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Wednesday, December 09, 2015

Season Of Peace? Not So Fast; The Donald Gets Leader Sanchez On The Guv's Tail, Plus: Digging Deeper Into State Budget Mysteries 

Sen. Sanchez
Put a lid on the season of peace talk. We'll be battling in La Politica until they light the final luminaria on Christmas Eve. And we can thank The Donald for that.

With all eyes peeled to the GOP effort to take over the state Senate in 2016, Senate Majority Leader Michael Sanchez moved to put Gov. Martinez and the R's on the defensive and using their leading presidential candidate as his foil:

Gov. Martinez's opposition to the state's immigrant driver's license law is similar to GOP presidential hopeful Donald Trump's racially charged comments, the state's top Democratic Senate leader said. . .Senate Majority Leader Sanchez, D-Belen, told reporters the Republican governor's efforts to repeal the law and her "lies" about pending federal Real ID requirements were "almost Trumpism" since they were dividing New Mexico residents. "We're family in New Mexico," Sanchez said. "All this governor has done is try to divide us."

Well, we may be family, but we ain't a happy one. State politics is as polarized as it is in DC.

The Guv blasted back at her archenemy, again blaming him for failing to repeal driver's licenses for undocumented immigrants. Dems reloaded, pointing out that a bipartisan bill compliant with federal Real ID requirements passed the Senate this year with major support from R's but Susana still refused to compromise.

Trump and other assorted GOP lunacy that puts Martinez on the hot seat is an early Xmas gift for state Dems, but will Trump be the gift that keeps giving throughout next year's campaign? The D's are knocking on wood.

As we've noted time and again, this is a machine that throws long and deep on offense but gets weak in the knees when it comes to defense. Perhaps that's because for five years the Dems have mostly sat there and took their whipping. Now with the Senate threatened the Dems are playing a bit of offense. They better get used to it or it could be Minority Leader Sanchez or Lt. Governor John "The Tiebreaker" Sanchez.

BUDGET MYSTERIES

If the state's new projection that oil will average $49 a barrel for the budget year that starts next July goes bust, it will cost the state about $10 million in taxes and royalties for each dollar the projection falls short.

With $37 oil we're about $12 short of that goal or a $120 million hit to the $6 billion plus budget. That would mean  $112 million in "new money" available for the next budget year--not the $232 million the state broadcast this week.

But let's get out of bean counter world and into our real deal biz coverage.

The state has irresponsibly slashed tax rates under both Governors Richardson and Martinez and thus is losing literally hundreds of millions of dollars in revenues a year. All that tax cutting was supposed to stimulate the economy here. It did not and that is the defining fallacy of the Santa Fe budget hawks and their chief advocate, the chairman of the Senate Finance Committee.

Even a partial restoration of the previous corporate tax rate and an uptick in the personal income rate for only the wealthiest taxpayers would solve much of the budget woes facing the state.

But those who hold sway in Santa Fe are happy with the shrunken size of government and constant tight times. They say the government that governs least governs best. They seem oblivious to the fact that New Mexico is now labeled the worst run state in the nation and that all their tax cuts did not deliver what they promised. You might liken them to the climate change deniers, holding on to a notion long discredited but using their monied megaphones to keep their big fib alive.

What we need in Santa Fe are some additions to our distinguished list of "No Bullshit Economists." That list is currently: Dr. Chris Erickson at NMSU, ABQ's Dr. Kelly O'Donnell and the economists at the Brookings Institution. NMSU's Jim Peach is under consideration. (Come on UNM's BBER, we need more straight talk).

GONE KAPUT

The argument that continued increases in oil production will bail us out despite the crashing oil prices just went kaput:

According to (state) data, 12.7 million barrels of oil were produced in the state in August — a number that fell to 12.1 million in September. . . If production levels continue dropping and the price of oil fails to increase, which some experts say is likely, New Mexico businesses will be affected. From layoffs in the actual industry to a decrease in construction, to a decrease in the amount of traffic that restaurants and retail outlets in oil town areas see.

And the assertion of Dr. Tom Clifford, head of the NM Department of Finance and Administration, that lower prices at the gas pump will give NM consumers an extra $600 million to spend and that will translate into higher state tax revenues, is questionable (not withstanding this wish and hope piece from the Santa Fe paper). Has the crash in national gas prices led to a big boost in consumer spending? Tourism is helped some, but overall?  No.

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