Report: Corruption, cronyism stifle NM economy

New Mexico’s reliance on government jobs, its history of corruption and a “poorly compensated” citizen Legislature create a “perfect storm” that is a major reason for the state’s languishing economy, according to a report released Thursday by the non-partisan Committee for Economic Development and the University of New Mexico.

“New Mexico’s economy is stagnant, largely because of the state’s reputation for corruption and crony capitalism and an environment that fosters pay to play behavior,” said the report.

The Committee for Economic Development describes itself as a Washington, D.C., based non-profit, business-led public policy organization.

The study recommends business leaders push for greater campaign finance and lobbyist disclosure, an independent ethics commission and a “rigorous” review of tax subsidies to determine whether the incentives are worth the money spent.

The authors describe crony capitalism in New Mexico as “regulatory favoritism, pay-to-play political coercion and interest group politics, in which companies gain more from political activity than their own economic activity.”

It looked at the state’s tax subsidies for certain corporations, noting that private companies can apply for 34 different tax credits in seven industries. Between 2011 and 2013, the state issued 860 subsidies at a cost of more than $262 million, the report said.

What it comes down to, the report says, is that in New Mexico it takes about $31,000 in tax subsidies to attract a job with an average salary of $43,000.

While the incentives might be worthwhile, it’s hard to know without regular scrutiny, the report says.

And that can lead to the perception of cronyism, especially since many industries that benefit also contribute to the campaigns of public officials who help write the subsidies, according to the report and Mike Rocca, a UNM political science professor who was involved in the study.

In addition, New Mexico is one of 16 states that still has a part-time legislature with relatively low pay and limited resources, making lawmakers “susceptible to interest group politics and lobbyists because they lack staff and resources to do their own research and depend on lobbyists for basic information on issues.”

Rocca, in an interview, acknowledged that many states “struggle with cronyism and some elements of corruption,” but “what’s been clear … is that some states do a better job of controlling it than others.”

The report says New Mexico has become “infamous” because of a number of cases, ranging from the 2008 pay-to-play investment scandal during the administration of Gov. Bill Richardson to the more recent case of former Secretary of State Dianna Duran, who just finished serving a 30-day jail term for illegally diverting campaign donations to fuel a gambling addiction.

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