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NEW MEXICO LEGISLATIVE FINANCE COMMITTEE

New Mexico population growth falls well below region, nation

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New Mexico’s population growth has slowed significantly in the last 10 years and that could be bad news for the state’s economy, two Las Cruces economists said.

The report, presented by the New Mexico Legislative Finance Committee (LFC), shows the state’s population has grown by only 2.8 percent during the past decade because of declining birth rate and more people moving out of the state than moving into it.

That could be bad news for the state’s economic future, and it should trigger changes in the state’s economic priorities going forward, the economists said.

“A slowdown like this is not a good sign for economic growth in the state,” said Jim Peach, Ph.D., professor emeritus in the New Mexico State University Economics, Applied Statistics and International Business Department (EASIBD).

And, although there is no change as a result of the 2020 census, New Mexico could lose one of its three congressional seats in 2030 or 2040 if current trends continue, Peach said.

“The situation is very bleak,” said EASIBD Interim Department Head and Professor Chris Erickson, Ph.D.

“The very slow growth that we’re experiencing shows the economy is failing,” said Erickson, a Bulletin columnist.

Peach said population demographics like birth rate, death rate and migration can change over time and there is often little state government can do about them.

Erickson said New Mexico’s economic woes can be blamed on the state Legislature and former New Mexico Gov. Susana Martinez. Current Gov. Michelle Lujan Grisham “has not really had the opportunity to enact economic programs to move the economy forward” because of Covid-19, he said.

Peach and Erickson both said steps the state should take to try to change population decline include greater investment in infrastructure – especially broadband connectivity – and education.

“The number one thing we need to do in this state is fix K-12,” Erickson said. New Mexico needs “ a different kind of financial model,” he said, with more local funding and local control of public schools and “a much better ability to adapt curriculum to local needs like it’s done in most other states.”

New Mexico may actually find itself spending less money on pre-school and K-12 education if the declining growth rate continues, Peach said. And, it will likely spend more on Medicare, Medicaid “and all of the things that we do for the elderly,” he said.

Consolidation should be the direction higher education is heading in the state, Peach said. New Mexico has 22 community colleges, five tribal colleges and five major universities, and “that’s too many for a state this size,” he said.

“We should have the best education system at least in the region,” Peach said. “Our schools and colleges ought to be as good as those in surrounding states at a minimum.”

New Mexico colleges and universities showed they could “move higher education online very effectively last year,” Erickson said. “Why open more physical campuses?

“We should be going in the other direction,” said Erickson, adding that he has “become very good at teaching online in the past year.”

Peach said the state should not tap its permanent fund (which is a major funder of education in the state) and should not reduce its current $1.75 billion reserve fund.

“Above all, we need stability,” he said.

The state’s reserve fund remains untapped in part because of a fear that oil and gas will run out in the state, Erickson said. “It will never run out,” he said, although the demand may have already peaked.

State reserves are considered “a rainy day fund,” Erickson said.

“It’s a rainy decade,” Erickson said. “Spend that money on something that benefits people. Our children’s future is right now being wasted.”

Erickson and Peach agreed that the Cannabis Regulation Act passed by the Legislature in a March special session and signed into law in April by Lujan Grisham likely will not produce a big money-making industry for the state.

It’s a classic case of “only look(ing) at the benefits as opposed to only look(ing) at the cost,” Erickson said. “There’s a lot of competition in marijuana right now.”

The Legislature also made substantial changes in the state’s liquor laws during the 2021 regular session, but that also is unlikely to generate much new income for the state, Peach said.

Both economists said state government should be working to improve New Mexico as a whole rather than focusing on specific industries.

“I don’t think we ought to be picking industries,” Peach said. Instead, he said, New Mexico leaders should “make this state a really attractive place to live and work.”

“I’m not a big believer in trying to bribe potentially large employers to come to our state,” Erickson said.

Instead, he said, New Mexico should “grow internally,” focusing on “our own business, home-grown entrepreneurs and job creators.

“We can do better and we’re not,” Erickson said.

He said the Legislature also needs to shift its economic focus from the future to the present.

“If you do it right, more economic activity and more revenue” are possible, he said.

The outcome predicted in the LFC report “is not inevitable,” Peach said. “Things change. This is not something that is chiseled in stone.

“The bright spots are that we seem to be recovering from the pandemic faster than we did from the Great (Recession)” that began in 2007, he said.

“It took us 11 years to get back to where we were in terms of jobs before the recession started,” he said. “We had just barely done that and the pandemic hit.”

Covid-19 caused a huge loss of employment in the state, Peach said, but New Mexico “is coming back a bit faster … and that’s a good sign (and) oil and gas is coming back faster than expected.”

“Given the status quo, New Mexico is heading toward having more, older New Mexicans using relatively expensive public services … and fewer, younger New Mexicans in school and working,” the LFC report said. “With birth rates continuing to fall, 43 percent of children who disenrolled from public schools during the pandemic moving out of the state, and the number of high school graduates projected to decline 22 percent by 2037, the state should be intentional about right-sizing capacity to address these trends.”

Visit www.nmlegis.gov/Entity/LFC. Scroll down and click on Policy Spotlight: Population Trends to read the full LFC report.