Among the various economic policy areas impacting New Mexico is its regulatory burden, which poses challenges for businesses. Heavy regulations can hinder business growth in the state. However, there is potential for bipartisan regulatory reforms in Santa Fe.
New Mexico could consider adopting "regulatory sandboxes" as a step toward reform. In 2023, Albuquerque Democrat Rep. Meredith Dixon introduced HB 356, "The Technology Sandbox Act." Although it did not pass or receive a hearing in 2023, this concept is relatively new to New Mexico and should be discussed in upcoming legislative sessions.
A "sandbox" is essentially a regulatory space where entrepreneurs and innovators can experiment with new ideas without being constrained by outdated regulations. This allows regulators to monitor and support innovation rather than stifle it.
The sandbox concept originated in the UK in 2014 for financial technology innovations and has since spread globally. In the US, states have applied it to industries such as fintech, insurance, and property tech. More recently, sectors like agriculture, healthcare, and energy are being considered.
While industry-specific sandboxes are beneficial initially, the ultimate goal is to create universal sandboxes that provide flexibility across all industries. This would foster economic growth while empowering businesses of all sizes. Arizona, Kentucky, Utah, and Missouri have already implemented broad sandboxes.
Outdated regulations not only affect business owners but also discourage potential business ideas due to their irrelevance to modern models. Sandboxes enable businesses to focus on solving consumer problems effectively.
It is hoped that New Mexico's newly formed Legislature will adopt a more business-friendly stance during the upcoming session. A moderate approach focusing on economic growth and diversification could benefit both Republicans and Democrats while capitalizing on the state's oil and gas boom.
Tax reform has been advocated previously; however, New Mexico's complex regulations also need attention. Regulatory sandboxes present a bipartisan opportunity worth exploring this session.
Paul Gessing is president of New Mexico’s Rio Grande Foundation—a nonpartisan organization promoting prosperity based on limited government principles.
