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.

Richardson Threatens Public Safety

There's a time to play politics, and there's a time to solve problems. Apparently, someone forgot to clue Governor Richardson into this fact:

The state of New Mexico would have to shutter two prisons, give early releases to up to 660 prisoners and lay off and furlough Corrections Department employees if Gov. Bill Richardson signs budget cuts approved by the Legislature, his office said Wednesday.

Richardson's office raised that grim possibility as his staff analyzes the impact of $253 million in spending cuts legislators passed during a special session last week to deal with a revenue shortfall.

If the real measure of leadership is how someone performs in a time of crisis, Governor Richardson is failing miserably. The Governor has always been a great campaigner, there is no question about that; however, now that we actually need an executive leader, he is seriously falling down on the job.

He's still in political spin mode, which is nothing short of ridiculous considering that he can't run for re-election. In fact, his attempt at side-stepping responsibility by choosing to threaten the public with the unleashing of criminals rather than cut fat from a bloated bureaucracy is very likely going to hurt the campaign prospects of those who wait quietly in the wings.

The Governor has been shown to be quite enamored with all things Cuban, so I can't help but wonder if his strategy is not just a bit Castro inspired:

It is true that Castro opened his jails during the 1980 exodus, flooding Miami’s streets with criminals, drug addicts and mentally unhinged people, which contributed to Miami’s skyrocketing crime rate and helped it become murder capital of the world by 1981.

Fidel Castro did it to take make a point and causes chaos for those who didn't agree with his style of governing, and it appears that Governor Richardson is doing the exact same. Worse, it looks like there isn't a single person in his administration with the backbone to step up and say, "Hey Governor, threatening to unleash criminals on the taxpaying public is not a viable option."

It is true that one Richardson Administration politician has publicly noted that "the state can only have one chief executive at a time." But, it is equally true, that a public official's first responsibility is to the public. Of course, this is a fact that seems to be long forgotten by the ruling political elite in New Mexico. They work for us, we do not work for them. We put them where they are, and we can take that away. And, if they continue to choose to threaten instead of lead, I'm sure come Election Day, we will do precisely that.

The Governor of La La Land

That's the only way to look at it. Governor Richardson has officially relocated to La La Land:

1. Los Angeles, California (often abbreviated L.A.). This expression pokes fun at the alleged eccentricities of the city's inhabitants. For example, What do you expect? Frederick has lived in la-la land for ten years and it has rubbed off on him. [Slang; c. 1980]
   
   
2. A state of being out of touch with reality, as in I don't know what's going on with Amy--she seems to be in la-la land. [Slang; c. 1980] Also see cloud-cuckoo land; never-never land.
   

No, I don' mean that he has moved to Los Angeles - although, one could only hope. But, like Frederick in the example above, it appears that Governor Richardson's contact with Hollywood's elite has altered his perception of reality:

New Mexico lawmakers on Friday wrapped up their special legislative session, sending Gov. Bill Richardson a package of measures to repair a $650 million budget shortfall this year.

“It isn’t pretty. It doesn’t solve the problem; we know that. But it’s a step forward,” Majority Leader Michael Sanchez, D-Belen, said before the Legislature adjourned.

The package includes spending cuts of about $253 million this year in public schools, colleges and other government programs.

Richardson criticized what he said were “excessive” cuts to state agencies, and warned they could result in layoffs and reduced services.

That is the only possible explanation for the Governor's reaction to the recently ended special session. See, when you have a $650 million deficit and growing, and you only cut $526 million, that leaves a gaping hole of a whopping $124 million. No one in their right mind would call those cuts "excessive" as they clearly fall far short of the mark of what's needed.

Then again, I guess if you're a Governor living in "cloud-cuckoo land" you're not really in your right mind.

Now That's Interesting

It's like the legislature just woke from a seven year slumber, and decided to, well, decided to start acting like a legislature. For seven years, those controlling the legislature have rubber stamped every ridiculously large, bank-breaking budget proposed by the Richardson/Denish Administration.

Now, the piper wants to be paid, and it is becoming increasingly clear that the Richardson/Denish Administration have created, long-term structural problems for New Mexico. But hey, don't take my word for it. Instead, read what Lt. Governor Diane Denish has to say about the failed policies of her administration:

We know temporary “band aids” applied to remedy our budget shortfalls are not the answer to long-term, structural problems with the state budget. We must craft solutions that work for future generations of New Mexicans.

In other words, what the Lt. Governor is trying to sell us is, "I got us into this mess, so I can get us out of this mess." Of course, we know that's not the way it works in the real world. In the real world, when people make bad decision after bad decision that results in the virtual collapse of their organization, they can expect to be fired.

Now in case you're wondering what type of bad decisions have been made by Rchardson/Denish Administration, you have to look no further than some of the proposals that are being put forth by their Democratic peers in the legislature to fix the "long-term, structural problems". For example, consider this press release received from Representative Cote:

Rep. Cote introduced HB24 on the floor of the House today. The proposed bill calls for the Governor to reduce the number of exempt employees in cabinet departments and state agencies with salaries over $50,000. According to the bill, cutting at least 180 of these positions would save $8.1 million for the rest of this year and $19 million in the next fiscal year.

“Under the current fiscal conditions, all state expenditures must be analyzed and none excluded. I’ve noticed significant growth in the number of exempt positions in the last several years and the incumbents of which could be placed into permanent classified positions. My bill is an attempt to reduce the size of the state’s payroll. I feel the state government has grown too large for the revenue available in the state of New Mexico,” Rep. Cote (D-Dona Ana, Otero-53) stated.

During the last regular session the Governor said he would trim salaries of 470 exempt employees but, in the past year alone, the number of Governor exempt employees has risen by 27 positions from 789 to 816, while the number of state classified employees has stayed the same. Over the past seven years the Governor’s exempt positions has risen by 281 positions.

That's right, Lt. Governor Denish has stood silently by as her partner in crime, Governor Bill Richardson, has created and handed out new government jobs as payback for political favors. This practice, among many others has led to the long term, structural problems with our state budget, that now threatens the financial viability of education, social and infrastructure programs.

Of course, Lt. Governor Denish would rather we not point fingers and blame (read: personal animosity):

Legislators should act quickly, she said–putting “personal animosity aside”–because the state doesn’t have “time or money to waste”

Of course, she's right. The state doesn't have time or money to waste... Diane Denish and Bill Richardson have spent seven years wasting our money and our time, and the proverbial cupboard is now bare.

Can't Miss the Parade

Our elected officials are struggling with how to fix an astronomical and ever-growing budget deficit without cutting expenditures or raising revenue. I'd really like to see the former versus the latter occur, and even those who want to empty our wallets, are struggling with the lack of financial restraint being shown by state government agencies in this time of economic crisis:

"Knowing that, the administration has not put the brakes on spending," said Ortiz y Pino, who is running for lieutenant governor. "There is no evidence in my mind that this administration in any way slowed down the spending in state government. Now, I've worked in administrations in the past, and as soon as there was any question that we were going to be in budget trouble, the word was out. Stop hiring, don't fill vacancies, no out-of-state travel, no contracts, no printing. Nothing, nothing, nothing, just make sure we get through this OK. Has this administration done anything remotely like that?

In related news...

New Mexico plans to sponsor a float in the 2010 Tournament of Roses Parade in Pasadena, Calif.

New Mexico Tourism Secretary Michael Cerletti said the response from the southern Californian travel market to New Mexican floats in the 2006, 2008 and 2009 parades was tremendous, and a float is a good way to reach potential visitors.

Phew! It's a good thing we have our spending priorities straight.

Shifting Costs is not a Budget Solution

The Albuquerque City Council has a budget proposal from Mayor Chavez in front of them that makes absolutely no sense whatsoever in the current economic climate:

On the table now is the mayor's $475 million proposal for basic city operations. It would shift money out of the construction budget and into the operating fund to help offset dwindling revenue from the tight economy. The measure would also cut about 200 vacant jobs from the city payroll.

"There's not a lot of room to play around with," said Councilor Ken Sanchez, chairman of the council budget committee.

In hearings this month, councilors have already made changes to provide enough money for regular city employees to get 3 percent raises, starting July 1.

Shifting costs from one time construction expenditures to cover recurring expenses accomplishes one thing and one thing only... a postponement of the inevitable. It just means that you are putting off the layoffs of city employees and cutting of services until after the election. Of course, we are going to have the same problem next budget year. Actually, the problems next budget year were originally reported to be even worse.

Now, I realize there may be a handful of you, probably Mayor Chavez included, that believe that the worst is behind us, and that the picture for the future is brighter. Of course, this belief has no grounding in reality:

Loan servicers are overwhelmed by the flood of applications. Mortgage investors are angry about a congressional bill prohibiting them from suing servicers that modify loans. Foreclosures are rising as unemployment soars.

I don't live in the City of Albuquerque, but I would urge those of you that do to avoid voting for anyone not up to the task of making the hard decisions of truly balancing the City budget.

Mayor Chavez Buys Votes for $1.3 Million

I've long been an opponent of publicly funded campaigns, and it appears that the mayoral campaign currently underway is the perfect case study of why using our tax dollars to elect politicians is a lousy idea.

First, let's consider how Albuquerque's incumbent Mayor Marty Chavez was able to get on the ballot:

The confirmed city employees constitute 42 percent of the volunteer base used to collect the qualifying donations, making Fleisher correct in that respect. But those employees collected more than their share of the contributions. The review shows that 152 of the 295 books, or 52 percent, were used by city employees to qualify the mayor for public financing.

For example, the city’s employee relations manager, Lawrence Torres — who is the administration’s liaison with the city’s unionized workers — collected 10 books for the mayor, which was the largest group of books collected by one individual. Torres confirmed he collected the contributions, but declined to discuss how he did it, or why he participated in the drive.

Along with Torres, many of the city’s department directors — who are appointed by the mayor — collected contributions, as did many of their department managers plus the mayor’s own staff.

In other words, there is nothing grassroots about the whole taxpayer funded campaign program. The biggest beneficiaries are those already in office. Of course, getting your appointees to collect the signatures and money you need to get on the ballot and rake in the taxpayer money is only the beginning of the story.

Next comes the actual execution of the campaign. This is where you have to convince people to vote for you. Of course, once again, the incumbent in this case, Mayor Marty Chavez, has a great strategy. Try and buy the votes of a large voting block:

Mayor Martin Chávez says the city's blue-collar, clerical, security and transit employees won't have to wait an extra six months for their annual pay raises.

Chávez said his budget office had found about $1.3 million that isn't needed in a workman's compensation fund. That will allow the city to provide pay raises to more of its employees on July 1, the mayor said. The raises are expected to be about 3 percent.

That's amazing! Mayor Chavez found $1.3 million to pass out as raises. Somebody please explain to me how that happens. Last I checked the City of Albuquerque was looking at huge budget shortfalls:

Albuquerque faces a $20 million budget shortfall because of the worsening economy, and city officials are trying bridge the budget gap without laying off city workers.

In fact, the $20 million budget shortfall is just the beginning. It has been estimated that this amount will grow even larger next year. Yet, the Mayor is handing out raises. There is only one motivation to do this - buying votes!

The Bottom Two Percent

The bottom two percent is where the Public Employee Retiree Association (PERA) found itself when the dust settled at the end of the 2008. The investment strategy that was signed off on by the State Investment Council members (SIC) put it into the bottom two percent in the nation. Of course, it wasn't just PERA funds that suffered under the State Investment Council guidance: [see update at the end of this post in red].

The PERA fund's annual performance ranked in the 99th percentile of similar funds in the nation, meaning that 98 percent of funds performed better, according to the LFC. The land grant fund ranked in the 61st percentile, the severance tax fund in the 78th, and the ERB in the 85th.

A variety of problems affected each fund's performance, since each fund's asset mix and objectives are different. The State Investment Council manages the land grant and severance tax funds. ERB and PERA each have separate managements.

The LFC found PERA suffered from a "large exposure to international equity investments." As of Dec. 31, 21 percent of PERA's assets were in international equity. While that allocation proved "extremely advantageous throughout the middle part of the decade," the sector has fallen more than 45 percent in the past year, LFC said.

ERB's worst performing asset classes were fixed income and hedge funds, LFC found. The hedge fund assets under-performed benchmarks "by a staggering 1,920 basis points," according to LFC. A basis point is one 100th of a percentage point.

Contributing to the severance tax fund's decline were "economically targeted investments," which the LFC said are "intended to stimulate the New Mexico economy despite having a lower than market rate return."

That last point is really a sore point for me. This could have easily been prevented. Don't get me wrong, we would have lost money like everyone else, but we didn't have to be in the bottom two percent of the nation. Let's roll back the clock two and half years to see how we landed on this worst in the nation list:

You read that correctly. An advisor to the state was terminated because, well, because they did their job. They advised the state against making an investment that would not yield the good financial returns New Mexicans should expect from an investment. If our advisors are supposed to be "on the same page" as the state, it kind of makes you wonder why we need advisors?

So, what was this unsound investment that "the state" wanted made? Well, you had to wait a few months to get the inside scoop:

Cincinnati-based Fort Washington Capital Partners resigned as the SIC's investment advisor for the program last July, citing disagreements with the state over its role. The state had asked Fort Washington to render opinions on two large investments in space-related companies and Fort Washington refused, arguing that the proposals seemed more like economic development projects than private equity transactions.

Go back and read the entire original post and let me know if it doesn't jut set your blood a boiling. And, if that doesn't put you over the edge, maybe the SIC's investment in Bahrain owned companies to supposedly "stimulate the local economy" will do the trick.

UPDATE: Looks like I may have misread that article Albuquerque Journal article this morning. PERA made it's own investment decisions without any input or oversight from the SIC. Below is the email I received from the SIC's Public Information Officer:

Mr. Burgos,

While I understand the your blog’s intention is primarily to offer opinion, it appears the core premise of your post today is based on a completely faulty assumption that Public Employees Retirement Association (PERA) investment strategy is signed off on by the State Investment Council (SIC).

For the record, SIC and PERA are two completely separate entities managing different Funds for the State of New Mexico. PERA has its own investments, managers and board of directors. SIC has ZERO input, influence and control over PERA Funds, and State Investment Council members have nothing to do with PERA performance.

The Education Retirement Board (ERB), likewise, is managed by different people, with a different board who oversee separate investments.

Unfortunately, there are similar factual problems with the rest of your post regarding a very old concern we had with Fort Washington, and a more current third-party criticism – which also has some significant factual problems. We would be glad to address these individually if presented in a meaningful way and I invite you to contact me on these issues if you like.

While SIC performance for the 4th quarter was definitely below par, this was primarily due to the historic market challenges and negative effects of a conservative hedging strategy that while well intentioned, hurt performance during December’s market rally. This same strategy in the first quarter of 2009 should easily put the SIC in the top 25% of peer funds around the country. Those performance numbers will be available in the coming weeks, and I will certainly make those available for your review.

While I am unable to post this response to your website, you may certainly do so if you believe it is appropriate. I do hope that you address the factual problems I address here as soon as practicable.

Regards,

Charles Wollmann
Public Information Officer
New Mexico State Investment Council
(505) 476-9540 office
(505) 231-3334 cell

I did leave Mr. Wollmann a voicemail, and am eager to hear more about the "factual problems with the rest of [my] post regarding a very old concern [they] had with Fort Washington, and a more current third-party criticism." Mr. Wollmann is correct that I formulate opinions - nothing more, nothing less - based on the information I have at hand. Sometimes, I misinterpret that information. Hey, I'm only human. But, like you, I'm always eager to hear the other side of the story.

Richardson's Economic Abilities

Ever since I read Governor Bill Richardson's withdrawal statement, something has been gnawing at me. At first I couldn't figure out what it was, but now I think I've isolated the culprit. It's this statement by Governor Richardson (subscription):

"As you might expect, I am disappointed in this turn of events. There were a lot of ways in which I thought I could help the country in this time of financial crisis. Sometimes your own dreams and plans must take a back seat to what is best for the nation.

There are three sentences in the selection above, and only one of them has an iota of truth. The part about being disappointed about the turn of events. That's completely believable. I'd be willing to believe that anyone who has had to retain legal counsel on the chance that they will be brought before a grand jury would be "disappointed in the turn of events."

But, the second and third sentences are classic Bill Richardson. Statements with no basis in reality. Does anyone actually believe that Governor Bill Richardson is one of the guys who could help the country come up with a solution to a global financial crisis. Gosh, I hope not.

Let's just look at the simple facts. Even President-elect Obama choose to announce his economic team separate from his selection of Bill Richardson as Commerce Secretary. Why? Well, there is nothing in Governor Richardson's resume which indicates that he knows the first thing about managing an economy. Quite to the contrary, during a time of unbelievablely high tax revenue, Governor Richardson has spent us into a half a billion dollar budget shortfall.

Granted, he is in good company. There are 44 other Governors who have the same miserable economic track record.

The states’ fiscal problems are continuing into the next two years. At least 38 states have looked ahead and anticipate deficits for fiscal year 2010 and beyond.[1] These gaps total almost $80 billion — 17 percent of budgets — for the 30 states that have estimated the size of these gaps and are likely to grow as gaps are re-estimated in the next few months.

Figure 2 shows the size and duration of the deficits in the recession that occurred in the first part of this decade, and estimates of the likely deficits this time. This recession is more severe — deeper and longer — than the last recession, and thus state fiscal problems are likely to be worse.

The fiscal situation is going to get worse in New Mexico, and we have Governor Richardson to thank, along with some other elected officials, to thank for the pickle in which we currently find ourselves.

As to the Governor's statement about the Secretary of Commerce job being his dream gig. Let's get real. His dream gig was to become President. That didn't happen. His next big hope was to be named Secretary of State, but that was a bust as well. Then, with an impending financial crisis in New Mexico and a threat of prosecution for rampant pay to play policies, his goal was simply just to get out of Dodge. But, I don't think anyone would mistake that for his dream.

As to putting the nation first... Well, if there is one thing Governor Bill Richardson has proved over his tenure in office, it is that putting others ahead of himself has never been his priority.

Good to Know They're Working Hard Together

With New Mexico facing a half billion dollar shortfall due to a gubernatorial spending spree the likes of which New Mexico has never before seen. It is good to see that the dynamic duo are working hard together...

Lt. Gov. Diane Denish and Gov. Bill Richardson have been trying to find time for a one-on-one meeting, but it’s been difficult.

“He’s out of town this week,” Denish said of Richardson on Wednesday. “I have a meeting scheduled next week. We are trying to maybe have a meeting this Friday. It depends on his schedule.”

Well, at least they try to fit in a quick meeting to deal with the budget crisis on those rare occasions when the visiting Governor's schedule allows.

Where Did All of the Money Go?

So, we've got this half a billion dollar budget shortfall we're facing in New Mexico, and you're probably scratching your head, and wondering, "Where did all the money go?" After all, oil and gas had reached tremendously high levels over the last few years, and state government was awash in cash - our cash I might add.

Well, to answer the question, "Where did all the money go?" All you need to do is take a look at this inflation adjusted chart (for my critics) that our friends at the Rio Grande Foundation (RGF) kindly put together:

Whoa! Talk about your out of control spending. You'll notice it really started to climb in FY 2002. Guess whose administration we have to thank for our current economic predicament? The chart above was published in RGF's publication New Mexico’s Taxpayer Protection Act: One Small Step for Taxpayers? In the paragraph immediately following the chart, they made the following statement:

On one hand, you don’t want government to spend every nickel that comes during good times or else you will have a vicious boom and bust cycle.

Hmm, seems like a simple concept to grasp. Of course, neither our state nor our national leaders seem to grasp this very simple concept. Yes, I lay the blame on Republican's nationally as much as I do on Democrats in New Mexico.

If you want the actual details of where our hard earned money went (remember: we earn it; they spend it), I suggest you download and read RGF's recently released Piglet book. Pull out a calculator and add up all of those little giveaways, and you'll see what we need to cut in order to make up the budget shortfall.

The Backhanded Compliments Just Keep Coming

So, Barb from Democracy for New Mexico left a comment to yesterday's post about Governor Richardson failing to do the right thing with regard to vacating his position, so that Lt. Governor Denish can do the job she is inevitably going to inherit:

Plus no-one in their right mind would leave their elected post before being confirmed by the Senate for a Cabinet post.

Yeah. People who care about the company/organization/state they are leading step aside all the time to make way for new leadership before their next job is in the bag. People who believe in the leadership skills of their successor are more than willing to turn over the reins. But, therein lies the problem.

Although I am more than willing to give our soon to be Governor the benefit of the doubt that she has what it takes make the tough decisions to turn around the financial pickle in which we now find ourselves, it doesn't seem our outgoing Governor feels the same (subscription):

Both Richardson and Denish assured reporters the transition will be smooth, but said Richardson won't cede authority until he leaves.

"On some of the major budget items, obviously I'll make the decisions but she's going to have a role in them," said Richardson, who was nominated by Obama on Wednesday.

Are we witnessing an incredible display of machismo here or what? Where's the outrage Barb? This is worth repeating:

Obviously I'll make the decisions but she's going to have a role in them.

Governor Richardson is talking about our soon to be top executive the way that some people talk about incapacitated family members before putting them into a retirement home.

Denish, who was joined Thursday by her husband, Herb Denish, said she intends to make decisions on whether to retain members of Richardson's Cabinet on a case-by-case basis.

More urgent, she said, is addressing a budget shortfall that's ballooned to more than $500 million in the past three months.

"The people of New Mexico expect us to get down to business," Denish said.

Obviously, Lt Governor Denish understands the problem at hand - a half a billion dollar deficit. And, she's dead right, the people of New Mexico expect her and the legislature to get down to business. I mean who are we kidding here? The Governor hasn't been around to focus on the state for the last two years. Now, we're supposed to believe that while he's away "at least half the time" - his words - in Washington going through the confirmation process he's going to be able to "get down to business."

Although Richardson intends to call the shots while awaiting confirmation by the U.S. Senate, he said he'll mix some of Denish's proposals — such as implementing safeguards on payday lending — into the legislative agenda he'll present to state lawmakers on Jan. 20.

"We're going to have to incorporate some of her ideas on the issues she cares about in the budget," Richardson said.

He also voiced confidence in Denish's ability to lead the state.

WOW. Talk about your backhanded compliments. For goodness sake, "We're going to have to incorporate some of her ideas on the issues she cares about in the budget." Gotta love it. He has to incorporate some of her ideas. Could he be any less enthusiastic?

Let's get real here. Denish, not Richardson, is going to have to govern when this budget comes into being in June 2009. If he had "confidence in Denish's ability to lead the state," she'd be taking his ideas under advisement while making budget decisions - not the other way around.

This is a all a recipe for disaster and brings us full circle back to the heart of Barb's original comment. Whether it's okay to just let people stay in their current job while waiting for their next gig's contract to be signed.

Well, Barb let me tell you how this works in the real world. When you find out your current key employee is moving on, you wish them well and send them on their way. You don't wait until their new employer has finished crossing all the t's and dotting all the i's because it in THE EMPLOYEE'S best interest.

Make no mistake, Governor Bill Richardson works for us, the people of New Mexico, not the other way around. We hired him. We pay him. And as his employer, it's time for the people of New Mexico to wish Governor Richardson well, and show him the door. If we don't, we only have ourselves to blame when our problems are compounded because we find ourselves dealing with a key employee transition right in the middle of the most important legislative session in recent history.

Have They Lost Their Mind?

An article on Tuesday in the Journal indicated that the City of Albuquerque is already projecting that they will be unable to meet their current financial obligations (subscription):

Albuquerque's system of public financing for campaigns could run out of money before surviving its first mayoral race.

Interim City Clerk Randy Autio estimates that the "Open and Ethical Elections" fund will contain about $1.4 million in April, when the first payments to candidates are expected. The election will be next fall.

Each person who opts into the voluntary system is supposed to get $1 per registered voter. In the mayoral race, that would add up to about $328,000, though the number of voters might grow before campaign season.

If at least five people choose public financing, there wouldn't be enough for the mayoral campaigns, let alone City Council candidates.

The city has been setting aside about one-tenth of 1 percent of its general fund budget to pay for the public campaign financing.

Amid a budget crunch at City Hall, councilors are debating what to do.

Which makes you wonder... How the heck, "amid a budget crunch," could they possibly be considering asking taxpayers to foot the bill to build an arena? (subscription):

City Hall could finance a $344 million events center and hotel complex by imposing a new one-eighth percent gross-receipts tax and by tapping revenue generated by the project — but it would need to find other money for related improvements.

And the city must also be willing to use its existing tax revenue as a "backstop" in case the new tax isn't enough to pay off the debt, according to a financial analysis by the firm Piper Jaffray.

City Hall would need to find separate funding for about $53 million in related improvements around the project's Downtown site, such as a canopy over the railroad tracks, plazas, road improvements and parking garages, the report said. City officials say the state government is one potential source for that money, plus some of the city roadwork would have to be done even if the project isn't built.

The financial overview by Piper Jaffray was presented to the City Council's finance committee this week. The full council will hear about it in a study session Thursday and in a presentation at Monday's regular City Council meeting.

Piper Jaffray was hired by the development team designing and studying the feasibility of a Downtown event center and hotel. The work of Piper Jaffray, along with all the other consultants, is being reviewed by an independent team with no stake in the project, according to the city Department of Municipal Development. RBC Capital Markets, for example, is reviewing the Piper Jaffray report.

The city hasn't decided whether to move forward with the project.

Am I missing something here? What's there to decide? The City of Albuquerque doesn't have money to cover current commitments. How in the world can it be considering adding more? Oh wait, that's right. "City officials say the state government is one potential source for that money." Only one problem with that logic. The state government coffers are running dry due to the rapidly declining prices of oil and gas.

Bonds and Levies on the Ballot

If you haven't voted already, I strongly recommend printing up your sample ballot before heading over to the polls. If you live in Bernalillo County, you can download your sample ballot here. The federal office races may get the lion share of attention, but you'll find they only make up a small portion of the ballot real estate.

In fact on my ballot there is no less than a whole page of 12 bond and levy proposals to consider - plus five constitutional amendments. With the market continuing on its downward spiral, and the news of a worsening economy leading off every news hour, you have to wonder who in their right mind would vote to increase property taxes (mill levies) or authorize more government borrowing (bonds).

The problem with the latter is that in a recession, government revenues will drop (think $10 million budget shortfall for Bernalillo County), and when there isn't enough money coming in, you can bet your last dollar that it won't be long before your friendly local government entity will come after you and I with tax increases to make up the revenue shortfall.

The Beginning of an Unsettling Trend

Year after year, Mayor Martin Chavez has been spending with reckless abandonment. Last year, it became clear that his fiscal irresponsibility was finally catching up with him. This year the projected budget shortfall for Albuquerque is more than double what was predicted last year (subscription):

A recent budget forecast estimated the city would face a $50 million shortfall next year if no budget adjustments were made. And that was before the mayor announced 5 percent raises for firefighters and double-digit raises and other financial incentives for police to boost recruitment— expected to cost around $10 million altogether.

But Chávez says not to worry: The city can pay for it all by holding the line on other expenses.

"At the very first sign of (an economic) slowdown, we stopped filling positions," Chávez said.

The $50 million projected deficit is based on many assumptions, such as incremental increases in most expenses. Instead, city programs will see a "lack of growth," Chávez said.

Am I the only one who finds it hard to believe they've got it under control when deficits continue to increase?

Roads Already in Trouble

Boy, it sure looks like Governor Richardson is still playing catch up from his one year paid hiatus as Governor. Apparently, someone forgot to tell him the current financial situation of New Mexico roads (subscription):

Gov. Bill Richardson spent Thursday trying to drum up congressional support for New Mexico's Rail Runner commuter train and remained coy about whether he will endorse a presidential candidate before the state's caucus on Tuesday.

Richardson said in an interview that he met with Sens. Pete Domenici, R-N.M., and Jeff Bingaman, D-N.M., and asked them to help secure additional federal money for the New Mexico rail project.

The governor said the state is seeking a three-year extension of a federal air quality grant that has funneled $10 million per year to New Mexico for the past two years. That money expires next year.

"We're committed at the state level to fund it, but we don't want to have the Rail Runner funds in the future affect our highway funds," he said. "Getting the federal government to do a little more is one of my objectives on this trip."

Sorry Governor, you're a little to late to the game on this one. The Rail Runner has already had a huge negative impact on our our highway funds. And, just how is the state committed to fund it? Hasn't anyone filled the Governor in on the fact that the state is facing a $4 Billion shortfall?

The president pro tempore of the New Mexico Senate indeed pulled no punches in addressing the attendees at the Association of Commerce and Industry's business day breakfast in Santa Fe on Jan. 22.

"We're $4 billion in the hole," Jennings said of the fiscal challenges facing New Mexico. "But luckily, we have $360 million in new dollars to solve that, so things are looking up."

Governor Richardson really ought to take a few minutes to visit with the Senator Tim Jennings.

If you ask me, the Governor is looking for funding to cover his fiscal mismanagement of state's resources for three years. You know, just long enough for him to be long gone from New Mexico and before the the realy big tax increases have to be put into place.

Four Billion Reasons Against Universal Health Care

Just like there are consequences in life, there are consequences in government. The spending party never lasts forever. At some point the bill comes and then those spend, spend, spend politicians start looking at new ways to separate you from your hard earned money. But, don't take my word for it. Look at what one reasonable Democratic party leader had to recently say about the state of our state finances:

Tim Jennings warned his audience that he is a blunt speaker.

The president pro tempore of the New Mexico Senate indeed pulled no punches in addressing the attendees at the Association of Commerce and Industry's business day breakfast in Santa Fe.

"We're $4 billion in the hole," Jennings said of the fiscal challenges facing New Mexico. "But luckily we have $360 million in new dollars to solve that, so things are looking up."

$4 Billion in the hole! Ouch, that's not a pretty picture. I would suggest that any reasonable person would say, time to stop the spending. Any bill that is up in the legislature that requires new recurring funding should be dead on arrival.

In his State of the State the Governor said:

Our sound financial management of our permanent funds has allowed us to invest more than $3 billion into New Mexico schools and taxpayers. And I’d like to assure those who opposed the investment into our schools – our permanent funds have grown from $9 billion to $15 billion and our schools are benefiting from that investment.

Anyone want to bet how long it is going to take before some of our folks start planning another raid on that permanent fund? My guess is 2009.

Richardson Administration Diversion of Road Funds

Governor Richardson' administration is finally starting to come clean about the real problem with road funding (subscription). Of course, if you blink, you might miss the truth and assume it has to do with the federal funding drying up. But, pay close attention and you'll notice this:

New Mexico also has been diverting substantial revenue once earmarked for roads into the state's general fund.

Looks like we're not going to have to wait until Richardson is out of office to begin to feel the effects of his poor fiscal policies.

Road Crisis

On Monday, I attended a NAIOP luncheon, which featured Transportation Secretary Rhonda Faught and MRCOG Executive Director Lawrence Rael as the speakers. During her speech, Secretary Faught provided a lot of facts and figures, but what struck me most was that she repeatedly referred to the "funding crisis" facing our roadways.

Apparently, we have billions upon billions of dollars in road infrastructure needs that we are not going to have the funding to address in the VERY near future. I find this puzzling considering that Governor Richardson has had billions of "extra" dollars that he has blown through during his tenure. In a couple of year's time, we are going to feel the full effect of the Governor's wasteful spending. Of course, by that time Governor Richardson will have conveniently moved onto greener pastures.

One of the most fundamental purpose of government is to provide for the infrastructure needs. The Richardson administration has failed miserably in this regard.

It's North Against the South

No, I'm not talking about the Wilson versus Pearce match up to win the GOP primary for Senator Domenici's seat. What I am talking about is the little train versus space funding fight (subscription) that is sure to dominate discussions during this upcoming legislative session:

"The train is nothing but a local issue, and it helps two of the wealthiest counties. Why is the rest of the state subsidizing them?" asked Rawson, who added that the spaceport "absolutely is a statewide project."

Hmm... You know, the man has point. I don't think that anyone in their right mind could argue that a train that only goes from Los Lunas to Santa Fe (eventually) could be a seen as benefiting the whole state. After all, we're only talking about a VERY small number of riders in just four of New Mexico's thirty-three counties. Yup, any sane and rationale person would have to deduct that this is a local issue...

But the southern New Mexico lawmakers will confront powerful opposition, including from House Speaker Ben Lujan, D-Santa Fe.

Lujan has the opposite take on the matter. He said Thursday that it is appropriate to ask local voters to share a portion of the financial burden for the spaceport because it will affect mainly that region.

"The Rail Runner benefits the whole state," Lujan said.

So, much for sane and rationale leaders in New Mexico politics. Speaker Lujan's comments are sure to leave more than a few people just a little bit confused. After all, Speaker Lujan is saying that Spaceport America is a local issue, but I could of sworn when we were sold this bill of goods by one Presidential candidate it was a very different story:

In announcing the partnership, [Governor Bill] Richardson emphasized that New Mexico wants to be on the ground floor of public space travel. He said that today's announcement will "change the face of the state and change the face of the world."

Well, that doesn't sound like a regional issue, does it? But, wait it gets better. Speaker Lujan's money quote of the week:

[House Speaker Ben Lujan, D-Santa Fe] added that requiring local support in the form of local tax revenue for the spaceport was necessary to pass the legislation in 2006.

"When you make a deal, you need to stick to it," Lujan said.

As I recall, the original deal for Governor's train project promised it wouldn't take away from road funding. I guess what's true for the goose is not true for the gander.

Looking Forward to Crumbling Roads

Governor Bill Richardson is being called to the table on his duplicitous stance regarding Rail Runner funding (subscription):

[Sen. Tim Jennings, D-Roswell] said he recalls lawmakers and Richardson administration officials talking about the plan [to raise taxes] in 2004.

"They pretty much said, 'We're going to have to do this,' '' Jennings said in an interview Tuesday.

The Rail Runner now runs between Belen and Bernalillo at an operating cost of about $9.5 million a year. More than $8 million of that is paid by the federal government, but that funding disappears in 2009.

That will happen just as operating costs are projected to rise to $20 million a year with the extension of service to Santa Fe.

It also coincides with the time that Governor Richardson is hoping to abandon the state of New Mexico for the greener pastures of Washington D.C. The financial house of cards Governor Bill Richardson has built through his spend, spend, spend policy is about to come tumbling down, and as has long been predicted "New Mexico will be on the hook for several projects that will cost millions of dollars in coming years."

So, where does this leave us?

Sen. John Arthur Smith, D-Deming, chairman of the Legislative Finance Committee, said the state needs to find a funding source— and quickly.

New Mexico is struggling with a huge funding gap for its highway system, estimated by some at half a billion dollars. Critics of the Rail Runner project fear operating costs will eat into money better used on road construction and maintenance.

"The administration is saying it will find other sources," Smith said. "Who's going to be sacrificed? I'm submitting that it will be the state's roads."

Nice. Think about that during your morning commute.

How NOT to Plan for a Budget Shortfall

According to a Journal article back in January (subscription):

On balance, the city needs about $22 million in cuts, additional carryover or revenue, according to the report. That's the equivalent of 4.5 percent of the projected spending.

Chief Administrative Officer Bruce Perlman said the city will be able to come up with the money and is looking at ways to cut expenses in the current year.

"We're scrutinizing hiring very carefully," and departments have been told that their budget requests for next year should not call for net increases, except in critical areas such as public safety, Perlman said.

He said the city is hoping for additional economic growth that will provide tax revenue.

Perlman said revenue is difficult to forecast precisely. "It is not an exact science. It's like meteorology: '20 percent chance of snow.' It's not a certainty." [Hat tip: Eye on Albuquerque]

Is it just me, or does anyone else find it scary that the Chief Administrative Officer for Albuquerque is comparing revenue forecasting to meteorology? I wonder how many businesses could survive if they operated under the same premises. And this is the administration that wants to run our schools? But, I digress.

Here's the thing, I'm trying to figure out how with a $22 million shortfall, this is even close to a priority (subscription):

The city's plan to install a 210-foot reflecting pool at the Albuquerque International Balloon Museum isn't holding water with some folks.

Critics say the money would be better spent on permanent restrooms and other infrastructure at Balloon Fiesta Park, and question how much water the 18- to 36-inch-deep pool and fountains would use.

"Evaporation is a huge problem," said City Councilor Michael Cadigan, who calls the reflecting pool an "evaporating pool."

"You might as well run water down the street," he said.

Proponents of the estimated $2.5 million project, which would include the pool, a park on the north side of the museum and landscaping between the museum and the Balloon Fiesta Park, say the area would be open to the public year-round.

Wait a minute. What I'm thinking? The city is probably counting on the pennies that people will throw into the reflection pool as a key component of that "hoped for economic growth."