Monday, August 17, 2009Special Recession Session Won't Be One Day Wonder; Lawmakers Want More Time, Plus: My Special Report On State Budget Crisis, And: A Missing Mayor![]() A bipartisan group of lawmakers will be assembled by the Guv to cut a deficit closing deal before the session begins, but there is still the issue of public input and public perception. Lawmakers want to look deliberative--not slapdash--in addressing one of the worst fiscal messes in state history. Look for the idea of a one or two day special to fade as we go forward. The Guv, not without cause, would like a one day wonder because it would keep the agenda tight and give little time for argument to develop. He would have greater control. But a small set of lawmakers--no matter how sound or bipartisan the groundwork they lay--is not going to speak for all 112 legislators on an occasion of consequence and perhaps one with some political danger. LET'S MAKE A DEAL ![]() Look for a multi-pronged approach from the Roundhouse, all designed with avoiding employee layoffs or furloughs. A good chunk of the state's $570 million in cash reserves will be gobbled up. It appears when the dust settles we will likely have reserves that total 6% of the budget, not the 10% plus levels we have grown accustomed to. Big Bill Department of Finance Secretary Katherine Miller seems particularly anxious over the reserve issue. While the Guv and Legislature held a lavish six year spending party, everyone took time to overfund the reserve--to the tune of as much as 13 percent of the budget. This was meant to calm nerves and cover with a fig leaf the bare fact that we were spending ourselves silly. We were spending ourselves silly. We just had so much cash coming in we could overfund the reserve fund. Not now. WHERE THE KNIFE WILL CUT ![]() Capital outlay--or in layman's language--construction projects--will again be trimmed as they were in this year's regular legislative session. The money would be shifted over to the general fund. However, much of the low-lying fruit has been picked here. The projects that lawmakers will look to deauthorize will not be as frivolous as the first batch. Turf battles could erupt. We're told there are about 1,000 state cash accounts for various state agencies--why so many is an interesting question--that will be trimmed of excess cash as lawmakers look in normally obscure pockets of state government to pick clean everything but the lint to get this budget to balance. There will be another revenue forecast before the October special. If it shows the fiscal black hole is not deepening, the state should be able to avoid personnel cuts; if it's worse, layoffs and furloughs could come back into play. WHY WE'RE HERE ![]() It is true that state government has grown some 50% in the past six years. (Earlier reports pegged the increase at 40%. It depends how you measure it. In 2003, when Bill took over, the budget was about $4 billion. It peaked at about $6 billion, a 50 percent increase.) But before the lynch mob forms for Big Bill, keep in mind that the Legislature--including just about every Republican--also drank from that boom era punch bowl and voted for the fat budgets of the very fat years. WILL IT EVER BE THE WAY IT WAS? No, it won't be the way it was--at least not for many years. State revenues, which peaked at $6 billion, are now down to around $5 billion. They will eventually stabilize, but barring a world energy crisi that spikes oil and gas prices and leads to a production boom here, we are in for a slow to no-growth era. Our manufacturing base, symbolized by the collapse of Eclipse Aviation and the slow employment declines at Intel, is not adding jobs. Funding for the national laboratories--huge drivers of the economy--not necessarily because of the percentage of the work force they employ--but because of the huge payroll they bring into the state--are in a no-growth mode (or worse) for the foreseeable future. The clincher is the availability of credit. Loose home equity loans and high credit card limits for consumers are relics of the past. It will be a long, slow climb out of the hole for New Mexico consumers. THE NEXT ONE ![]() As for the padded payroll, some quick calculations done over the phone with ABQ GOP State Senator Sue Wilson Beffort shows that the over 450 "exempt" employees--those whose jobs are awarded by the Governor and whose numbers have soared under his watch--are costing around $30 million a year. No one wants to throw people out of work in this environment, but the next governor may have no choice but to start off loading the political hires if they want to get control of the budget. YOUR TAXES Beyond "lean and mean," in the coming year look for debate over the myriad of tax credits that are on the books. Santa Fe is going to be looking for revenue without directly raising taxes. While tax increases that directly impact you may not be likely--legislators still fear raising them--the era of tax cuts is over in New Mexico. You can make book on that. LOOKING FURTHER AHEAD ![]() THE WAY FORWARD Smaller, leaner government appears to be our future, and that won't be all bad as there is plenty of excess to be rid of from the Great Boom. However, the crushing social needs of this economically poor state remain stubbornly unsolved even after literally billions of dollars was thrown at them in the last ten years. Future lawmakers and taxpayers will demand more accountability and cost-efficient means of attacking such sore-thumb issues like the poor high school graduation rate which stands at a dispiriting 54 percent. To quote the late capitol reporter Ernie Mills, "Don't say we didn't tell you." A MISSING MAYOR ![]() Chavez appears willing to take some heat over missing this latest one--and probably a couple of more. He canceled the North Valley event, saying he had an interview with the ABQ Fraternal Order of Police. By Chavez not showing, rivals Richard Berry and Richard Romero were deprived of a high-profile opportunity to beat up on him. Still, we would be surprised if Chavez, seeking a fourth term, was not in attendance at most of the September forums. If not, his absence might become a campaign issue. Meantime, the next big event in the race will likely be the unveiling of campaign TV spots in late August.Early voting in the mayoral election begins the first week of September. E-mail your news and comments. (c)NM POLITICS WITH JOE MONAHAN 2009 Not for reproduction without permission of the author |
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