Tax Them Not Me

There is a troubling trend I'm seeing during this economic crisis, and I guess the best way to sum it up is a "Tax Them Not Me" attitude that is prevalent throughout the state. I've never been one to say that we should have no taxes and no government.  Quite the opposite.  I believe that we should have limited taxes thereby limiting the size of government.

I firmly believe that our current tax structure, particularly during good economic times, is generating too much revenue, and in turn, needlessly growing the size of government. Unfortunately, the result of this is that when the economy turns south, the self-preservation tendencies of those in government is to raise taxes in order to protect their pet projects, and in many cases, irrelevant jobs (e.g. film museum director positions in non-existent film museums):

The film museum is perhaps New Mexico's most unusual cultural property. It's not in the phone book, and there are no exhibits, no visitors and no staff. In fact, there's no museum.

What they do have, however, is an executive director. Last year, the governor put Maloof in charge of a staff of none at a nonexistent museum paying her $88,000 a year. Maloof became the highest-paid museum director in the state system administered by Cultural Affairs Secretary Stuart Ashman, a member of Richardson's cabinet.

Now, historically my limited taxes / limited government stance has put me in the camp of the business community and those who have worked, saved and invested to accumulate wealth.  However, during this economic downturn, a surprising number of those same folks have now taken a stance that is truly troubling. Namely, rather than fighting and unneeded tax increases and pushing for a leaner, more productive government, they've become advocates of increasing taxes on the poor:

TERRI COLE, president and CEO, Greater Albuquerque Chamber of Commerce:

Now, back to food. Yes. The Guv should sign the partial reinstatement of the food tax. Signing it gets us closer to the fact that it should never have been repealed in the first place. It was bad tax policy. We need broad based taxes so that they can be kept low and fair to all. We should, however, use effective programs like LICTR (Low Income Comprehensive Tax Rebate) to help New Mexicans neediest families.

The Greater Albuquerque Chamber of Commerce is not alone in taking this stance. Other special interest and business groups have also endorsed the idea of taxing starving families to protect their subsidies and keep their profit taxes in check.  Personally, I just can't get behind that idea.

First, let's deal with the obvious.  Like the Earned Income Tax Credit on the federal level, the neediest families don't take advantage of things like LICTR because they can't afford to have tax consultants  on a retainer to tell them how to get their money out of the system.  And, generally speaking, the way that the government communicates those credit opportunities is nonsensical even to the most educated amongst us. In fact, government and those pushing policies like these count on large numbers of people not taking advantage of what is available to them.

So, if an industry cluster is going to push for tax increases to balance the budget, they should adopt an attitude of tax me first, as opposed to tax them not me. Or, alternately, they could, like me, say enough is enough.  Get serious about reining in the spending and eliminating unnecessary jobs and programs before we consider raising taxes.

Let's See the Proof

The Governor's office and Lt. Governor Diane Denish appear to be in a he said / she said squabble about the state's failure to land a Race to the Top education reform grant from the Obama administration:

Richardson spokeswoman Alarie Ray-Garcia said that despite Denish's interest in education, she declined repeated invitations to help develop the proposal.
        
"Her only involvement was to write a letter in support of the state's proposal, which she praised as being 'innovative,'" Ray-Garcia said.
        
"Now, for whatever reason, she has decided to attack the hard work of a lot of New Mexicans, including Secretary Garcia and her staff, who dedicated a lot of time and resources into this proposal. It was a strong proposal and Governor Richardson was proud to spend considerable time in Washington D.C. last week lobbying Secretary Duncan on its merits."

Denish spokesman James Hallinan said Denish was never invited to participate in the grant-writing process. 

Now, I admit to being a bit curious as to whom is telling the truth here. And, as it was pointed out to me by one reader, this should be relatively easy to prove one way or the other. Maybe Richardson spokeswoman Alarie Ray-Garcia would like to send us a copy of the emails or memos that were sent to the Lt. Governor inviting her to help develop the proposal, or maybe a copy of one of the written responses where she "declined repeated inivtations."


Alternately, maybe the Lt. Governor's spokesman, James Hallinan could send us a copy of the request the Lt. Governor made to actually be involved with the proposal writing. I'm just saying, if one of you is telling the truth, please back it up with a little written evidence.


As a relative tangent, you've got to love the fact that teachers' union representative actually wrote a letter AGAINST the state's request for $160 million from the feds:

And while the state's chances probably weren't helped by a letter from Albuquerque Teachers Federation President Ellen Bernstein criticizing the state's application, that likely wasn't a determining factor. 

It may not have been a determining factor, but I do hope that when we have a second special session this year because revenue is less than projected, our state legislatures take note that the union went out of their way to keep money for education from coming into the state.  Education cuts in the amount of $160 million should absolutely be on the table if a second special session is called.

They Went Ahead and Did It

It took three days of meetings behind closed doors for the Democratic leadership to make a monumental mistake and push through regressive tax increases on New Mexico's working and non-working families:

The tax hike legislation included an increase in the statewide gross receipts tax, or sales tax, as well as a partial reimposition of the sales tax on food.
        
Members of the Republican minority harshly criticized the omnibus bill (SB10,12,13), arguing that the largest tax increase in recent history had been hatched without their input and that the tax changes should be considered separately.
        
The proposal would impose "a serious tax burden on New Mexico working families," said Rep. Dennis Roch, R-Tucumcari.
        
House Speaker Ben Lujan, D-Santa Fe, said the tax increases were needed to avoid deep cuts to public schools in the 2011 budget year, which begins July 1. 

Of course, the Speaker's excuse is total and complete nonsense. The tax increases pushed exclusively by the Democrats on everyday New Mexicans struggling to get through this economy that has left so many unemployed and struggling to pay for the basics, like FOOD, could not come at a worse time. More than half of the $200 million tax increases introduced are regressive in nature. Yet, we all know that almost an identical amount could have been easily cut from government:

The committee to improve government efficiency has delivered its final report to Gov. Bill Richardson, recommending cuts and consolidations that total $129 million.

The committee said there are too many state government employees. New Mexico has nearly 25 state employees for every 1,000 people. That ratio is higher than any state in the region and twice the national average.

So, please excuse us Mr. Speaker while we take umbrage with your attempt to pretend your putting our children first.  It is clear to everyone that patronage is the first priority of your caucus, and to heck with taxpaying New Mexicans.

Of course, you've got to love the irony of the fact that one Lujan expresses outrage at increases in healthcare premiums at the same time his father pushes tax increases on food for the same struggling families:

One New Mexico congressional representative expressed outrage at the increases in a statement.

“At a time when families throughout New Mexico are struggling to make ends meet, these rate increases are outrageous,” Rep. Ben Ray Luján, CD-3, said.

Maybe this family of politicians needs to caucus.

What's That You Feel in Your Pocket

Near as I can tell that hand you feel in your back pocket belongs to the NM Senate:

The Senate-passed tax increase package would raise the statewide gross receipts tax rate — now 5 percent — by one-eighth percentage point, yielding almost $60 million a year.
        
The bill also would reimpose part of the gross receipts tax, or sales tax, on food. The rate would vary, depending on the local gross receipts tax rate of the city or county in which the food was bought, but average about 2 percent. The change would bring in an estimated $68 million.
        
Another $66 million would be gained from eliminating the deductions that some New Mexicans can now take on their state tax returns for the state and local taxes they've paid. That would increase their taxable income.
        
And the state would get $11.6 million from a newly imposed compensating tax on out-of-state companies that sell products to New Mexico businesses but have no physical presence in the state.

Oh, I know that some you will say that the legislature has no choice.  They have to raise taxes to get us out of this pickle. But, that's not true.  There are other options:

The numbers are big and the money bigger, but the bottom line is New Mexico could find $280 million to help fix its budget.  Rep. Dennis Roch, R-Tucumcari will try to bring an amendment to the state budget bill that will simply cut those state positions which are currently vacant.


Roch points to a report he requested from the Legislative Council Service (LCS) outlining the job vacancies in state government. The report says as of January 4th, there were 4369 vacancies in state government. The problem according to Roch is that the proposed budget lawmakers are trying to tackle would fund 3396 of those positions. Roch argues if the state can function now without those positions filled, then it can function by eliminating them altogether.

But hey, that makes too much sense, right? Cut non-existent jobs over increasing taxes on struggling families.

I've got to run, but you can catch me today at 3:00 pm on Jim Villannucci's show on 700 KKOB discussing this and other issues with Carter Bundy.

New Mexico Democrats Have a Problem

Last week, I attended an event that had, among others, Lt. Governor Diane Denish as a speaker. To the delight of myself and the small business audience in attendance, the Lt Governor said, and I paraphrase, "Now is not the time to raise taxes. It is time for the government to do what the private sector has been forced to do and control spending."

Now considering that Lt. Governor Denish is usually considerably to the left of me, and that her campaign for Governor is well-funded, it can only be concluded that her internal polling is telling her that supporting tax increase, any tax increases, right now would be the equivalent to political suicide.

And, herein lies the problem...

More details on tax hikes and spending cuts in a new state budget plan emerged Sunday as New Mexico lawmakers prepared to return to the Capitol today for a special session on the budget.
        
The plan, hammered out behind closed doors by top-ranking House and Senate Democrats, would increase the state's gross receipts tax, raise the tax on cigarettes and have New Mexico cities reinstate a portion of the gross receipts tax on food items that was repealed six years ago. 

Yup, leave it to the Democrats to propose a slew of new taxes as families are struggling to survive. If these tax increases are passed, they are going to hurt campaign efforts of every Democrat running for office during this election cycle. Mind you, that's not something that's particularly upsetting to me, but for a strategic standpoint its interesting to watch how this is playing out. 

As a limited government guy, I wouldn't mind seeing some taxes cut for a variety of reasons I've outlined over the years.  But, in the current economy, I would be willing to settle for no new taxes. The Democrats seem to be operating as though it is business as usual (i.e. let's find another incremental tax to pass).  But, there is nothing usual about the situation in which we all find ourselves.


Right now, Lt. Governor Denish is trying to emerge from Governor Richardson's shadow and define herself as a leader in her own right. Of course, taking a stand against new taxes when her Democratic colleagues are pushing for them is setting her up to appear either:


a) Lacking in leadership and the ability to influence policy.


OR


b) Saying what the people want to hear in public and privately supporting the taxation of the masses.

Either way, New Mexico Democrats, from the Lt. Governor on down, have a big problem.

Revenue Growth Predictions

It looks like all of the movie magic in the Land of Enchantment has begun influencing financial projections by the Richardson Administration:

Economic analysts for Gov. Bill Richardson's administration said Thursday they remain confident that New Mexico revenues will increase by nearly $300 million next year, a day after legislators voiced doubts about significant rebounds in the state's economy.
        
The revenue estimates, which don't factor in proposed tax increases, are key to ongoing budget negotiations between top-ranking Democrats in the House and Senate. 

 That's a pretty amazing prediction. I'm wondering what the Administration's position is on Tooth Fairy and Santa Claus?

Richardson Approval Numbers in Free Fall

The Teflon Governor is Teflon no more.

We're going to have our New Mexico poll results out starting tomorrow- perhaps the most interesting thing we found is that Bill Richardson has become one of the least popular Governors in the country, with 63% of voters in the state disapproving of him to only 28% approving. He's even in negative territory among Democrats at a 42/47 spread.

I've always been amazed by Governor Bill Richardson's early popularity. Despite the rhetoric, the "successes" of this Administration have been nothing more than smoke and mirrors.

• The Richardson Administration threw more and more money to appease education special interests groups, while ignoring the fact that each year student performance is worse than the year before.
   
• The Richardson Administration raided our road funds to give $100 million dollar gifts to billionaires, and build a train that benefits only a tenth of a percent of the state's population.
  
• The Richardson Administration has been mired in one pay-to-play scandal after another.

And, this is just the tip of the iceberg. I could go on for days, but you can just hit the appropriate label button below and read it all without me repeating it.

So, what does this all mean for the Democratic hopefuls during this upcoming election year.  Well, right now it looks like Richardson Administration #2, Lt. Governor Diane Denish, is still polling out ahead... barely:

Where New Mexico departs from its regional counterparts is that it still looks favored to vote Democratic in its most significant statewide race this year. Lieutenant Governor Diane Denish leads her top Republican opponent, Pete Domenici Jr., by a 45-40 margin and has leads of 14-18 points over the rest of the GOP field.

Denish is by far the best known of the candidates running, with 41% of voters in the state holding a positive opinion of her to just 34% who see her negatively.

 Keep in mind, the Lt. Governor has been campaigning for this position for going on two years. So, I don't know that those  numbers are anything to celebrate about - especially, considering Pete Domenici Jr. just got in the race a couple of weeks ago.

It's going to be very hard for the Lt. Governor to start disengaging herself from the Governor after Denish has been so silent for so long. Only 34% of the voters see her negatively right now, but let's be realistic.  She has operated in the shadow of Governor for the last eight years. His failed policies are bringing him down very quickly.  It's not going to be very long before that same problem is encountered by Richardson's #2. This is particularly true when we consider that the Governor spent so much time out of state during his Presidential dream chasing, that the state was actually being run by Lt. Governor Diane Denish.