2010 The Year of the Tax Increase

Every year Governor Richardson gives a name to the upcoming legislative session. Well, if even a small part of the proposals made by Governor Richardson's Budget Balancing Task Force come to pass, the 2010 legislative session will be known as The Year of the Tax Increase. Actually, we should probably make that plural. This 400+ page document has tax upon tax upon tax proposed as the solution to our supposed budget woes.

Some of these tax increases, if passed, would take effect TOMORROW. I kid you not. Proposed income tax increases would begin tomorrow and are designed to take $327,971,000 out of our pockets over the next five years and give it to elected officials to make up for their spending spree over the last seven years. Now, while the economy, at least temporarily, does not seem to be getting worse, it also doesn't seem to be getting any better.  Unemployment numbers are holding steady at levels not seen since the 1940's:

New Mexico's jobless rate remained steady at 7.8 percent in November, the same as the previous month but much higher than the 4.6 percent rate in November 2008.
    
The national unemployment rate in November decreased to 10 percent.
    
The state's labor department, the Department of Workforce Solutions, says the state lost 25,400 jobs over the past year.
    
The department says the decline in the number of jobs is the worst New Mexico has seen in modern times and it will be a number of years until employment reaches pre-recession levels. 

That's right, it will be many more years until we get back to healthy rates of employment and a growing economy.  Yet, for those of you lucky enough to be holding a job, you're going to find yourself, not only working harder because you're doing the work that used to be done by two or more people, but also working for less, because state government is going to be taking hundreds of millions of dollars out of your pocket.


Remember all tax increases are permanent. It's just the nature of the beast. Consider this from the report:

The gross receipts tax was first levied in 1934 (as the emergency school tax) as a temporary measure to keep the schools open; it was made permanent in 1935. The tax applied to almost all business sectors, including services. This contrasted markedly with other early-adopter states, like Mississippi, which taxed only sales of tangible goods. In 1966, the tax was reorganized and renamed as the gross receipts tax.

Government  always uses some sort of "emergency" to rationalize its takings, be they individual freedoms or financial. However, long after the "emergency" has subsided, what was supposed to be a temporary measure becomes permanent.  There are those who think it is time to raise these GRT taxes even higher. Yet, consider that:

The table following the map shows that New Mexico’s average tax rate is the 28th highest out of the 46 states with a sales tax. However, New Mexico ranks fifth highest in terms of sales tax revenue as a percent of personal income, a result of both the relatively low level of personal income in New Mexico and the broad base of New Mexico’s gross receipts tax.

What, fifth highest in terms of sales tax revenue is not high enough? We want to be number one? I really don't see how being at the top of this list would be a good thing. Let me put this in another perspective, total GRT collected from us, the taxpaying public, in 2004 was $2.3 BILLION.  Five years later, the economic crisis has resulted in only $3.2 BILLION taken from our bank accounts.

Wait a second! That's not a decline in GRT.  That's an increase in GRT revenue ! In fact, that's a 38% increase in taxes in collected.  Now, ask yourself, am I making 38% more today than I was five years ago?  If the answer is yes, well, you're lucky. But, the truth is that as a whole we're only making about 22% more today than we were in 2004.  If the government thinks they are in a crisis, then the taxpaying public must be beyond crisis. Yet, they want to raise our taxes even more.

I could go on, but I think you get the point.  State government IS NOT in a revenue crisis situation.  The problem is that spending has been out of step with reality for many years now.  At the very least, we should be cutting expenses back to 2004 levels. If you doubt me, then ask yourself, are my neighbors, family and friends better off today that they were in 2004? I'd be very surprised if you could answer that with a "yes".

If you're the type to make New Year's Resolutions, I've got easy one for you to make.  Resolve to call your legislators and the Governor, assuming you can locate him, and let them know if they like elected office, they will cut spending to bring it in line with our income growth before considering a single additional tax.

It's Getting Worse

No, I'm not talking about the economy. I'm talking about the peeling away of our individual right to privacy and freedom. The TSA has heightened alerts after the failed Christmas Day bombing of an airplane. This heightened alert means that millions upon millions of travelers will be treated as criminals as they travel for business or pleasure:

The current directive requires airlines to pat down all passengers boarding planes bound for the United States and inspect their carry-on bags.

It also gives airlines the discretion to take other measures to prevent people from secretly assembling or igniting bombs on aircraft. Those measures include prohibiting people from keeping pillows or blankets on their laps during the final hour of flight.

I can't decide what is worse, the virtual strip search or the humiliation of a forced pat down of otherwise law abiding citizens to travel the country.

What is truly bothersome is that this expansion of an overreaching police state is absolutely unnecessary. This bomber could have been stopped from ever boarding the plane.

"A systemic failure has occurred, and I consider that totally unacceptable," Obama told reporters Tuesday during his vacation in Hawaii, referring to what authorities allege was Umar Farouk AbdulMutallab's failed attempt to blow up a Northwest Airlines plane preparing to land in Detroit, Michigan.

The president said information on AbdulMutallab should have sufficed to alert authorities to prevent him from getting on the flight from Amsterdam, Netherlands.

So, despite massive amounts of Homeland Security spending and the further erosion of freedoms, we still have the same problems today that we had in the pre-9/11 world. Namely, a failure to communicate in the intelligence community.

Now, I know there are people out there who feel it okay to give up our rights to ensure our safety - although, I have yet to meet them in my circle. But, when does it stop? If terrorist gunmen were to unload in a shopping mall, would we then be okay with being patted down and virtually strip-searched every time we went to the mall? Would we tolerate it going to work, or church, or ours kids sporting events? Where does it stop?

I've remarked before that it troubling how quickly we have adapted to this government intrusion.  It is not so far fetched to believe that it will continue to the extremes mentioned above in a very short time. As one year comes to an end and another begins, I sincerely hope this trend reverses itself.  If it does not, by the time our kids grow up, this country will no longer resemble the free nation we all loved.

The One Week Break

December 10th came and went without me noting a major milestone in this online experiment. It marked the fifth anniversary of this blog. Five years, more than 1,200 posts and over 4,000 online comments left by readers, plus thousands of comments sent to me privately.

I've been truly humbled and amazed by the way this thing has grown, the doors it has opened and the opportunities for civic involvement it has provided for me. Sure, it got a little old at times attending meetings and being cautioned that the discussion was not to be used as blogging fodder. But, as time has passed, people have realized that I don't write about what I hear, I write about what I read. So, I hear that admonition much less often.

Last week marked the first time in five years that I went an entire week without blogging. No, I wasn't away on vacation. I just took a break. I have to confess that I actually considered just stopping altogether. I mean, five years is a good run, right? But truth is, I think I'd miss it. So, I guess I'm not going to stop anytime soon. I'm going to keep on writing, and hopefully, you'll keep on reading.

For those of you who have been with me from the beginning, thanks for the company. And, to those who have joined more recently, I hope you'll stick around. The world around us is going through major changes, and for what it's worth, I'll keep contributing my two cents from the side of this mountain as long as you'll keep reading.

Another Reason Dollars Should Follow Children

Whether a charter school is succeeding or failing in meeting its students educational needs, there is one component that is undoubtedly in play that does not exist at most regular public schools - parental involvement. In order for a child to be attending a charter school, a parent or guardian had to make a conscious choice and effort to get their child into that school. And, in the end, if they are unsatisfied with the results, they can move their child out of the school and to another.

This is a good thing. In fact, parental involvement in a child's education is one of the key factors in improving student performance. Yet, the Albuquerque Public Schools (APS) wants to shut down opportunities for more parents to take an active role in their children's education:

Albuquerque Public Schools wants lawmakers to place a moratorium on new charter schools until existing schools are fully funded.

The request is one of the items on the district's legislative wish list, and it aims to help APS deal with a budget crunch.

"We need to stop putting in place new programs or schools that take away from the pie of money," APS lobbyist Joseph Escobedo said.

The theory that moving dollars from one education environment to another is "taking away from the pie of money" is absurd. It is a redistribution of money, but it doesn't shrink the overall pie. Kids are still going to be educated using the same amount of dollars. Actually, maybe I should reword that to say some kids will finally be educated using the same, and quite possibly less, dollars.

Why is it that government entities always support redistribution of wealth from taxpayers to their budgets, but fight tooth and nail when the redistribution is from their budgets to another public entity budget? When that is proposed, it makes the pie smaller. Of course, we all know that it doesn't shrink the pool of money, it just allows it to move to potentially more productive uses. Something that really ought to be the focus of the upcoming legislative session as opposed to taking more from taxpayers. But, I digress.

This is yet another reason that taxpayer dollars allocated for educating our children should follow those children as opposed to making the children follow the dollars.

Disclaimer: Our kids attend a fantastic charter school, Family School. So, I've got an inherent bias here. Plus, it would be highly hypocritical of me to take advantage of school choice for my children, but say from this point forward other people's children should not be afforded the same opportunity.

Return to Feudal Times

People who work for the government work for us - the taxpayers. Ultimately, we're their bosses. I know, based on some interactions you have with your employees it seems that they conveniently forget this fact.

Be that as it may, it truly works much the same as any business. We, the tax-paying bosses, produce revenue so that they have a job. This goes for everyone who is collecting a government paycheck, from President all the way down to administrative support staff in the smallest municipality in the nation.

Of course, the one biggest difference is that you, the taxpayer, can't immediately fire these employees for poor performance. Imagine how different your last unsatisfactory interaction with a taxpayer paid employee would have been if you could fire those who don't meet your level of expectation. Sure, you're probably thinking, "I can fire the elected ones." But, the thing is that particularly type of firing is a delayed action. The underlying reason the individual is losing their job is not apparent in that type of firing.

It's kind of like housebreaking a dog. If you scold the dog after the fact for eliminating in the home, it will not equate the reprimand with the actual act of relieving itself in the home. For that to happen, you actually have to catch the dog in the act and show your displeasure. Same thing with elected folks on the taxpayer payroll. When they get reprimanded (read: the boot out of the door), they think it has something to do with changes in the political wind. They rarely think it is because of their repeated poor job performance.

Ok, so our system isn't perfect. No news on that front. But, the system we've had in place is still better than any other around the world. Or, at least it had been. There wasn't immediate accountabilty, but until recently there had been some semblance of accountability. For example, until recently, our employees felt obligated to provide us information when we requested. An obligation that is legally mandated.

I said until recently. Now, it appears even that level of accountability is going by the wayside:

Days after a spokesman for Gov. Bill Richardson told a TV reporter that it was “not appropriate or dignified” to identify the 59 political appointees who are losing their jobs, Richardson’s office has formally denied a newspaper reporter’s request for that information.

The Santa Fe New Mexican’s Kate Nash didn’t get much – including anything that identifies the people who are being laid off – in response to her request.

Reporters, who happen to be taxpayers as well, have historically taken the role of internal audit committee for our, the taxpayers, business. In other words, they've looked out for our interests. However, if we allow them to be shut out and denied information about who is or isn't working for us at a given time, then we stop having any sort of control over our government employees and officials. When this happens, those folks no longer work for us as public servants. Instead, we work for them in a manner very reminiscent of feudal fiefdoms in days of old.

I don't know about you, but the idea of becoming a serf is not particularly appealing to me.

So Here's a Thought

The union appears to be a little riled with Governor Richardson over the nonnegotiable forced furlough of state employee's as one tactic to plug the state budget gap:

The American Federation of State, County and Municipal Employees Council 18 says Richardson's administration violated the law by refusing to bargain with the union over five unpaid furlough days Richardson ordered for 17,000 state workers in December, January, March, April and May.

"It's a fairly simple complaint," said Albuquerque attorney Shane Youtz, who is representing AFSCME and its 6,000 members. "We asked politely to bargain and were told no."

State Personnel Director Sandi Perez said the state fulfilled its legal duties by discussing the furloughs with union leaders in November.

Well, here's a fairly simple idea for union leaders. Next time, the government starts promoting spending gobs and gobs of money (translation: hundreds of millions) on things like Spaceports and trains, you might want to voice your opposition. After all, it's things like the ongoing tens of million of dollars in losses incurred by the Rail Runner that are causing your union members to have to take unpaid furlough days:

The red ink lubricating the wheels of the Rail Runner is getting redder. Its operating deficit for the fiscal year ending June 30, 2009, topped $19 million. It collected a mere $1.9 million in fares against $21 million in operating expenses. The losses are greater than we reported in August. Based on information provided us by the Middle Rio Grande Council of Governments, we reported then that the Rail Runner’s operating loss through May 31, 2009, exceeded $13.4 million. But data for the entire fiscal year, ending June 30, 2009, reveal a number almost 42% higher.

Now, I realize there are several members that might be taking that train up to Santa Fe, but I'll bet you there are even more that are not. Which mean, that the vast majority of members are going to see a cut in pay, so a handful can pay less than their full share to ride the train to Santa Fe.

It's just something for you to consider.

Tax Increases Only Inevitable in Governor's Mind

Governor Bill Richardson is all about raising taxes in the upcoming 2010 legislative session. In his mind, a tax increase is inevitable. But, thankfully sounder minds may prevail:

Sen. John Arthur Smith, D-Deming, the Finance Committee chairman, said many lawmakers from rural parts of the state — both Democratic and Republican — remain wary of raising taxes during tough economic times, despite the state's budget deficit.

"There's no guarantee there's going to be revenue enhancements," Smith said Thursday. "I just don't see an overwhelming vote."

Lawmakers already have reduced general fund spending by about $700 million, from $6 billion to about $5.3 billion, because of steady declines in state tax revenues. Some legislators say there's room for more cuts in the state budget, which grew by 50 percent during Richardson's first six years in office.

First, a word of advice to those that oppose tax increases. Let's call them what they are - tax increases. The presumably poll tested and less offensive positioning of tax increases as "revenue enhancements" isn't fooling anyone. The voting public in New Mexico is not as naive as some elected officials would like you to think. If you raise our taxes, we'll know it. And, we'll hold it against you. We get enough "enhancement" junk mail in our inboxes to know political spam when we hear it.

With that said, let's talk about the resistance to cutting the bloated budget - a budget that increased 50% since the current administration took control. Exactly what has this recurring explosion in spending bought us?

• Is your life better today than it was in 2002?
• Are schools performing better than they were in 2002?
• Do you feel safer in your homes today than in 2002?
• Do you feel more optimistic about your future today than you did in 2002?

My guess is that the vast majority of New Mexicans would answer all of these questions with a resounding, "No!" So, let's stop talking about tax increases and let's get back to a time when life was enhanced and government was smaller. It would be a small step back to make a huge step forward.

New Legal Industry Niche Grows

In Monday's post, I noted that a new industry would result while the State tried to hold onto their unconstitutionally imposed property produced lightning tax revenue, and sure enough the lawsuits have started:

The owners of about 30 homes sued the Bernalillo County assessor on Tuesday to recover more than $42,000 in overpaid property taxes — the latest twist in the debate over "tax lightning."

The plaintiffs, 50 in all, argue they paid too much in taxes because of the state's unconstitutional property tax law, which two state district judges have already ruled against.

More litigation could be on the way. Clinton Marrs, the plaintiffs' attorney, said he is working on another suit that would involve about 100 homes.

"This is just the first wave," Marrs said of Tuesday's suit.

So, let's consider this for a moment. Bernalillo County Assessor Karen Montoya indicated that tens of thousands of taxpayers have been unjustly impacted by tax lightning. With just 30 homes suing, the remuneration potentially owed is $42,000. Imagine what it will be when everyone starts suing.

Did I mention that the biggest jump in keyword activity on this site in the last two days came as a result of words associated with tax lightning? Hmm, I've never sold ads on this website, but considering the size of this market, maybe I should make an exception this once and sell a top and side banner ad to a legal firm for the month of December and January at $2500 a pop? After all, tis the season to need a little extra spending money.

Any takers?

Visual Depiction of Unemployment Reality

A reader sent me a link to this visual depiction of our nation's unemployment numbers since January 2007, and it eerily looks like a disease infecting the entire nation.

State Prepared to Fight County Tax Lightning Correction

A law from 2001 put a 3% cap on the amount our property taxes could increase year over year. However, the law allowed the property tax to be reassessed upon sale of the property. The result has been an unconstitutional tax lightening effect. In other words, two neighbors in the same size house could find themselves paying hugely different annual tax bills.

After two judges have found this unequal taxation to be unconstitutional, Bernalillo County Assessor Karen Montoya has opted to do the right thing and put everything back in balance by 2010. But, it appears she is going to get a fight from State Secretary of Taxation Rick Homans:

Rick Homans, secretary of the state Taxation and Revenue Department, said Montoya's decision could have serious consequences.

"A massive rollback in property taxes, as suggested by the county assessor, raises several complex legal questions and has potentially serious fiscal implications that need to be studied more closely in the weeks ahead," he said.

Leave it to a state bureaucrat from the Richardson administration to twist the facts into a new reality. The truth of the matter is that it was the law that was passed in 2001 that raised the complex legal issues. Complex legal issues that impact tens of thousands of voters in Bernalillo County alone. Complex legal issues that have been determined by the courts to be unconstitutional, not once but twice.

Now, it is refreshing to see an elected official like Bernalillo County Assessor Karen Montoya decide to take a corrective course of action on behalf of taxpayers. Compare that action to the current administration's fallback position to delay justice for those unfairly penalized. The Richardson administration would rather push off taking any action, and instead create a new industry and over burden the court system by forcing tens of thousands of taxpayers unjustly impacted by tax lightning to sue for equitable treatment under the law.

Considering that many of those homeowners are probably struggling to keep a roof over their families heads in these times of increasing unemployment and home foreclosures, it is clear that this administration puts protecting their revenue streams ahead of the needs of working New Mexican families.

An Interesting Choice

Listen, I'm the first one to advocate for cutting the explosion of appointed positions from state government. But, with the culture of corruption and fraud that has plagued New Mexico under Governor Bill Richardson's, especially in the arena of investments, this cut leaves you scratching your head:

One employee who got a pink slip said his job probably isn't the kind the Legislature intended to eliminate.

Bruce Kohl, head of the Securities Division at the Regulation and Licensing Department, said he's a recognized expert in his field who has put in 15 years at the division under several governors.

"I think they intended to get rid of political deadwood, not the technical professionals needed to run state government," he said.

"I think the public has the perception that exempts are a bunch of political hacks who can't be touched, but there are some very good people who serve as exempt employees," he said.

Kohl, an attorney, worried more about what's next for the division than his own future. Among other things, the division brings securities fraud cases.

This is right up there with those that were looking to gut the State Auditor's office. There is only one way I think this makes sense. That is if the Governor's office is going to release a statement that says Mr. Kohl was guilty of looking the other way while the Richardson Administration allowed political connections to be used to guide investment contracts that resulted in millions upon millions of dollars in losses for New Mexico taxpayers.

Of course, if the opposite were true, and Mr. Kohl played a role in bringing these practices to light, well, then it sure would appear that the Richardson Administration is going after the good guys. I don't know which it is, but someone's got some explaining to do.

Political Sound Bites

That's really what we're talking about here - political sound bites. It's beyond absurd for Governor Bill Richardson to be proposing a special initiative to close the Hispanic education gap:

Gov. Bill Richardson said Tuesday that he will work with state legislators to develop and pass a Hispanic Education Act in the 2010 session of the New Mexico Legislature.

This administration has a proven track record of spending hundreds upon hundreds of millions of dollars on budget breaking projects like spaceports and trains, but to expect them to make any gap closing changes in education is just ridiculous. For us to believe this is possible, we would have to forget the track record of education failures in student performance that have plagued this administration from day one.

And, am I the only one who finds it a little bit insincere for Governor Richardson to talk about closing the education gap for Hispanics by passing a Hispanic Education Act? Seriously, this may make sense for a state with a small percentage of Hispanics, but in New Mexico, we've got the highest percentage of Hispanics of any state in the nation - 45% of our state's population.

So, nearly half of our public school children are Hispanic. Fixing and education gap for almost half of the student population does not require a special initiative. It requires a complete overhaul of the education system. But, don't expect anyone in this administration to be up to that challenge. Instead, look for them to blow more smoke and spend more money on initiatives that will do nothing to improve student performance:

Richardson asked summit participants — students, teachers, administrators, politicians and others — to come up with solutions before the legislative session. He said he wants the recommendations to help shape a new Hispanic Education Act, similar to New Mexico's Indian Education Act. That act created a special state division, which compiles an annual report on the progress of Native American students and encourages communication between tribes, among other things.

Yeah, that's what we need. A new "special state division" to compile annual reports and encourage communications. That'll solve all of our problems. Maybe we should bring back the efforts to create a Department of Hispanic Affairs as well?

The Bankrupting of America

You know you have a problem when the folks that print the money are spending so much that they are exceeding their own debt ceiling:

The Senate began a debate Monday over the future of health care in America that's likely to go on for weeks, but behind the scenes, lawmakers are struggling to resolve an even more explosive issue: how to pay for all their ideas.

Federal budget deficits remain at record highs. The national debt is $12.1 trillion; Congress must vote soon to let it go higher, or else the Treasury won't be able to issue new debt. President Barack Obama is expected to announce today a plan to send an additional 30,000 to 35,000 American troops to Afghanistan, which will require more spending.

If you think healthcare insurance for all is the most important issue facing this country, think again. This forced insurance boondoggle will result in a deterioration of service options and a bankrupting of America. The only good news is that bankruptcy is a time of re-organization. At least that's good news if you think the political leadership of our country needs to be re-organized out. And, by re-organized, I mean shown the door.