Monday, August 08, 2016
PNM Gets Blackeye Over Blackout, Plus: NM Is Not Alone; Over Exuberant Tax Cutting In Energy States Hit Budgets Hard
One of the largest power blackouts to strike the ABQ metro area in recent history also caused an information blackout Sunday night.
PNM customers, hungry for information and in some cases fearful over the mass outage, waited and waited for the electric company to acknowledge the outage and provide relevant information. And they waited some more.
It was at least 45 minutes before PNM came with a brief Tweet explaining that a lightning strike at a power transfer station on the city's west side plunged the state's largest metro area into darkness as well as portions of Santa Fe. To add insult to injury the PNM website that is supposed to have outage info had apparently crashed.
(One person died in a traffic accident in Santa Fe believed to be related to the power failure).
It was a rare misstep for PNM which has ably served the state for decades and in past crises has responded more than adequately. But not this time. In this age of terrorist threats and a nervous public, the appropriate authorities--the state PRC, the FERC and the Legislature should be asking questions as to why a company that spends millions on PR and advertising could not properly inform the public when it was most in need of information.
Just as important, why did a lightning strike at a lone transfer station expose nearly the entire electric grid in the state's largest metro to collapse? Where's the back-up?
PNM is currently asking the state PRC for a whopping 16 percent increase in its electric rates, saying it needs to cover its investment expenses. Understood. But Sunday night raised serious questions about what kind of return on investment we are currently getting.
PNM has a black eye after this blackout.
BOOM TO BUST
You're not alone, New Mexico. The oil boom caused a lot of other states to slash taxes dramatically and now that the crash has come like us they are going broke.
Under Gov. Big Bill New Mexico phased in cuts to the state’s top personal income tax rate, costing an estimated $500 million in revenue per year. In 2013, under Gov. Martinez, lawmakers took an axe to the state corpate tax which the Legislative Finance Committee reports is costing us more than expected. No wonder we have a budget shortfall for the current and past fiscal year estimated at upwards of $600 million.
Here's the company we're keeping:
--Most energy-reliant states celebrated “boom” times with ill-advised tax cuts and corporate giveaways. The most egregious example is Alaska’s elimination of its personal income tax some 35 years ago. With near complete reliance on the energy sector, Alaska has no personal income tax or state sales tax to turn to in times of crisis.
--Louisiana’s decision to eliminate the “Stelly Plan” in 2008. . . significantly reduced tax rates for the wealthy. This politically charged policy change cost the state an estimated $800 million a year.
--North Dakota lawmakers slashed income tax rates for years, pushing to lower or even eliminate them as energy prices slumped. 2015 legislation alone reduced both individual and corporate income taxes across the board by 10 percent and 5 percent, respectively.
--Oklahoma’s shortfall was driven in large part by generous tax breaks and unaffordable, repeated cuts to the state’s income tax over the past decade. The most recent income tax rate reduction had the poorest timing of all, triggered this January despite an official “revenue failure.” Today this series of cuts comes with an annual price tag in excess of $1 billion in lost revenue.
A special session of the Legislature here is expected after final budget numbers are reviewed Augut 24. What's the way out, at least for now? The proposal to draw down the $224 tobacco settlement fund to plug a budget hole from last year of at least $159 million makes sense.
For the shortfall forecast the budget year that began July 1st, a repealable gas tax and a freeze on the corporate tax cuts would fit the bill. Lawmakers can also raise more revenue by suspending some of the myriad tax exemptions for a year, but good luck with that.
As for kicking a $500 million budget can into the January session, that isn't going to cut it.
What about those personal income tax cuts that have middle and low income families essentially paying the same rate as upper income earners? That is going to have wait for a new governor. Even under the threat of fiscal suffocation the current governor refuses to come up for air.
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(c)NM POLITICS WITH JOE MONAHAN 2016