State Facts
Analysis
New Mexico has a mediocre rank on economic freedom but does very well on personal freedom, a combination that seems to fit with the state’s relaxed, slightly left-leaning political culture.
New Mexico scores well on fiscal policy solely because of its low tax burden (at 8.2 percent of personal income), but it is able to maintain such a low tax burden only because of extremely generous federal grants. Government spending, debt, and employment are all extremely high (spending and employment are nearly three standard deviations above the mean), and fiscal decentralization is extremely low.
New Mexico scores poorly on regulatory policy. While land-use regulation is a bit lighter than average, labor regulation is fairly tight, with a minimum wage, no right-to-work law, and a “smoker protection” law in employment. Health insurance freedom is low because of rating bands in small group and nongroup markets, mandated direct access to specialists, “prior approval” rate review, and an abnormally high number of mandated benefits, adding 52.5 percent to the cost of a typical, no-mandated-benefit policy. Cable and telecom have not been deregulated. Occupational licensing is extremely severe in both its extent and its requirements—education/experience and examinations—but the state does very well on health professionals’ scope of practice. The liability system is below average. New Mexico improved significantly on insurance regulation by joining the Interstate Insurance Product Regulation Compact and by moving from “prior approval” to “file and use” standards for auto and homeowners’ insurance rates. The state also lacks a certificate-of- need (CON) law for new hospitals.
The state fares well on personal freedoms because gun control is light, marijuana laws are comparatively liberal, and incarceration and victimless crimes arrest rates are quite low. In addition, several kinds of gambling are allowed, private school regulation is light (but home school regulation is tougher by national standards), asset forfeiture has been partly reformed, and alcohol taxes are relatively moderate. However, tobacco freedom has declined over time and is now significantly worse than average. No same-sex partnerships are legally recognized.
Policy Recommendations
- Spending on police and fire protection, corrections, education, general administration, public buildings, health and hospitals, parks and recreation, public welfare, miscellaneous commercial activities, and employee retirement is above national averages; these areas should be targeted for reduction, with the savings applied toward cutting the gross receipts tax.
- Roll back occupational licenses, such as those for teacher assistants, ambulance drivers, mobile home installers, pipe layers, boilermakers, bartenders, and dental assistants.
- Legalize same-sex civil unions.
