Mario Burgos

Clear thinking and straight talk from the top of a mountain.

Monday, April 05, 2010

Is the Worst Behind Us?

On April Fools Day I received an email newsletter from David Murphy of Salestraq, which unfortunately wasn't an April Fools joke. In it, he tells anecdotes of people he knows who have not paid their mortgage for 11 months and yet have not been foreclosed by their financial institutions. That's pretty scary in that it means there is potentially a second shoe yet to fall.

And, the link he provides to the dynamic TransUnion Data Map seems to confirm that the worse is not yet behind us. It shows the national average 60-Day mortgage delinquency rate at 6.89%.  But, if you factor in many people are not being foreclosed that are significantly beyond this, it is not unreasonable to expect this to get much worse before it gets better.

The other thing that jumps out at anyone looking at the TransUnion map is that credit card defaults are much, much lower with the 90-Day Delinquency rate at 1.21%.  That really doesn't make sense when you think about it. So, where does this leave us?

Well, we already know that the state, despite its recent special session to deal with budget shortfalls, is still in trouble:

Revenue collections for the current budget year are running $76 million below what had been anticipated, according to the Legislative Finance Committee.       

That spells potential trouble for public schools, colleges, courts and state agencies, although it could be July or August before it's clear if weak revenues will force more budget reductions.   

If revenues fall short for the fiscal year ending in June, then New Mexico's cash reserves must make up the difference to balance the budget.
Those reserves are the state's financial safety net. 

Now, consider that mortgage foreclosures mean less property tax revenue collected, and if unsecured debt defaults increases it means less consumer spending and lower GRT. On top of all this consider that unemployment in the state continues to increase, and I hate be all doom  and gloom, but I don't see how this means the worse is behind us.

Labels: ,

Wednesday, March 31, 2010

It's All About the Benefits

Reading article after article about the budget crises facing state, county and municipal governments, and one culprit becomes clear - budget busting benefits.  When people in government find themselves furloughed or worse, they ought to take a moment to consider they may be the victims of their own success. Think I'm exaggerating? I'm not. Consider the courts:
Now, Metro Court employees are looking at furloughs for the first time, while 2nd Judicial District Court employees are likely to go from the equivalent of about half a week a year to a total of about eight days unless more money is found somewhere.
"Ninety-five percent of our budget is people — salary and benefits," state District Court executive officer Juanita Duran said. "There's only one answer: furloughs."

 Of course, the benefits problem is not just limited to the courts. Schools have the same problem:

One reason for the Albuquerque school district's budget crisis: Officials miscalculated the amount of money needed for employee salaries and benefits during the past two years.

Superintendent Winston Brooks announced last week that the district must cut $43 million from next year's budget, likely requiring hundreds of layoffs.

About $24 million of the required cuts is due to a reduction in state funding.

The remaining, however, is to make up for nearly $20 million in underestimated employee salary and benefit costs over the past two years.
Every time their unions sat down to the bargaining table, they pushed for increasingly more attractive benefit packages.  And, when the financial screws are turned, they do everything in their power to protect those unsustainable benefits:
The teachers’ union and other advocates are exhorting state lawmakers to repeal state income tax cuts passed earlier this decade — and to pass other tax-side measures – rather than rely on cuts and the increased contributions law to address New Mexico’s budgetary shortfall. Recent projections show the state with a $441 million shortfall for the year that ends July 1, 2010.
Of course, this problem is not limited to state provided benefit entitlements.  We've known for years, and are now reminded with increasingly frequency, that nearly every entitlement program introduced at the federal level is unsustainable:
The trust funds for both Medicare and Social Security will run out of money earlier than expected because of the recession, the trustees reported today. The Medicare Trust Fund will run out of money by 2017 two years earlier than forecast last year. The Social Security Trust Fund's life has been shortened by four years and is expected to run out by 2037.
Yet, despite this knowledge, our elected officials keep introducing more budget breaking "benefits" to the mix. It makes absolutely no sense at all.

Labels: , ,

Wednesday, March 10, 2010

Tax Them Not Me

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

I firmly believe that our current tax structure, particularly during good economic times, is generating too much revenue, and in turn, needlessly growing the size of government. Unfortunately, the result of this is that when the economy turns south, the self-preservation tendencies of those in government is to raise taxes in order to protect their pet projects, and in many cases, irrelevant jobs (e.g. film museum director positions in non-existent film museums):
The film museum is perhaps New Mexico's most unusual cultural property. It's not in the phone book, and there are no exhibits, no visitors and no staff. In fact, there's no museum.

What they do have, however, is an executive director. Last year, the governor put Maloof in charge of a staff of none at a nonexistent museum paying her $88,000 a year. Maloof became the highest-paid museum director in the state system administered by Cultural Affairs Secretary Stuart Ashman, a member of Richardson's cabinet.
Now, historically my limited taxes / limited government stance has put me in the camp of the business community and those who have worked, saved and invested to accumulate wealth.  However, during this economic downturn, a surprising number of those same folks have now taken a stance that is truly troubling. Namely, rather than fighting and unneeded tax increases and pushing for a leaner, more productive government, they've become advocates of increasing taxes on the poor:
TERRI COLE, president and CEO, Greater Albuquerque Chamber of Commerce:

Now, back to food. Yes. The Guv should sign the partial reinstatement of the food tax. Signing it gets us closer to the fact that it should never have been repealed in the first place. It was bad tax policy. We need broad based taxes so that they can be kept low and fair to all. We should, however, use effective programs like LICTR (Low Income Comprehensive Tax Rebate) to help New Mexicans neediest families.
The Greater Albuquerque Chamber of Commerce is not alone in taking this stance. Other special interest and business groups have also endorsed the idea of taxing starving families to protect their subsidies and keep their profit taxes in check.  Personally, I just can't get behind that idea.

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

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

Labels: ,

Wednesday, March 03, 2010

What's That You Feel in Your Pocket

Near as I can tell that hand you feel in your back pocket belongs to the NM Senate:
The Senate-passed tax increase package would raise the statewide gross receipts tax rate — now 5 percent — by one-eighth percentage point, yielding almost $60 million a year.

The bill also would reimpose part of the gross receipts tax, or sales tax, on food. The rate would vary, depending on the local gross receipts tax rate of the city or county in which the food was bought, but average about 2 percent. The change would bring in an estimated $68 million.

Another $66 million would be gained from eliminating the deductions that some New Mexicans can now take on their state tax returns for the state and local taxes they've paid. That would increase their taxable income.

And the state would get $11.6 million from a newly imposed compensating tax on out-of-state companies that sell products to New Mexico businesses but have no physical presence in the state.

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

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

Roch points to a report he requested from the Legislative Council Service (LCS) outlining the job vacancies in state government. The report says as of January 4th, there were 4369 vacancies in state government. The problem according to Roch is that the proposed budget lawmakers are trying to tackle would fund 3396 of those positions. Roch argues if the state can function now without those positions filled, then it can function by eliminating them altogether.
But hey, that makes too much sense, right? Cut non-existent jobs over increasing taxes on struggling families.

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

Labels: , ,

Monday, March 01, 2010

New Mexico Democrats Have a Problem

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

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

And, herein lies the problem...
More details on tax hikes and spending cuts in a new state budget plan emerged Sunday as New Mexico lawmakers prepared to return to the Capitol today for a special session on the budget.

The plan, hammered out behind closed doors by top-ranking House and Senate Democrats, would increase the state's gross receipts tax, raise the tax on cigarettes and have New Mexico cities reinstate a portion of the gross receipts tax on food items that was repealed six years ago. 
Yup, leave it to the Democrats to propose a slew of new taxes as families are struggling to survive. If these tax increases are passed, they are going to hurt campaign efforts of every Democrat running for office during this election cycle. Mind you, that's not something that's particularly upsetting to me, but for a strategic standpoint its interesting to watch how this is playing out. 

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

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

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


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

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

Labels: , , ,

Friday, February 26, 2010

Revenue Growth Predictions

It looks like all of the movie magic in the Land of Enchantment has begun influencing financial projections by the Richardson Administration:
Economic analysts for Gov. Bill Richardson's administration said Thursday they remain confident that New Mexico revenues will increase by nearly $300 million next year, a day after legislators voiced doubts about significant rebounds in the state's economy.

The revenue estimates, which don't factor in proposed tax increases, are key to ongoing budget negotiations between top-ranking Democrats in the House and Senate. 
 That's a pretty amazing prediction. I'm wondering what the Administration's position is on Tooth Fairy and Santa Claus?


Friday, February 19, 2010

Elect Officials Fail New Mexico

When the Legislature meets during the 30 day session, the constitutional mandate is clear:
B. Every regular session of the legislature convening during an even-numbered year shall consider only the following:

  (1) budgets, appropriations and revenue bills;

  (2) bills drawn pursuant to special messages of the governor; and

  (3) bills of the last previous regular session vetoed by the governor.

Labels: , , ,

Wednesday, February 17, 2010

Stitching a Budget Together With Disappearing Thread

They are feeling the pressure at the Roundhouse to get a budget approved before the strike of noon tomorrow.

"I'm hopeful we can come up with something (to avoid a special session)," said Senate President Pro Tem Tim Jennings, D-Roswell, who's participated in the budget talks.

The House approved cuts of about 1 percent for public schools and government services, while the Senate budget package calls for reducing spending levels by about 3 percent.

The shallower cuts in the House plan would be made possible by more than $300 million generated by tax hikes, primarily the gross receipts increase. The Senate plan relies on $180 million in new tax revenue.

However, Jennings said he's concerned revenue levels might end up being even lower than projected and said Richardson has criticized more tax ideas than he's offered. 
 I'd say that Senator Jennings concerns about lower revenue levels are well founded.  Consider for a moment the source of some of the revenue being expected to help plug the gap:
The Finance Committee approved the budget on Thursday and sent it to the Senate for consideration.
The committee proposed spending about $5.5 billion in the next fiscal year, which starts in July. That includes about $200 million in federal aid that's replacing state money for Medicaid, public schools and higher education.
 Of course, there's one obvious problem with this plan. It seems to fail to consider the reality of what is being said about the future of federal money coming to the states:

Payments to states and individuals will fall to $11 billion, from $14 billion, per month. Much of this spending -- such as Medicaid funding and additional unemployment benefits -- was meant to stabilize the economy during the recession.
 Yuppers, it looks like that faucet is starting to be turned in the opposite direction. So, here's my prediction. Assuming a state budget gets approved by noon tomorrow, we will most likely see a special session before the summer is over to deal with the "surprise" lower than expected revenues.

Labels: , ,

Thursday, February 04, 2010

Wall Street Versus Main Street Continues

I've wondered aloud on more than one occasion why the vast majority of stimulus efforts on the federal level were given to Wall Street versus Main Street. Of course, we all know the reason.  Democrats are providing special favors to their favorite campaign donors and making sure that big inefficient businesses with powerful unions can keep their doors open regardless of the lack of demand for their product.

Well, as near as I can tell, the same thing is happening in the New Mexico legislature - the interests of large business at the expense of small business. Only instead of giveaways of taxpayer money, we're talking about who the Democrats in the legislature are opting to tax.  Mind you, I say Democrats because the Republicans have made it clear that reining in the size of government should happen before increasing taxes:
Republicans in both the House and Senate are expected to take a hard-line approach against tax hikes, although they bristle at suggestions they're merely trying to block the Democratic agenda.

"They've never asked us to be part of the solution," said Rep. Jimmie Hall, R-Albuquerque.

Hall said he thinks there are still ways to trim the budget — by targeting administrative and vacant positions — without hurting core services.

"I can't support any tax increases until we shrink state government down to a level that a populist can support," he said. 
So, back to the tax, tax, tax enamored House Democrats. Let's take a look at their proposed solution:
Gov. Bill Richardson said Wednesday he supports the House's budget approach, which includes temporarily raising the gross receipts tax rate and imposing a personal income surtax on high-earning New Mexicans. 
I've explained in a previous post that what is really being proposed is a tax increase on the profitable retained earnings of remaining small businesses.  In other words, the money they need to weather the storm and keep key employees at work is the target of the tax increase. Now, yes, I'm of the mind that significant spending cuts should be made before even considering any tax increase, but I can't help but wonder if the Democrats are so bent on raising taxes, why they are targeting small New Mexico businesses instead of large Wall Street firms.

Think about it.  The general consensus is that small, not large businesses are the key to a true economic recovery. The irresponsible stimulus spending may have helped keep the doors open of those who are "too big to fail," but it did nothing to keep your neighbors, family and friends employed:
Unemployment rates were higher in December than a year earlier in 371 of the 372 metropolitan areas and lower in 1 area, the U.S. Bureau of Labor Statistics reported today. 
President Obama is finally awakening to the fact that America (and his popularity) is hurting because he has put the interests of Wall Street and unions before that of Main Street families:
Faced with a national 10 percent unemployment rate and a corresponding erosion in his popularity, President Obama delivered his first State of the Union address tonight and offered up a laundry list of proposals aimed directly at the small businesses who do 60 percent of the hiring in America.
So, you've got to wonder why House Democrats in the legislature have targeted small businesses and left big businesses alone. Sure some big business tax bills were introduced, but bills like HB 62, which would could raise taxes on large out of state corporations, got a pass in favor of taking more money away from job creating small New Mexico businesses.

Come Election Day 2010 the House Democrats, all of whom are up for re-election, are going to find that it is the Main Street business owners, employees and their families that are going to vote.  You know, the ones that actually live in the state.

Labels: , , ,

Wednesday, January 27, 2010

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.

Labels: , , ,

Wednesday, January 06, 2010

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.

    Labels: , , ,

    Friday, December 18, 2009

    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.

    Labels: , , , ,

    Tuesday, December 15, 2009

    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.

    Labels: , , , ,

    Thursday, December 03, 2009

    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.

    Labels: , , ,

    Friday, November 20, 2009

    Taxes Before Responsibility

    There's a war brewing for the 2010 Legislative Session. The battle lines have been drawn, and on one side are those that believe government excess should be pared down, and on the other side are those that want to see the tax and spend party to continue by raising even more taxes. The spend, spend, spend people have formed the organization, Better Choices New Mexico, to make their case, which basically boils down to:

    This alliance of small businesses, faith-based groups, working families, and nonprofit organizations believes cutting critical services and programs would be a terrible mistake. Instead, the Legislature needs to open the books on tax expenditures, close the loopholes for out-of-state corporations, and rollback the tax breaks for the wealthy.

    What's amazing to me is that essentially what they are defending is the spending gone wild policies that have left us in an economic crisis that should not have occurred. Any organization that wants to be taken seriously about seeing better choices in New Mexico had better address the severe mismanagement of taxpayer funds by the state before asking for more money. Their one-pager makes the case over and over again for increasing revenue, but not once does it talk about cutting expenses. The closest it comes is to suggest shifting dollars from one area of waste to another.

    And, mind you there is a lot of waste in government spending in this state. There are the obvious signs of waste that are uncovered everyday:

    Nemazee and others connected to Carret Asset Management gave campaign contributions to Gov. Bill Richardson before and after receiving the contract, according to the magazine. “The contract with the State Investment Council, which oversees $12 billion in trust funds from oil and gas leasing fees, has so far yielded $1.7 million in fees for Carret,” the author of the article, Nathan Vardi, reports.

    Of course, no one wants to take responsibility for this kind of waste:

    Richardson’s spokesman says the governor, who is chairman of the New Mexico State Investment Council, played no role whatsoever in the hiring of Carret.
    Only in New Mexico could the Chairman get away with full denial of accountability. Then again, this is the same Governor who can hand out multi-million dollar favors like candy on Halloween
    without the least bit of economic restraint, no matter how bad out budget situation may be:

    I'm positively shocked that Governor Richardson has been a long time friend of the Hool brothers who are behind the Santa Fe Studios. The project, which I wrote about a few months ago, is being subsidized to the tune of $10 million by state taxpayers with taxpayers in Santa Fe County chipping in another $6 million. The whole thing stinks.

    Of course, at the same time as he is pushing for additional subsidies for an already-subsidized industry, Richardson is pushing for tax hikes on the rest of us.

    Then, there is the wasteful spending that is not so obvious unless you're a government insider:

    I am a state employee who is faced with trying to determine where to cut groceries, utilities, Christmas spending...I can accept the furlough...However, I looked at the salaries at executive agencies and must ask how did the agency on aging become a full Department? Military affairs? Where did some of these commissions come from? Do we need them or should we place higher expectations on persons employed in these areas? For example, why isn't the Department of Homeland Security part of the Department of Public Safety?

    Why not consolidate programs and eliminate some high salaried executives? Why are we paying outlandish rents for private buildings when there are vacant government buildings? I am not placing the blame on any branch of government, just venting.

    Well, someone better start blaming a branch of government. It's called accountability. But, then again, its easier to push for tax increases than to actually try to make a better choices in New Mexico. After all, it's all about our children, right?

    Three sport utility vehicles purchased for school administrators from an out-of-state dealer. A $91,000 tow truck. Thousands of dollars for iPods for students. Paying athletes and cheerleaders to pull weeds. Lunches, including a $110 tab at the Rio Chama Steakhouse paid for by federal funds intended for low-income students.

    These are just some of the questionable expenditures uncovered by audits of five medium-sized school districts that were discussed Thursday at a meeting of the Legislative Finance Committee. One LFC staffer said these audits "barely scratch the surface" of waste and abuse in some school districts.

    Yeah, it's all about the children. Now, you tell me something. Do better choices start with putting more money in state coffers, or does it start by saying enough is enough? Until the people taking and spending our money are held accountable for their fiscal mismanagement, corruption and fraud, I say they don't get to increase taxes by even one tenth of one percent.

    Labels: , , , , , ,

    Wednesday, October 21, 2009

    Education Cuts Put in Perspective

    The education establishment is up in arms and willing to go to any length to fight education cuts during the special session. Admittedly, part of the problem is the way that cuts are proposed. Rather than take responsibility for past irresponsible actions, the Richardson/Denish Administration like to propose "across the board" cuts:

    Richardson has proposed a 3.5 percent cut to state agencies and a 1.5 percent cut to public schools, which would amount to about a $40 million reduction in the state budget for kindergarten through 12th grade.

    Taking this approach to reigning in a budget gone wild is irresponsible at best. Yet, a recent special audit report released by State Auditor Hector Balderas show just how much waste is in education:

    The money involved in the transfer to the discretionary account came from funds meant for technology and transportation, Balderas said. About $3,500 of it came from federal Head Start money, in violation of the federal rules, the audit states.

    Among the items allegedly purchased by the northern New Mexico school district through the discretionary account were:
    • More than $2,800 in lobbying expenses.
    • $200 spent on 20 bags of beef jerky for lobbying at the Legislature last March.
    • $742 spent on food at the Bull Ring in Santa Fe for a legislative meeting last February.
    • More than $900 spent on flowers for funerals and other events.
    • Jackets for all district staff for staff appreciation in January 2007 costing $3,299. More jackets for staff and also for legislators in March 2007, costing $290.
    • Gift certificates from Wal-Mart for three retiring employees in May 2006 costing a total of $150.
    • A $302 gift from Zales Outlet for the district's retiring superintendent in August 2006.
    • Another $1,200 for items for conference rooms from a vendor called "Nambe" in August 2008.
    • For district staff: more than $1,300 for hams in December 2007, more than $1,600 for turkeys in February 2009 and more than $900 for denim shirts in April 2009.
    • And more than $2,400 spent on jackets for district leadership in March 2009.
    The audit said that depositing money into the discretionary account resulted in less money available for school district operations. Auditors looked into transactions from the discretionary account from fiscal years 2006 to present.

    Consider that's just one finding, and it accounts for almost 1.5% of the district's annual budget. Let's roll up our sleeves and get the job done.

    Labels: , , ,

    Thursday, October 15, 2009

    Budget Cuts Shouldn't Hurt Kids

    Governor Richardson's mantra going into the Special Session this weekend is a simple one: "Budget cuts shouldn't hurt kids." It's one that I wouldn't be surprised to learn had been voter tested and approved:

    But most interesting was $38,353 paid for "research/polling" to a company called Fairbank, Maslin, Maullin & Associates in Santa Monica, Calif. Nearly all the money was paid in June, a much smaller chunk paid in September.

    It's a simple message, and a nice diversion tactic. Governor Richardson gets to avoid taking ownership for spending New Mexico into a crisis. He gets to pretend to be the great savior of our children, while trying to turn the legislature into the big bad wolf:

    Gov. Bill Richardson late Tuesday rejected legislative proposals to plug a state budget gap that's now expected to top $650 million, saying at least two of them would cut too much money for public schools.

    Richardson called for lawmakers to try again before a special legislative session on the budget starts Saturday.

    "Governor Richardson has studied the legislative proposals and finds the cuts to education unacceptable because of the severe impact to teachers and kids," Richardson spokesman Gilbert Gallegos said. "The governor wants one proposal from the Legislature, not three, that makes fiscally responsible cuts without hurting schools."

    But, here's the thing. The Richardson Administration, and to a great extent the rubber-stamping majority in the legislature have done more to damage education in New Mexico over the last seven years, then anything some cost-cutting could ever do. They've herald one supposed "great" education reform after another without ever actually doing anything to improve education for our children. Worse yet, they've refused to ever take ownership of their repeated failures:

    A new batch of testing results shows New Mexico students' math scores are among the nation's worst, with little change from previous years.

    The data, released by the National Assessment of Educational Progress and often called the Nation's Report Card, shows New Mexico's fourth-graders with an average math score of 230 out of 500. The national average was 239.

    The New Mexico average score for eighth-graders was 270, compared to a national average of 282.

    The achievement gap between New Mexico's Anglo students and students of other ethnicities remained wide, without significant change from 2007.

    Secretary of Education Veronica Garcia said the overall numbers may not provide a fair comparison because of the small sample of students tested. About 11 percent of New Mexico's fourth-graders and 10 percent of eighth-graders took the test.

    Garcia also said students and teachers in New Mexico often do not take the test very seriously because scores are not broken down by district or school. She said other states use incentives to raise awareness about the test's importance.

    Oh yeah, that's the problem with the test scores. We don't have a big enough media campaign to let our kids know that tests are important. They actually know all of the information, there just not taking the test seriously. GIVE ME A BREAK! Here's a novel idea... How about taking ownership for the education failures?

    Look, year after year, we've thrown ever-increasing pots of money at education with ever-worsening results. How about we try something different? Go ahead and cut education spending. Let's stop pretending the children are going to get hurt. Based on the test results released year after year, it can't get much worse for them.

    And, as long as we're making cuts, how about getting rid of the hundreds of governor created and appointed positions drawing down comfortable salaries for absolutely no work. In fact, let's fire everyone who can't seem to get their department to actually provide the services they are supposed to be providing.

    Heck, why stop there? Let's just fire everyone who refuses to take responsibilities for seven years of failures and fiscal mismanagement. Start with Governor Richardson and don't stop until you find someone who says, "I've totally and completely messed up, and this is how I'm going to fix it." My guess is that before you find that person, the budget will actually be balanced.

    Labels: , , , , , ,

    Thursday, October 08, 2009

    Get Our Deposit Back

    On October 17, the legislature will go into Special Session to deal with the escalating budget crisis that will likely get worse before it gets better. There are legislators that would like to cut expenses. There are legislators that would like to increase taxes. And, there is an executive who is offended that some legislators refuse to live in a fantasy world:

    Gov. Bill Richardson might have a new nickname for two of his frequent adversaries in the New Mexico Legislature.

    Speaking to reporters Monday after a news conference in Santa Fe, Richardson voiced frustration with Senate President Pro Tem Tim Jennings, D-Roswell, and Senate Finance Committee Chairman John Arthur Smith, D-Deming.

    "I don't want this gloom and doom that is coming from certain quarters," Richardson said.

    New Mexicans would be wise to listen to the prognostications of these two gentleman. They know of what they speak. One idea that might be worth exploring during this session comes from a 73 year old who bought into the space dream:

    When a private spaceship soared over California to claim a $10 million prize, daredevil venture capitalist Alan Walton was 68 and thought he'd soon be on a rocket ride of his own.

    Walton plunked down $200,000 to be among the first space tourists to make a suborbital thrill-ride high above the Earth aboard a Virgin Galactic spaceship.

    Now he intends to ask for his deposit back if there's no fixed launch date by his 74th birthday next April.

    New Mexicans have put more than a $100 million into Governor Richardson's space odyssey, and now that its time to pay our other bills. Maybe it's about time to ask for our deposit back. After all, it's not like this has come even close to delivering what was promised.

    When Virgin officials and the state of New Mexico came together to announce a partnership to turn the commercial space industry into a reality, they estimated commercial flights beginning in 2007 in California and moving to Spaceport America as soon as the New Mexico facility was ready in 2008.

    Reminder folks: we're two months away from 2010! Unlike federally backed NASA, the state of New Mexico can't actually print its own money to explore the final frontier. We have to live in reality.

    Besides, think about it. Do you really want the state government of New Mexico to be directly involved in something as complicated as space launches. Remember, this is the entity that can't figure out how to do something as simple as answering the phone:

    New Mexico has extended call-center hours, upgraded the phone system and added 15 workers. Even so, "We still are receiving reports of people's inability to get through," said Carrie Moritomo, a spokeswoman for the state Department of Workforce Solutions.

    Of course, they could hire more people, but part of that budget is probably tied up in supporting the Space Authority. So before we start raising taxes, how about we revisit every last one of Governor Richardson's "great" initiatives of the last seven years, and start asking for our deposits back. And, while we're at it. Maybe we can eliminate some of those high-paying, low-performing jobs the Governor was so fond of creating:

    Five years ago, just eight of Gov. Bill Richardson's political appointees made more than $100,000 a year. Today, more than 100 earn at least that much.

    Hey, it's just a thought.

    Labels: , , ,

    Monday, August 24, 2009

    The Healthcare Paradox

    This weekend, Congressman Martin Heinrich and a panel of experts spoke to an overflow crowd on the topic of proposed federal gift to the health insurance industry:
    Several members of the audience asked about costs and how they would affect a rapidly growing federal deficit, now projected to reach $9 trillion over the next decade.

    Heinrich said much of the more than $1 trillion in estimated costs would be funded through provisions in various bills that would tax certain employers who do not provide health insurance to employees. Other costs would be paid for by eliminating "waste, fraud and abuse," he said. The congressman said he would remain open to other ideas on paying for health care changes.
    A gift to the health insurance industry is in fact what we are talking about here. This is another classic example of taxing one form of business to give to another. In this case, every business that does not now pay for health insurance will have to pay for health insurance. We're also going to find in the long run that everyone's personal income taxes are going to go up. Because, let's face it, government can't control costs either:
    State government's largest health care program faces a serious budget shortfall that could balloon to $300 million next year, forcing Gov. Bill Richardson's administration to start planning for cutbacks in Medicaid.

    Options range from reducing or eliminating benefits, such as dental care for poor adults, to lowering the reimbursement rates for doctors and other providers, according to New Mexico Human Services Secretary Pam Hyde.

    If drastic cost-cutting becomes necessary, she said, the state might need to scrap entire portions of Medicaid, such as a program to help low-income workers with insurance coverage, or revamp Medicaid to provide a minimum amount of services.
    Mind you, this is what it looks like when state government is receiving $3 billion dollars of federal bailout money for services. Oh, I know what you're going to say. That's a state problem. We're talking about the a federal healthcare solution. The federal government can control costs:
    Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.

    The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

    By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
    Yeah, right. The federal government is great at balancing a budget and projecting the ultimate costs of a pie in the sky program. If you believe that, please send me an email regarding the ocean front property I have for sale in Arizona.

    UPDATE: To help illustrate my point regarding the federal government's success when it comes to cost projections:
    The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

    The higher deficit figure, based on updated economic data, brings the White House budget office into line with outside estimates and gives further fuel to President Barack Obama's opponents, who say his spending plans are too expensive in light of budget shortfalls.

    The White House took heat for sticking with its $7.108 trillion forecast earlier this year after the Congressional Budget Office forecast that deficits between 2010 and 2019 would total $9.1 trillion.

    Labels: , ,

    Wednesday, June 17, 2009

    What's Another Trillion?

    We've already accumulated $1.5 trillion in taxpayer debt, now here comes the trillion dollar healthcare proposals:
    A leading health care bill under consideration in Congress would cost the government an estimated $1 trillion over the next decade and reduce the ranks of the uninsured by about one-third, or 16 million individuals, congressional budget officials said Monday in a preliminary estimate.
    I want to make sure you read that passage carefully. A trillion dollars will reduce uninsured by one-third. Therefore, it is not to far off to assume that it would take $3 trillion to insure everyone. And, make no mistake, there is not such thing as bills that "cost the government" money. It costs the taxpayers money. The only money the government has comes from you or me.
    The three advocate a mix of tax increases, spending cuts and new mandates guaranteed to annoy nearly every major player in the health-care debate, including a mandate on businesses to contribute to health insurance costs and a tax on some benefits provided through the workplace.
    Funny how they like to call it "tax increases" and "new mandates" as if they are two different things. A tax increase takes money out of your pocket and gives it to the government to spend as it sees fit. A mandate, as described above, takes money away from businesses and forces them to spend it on government programs. If you ask me, that's the exact same thing.

    Labels: , , , ,

    Tuesday, May 26, 2009

    Will They Never Learn?

    First, Mayor Chavez come up with the "brilliant" idea to shift one time construction revenue into the recurring costs pool. Now, he wants to bring back the idea with nine lives - the infamous Streetcar. Will it never end?
    Plans for modern rail in Albuquerque aren't dead just yet.

    Mayor Martin Chávez, still pushing for a streetcar system, is broaching the idea of a scaled-down project that would connect Downtown, the university area and the airport.

    It would cost about $130 million — far less than the broader, $270 million system scrapped 2 1/2 years ago.

    Even at a reduced price, the council may not be willing to climb aboard. Several city councilors, even those inclined to support the project, are skeptical about moving forward anytime soon.

    A proposal to be considered next month, in fact, could limit the mayor's flexibility to pursue the project.

    "Unless somebody drops $300 million on us, it's going to go to the voters some day," City Council President Isaac Benton said in an interview. But "I don't see any immediate movement on it."
    Even if someone drops $300 million of our children's money (that is what we're talking about here, ours is long since spent) into our elected officials laps, it still doesn't change the fact that it will result in NEW recurring revenue expenses. Based on the current budget crisis, it is impossible to understand how anyone could think this is a good idea.

    Labels: , ,

    Thursday, April 16, 2009

    Tea Party and Baseball

    It was a slice of Americana. My family and I went to catch an Isotopes game last night, but not before taking part in the "parade" down Montgomery:
    Several thousand people brandishing signs and carrying tea bags jammed a long Albuquerque boulevard on Wednesday as Americans protesting federal government tax and spending policies conducted "tea parties" across the country.

    Demonstrators in northeast Albuquerque lined both sides of Montgomery NE for about six blocks, waving American flags and cheering back at many slow-moving drivers honking their horns in apparent support.

    They joined other demonstrators in New Mexico and across the country on a symbolic day — the deadline for Americans to file their income taxes.

    Traffic slowed to a crawl and some drivers — clearly fewer than those honking in approval — jeered at the demonstrators. Albuquerque police reported no major disturbances.

    "Americans are fed up with their wallets being held hostage by special interest groups and politicians," said Floyd Smith of Albuquerque, who was among the demonstrators on Montgomery.

    I say parade because that's exactly what it felt like. It's kind of interesting, but words like demonstrators and protesters bring up images of angry mobs. Yet, what my family experienced on our detour down Montgomery on our way to the baseball game was nothing like that. People of all ages were smiling and waving signs and flags. Cars were honking, passengers were waving and flashing thumbs up in support.

    This gives me hope for 2010.

    Labels: ,

    Wednesday, February 11, 2009

    So You Think You're a Moderate?

    Ever wonder what someone means when they say they're a moderate Republican? Well, it looks like the "stimulus package" vote has defined the term moderate for the modern era:
    Details are starting to emerge on the blending of House and Senate versions of the stimulus package. Two senior Democratic sources said negotiators had agreed on a top line number of $800 billion, but later one of those sources said the number could be even less. Both would be less than either the Senate's $838 billion bill or the House's $819 billion package.

    Several sources involved told CNN that the number is lower to satisfy the three moderate Republican senators.
    Wow, talk about showing restraint. Senator Specter, Senator Snowe and Senator Collins sure do know how to drive a hard bargain. Good thing they were there to push the envelope and shave 2% or so off of that mammoth spending proposal. Can you imagine the world of hurt future generations of Americans would have been in if they had not fought tooth and nail to keep that spending down in THIS SECOND $800 BILLION ECONOMIC STIMULUS PACKAGE IN LESS THAN SIX MONTHS!

    Sorry, didn't mean to yell.

    Labels: , , , , ,

    Tuesday, December 30, 2008

    The Most Pressing Issue of the Day

    New Mexico is entering full economic crisis mode. We're facing a half a billion dollar budget shortfall that in all likelihood will continue to worsen through 2011. Jobs are disappearing in our capital city at an ever increasing rate (subscription):
    "Overall, the Santa Fe job market has stagnated in recent months, with only five of the area's 12 (industry categories) adding jobs," said the report, released last week.

    Santa Fe lost 300 jobs at area hotels and restaurants in November, the report states.

    Occupancy rates for Santa Fe hotels have been crashing over the past three months.

    Hotel operators have acknowledged there have been layoffs in recent weeks. In November, only about 44 percent of hotel rooms were filled, down from 53 percent for the same month in 2007. It was the first time the average occupancy rate had dropped below 50 percent in 10 months.
    And, the job picture for the state as a whole is not much better:

    According to the latest numbers from the U.S. Bureau of Labor Statistics, unemployment in New Mexico rose by more than one third — from 31,000 to 41,700 persons — between November 2007 and November 2008.

    The state’s unemployment rate rose from 3.3 percent to 4.3 percent over the same time period. New Mexico lost 3,700 manufacturing jobs, reflecting layoffs at Intel, Eclipse Aviation and TMC in Roswell, among other staff reductions. Construction jobs fell by 2,500 over the past year.

    But, it looks like at least one legislator has decided that there are more pressing issues to deal with the then the looming half a billion dollar budgetary crisis and ever shrinking job market. After her last campaign, Representative Mimi Stewart has come to the conclusion that the most pressing issue of the day to is the need to abolish the electoral college:
    An Albuquerque lawmaker plans to introduce legislation that would align New Mexico with several other states that are seeking to do away with the electoral college system for presidential elections.

    Four states — Hawaii, Illinois, Maryland and New Jersey — have already approved bills calling for a system that would use the national popular vote to determine who's elected president.

    Rep. Mimi Stewart, D-Albuquerque, who plans to introduce a bill in the upcoming legislative session to do likewise, said she's heard repeated gripes from constituents who dislike the current system.

    "It's a fairness issue," Stewart said Monday in a telephone interview.

    "Mathematically, 11 states could currently choose who's elected (president). I think people are tired of the electoral college."
    It's good in these times of need that we have legislators who understand our priorities.

    Labels: ,

    Tuesday, December 09, 2008

    Taking Just a Pinch

    Chances are that if you hear someone is promising to give you a good, quick pinch, you are going to move out of the way. Why? That's simple. Pinches hurt, and we're not just talking about pinching body parts.

    You can be rest assured that when the government decides to start doing pinching, it is going to hurt (subscription):
    The gap between expenditures and state revenue has grown steadily over the last three months as New Mexico increasingly finds itself being pulled into the national recession. For just the third time in 20 years, the state now faces the prospect of a revenue decline during the current budget year.

    Miller and other members of the Richardson administration said Monday that they believe the combination of recouping unspent infrastructure appropriations, imposing minor budget cuts and a hiring freeze on state agencies, and taking a pinch of help from the state's cash reserves can balance the budget for the current fiscal year that ends June 30.
    Ok, let's start by repeating the obvious. Facing a budget deficit should not have come as big surprise to anyone. We have had to do it three other times in the last the twenty years. You'd think government would learn. You can't spend, spend, spend in good years, because inevitably there will be lean years, and then you're going to have to make some cuts.

    Now, what should the government do first to fix this problem? Well, that's relatively simple. They should look at all new recurring services and expenditures that have been added since Richardson came into office, and start cutting them.

    The thought that they can fix this problem by simply "recouping unspent infrastructure appropriations" is ridiculous. Let me re-state that. If you think this is a one-time momentary blip in an otherwise booming economy, than it makes sense to just cut back on previously planned expenditures.

    But, if you
    face reality and acknowledge that next year is likely to be just as bad, if not worse, then you realize that approach is nothing more than sticking a finger in a collapsing dam to plug a hole. The only thing worse than that approach is "taking a pinch of help from the state's cash reserves."

    Taking a pinch from our reserves is the equivalent of robbing our children blind while they sleep. Rather than readjust to a budget that is within our means, we are talking about guaranteeing higher taxes on our children

    Plus, consider that this economy could sink further before it begins to rebound. If we're deciding to "pinch" at the first sign of economic weakness, then we're practically guaranteeing that we're going to be amputating when this gets worse, and it will get worse before it gets better.

    Labels: , , ,

    Friday, November 21, 2008

    Watch Out! Here Comes the Tax Man

    Are you feeling the squeeze? The economic pressures keep increasing. The Dow Jones took another dive finishing at 7,552 - a five and a half year low. To put this in perspective, in October of last year it was trading at over 14,000. It has lost nearly half its value in a little over a year. In other words, the market has lost TRILLIONS of dollars in value. My gut says that before the end of 2009 we'll see the Dow hovering at 5,000. Mind you, I'm not an economist or market professional, but then again a lot of those folks predicted the bottom to be around 8,000.

    The hit to the economy is not just paper losses. We're losing real jobs. The jobless rate is at a 16 year high and climbing:

    The US has been rocked by the fastest weekly rise in unemployment in 16 years.

    New claims filed for unemployment insurance zoomed last week to 542,000, the highest since the summer of 1992, when the nation was recovering from a recession, the Labor Department said.

    The latest news on the crucial jobs market was worse than analysts expected. Meanwhile the numbers continuing to draw jobless benefits climbed to more than four million, the highest in just over a quarter-century.

    So, what's next? Well, it looks like the tax man is coming. Yeah, you're probably thinking. We all know that. The tax man is coming to tax the rich. Uh, think again. The tax man is coming for everyone [cue ominous music] - the rich, the tired, the poor, our huddled masses are all about to be taxed a little more:

    Since the study findings were released last fall, education advocates have been pushing for use of the new formula. Despite approval from the state House last winter, a measure on the funding formula died in a Senate committee.

    The biggest problem was where to get the additional money. Now advocates think they've found a solution.

    Bud Mulcock, with the New Mexico Coalition of School Administrators, said a 1 percent increase in the state's gross receipts tax could raise between $470 million and $475 million.

    He suggested money raised from a tax increase be dedicated to schools and not directed to the state's general fund. That would ensure the money goes to education and would also be a selling point to the public, he said.

    That money, Mulcock said, not only would pay to implement the funding formula, but also would ensure no cuts are necessary for the following year. "It's a bold stroke," he said, "but I think it's a time for bold strokes."

    Yup, no doubt about it. During the toughest economic times to hit our country in a quarter century, increasing gross taxes on everybody in New Mexico by over 15% is definitely a bold move. Before you start leaving me nasty comments that the proposed tax increase is only one percent, remember that adding a percentage point to a tax in the five to seven percent range is a huge tax increase. And, it is going to hit the poorest amongst us the hardest.

    Mark my words, this is only one of many new taxes which will be pushed. In addition to the tax and fee increases we'll see being pushed statewide, you are going to have regional (think rail runner and spaceport) and municipal tax increases to cover the budget shortfalls from the spending spree of prvious years.

    Labels: , , , ,

    Wednesday, October 29, 2008

    Bulding an Arena in a Recession

    Chalk this up to one up to absolutely ridiculous (subscription):
    Albuquerque's young, growing population looks strong enough to support a Downtown event center, according to a new consultant's report.

    And if City Hall opts to build one, the WNBA has interest in awarding a team to the Duke City, the study said. The league would want a local ownership group willing to pay a $10 million expansion fee.

    The remaining wild card for the whole project, of course, is the tight economy that's squeezing government revenue.

    "In terms of an opportune time to make an investment, if anyone's liquid enough, these are great times," Mayor Martin Chávez said. "What we have to be cautious about ... is that it doesn't impede our ability to provide basic services."

    One hurdle is whether the market will support an 11,000-seat event center. The new report by Convention, Sports & Leisure International says the market characteristics are "very favorable."

    The report was conducted as part of a series of studies examining the feasibility of a $400 million plan to build an event center and hotel in Downtown Albuquerque, near the Convention Center and railroad tracks. The mayor and council haven't decided whether to go forward with the project.
    Well, if they have any sense, they'll determine NOT to go forward with the project.

    Labels: , ,

    Wednesday, August 13, 2008

    Richardson Pushes Payday Loans on New Mexico

    Governor Richardson is still committed to having a special legislative session start this Friday. Why? Well, originally it was to try and push a budget busting healthcare plan that had rightly died during the last legislative session.
    "We can invest in health coverage in a fiscally responsible way," Richardson said in a statement. "While cynics will no doubt complain about using revenue from oil and gas, I am confident — as I have been for the past six years — that New Mexico's economy is performing well and will allow us to expand health care coverage to all New Mexicans."
    Hmm, yeah...Let's see that quote comes from a post I put up just 30 days ago. And, in 30 days that projected windfall has shrunk by over 40% (subscription), but Governor Richardson is never one to let reality get in the way of big spending:
    "The bottom line is the state still expects $225 million in extra money — money that should go back to New Mexico families who are struggling to make ends meet," Richardson said in a statement. "I am confident we can put money in people's pockets in a fiscally responsible way."

    Last month, revenue collections were projected to be almost $400 million higher than anticipated in the current budget year. That was mostly because of money New Mexico collects from taxes and royalties on the production of oil and natural gas. But prices have dropped sharply since last month's revenue estimates, which are developed by administration and legislative economists.
    Governor, it would appear that those who are complaining about using oil and gas revenue are not so much cynical as they are realistic. The bottom line here is that Governor Richardson's approach to spending is akin to going to a payday lender. The Governor is taking money he doesn't have (i.e. projected) and spending it without concerning himself with consequences.

    If he wants to put more money back in the pockets of struggling New Mexicans, he should cut the state spending budget that he has grown from $3.9 billion to over $6 billion and allow New Mexicans to pay less in taxes. Of course, that would be the fiscally sound way to give us back our money. But, no quite in keeping with the Governor's tradional mode of operation.

    Instead, he is proposing to give us back money that he hasn't yet collected. In other words, he is taking out a payday loan to help those struggling New Mexicans. The exact strategy that puts many New Mexicans in a poor fiscal position in the first place. We all know that most of the people borrowing from payday lenders end up in a dire financial situation.

    Mark my words, the end result of the Governor's payday loan approach to spending based on a volatile projected revenue source will be more taxes for every New Mexicans - including those already struggling under a heavy tax burden.

    Labels: , ,

    Clicky Web Analytics