It's Called Permanent for a Reason

New Mexico has something called a Permanent Fund.  It is money socked away in recognition of the fact that one day the oil and gas resources that fill our state coffers will be no more. It might be worth visiting Merriam-Webster's definition of the word permanent:

Main Entry: ¹per·ma·nent

Pronunciation: \-nənt\

Function: adjective

Etymology: Middle English, from Anglo-French parmanant, from Latin permanent-, permanens, present participle of permanēre to endure, from per- throughout + manēre to remain — more at per-, mansion

Date: 15th century

: continuing or enduring without fundamental or marked change : stable

synonyms see lasting

— per·ma·nent·ly adverb

— per·ma·nent·ness noun

Now that we understand the word "permanent,"  I think we can all agree that there isn't any circumstance in which "Permanent Fund" could be misinterpreted to mean "Rainy Day Fund:"

A type of contingency fund in which money is set aside to be drawn upon in case of a future budget deficit. It is often referred to as a budget stabilization fund.

Yet, that is precisely the type of convenient rewriting of the English language one legislator is promoting:

A leading state Senate Democrat says it's time to borrow against New Mexico's rainy day funds for a $500 million loan — a gamble he says would make it unnecessary for lawmakers to approve major tax hikes and cut the salaries of state workers this year.
    
Under the terms of a bill introduced by Senate Majority Leader Michael Sanchez, D-Belen, up to $500 million could be moved into the state's general fund by directing the state's Board of Finance to issue short-term revenue bonds.
    
The bonds would be paid off over five years via a special fund created for that purpose, Sanchez said, with the money coming from general fund appropriations and a portion of the state's gross receipts tax revenues.    

Sanchez acknowledged that the bill (SB184) hinges on a wager that the state's economy will improve in the next few years.

You might consider sending the good Senator from Belen an email letting him know that we, the taxpayers and our children and grandchildren, prefer that he keep his wagering to recreational pursuits done with his own money on his own time at any one of the fine tribally owned casinos found throughout the Land of Enchantment.

Only One Committee Referral

You can tell a lot about the future of a bill introduced in a legislative session by the number of committees it is referred to before it sees the light of day on the floor for a vote. If a bill has three committee referrals, you can expect it's got a long uphill battle that will see the session end before the bill makes it to the the floor. When it comes to tax raising legislation, that is what those of us prefer to spend our own money want to see.

On the other hand, if a bill has only one committee referral, then it's pretty clear that someone with power wants to see it passed.  Last week, we noted that HB 9 INCOME TAX SURTAX bill, had quickly collected a lot of signatures by those who believe in taxing more before spending less. Now, we observe that it has only one committee referral.  If you find yourself in the group that currently pays 59% of the state's income tax revenue, and you don't want to pay even more, you better start lighting up those phone lines and filling those inboxes.


 

It Only Took Three Days

So, who wants to raise our taxes? If you're a legislator in Santa Fe eager to raise taxes on small businesses in New Mexico, raise your hand.  No, better yet, just scribble your name on top of the proposed new tax bill.

Oh, sure I understand how some readers might think that this is a tax on the rich, but that's because they don't understand how most small businesses are set up.  They are usually limited liability companies or sub chapter S corporations.  That means that the profit from their company ends up on their personal income tax filings.

Now with banks being tight on lending (despite bailouts from taxpayers), most profitable small businesses are keeping those retained earnings in their company to keep their doors open and hold onto their key employees. But, that last lifeline is about to be raided by legislators and the administration in Santa Fe because it's easier to force more layoffs in the private sector than to cut unnecessary spending in public sector.

After all, who is going to notice if one more small business is forced to close their doors? Well, the answer is I will, and I sure hope you feel the same.  If you find your legislator's signature on this additional tax on small business, I hope you'll give them a call and ask them to get their priorities straight. If you don't know what your legislator's signature looks like, no problem, you can download this PDF of the entire bill along with the document they signed to kick off the session.

What's Important to Voters

On the national level, elected Democrats just received a wake-up call that their agenda is not our agenda. And, by our, I mean the majority of voting Americans whose number one concern is housing and feeding their families:

Shorn by Massachusetts voters of their pivotal 60th Senate vote and much of their political momentum, the White House and congressional leaders are considering a more modest version of Obama's top legislative priority. It could focus on curbing insurance company practices like denying coverage to sick people and on helping low-earning people and small businesses afford coverage, officials said.

Also fueling the Democratic search for a fresh health care strategy is a conviction by many in the party that it's time for an election-year focus on jobs and the economy, which polls show are easily the public's top concerns.

Of course, they're kind of missing the mark. Jobs and the economy are NOT an election-year focus.  They are an EVERY year focus.  Think about it. If we have a strong economy and jobs, the vast majority of Americans can take care of meeting their own healthcare needs.  I know.  What a concept!

I'll also let you in on a little secret. The more government taxes and regulates, the less likely we're going to see jobs and a strong economy. The bigger government gets, the smaller the private sector gets. 

Don't believe me? Well, look for a state with a really big government footprint. A state like, hmm, well, a state like New Mexico. We've got lots of big government and very little industry.  The result? We've got a very poor populations per capita.  Are we seeing how this works?

Our state legislators would be wise to consider this as they wrangle with how to save all of those "very important" government programs. If we want to see jobs and growth, we need to shrink the size of government.  Of course, the easiest way to do that is stop feeding the beast.  In other words, make do with the revenue we have as opposed to taking away more jobs by increasing taxes even more.

Never Quite Short Enough

Despite the fact that this year's State of the State address by Governor Richardson was billed to be his shortest to date. It still seemed a bit long to me. Then again, I always have a hard time continuing with the speech after the Governor begins spewing nonsense:

New Mexico has always been fiscally responsible.

Unlike Washington, New Mexico cannot run a deficit, nor overspend.

We must have a balanced budget.

And we have balanced the budget every single year.

If New Mexico can't overspend, you have to wonder how we got ourselves into this pickle.  Oh wait, no wondering needed.  I know exactly how we ended up here.  We took one time funds and created recurring expense obligations - one after another after another.  There are the obvious examples like the Rail Runner and the Spaceport, and there are many more not so obvious examples, like continually throw money at education without expecting a single result.

There's been a lot of talk about increasing taxes this session, but the shot heard round the world should serve as a warning to those that prefer tax raising over spending cuts.

Weak Attempt at an Alibi

We've all seen the movie plot line. It's been in every mob movie made to date. The mob boss needs an alibi.  So, he makes a point of being seen somewhere other than the scene of the crime.  After all, if he was seen by hundreds at a party, how could he possibly be linked to the crime in question.  Sure, his hired guns were there, but hey, there's no guilt by association, right?

The State Investment Council got together this week to hear what outside consultants found in their review of the agency. 

To no surprise, Gov. Bill Richardson, who chairs the council and controls it through his appointment of a majority of its members, didn't attend the council meeting.
        
As I first reported last February, Richardson has rarely attended the meetings of the State Investment Council, which invests billions of dollars in state endowment funds.
        
Now, the governor is using his absence in an apparent bid to distance himself from the scandal that has rocked the council over the past several months.
        
"The reality is I left decisions to my state investment board," Richardson told reporters Tuesday. "I hardly attended meetings. I felt that I shouldn't be part of decisions."

Now we know why the movie industry loves to come to New Mexico. We provide great inspiration for future plot lines.

Imagine That

I've noted before that there are places that government spending can be cut to provide taxpayers better return on their investment.  Now, the Committee on Government Efficiency has come to the same conclusion:

The Committee on Government Efficiency delivered its report to Gov. Bill Richardson and legislators with recommendations to merge some departments, eliminate certain boards and commissions, saving $129 million overall.

Now, let's see if the Governor and legislators are more committed to finally reigning in spending or continuing to throw our hard earned money away.

Blood in the Water

There must be blood in the water because the sharks are most definitely starting to circle closer and closer:

A records clerk at New Mexico State University is suing past and present state officials and a couple of controversial financial firms in a class-action suit to recapture money lost in questionable investments by the state Educational Retirement Board.

The suit, filed by Donna Hill of Las Cruces, seeks to win back money for 95,000 beneficiaries of the state educators' pension fund.

Hill, in an e-mail Tuesday, referred all questions to one of her lawyers, Jonathan Cuneo of Washington, D.C.

This suit appears to be identical to another suit that has been filed based on the questionable management of funds by the State Investment Council (SIC). Actually, calling the investment practices questionable is probably a bit too kind. Heck, calling them "investments" is in itself a bit of a misnomer:

The tab for bad investments the state made with Chicago-based Vanderbilt Capital just got worse — to the tune of at least another $65 million.
    
The Legislative Finance Committee is now estimating the state lost $155 million in a series of highly leveraged mortgage investments with Vanderbilt, up from earlier estimates of $90 million.
    
On Tuesday, the Senate Finance Committee was told by a private attorney whose client is suing to reclaim the losses that the red ink on the investments could go as high as $200 million.
    
Legislators were not happy .
    
"We've got a budget crisis, an ethics crisis and an investment crisis," said Sen. Cisco McSorley, an Albuquerque Democrat and chairman of the Senate Judiciary Committee. "I don't know if we can deal with all three in a 30-day session."
    
The concern was bipartisan. 

While this news was breaking, our fearless Governor Richardson, Chairman of the SIC, was addressing the Greater Albuquerque Chamber of Commerce (GACC) on his plans to raise taxes by $200 million - just a little more than the amount of taxpayer money the SIC "lost" under the administration's watch. 

Now, for those who might be tempted to argue that the Governor was simply derelict in his duties when it came to oversight of the SIC investment practice, consider this latest finding from an independent third party:

An outside review of the State Investment Council, commissioned after a string of scandals, recommends significantly curtailing the governor's power over the SIC. 

Scandal after scandal is bound to hurt those seeking office in 2010 with deep ties to the administration. After all, how much more can they expect the public to tolerate in the current economy?

On the negative side, said Larry Waldman, senior research scientist at UNM's Business and Economic Research, “The local situation is terrible. Job growth is the lowest it has been since at least World War II. It's worse than most people thought it would be.” He said New Mexico's economy probably won't show signs of recovery until at least the second quarter of this year. 

 Hmm, not exactly the time most rationale people would think to promote regressive taxes, but then again, it's not like this administration has ever really been concerned about the needs of everyday New Mexicans.

Money? What Money? Jobs? What Jobs?

Are you wondering why you can't find new jobs based on New Mexico's investment in roads from federal stimulus money:

A very small percentage of New Mexico's $3.2 billion in stimulus money has been funneled to highway and bridge construction.
    
The state's total allotment includes $302 million for transportation projects, which covers projects ranging from work on airport runways to bus shelters and mass transit systems. Just more than half of the transportation money, more than $169 million, is going to 15 highway and bridge projects, according to the New Mexico Office of Recovery and Reinvestment Web site. 

I can't help but wonder if it has something to do with the fact that Governor Richardson essentially bankrupt the NM DOT with his reckless spending. But, in all fairness to Governor Richardson, even if this had not been the case, you still would find it difficult to find significant employment gains from stimulus money:

An Associated Press analysis of stimulus spending found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.
    
With the nation's unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges — projects the president says are "at the heart of our effort to accelerate job growth."

Well, it didn't work the first time, so I guess try, try again.  What the heck, it's only your future earnings they keep spending.

Adding Insult to Injury

Wow, talk about adding insult to injury.  Taxpayers are bilked out of tens of millions while the Richardson Administration was at the helm of the State Investment Council. Now, they are making matters worse by requesting CYA budget increase funds:

The State Investment Council has asked for nearly $6 million in additional money to cover legal expenses associated with the ongoing investment scandal, and a leader in the state Senate is none too happy about it.
        
"It just doesn't make any sense to me," President Pro Tem Tim Jennings, a Roswell Democrat, said Friday. "I'm concerned that everyone is concerned with protecting themselves instead of protecting the public."
        
The State Investment Council wants a $1.7 million budget adjustment and a $4 million supplemental appropriation to cover the legal expenses. Much of the money would go to a San Francisco law firm that is charging up to $950 an hour and can earn up to $5.8 million under a contract that started at $30,000. 

Just to make sure that everyone is on the same page.  We have legislative committees recommending tax increases and 2 percent pay cuts for government workers and teachers while $950 an hour is being spent on San Francisco lawyers. 

Yeah, that makes sense.

When Will We Ever Learn?

Regulation costs money. Regulation upon regulation upon regulation costs lots of money without adding any significant benefit to our society.  In fact, more often than not these additional regulatory burdens lower our quality of life by misdirecting limited resources.

Yet, it seems not a week goes by that some new regulation designed to protect us is passed. We're told our schools are in a budget crisis situation, yet the federal government has put in more regulations that costs schools money in areas that have nothing to do with inproving academics:

Imagine a playground with bark chips instead of sand, curved plastic edges and smooth bolts so no one gets hurt, specialized swing chains and three different play zones for different ages.
    
This is not just someone's imagination. It's a set of federal guidelines that will cost Albuquerque Public Schools about $10 million to meet.
    
The federal guidelines are not mandates per se, but failure to follow them leaves the district vulnerable to lawsuits, said John Dufay, APS maintenance and operations director.
    
He said the most important reason for doing so is student safety, although liability is an issue. Any student injured on a playground that doesn't comply with the guidelines would have an easier case, he said. 

Now, I have two school age children, and don't want to seem them get hurt playing on playgrounds.  But, let's get real here.  Children sometimes get hurt when they play, and there don't exist safety measures that can be put into place to 100% protect children from getting hurt. I can almost guarantee you that even with these proposed playground changes, we will still have kids getting hurt during recess. And, we will still have schools getting sued when children get hurt because we live in a litigious society.

 It's not just regulation supposedly designed to protect children that is misguided. There are other regulatory burdens that basically boil down to more money out of our pocket. 

New pollution controls could be in store for New Mexico as the Obama administration moves to crack down on smog.

Parts of at least four counties — San Juan, Rio Arriba, Doña Ana and Bernalillo — could be out of compliance with the new ground-level ozone standard proposed by the U.S. Environmental Protection Agency.
    
Nationally, the new limits could more than double the number of counties in violation.  

What's going to follow these regulations? Well, let's see:

• increased vehicle emission testing = money out of your pocket
• prohibition on gas lawn mowers = money out of your pocket
• no pump times for filling your vehicle = citizen inconvenience 

Of course, that's just a partial list.  States and municipalities will have 20 years to come up with prohibitions and mandated services to meet these new federal regulations.  Plus, we know that as soon as these regulations are in place, someone will come up with a new stricter regulations will come into play. After all, that's what the government does - come up with new regulation and legislation.

The kicker is that we don't live in a national bubble, so the regulations and associated costs along with reduction in quality of life won't really make a big difference in the end:

"In places like southern Doña Ana County, there's not a lot the state can do," said Mary Uhl, state Air Quality Bureau chief. "There are not a lot of emissions to be reduced. The state will need to work with Texas and Mexico to address that."
    
The tighter standards, though costly to implement, will ultimately save billions in avoided emergency room visits, premature deaths, and missed work and school days, the EPA said. 

That last sentence says it all.  What we're really doing is cost shifting from one expense area to another. We're removing one inconvenience n replacing it with another. We're not improving our lives in any substantial manner.  We're just regulating for the sake of regulating.

Executive Budget Recommendation for Fiscal Year 2011

Governor Bill Richardson's 181-page Executive Budget Recommendation for Fiscal Year 2011 was released yesterday, and I'm having a really hard time making it past page ten:

Governor Richardson believes government must be managed in a fiscally responsible manner, and that every government program must be held accountable to the taxpayers. Throughout his administration Governor Richardson has worked to make sure every tax dollar is spent wisely. He has required state agencies to find efficiencies, streamline existing processes, realign resources as policy priorities change, and collaborate to reduce duplication and bureaucracy.

During his first year in office, the Governor implemented a number of efficiency measures, including eliminating unnecessary contracts, maximizing federal and other revenue, shifting dollars to the classroom, executing strategic purchasing and implementing a statewide performance review that by FY07 resulted in more than $80 million in savings to the citizens of New Mexico. He also stepped up enforcement against tax fraud to collect more back-taxes owed.

The only explanation for the above excerpt actually showing up in print is that the Governor has found money to hire joke writers. After all, there is a lot that can be said about how the Richardson Administration has managed the state, but the words "fiscally responsible" don't belong anywhere in that description.

Let's look at some of the key points being made here.

1. "Every government program must be held accountable to the taxpayers" - When was the last time you heard about a government program being held accountable under the Richardson Administration? The correct response would be never.  The only government programs that have been shutdown for a lack of accountability have come about as a result of external indictments. Heck, even the proposed across the board "3-percent reduction in spending" is a way of avoiding holding individual programs accountable.
    
2. "Throughout his administration Governor Richardson has worked to make sure every tax dollar is spent wisely." - Talk about re-writing history. I'm trying to understand how losing $90 million in an effort to fill the pockets of campaign contributors is considered spending tax dollars wisely.
   
   
3. "He has required state agencies to find efficiencies, streamline existing processes, realign resources as policy priorities change, and collaborate to reduce duplication and bureaucracy." Let's see, hardly a year went by where the Governor did not create new layers of government or dole out high paying government jobs to supporters. How this can be seen as reducing duplication and bureaucracy is anyone's guess.

The rest of his claims are just as ridiculous.  Scanning through the actual line item proposals actually leaves one scratching his head as well. Sure, there are a lot of proposed cuts, but its the proposed increases that just don't make a lot of sense.  For example when considering must haves during a time of economic crisis, consider whether these make the top of your list?

1. 26.2% budget increase for the Athletic Trainers Practice Board
2. 11% budget increase for the Interior Design Board
3. 489% budget increase for the Office of the Natural Resources Trustee
4. 28% budget increase for the Legislature

All I can say is that's an interesting choice of priorities when you're going to be coming after the taxpaying public for even more tax dollars.

Can't Say I Didn't Warn You

While some celebrated the passing of the Christmas Eve health insurance legislation in Congress, sensible folks lamented its passing for a variety of reasons.  First, as I've noted on more than one occasion providing health insurance to most Americans, does nothing to improve access to quality of healthcare for all Americans. Case in point:

The Mayo Clinic, praised by President Barack Obama as a national model for efficient health care, will stop accepting Medicare patients as of tomorrow at one of its primary-care clinics in Arizona, saying the U.S. government pays too little.


More than 3,000 patients eligible for Medicare, the government’s largest health-insurance program, will be forced to pay cash if they want to continue seeing their doctors at a Mayo family clinic in Glendale, northwest of Phoenix, said Michael Yardley, a Mayo spokesman. The decision, which Yardley called a two-year pilot project, won’t affect other Mayo facilities in Arizona, Florida and Minnesota.

Look for more top quality healthcare facilities to follow suit in the coming months and years. And, where will this leave us? Well, like most big expensive government entitlement programs, it will leave us even deeper in debt, and an insolvent program that fails to deliver as promised.  Oh sure, the program won't be a total loss. In fact, for those states whose Senators were into selling their votes, this legislation will prove to be a big win:

New Mexico Sens. Tom Udall and Jeff Bingaman on Wednesday criticized special deals that Democratic leaders struck with some senators to win support for a sweeping Senate health care bill headed for passage today.
    
But the two Democrats said the deals weren't enough to justify voting against a measure they said would benefit New Mexicans.

Senate leaders offered Sen. Ben Nelson, a Nebraska Democrat, 100 percent federal subsidies for new Medicaid beneficiaries added to his state's rolls under the Senate legislation. Other senators wrangled separate financial concessions for their states in exchange for their support for the Senate bill.

Sorry, criticizing the deals after the fact, but voting in a manner that tacitly endorses the deals doesn't really hold water. Pretending this was a win for New Mexicans is a little less than honest:

According to Udall, the Senate health care overhaul would eventually insure 91 percent of New Mexicans, improve rural health care and grant permanent reauthorization of the Indian Health Care Improvement Act, among other things. 

Think about that for a moment. Despite promises that this "landmark legislation" would insure all Americans, in New Mexico, the best outcome will be to insure 91% of New Mexicans... EVENTUALLY.  When this does EVENTUALLY happen, you can't help but wonder how many of the newly insured still won't have access to quality healthcare because they won't be able to find an institution willing to take their insurance.


What a mess.