Wednesday, August 08, 2012
We're Long And Deep On The Econ Beat: Denish Emerges; Mayoral Run Beckons? Also: Some Reader Opinion On ABQ Anemia, And: PERA Defends Pension Changes
We're also back today with more on the status of the big pool of money that funds state retirement checks under PERA--the Public Employee Retirement Act. It's all part of our continuing commitment to provide coverage of the big story of this decade--the economy and its impact on our state's politics. Our goal is to encourage debate that offers criticism as well as solutions.
First up is former Lt. Governor Diane Denish who was defeated by Susana Martinez in the 2010 Guv race. Observers have tagged her as interested in the mayor's contest next year and she recently told us she is looking at it, but it is too early to make a decision.
Joe: Your Monday morning blog was on target. Sure, everyone knows it is tough to create jobs in the current environment, but Martinez and Berry have another problem. What about simply working to protect the jobs we already have? Some examples:
The F-35 Fighter Wing decision to locate in Arizona--not Holloman air Force Base at Alamogordo-- is not necessarily a testament to the strength of Arizona Senator John McCain, it is a testament to Martinez's weakness. New Mexico has proof that if a Governor (a la Bill Richardson) goes to the mat for a base, they can have impact. When Cannon Air Force Base in Clovis was on the line, Governor Richardson and our base planning committee were working hard until that last dog died and it paid off--for New Mexico and Clovis. Where was Susana in this debate? Nowhere.
Remember that Los Alamos Laboratory Construction project that was to be the largest in NM history? That project had been in the que for 12 years. Contractors and others were preparing to be a part of the effort--it meant jobs for small business for Northern NM where unemployment is high. Was Governor Susana working the halls of Congress pushing for NM? Did she call in any chips to save and expand jobs in NM? No. Where was she when that decision was in the works? Nowhere.
Meanwhile she killed one of our cleanest industries--movie making. Movie publications and movie moguls have gotten the negative signals--New Mexico is no longer an industry leader, but an industry follower. Our "model" for attracting the industry is creating jobs--in other states. And, it's New Mexico's movie work force, which had been building steadily the last few years, that is out of work.....and that leads us to Mayor Barry...
Where was Mayor Berry when the movie industry battle heated up? He claims to have been behind the scenes but leaders are usually in the forefront. Mayor Berry missed a prime opportunity to stand up for Albuquerque and now many of those jobs are disappearing if not already gone.
Where was Mayor Berry in 2010 when ABQ Republican State Senator John Ryan filibustered the capital outlay bill at Martinez' bidding--much of it meant for Albuquerque. The dollars were comparatively small that year but it was a year when everything counted. Berry failed to step up to push for the regular session passage of the bill.
Meanwhile, about the Mayor's "ABQ The Plan." Well, it started out to be ambitious. But as one team member pointed out to me, it was like a good glass of single malt scotch in the beginning. Then he threw in a few ice cubes, added some water, gave it a twist, and pretty soon....well, you get my drift, nothing with any "flavor" of a real plan was left.
But don't worry.....Susana and her top dogs are monitoring the tattoo parlors (whew!), creating complicated school evaluation formulas that only a few people on the planet can understand, Berry is putting a pink bow on the white elephant convention center, and both revel in luring temporary call center jobs--temporary for the workers and temporary for the companies--and New Mexico joins a handful of job losing states.
Want less Government? This is it....or is it leaderless government?
Now on to Pete Dinelli, the former ABQ City Council and Public Safety Director under Mayor Marty Chavez who recently opined here on the convention center. The possible 2013 mayoral contender comes today with his take on the city economy:
Joe: Your report that the flat lined economy has hit city revenues and that New Mexico is the only state in the region losing jobs reflects failed leadership by Mayor Berry and Governor Martinez. Both have failed to present any plan to grow local business and attract new industry. Mayor Berry spends $20 million to renovate a vacant 40 year old convention center for the Albuquerque Convention and Visitors Bureau that has a $750,000 shortfall in revenues and that can't attract conventions. Thanks to Governor Martinez, the State Fair will have a new $30 million dollar casino in one of the poorest parts of town with the highest crime rate where the jobless cab spend their unemployment checks.
Everyone blames Obama for the bad economy and Romney only thinks more tax cuts for the rich is the answer while the middle class loose their jobs. No matter who is elected President in November, New Mexico has a large target on it as far as severe cut backs at both Sandia National Labs and Los Alamos National Labs, not to mention military cutbacks to our bases. Albuquerque and New Mexico need to prepare itself for stark reductions in federal spending. Albuquerque and the state need to take steps to reduce our economic reliance on federal funding. Mayor Berry needs to get rid of his Economic Development Director for his failure to produce and do the job himself of promoting the city and start anew by first examining industrial Revenue Bonds, capital improvement projects and Tax Increment Districts.
A READER WRITES
It's not just the politicos talking about the sluggish economy. Reader James Meiers was among those emailing in responses to the Monday blog:
I am one of those people who just moved away from Albuquerque in search of better opportunities and the anemic job scene was definitely a major consideration. I agree with you about the condition of the local and state economy based on my own observations and the experience of having just traveled from Albuquerque to Salem, Oregon.
My brother visited from Los Angeles to help me move. Given his tangential professional relationship to Hollywood, he was shocked at the rise and apparent fall of the film industry here--which had been seen in L.A. to be a threat luring professionals away. But we went out to eat every day, and spent time visiting various businesses and touring ABQ. Business is down everywhere, On the westside I've noticed that restaurant visits have seemed to be decreasing steadily since Christmas. It just seems like people are not going out or just going away (I should also mention that there are a half dozen or more houses for sale in my immediate neighborhood, which is in the heart of the city and has long been home to very long-term residents (It's not like the boom and bust of the westside, or worse, Rio Rancho).
I stopped in Moab, Utah last Friday night and that city was packed. I know it's a tourist destination, but aren't Albuquerque and Santa Fe? Albuquerque has a large airport and is the crossroads of two interstate highways. Santa Fe is only 45 minutes north. Moab is in the middle of nowhere, and it was filled with adventure and leisure tourists and the hotels were full.
I couldn't find a hotel room in or around Salt Lake City because there was an outdoor living industry convention that took over the city. Traffic and businesses in Colorado, Utah, Idaho, and Oregon have been pretty busy and traffic and life just seem more abundant. Downtown Boise on Saturday night was thriving thanks to their entertainment venues and a local motor cross event. Portland was also bustling on a Sunday late afternoon and evening as I drove around the city for a few hours just looking around before heading down here to Salem.
The problem is not the national economy. The problem is that New Mexico and Albuquerque are letting their economies wither and die due to inaction. This isn't just to put the blame on the inaction of the government, though they deserve serious blame for being inattentive or incompetent in the functions of Economic Development, tourism and cultural affairs--all of which should be working together. But the local business community is also to blame. This is a widespread problem, and demands a widespread response from the government, businesses, and the community--all of which now strike me as indifferent or otherwise completely disengaged compared to Albuquerque's equivalent cities and New Mexico's neighbors.
Blaming the specter of Washington, which already does way more for us than against us thanks to federal funding, gets us exactly nowhere.
THE PERA PANIC
Joe, Your headline about panic at PERA couldn’t be more inaccurate. It is true that PERA weathered one of the worst economic downturns in the country’s recent history better than many public pension plans. You didn’t mention, however, that in addition to a funded level of 70.5%, PERA has a $4.9 billion unfunded liability. What would you have us do with that unfunded liability Joe, saddle future generations with it, kick the can down the road, or deal seriously with the problems we face now before they get worse? New accounting rules soon to take effect could cause that $4.9 billion unfunded liability to increase if we don't act reasonably and soon. And our funding level hasn’t “gradually increased.” It is at 70.5% and declining.
Yes, in 2041 we may, if all of our economic assumptions prove accurate including that we earn at least 7.75% on our investments each and every year for the next 30 years, be able to fund half of the benefits we are promising today. But our funded status won’t stop declining and our members deserve better than a few cents on the dollar after having paid into PERA their entire careers. No one honestly believes we can invest our way out of our unfunded liability, Joe. The way to solve this is to do what the Board has done, set a reasonable funding goal and achieve it through measured changes that ask a little from everyone. This isn’t about some distant point in the future, this is about now.
Even if all of the changes the Board has proposed are enacted, New Mexico will still offer one of the best public pension plans in the country. The kind of pension plan that has gone the way of the Dodo bird in the private sector and many states and localities precisely because they failed to take the necessary, responsible and timely action that the PERA Board has taken. Reducing a 3% compounding cost-of-living-adjustment (COLA) to 2% is hardly "slashing" benefits. Only three states, NM, Arkansas and Mississippi have a 3% compounding COLA and some PERA retirees receive more as a result of the compounding than their original pension benefit. It is the single largest contributor to our unfunded liability. Again, in states and localities throughout the U.S. COLA's are being eliminated entirely and defined benefit pensions like PERA offers are being replaced by 401K plans. That's not the direction we want to go in New Mexico and with leadership we won't.
The PERA Board doesn't have the luxury of sticking its head in the sand and hoping these challenges go away. Pretending that genuine, short and long term funding challenges don’t exist sounds a lot like what we see too much of these days, i.e. ignoring today’s problems and placing the burden for fixing them on future generations when they will be worse by magnitudes. The PERA Board has taken a long, honest and sober look at where we are and has proposed reasonable changes to the benefit we offer. That isn’t panic that is responsible leadership. No group has a greater commitment to the best interests of our members and retirees than the PERA Board.
Where is it written that future generations will be absolved of any and all problems? PERA is too ready and willing to place a burden on today's people for a generation that has yet to be born. It is the same argument that is being used to back proposals that would ravage Social Security, Medicare and Medicaid. PERA has a responsibility to the people of today and the immediate generation to follow. Projecting the world of 2061 is foolhardy and downright dangerous, especially if it is used as the excuse to cut benefits to today's retirees and those of the near future (Your consultant says PERA funding is secure under current policy for half a century--that's 2061--not 2041).
And we are well aware of the $4.9 unfunded liability. we just don't agree that you can't carry an unfunded liability on the books. That's why we have home mortgages. PERA is insisting that we have hardly any unfunded liability. That's like paying off a 30 year mortgage that is a year or two old. It may make you feel good, but it is not necessary and not paying it off does not mean you are in immediate financial peril.
You say only 3 states have the compounding COLA. We might point out that they are the 3 states that pay their employees the least of the 50--or close to it. Their pension is a hard-earned reward. Thousands of your retirees are middle class, middle income citizens. Many of them reached a top salary of only $20 an hour. Many of them were blue collar workers. They were not overpaid compared to the private sector. Far from it.
We attract many state workers because of the pension and health benefits. In exchange, most of their salaries are modest. We're not talking of the few making over $90,000 a year but the vast majority of classified employees--the secretaries, the janitors, truck drivers and the like. We have already passed a major reform, raising from 25 to 30 years the number of years required in service before you can retire. That should hold us for now.
We're not opposed to a minor tune-up to the cost of living provisions and a tweak or two to address your intense concern over the "unfunded liability," but continue to believe there is a false urgency being created here that will not be beneficial to future generations but detrimental to them by permanently downsizing pensions.
We believe in a future prosperity where America and New Mexico generate abundance and reward their workers with ample pensions. We do not subscribe to the theory of permanent austerity. That's why we will continue to stand with those who will fight unnecessary changes proposed by the PERA Board and urge our state Legislature to go slow--very slow--before enacting pension reforms that will hurt working class New Mexicans--who happen to have toiled for the government.
Again, thanks for your thoughts, Wayne. We appreciate the work you and the board do.
THE BOTTOM LINES
Sam Bregman lost his race against Javier Gonzales for the chairmanship of the state Democratic party by 12 votes not one vote, as we blogged in a first draft on Tuesday.
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