a percentage point more than agriculture.
Jason Casuga, the MRGCD’s CEO and Chief Engineer, said conversations are not being had across the board regarding water conservation. “We’re not having a fair conversation about riparian depletions,” said Casuga.
He said he thinks both the bosque and farming are worth protecting. “If we’re going to have standards for depletions on urban areas, standards for depletions on reducing those across farming, then the only way to have a realistic discussion about reducing depletions, as a whole, is to include the riparian area.”
Casuga said that invasive Salt Cedar and Russian Olive plants drive the problem of the extreme riparian water depletion, and that it’s unfair to farmers and cities to ignore what he calls a “takeover.” And that is especially when irrigators are often the first to cut back on water use. “Are we really going to ask farmers and have cultural farms on the Rio Grande go away? And leave hundreds and hundreds of acres of invasive species of Salt Cedar and Russian Olive? Is that what we’re protecting?
He stressed that he thinks if there are standards for agriculturalists and municipal entities, then there ought to be standards for invasive species as well. That feeling has Casuga pushing for a massive, coordinated invasive plant removal effort. He’s calling on lawmakers to fund a multi-million dollar investment in the project next session.
He said not everyone is quick to get on board with proposals like this. “Right now, everyone says, ‘Hey, it’s expensive, and it’s hard, and the easy thing to do is to target ag.’ But, I pose the question back, ‘If we love the Rio Grande in the Middle Valley, and we love the heritage of ag, is it a conversation worth having?’”
He said the millions would also ideally pay for bosque upkeep and native plant restoration. But one hurdle is finding qualified contractors to take on that difficult job
A Mississippi crew is now working to clear invasives near Belen. The MRGCD said while saving water, the job also cuts wildfire risk, and makes a big difference if firefighters do need to move in.
The MRGCD’s Bosque Management Coordinator said the next step in the Belen bosque restoration project is to plant more native grasses and bushes, which is expected to help wildlife. The methods used to eradicate the invasives protected the native plants that were already there.
“The more diverse food sources you have available for the wildlife, the different types of wildlife you have, and you’ve got a healthy food system that’s supporting multiple species throughout the year,” she said. “The species that come here in the summer to breed, and the species that come here in the winter will still have access to be able to find bugs under the ground, find any of the seeds from the species that have been seeding out, and still have access to water and then access to places where they can hide and they can have burrows and sustain themselves through multiple conditions.”
The MRGCD is celebrating its 100th anniversary this year. It was founded to create the infrastructure capable of transforming the Middle Rio Grande Valley—by building and connecting more than 1,200 miles of canals and hundreds of miles of levees—to support agriculture and enable the growth of Albuquerque and surrounding communities.
Casuga said that it was a difficult endeavor then. “Tremendous amount of effort and resources were put in for that day—to set the river for essentially a hundred years that we’ve enjoyed with some problems here or there,” said Casuga.
He took a moment to think. “This might be generational work that needs to be done that sets the stage for the next hundred years.”
The MRGCD said Valencia and Sandoval counties need the most attention in removing invasive plants. While the District is still considering its exact proposal for a large removal effort, and doesn’t have a specific dollar figure on potential cost, it’s thinking of a project worth at least several million dollars.
New Mexico
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