Thursday, August 09, 2012
The NMFA Scandal: What It Means To A Struggling State Economy And Who Gets The Blame? Plus: More Emailgate, PERA Pain And A Defense Of City Convention Biz
Exactly what does the audit scandal at the New Mexico Finance Authority mean to the state's economy and the daily lives of Mr. & Mrs. New Mexico? We haven't really seen it summed up anywhere--until now. A Senior Alligator with a background in these matters comes with the explanation in a nutshell:
The state's construction industry will further dry up. Already the NMFA has cancelled a $40 million bond issue for statewide infrastructure improvements, and will probably not issue, or seriously delay, the $100 million dollar issue scheduled for later this fall.
The NMFA has cancelled the Framing the Future conference previously scheduled for September. That means that the NMFA has nothing to offer the counties, cities, and Indian tribes and is essentially throwing in the towel on future infrastructure. Couple that with Moody's and Standard and Poor's placement of NMFA on possible (read probable) downgrade and one can assume that a drop from current AAA rating on bonds will drop significantly, meaning that interest rates will gobble up a much larger share of public financing, leaving less for job-creating projects.
Couple this scenario with the Governor's killing of the $250 Million capital outlay bill in her first legislative session and her bungling of the capital bills in the 2011 session and the result is at least a half a billion dollar hit on the economy.
Okay, that's the economic impact. Now how about some good old-fashioned finger pointing? We jabbed at State Auditor Hector Balderas--as did the newspaper--for not being ahead of the curve on NMFA's fraudulent audit, but it is the Governor, says our Senior Gator, who must shoulder most of the blame:
The buck stops at the Governor's office. No matter how much finger pointing is going on, the NMFA is controlled by Martinez appointees. The Board includes four members of her cabinet, some of whom attended very few meetings. Furthermore, she changed almost all the other members so that 8 out of 11 NMFA board members are her appointees. The Board failed badly in its fiduciary responsibilities. The President of the NMFA, Richard May, is her designate as well.
The Governor's first NMFA Chair unfortunately resigned, and now we have Nann Winter, wife of ABQ City Councilor Brad Winter, as her replacement. Is she up to the task? Where were the cabinet secretaries, the chief of staff, the political advisers, and indeed, the Governor when they should have been competently minding this very vital state resource?
The NMFA has had a proud 20 year history, under Democratic and Republican Governors. It is sad to see the agency crippled. The construction industry and New Mexico's already anemic economy will suffer the consequences.
And that's how you cut to the chase. Balderas takes a minor hit for not being out in front, but the ultimate responsibility rests on the Fourth Floor of the Roundhouse. And that's why we have Senior Alligators--they specialize in the unvarnished truth--no matter what political party is helped or hurt by it. Did we say it's also the stuff you won't get anywhere else?
A timeline on the NMFA scandal is here. AP coverage is here. TV news comes with the interview of one of those arrested.
Then there's that other scandal hanging in the air--emailgate. To say that Michael Corwin of the union-funded Independent Source PAC has been leading the charge on this is an understatement of the first order. He's been like Javert in Les Misérables--relentlessly tracking his prey. And the Republicans have taken notice, repeatedly branding Corwin, a veteran private investigator, as a paid political hack and doing their best to undermine the stories that he and the PAC have continually produced and that have been picked up by the the media.
This week the R's slammed Attorney General Gary King as a union-financed political attack dog for Corwin and company and said emailgate is politically motivated nonsense. King did not respond, but Corwin did:
The Public Education Department (PED) had all the email addresses it needed to reach its licensees and therefore had no reason to try to create a list using its staff and computers to comb outside resources. PED has every right to use the emails of its licensees that it collected through the licensing process in order to communicate with the licensees. Even if it is to send licensees a newsletter. But PED knew that (Gov. Martinez political adviser) Jay McCleskey did not have that same right. So they created this list using government employees on government computers spent combing non-PED websites for days during government business hours just to get McCleskey a list he could access.
PED Secretary Skandera and others involved are in serious trouble. Republican efforts to bully King will not change that.
Well, we'll see how much trouble anyone is in as this goes forward.
Will there be any more emails from ISPAC hitting the streets of communications among senior Martinez staffers using private email accounts as they did in the PED case? The short answer is yes.
A reader writes of our discussion this week of PERA and the proposed reforms to the retirement plan for state workers:
Your comparing the unpaid portion of a mortgage with the unfunded liability of a pension is devoid of any understanding of the underlying economics. In a mortgage, a borrower has use of his purchase, but acquires complete ownership over time as the mortgage is paid from money earned or acquired by the borrower. In a pension benefit, the beneficiary, their employer, and earnings on the corpus combine to pay a benefit some time in the future. Therefore, unless the liability due the beneficiary is reduced by some means, the beneficiary will necessarily receive less than his expectation or possibly even nothing. You fail to understand that the unfunded liability is owed to the present beneficiaries who hope to collect some time in the future.
We disagree. We don't see the "unfunded liability" as having to apply much to present state workers because the fund has a robust balance of $11 billion. Also, PERA itself says the burden of its reforms would be placed mostly on future retirees.
One more on this from reader Robert Pacacioz:
Joe, thanks for standing up for us and speaking the truth about the "working class." I am now "retired" but still fighting for "our rights." Thanks again for saying, standing up, and doing the right things for us New Mexicans.
Joe, we thought it would be useful for your readers to have some of the real facts regarding Albuquerque's convention business and the results of ACVB's efforts.
Fiscal Year 2012 Convention Center bookings saw a 171% increase over the previous year, bringing in over $35 million in future direct spending to the city. This is a level of bookings that we have not enjoyed since 2002--not a bad statement to be able to make as we still deal with the uncertain economic climate. Overall, convention bookings throughout the city saw a 29% increase in hotel room night usage. And that is on top of 2011 numbers posting an increase of 6% in attendance and 3% increase in hotel room nights.
Our destination marketing efforts are stronger than ever with aggressive campaigns producing strong results...Incidentally, ACVB’s contract does go out to bid, and we were the only responder in 2010. That is because our 501c6 model was specifically constructed to do this work, and almost 70% of cities across the country use this model.
Your alligator’s accusation that we have been blaming situations for the last 15 years is puzzling. It would be hard to refute that the tragic events of 9/11 not only had a profound impact on the travel and tourism industry in New Mexico but throughout the entire world. It would also be hard to ignore the significant Native American resort development in the Central Rio Grande corridor and its effect on hotel and convention business in Albuquerque. These resorts are gorgeous assets for the tribes and the state...
Anyone that has been to the Convention Center knows that it is in dire need of updates in order to be competitive. Mayor Berry recognizes that need and has made a commitment of $20 million in renovations as a result of refinancing the bonds on the Center. This will be the first significant improvement since 1991.
Lodgers tax hasn’t fallen off a cliff. In fact, it is only down by 1.4% year over year. And the $700K deficit is due to the city replenishing its reserve funds this year--and thankfully our organization was financially strong enough to endure the reduction...
The convention and tourism industry is complex and competitive. And it is a critical economic engine for Albuquerque and New Mexico--so important that having serious dialogue about its future should be a top priority for city and state leaders...
And for those who missed it, here is the comment that set off the discussion:
It's total farce. ACVB is always in the middle of regrouping, revamping, reinvigorating, reforming and/or repackaging their marketing effort. 15 years ago they were blaming the tribal casinos for the decline in Lodger's Tax revenues. 10 years ago it was 9-11. Five years ago it was because the Convention Center is outdated/hasn't had enough money spent on it...Until ACVB is put out for competitive bid--and an open and honest competition--nothing will change. The only thing we can count on from them are mediocre efforts, anemic results, squandered millions, a bottomless sense of entitlement--and the same dog-eared excuses we've been hearing for almost two decades.
NEW LOOP NEEDED
Joe, After two failed efforts, its time to take the Legislature and the Guv out of the loop and implement a citizen commission to do the job of resdistricting. The process failed in 2001 and again in 2011. Taxpayers paid the bill for the lawmakers' intransigence and their failure to produce final version agreeable to all parties. Governors Johnson and Martinez share equal blame with Democratic legislative leaders on these failures.
Yep--$8 million bucks to the lawyers for a job that could be done for a fraction of that by a commission. But it only happens every ten years so how soon we forget the folly....
We know that Martinez Chief of Staff Keith Gardner and Jay McCleskey will choke on their breakfast burritos if they read this--but the above Senior Gator placing blame for a problem on both political parties is yet another example of how New Mexico Politics with Joe Monahan is an equal opportunity employer. We look at the issues from every angle--not a pre-formed political perspective. We're tough, fair, independent and accurate. And when we make a mistake we admit it. That's why we're New Mexico's #1 political web site--year after year. And that's also why.....
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