By Paul Gessing
Recently, a group of business and economic leaders traveled to Phoenix, AZ to get some ideas on why the Phoenix economy is so much stronger than New Mexico’s. Ideas were exchanged and I’m sure a good time was had by all.
But, the trip was a waste of time. You don’t need to travel to see why Phoenix is more economically prosperous than Albuquerque or why Arizona does better than New Mexico. Like most New Mexicans I have indeed been to Phoenix (and other parts of Arizona) many times and seen how the State has grown.
Here are a few of many ways in which Arizona public policies and outcomes make Arizona a fast-growing, successful state that leaves New Mexico in the dust:
• Arizona’s top personal income tax rate is 2.5% while New Mexico’s is 5.9%. Allowing people to keep more money means attracting more people.
• With our oil and gas largesse and $61 billion sovereign wealth fund New Mexico could easily reduce or eliminate our income tax, but that’s not how our politicians think.
• Arizona is a “right to work” state. New Mexico remains “forced unionism” for private sector workers. Forcing workers to pay political organizations for the privilege of working is just wrong.
•While it DOES have a high sales tax rate 8.38%, Arizona does NOT have a small-business-killing gross receipts tax like New Mexico. Our GRT rates vary but are not much lower than Arizona’s sales tax.
• Arizona has NO state-level prevailing wage law on public construction projects (New Mexico does). This means that roads, bridges, and schools in Arizona are built at market wage rates, not artificially inflated rates.
• Arizona’s labor force participation rate is significantly higher than New Mexico’s meaning fewer people on welfare programs and more people paying taxes. New Mexico’s Medicaid population is also the highest in the nation which sucks money from taxpayers and government programs while disincentivizing work.
• Business friendly Arizona has 10 companies listed on the Fortune 500 index including Freeport-McMoRan and Carvana (to name two). New Mexico has just thee publicly traded companies headquartered in the State. Our largest such company, PNM, is in talks to be sold.
• Arizona’s K-12 system has a variety of school choice options and outperforms New Mexico’s (which is dead last nationally). Arizona students outperform New Mexico’s while spending 45% less money per student.
• A good school system is more than just a nice amenity. Preparing young people for 21st century jobs makes Arizona more attractive to businesses and can keep young people involved in productive behavior rather than crime and drugs.
• To top it all off, according to the leading tracker of such information which is called “State Higher Education Finance,” Arizona spends approximately 1/3rd what New Mexico spends (per student) on higher education ($6,571 vs. $18,754). Is there anything that New Mexico policymakers can point to that we are getting for all of that additional money we’re spending?
Of course, many of New Mexico’s big spending projects are funded thanks to the oil and gas industry which dominates our state budget. Arizona has little oil and gas to speak of, but thanks to superior public policies across numerous areas of the economy it is faster-growing economically and in terms of population.
Rather than traveling to Phoenix, our community leaders and more importantly the Gov. and Legislature need to spend some time researching the numerous public policy advantages Arizona holds over New Mexico and embrace them.
Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
