A recent analysis reveals that New Mexico now ranks at the bottom of all U.S. states in terms of economic freedom, overtaking even traditionally high-spending states like New York and Hawaii. The findings come from the latest release of the Fraser Institute’s Economic Freedom of North America index, a widely referenced metric in academic and policy circles for assessing how government intervention affects individual economic choice. n nEconomic liberty is generally defined by the extent to which individuals can make independent financial decisions without excessive interference from taxation, regulation, or public spending. States with greater freedom typically experience stronger economic performance, including higher per capita income, faster growth rates, and lower poverty levels. These benefits often extend beyond material wealth, contributing to improved environmental outcomes, greater life satisfaction, and enhanced social equity. n nOver the past two decades, the index has informed hundreds of studies linking freer markets to better socioeconomic results. It evaluates three main areas: size of government, tax burden, and regulatory climate. New Mexico’s declining score reflects sharp increases across all three. n nDespite a significant windfall from its oil and gas sector, state leadership has chosen to expand public expenditures rather than reduce burdens on private enterprise. Since 2025, the state’s sovereign wealth fund has grown from $58 billion to $66 billion. During Governor Michelle Lujan Grisham’s tenure, the general fund budget has surged by 71%. State consumption spending as a share of personal income now leads the nation. Transfer payments rank third highest, sales tax revenue is also third highest, and government employment stands as the second highest in the country. Additionally, New Mexico’s minimum wage, when adjusted for per capita income, is the second highest nationally. n nRather than fostering a neutral environment where businesses compete on merit, policymakers have repeatedly directed public funds toward select industries. The state’s film production subsidy program, for instance, has been repeatedly criticized as ineffective and fiscally wasteful, yet continues to receive funding. n nMarket realities have recently prompted a shift in corporate welfare allocations, moving away from struggling ventures such as Maxeon and Ebon Solar toward more promising infrastructure projects like data centers—Project Jupiter in Santa Theresa and Zenith Volts near Roswell. However, such targeted investments do not substitute for broad-based reforms that empower all entrepreneurs. n nExperts argue that long-term prosperity depends not on picking winners but on creating conditions where innovation can thrive. With budget surpluses swelling, the opportunity exists to reduce taxes, streamline regulations, and limit the expansion of public sector spending. Doing so would allow the private economy to take a more central role in driving growth. n nFalling behind every other state in economic freedom—now even less free than California—should serve as a serious warning. Without structural changes, New Mexico risks deterring investment, stifling job creation, and undermining its long-term competitiveness. n— news from rrobserver
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New Mexico’s economic freedom now dead last
In a study published earlier this year, we highlighted the fact that New Mexico was the only state in the U.S. to have lost economic freedom since 1981. We now know that it is worse than we thought. n nPeople are more economically free when they are allowed to make more of their own economic choices; economists measure this freedom by looking at the degree to which government spending, taxation and regulation limits choice. n nWe relied on data from the Fraser Institute’s Economic Freedom of North America index. Over the last two decades, it has become the most cited and most used measure of state-level economic freedom in the U.S. Like its national-level counterpart, The Economic Freedom of the World, the state index has been used in hundreds of academic studies assessing the effect of economic freedom on a wide variety of measures of economic well-being. n nThese studies find that states and nations with higher levels of economic freedom tend to prosper. They have higher incomes, faster growth and less poverty. And prosperity yields a variety of other salutary outcomes including cleaner environments, higher life satisfaction, and more gender equality. n nWorking within the scope of the rule of law and a system of private property rights, humans tend to voluntarily cooperate together to improve their surroundings and outcomes. Government can play a useful role in enforcing property rights and in ensuring that people are free from fraud and force. But it can also stifle innovation and productivity by consuming wealth and placing too many barriers on workers, consumers, businesses and entrepreneurs. n nThe latest edition of the Economic Freedom of North America has just been released. And sadly, New Mexico has lost even more ground relative to the other 49 U.S. states. Now, the Land of Enchantment has fallen behind New York and Hawaii to be dead last in the nation. n nThis should not surprise anyone who follows New Mexico policy. The state has had a massive oil and gas boom in recent years, creating a gusher of tax revenue. But policymakers have done nearly nothing with that revenue to make the state more appealing to investors, workers or businesses. n nSince the start of 2025, New Mexico’s oil and gas sovereign wealth fund has leapt in value from $58 billion to $66 billion. The general fund budget has risen 71% during Gov. Michelle Lujan Grisham’s seven years in office. As a share of statewide personal income, the state’s general consumption expenditures are the highest in the nation. Transfers and subsidies are the 3rd highest. Sales tax revenue is the 3rd highest, and government employment is the 2nd highest. As a share of per capita income, New Mexico’s minimum wage is the second highest in the nation. n nInstead of creating and enforcing a level playing field for all New Mexicans, the state’s policymakers have long preferred to lavish privileges on favored firms and industries. Time and again, the state’s film subsidy program, for example, has been found to be a money loser. But they keep throwing good money after bad. n nMarket pressures have recently forced state policymakers to shift corporate welfare spending from unsustainable boondoggles like Maxeon and Ebon Solar to more economically viable projects like data centers (Project Jupiter in Santa Theresa and Zenith Volts near Roswell). n nAd n nBut whether these projects come to fruition or not, corporate welfare is not an efficient, equitable or sustainable strategy for long-term economic development. n nInstead, policymakers should focus on improving overall economic conditions by increasing economic freedom for all. While it may be unfashionable to say amid massive budget surpluses and revenue growth, the state needs to restrain spending. It should also reduce taxes, ease regulatory burdens, and let the private sector play a larger role in economic development. n nThe state’s descent to dead last in economic freedom, less free than even New York and California, should be a wake-up call. n nPaul Gessing is president of the Rio Grande Foundation in Albuquerque. Matthew Mitchell is a senior fellow in the Center for Human Freedom at the Fraser Institute in Canada. He lives in Northern New Mexico.