New Mexico
New Report Shows How To Boost New Mexico’s Economy
Backpacker at the top of Sandia Peak in New Mexico. USA.
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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
Economic Freedom in the Land of Enchantment https://www.fraserinstitute.org/studies/economic-freedom-in-land-of-enchantment
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
Economic Freedom in the Land of Enchantment https://www.fraserinstitute.org/studies/economic-freedom-in-land-of-enchantment
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.
Time is running out for lawmakers to debate and approve bills. Gov. Michelle Lujan Grisham is using the little time left to push lawmakers to get even more public safety bills across the finish line.
SANTA FE, N.M. – Time is running out for lawmakers to debate and approve bills. Gov. Michelle Lujan Grisham is using the little time left to push lawmakers to get even more public safety bills across the finish line.
It’s no secret Lujan Grisham has ambitious plans to improve public safety in New Mexico. She called a special legislative session last summer just to get a criminal competency reform bill across the finish line.
While the Legislature already sent her a collection of six public safety bills this year – including a competency bill – she’s pressuring lawmakers to keep going.
“I think there’s a lot more to be done,” said Lujan Grisham.
With nine days left to go, the governor is narrowing her public safety ambitions. She posted on social media Wednesday, urging New Mexicans to call their state representatives and senators and ask them to prioritize five bills.
Those bills include expanding New Mexico’s red flag law, increasing the punishments for assaulting a peace officer and reworking the state’s definitions of “harm to self” and “harm to others.”
“By changing this definition, we’re dealing with facts on the ground, things that have happened in the recent past, as opposed to a prediction of what may happen,” said state Sen. Moe Maestas.
All three of those bills are past the halfway point, so they still have a shot of crossing the finish line.
A bill expanding the state’s human trafficking laws is just barely past the starting line, while a Republican-backed proposal increasing punishments for felons caught with firearms is still at square one.
“If we’re going to limit the Second Amendment for people, which is what we keep seeing, come over. Shouldn’t we at least address felons who get firearms and deal with that situation? I think the answer is obviously yes,” said state Sen. Craig Brandt.
Many of the committees these bills are waiting for are backlogged with many other proposals, and lawmakers only have so much time left. But it’s clear the governor doesn’t want to wait another year for them to take action on these bills.
We’ll see strong winds and blowing dust with a chance of snow in the west Thursday. See the latest conditions at KOB.com/Weather.
ALBUQUERQUE, N.M. — Thursday is forecast to bring some stronger winds to New Mexico as we go through the afternoon and as the evening ushers in a storm system.
Stronger winds could lead to a public safety power shutoff in some places, as PNM and Xcel Energy have indicated.
For Thursday, Farmington could see some rain showers around noon. That’ll become more widespread throughout the afternoon and evening into the night when places like Gallup, Grants and Silver City could see snow. By Friday morning, blowing snow and blizzard conditions are possible.
The high winds won’t let up, however. 30-60 mph wind gusts are possible into Friday afternoon.
Meteorologist Kira Miner shares all the details in her full forecast in the video above.
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