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State receives D+ for tracking of job-creation incentives and subsidies

—Sharon Kayne, NM Voices for Children

New grades are out and, when it comes to tracking whether tax breaks are creating jobs, it’s a disappointing D+ for New Mexico. The grades were issued by the group Good Jobs First in their report “Money-Back Guarantees for Taxpayers: Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs.” In the report, New Mexico is ranked 45th in the nation, tying with two other states for that spot. Only three states ranked lower.

The report analyzed several economic development incentives and subsidy programs in states across the nation. It found that there is great inconsistency with how well states monitor, verify, and enforce their incentives to ensure that they are fulfilling performance measures like creating jobs.

“It’s politically popular to hand out tax breaks with the idea that they will create jobs,” said Gerry Bradley, Research Director for New Mexico Voices for Children. “Unfortunately, especially in New Mexico, tracking these economic incentives to make sure taxpayers are getting their money’s worth is considerably less popular. When you give a ‘job-creation’ tax break to a company and they don’t create any jobs, you’re really just handing out corporate welfare,” he added.

“It’s discouraging that Governor Martinez is hoping to pass another $55 million worth of tax breaks when we do such a poor job of verifying that the breaks we already have actually create jobs,” Bradley said.

The report looked at five incentive programs in New Mexico. While all five require that companies report their performance, the state only verifies these reports in three of the five. Only one incentive program (industrial revenue bonds) requires that money be paid back if performance measures are not met. All five incentive programs failed completely in the category of online disclosure of enforcement practices.

“Money-Back Guarantees for Taxpayers” is a companion report to “Money for Something,” which Good Jobs First issued last month. Both reports can be found on the group’s website at www.goodjobsfirst.org.


Senator Tim Keller and Rep. Nate Gentry introduce Red Tape Reduction Act Bill

—Ryan Hedin

On December 30, Senator Tim Keller (D-17) and Representative Nate Gentry (R-30) introduced legislation to add predictability to the state of New Mexico agencies’ rule-making and regulatory processes. HB 34 would impose a standard set of rule-making requirements on all New Mexico agencies and would give New Mexico businesses greater certainty as to what would be required of them when they choose to invest in New Mexico.

Under the current regulatory structure, any executive agency can alter licensing and permitting processes as they see fit and as many times as they like. Because of this, the “rules of the game” are different for nearly every entity that touches state government. This bill would standardize procedures such as public comment periods, appeal methods, fee structures, and response requirements.

Gentry said, “Providing regulatory certainty is a big step in the right direction in making our state better for businesses and for the public. This bill creates a framework for consistency, based on best practices and bi-partisan common sense.”

“Too often, New Mexico agencies change the rules of the game and, because businesses are not clear about what will be expected of them, they choose to invest in states where the regulatory environment is more predictable,” said Gentry. “I am confident that this legislation will reduce the amount of risk businesses face and will encourage more investment in our state.”

The bill is the outcome of a year-long taskforce comprised of business, environmental, legal, and community members and has been previously endorsed by the New Mexico Association of Commerce and Industry, and Conservation Voters of New Mexico. New Mexico is the last state in our country that does not follow this standard.
 
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