BY PAUL J. GESSING
Rio Grande Foundation
New Mexico leaders, especially those working in and around K-12 education, are scrambling for solutions to the State’s broadband issues. An estimated 25 percent of families in our State do not have access to broadband.
That is troubling in normal times given the importance of being able to access useful information at one’s fingertips, but when so many of our students have been forced to learn at home (whether that is virtual or home school), it becomes a much more serious issue. There are some challenges inherent in deploying broadband throughout New Mexico. Most obviously, we have a sparse population spread out over a large geographical area. It is just a fact that deploying broadband in those conditions is a big challenge.
Nonetheless, the federal and state government have funded about $325 million in broadband projects in New Mexico over a recent four-year period without much cccountability (according to the Legislative Finance Committee). Instead of even more spending on broadband, the Legislature should eliminate obstacles to broadband deployment it has created.
For starters, taxing something we want more of is a bad idea. We know that New Mexico’s gross receipts tax is an abomination in desperate need of reform. One problem with the GRT is that it taxes businesses for investing in tools that will improve the services they provide. New Mexico’s harmful GRT slaps taxes of 7 or 8 percent on investments in broadband throughout our state. For years bills that would allow companies a gross receipts and compensating tax deduction on construction and equipment expenses for expanding broadband services have been introduced in the Legislature. The deduction would apply to investments in construction of new infrastructure and equipment such as transmission facilities, fiber-optic and copper cables and switching equipment for serving new areas. For years these bills have died. Eliminating the GRT as an obstacle for broadband deployment would have reduced government revenues by just a few million dollars annually; nonetheless the Legislature refused to act.
Another way in which New Mexico public policies hinder the expansion of broadband access is through franchise fees and other rights-of-way access fees. Back in 2014 Bernalillo County was accused by several utilities including CenturyLink of using “rights of way” as a profit center for County government. A franchise fee ordinance was enacted in August, 2019 that ratified a settlement of the lawsuit, but if New Mexico really wants broadband, the Legislature (and local governments) should reconsider the fees charged to providers of beneficial infrastructure, especially in rural areas.
Certainly, “right of way” is a scarce commodity and charging for it is a reasonable government policy. However, if the policy of New Mexico government is going to be that broadband is an important good that should be available to as many New Mexicans as possible (and taxpayers should spend $325 million on improvements), it might be worth reconsidering these fees as a means of encouraging deployment.
Some of the ideas in this piece (and additional ideas are laid out) in a recently-published policy brief by Americans for Tax Reform, “Six Things States Can Do to Promote Private Sector Investment in Broadband.” It contains several ideas for increasing broadband deployment in New Mexico.
As a general rule government should facilitate private investment and reduce obstacles to investment. There will always be challenges in a sparsely-populated state like ours, but we can and must do better.