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Wednesday, May 24, 2017

Are The Weekend Barbecues Safe? Speaker Says Special Session Set to Last Only A Day; Tax Overhaul Over, Plus: UNM Scotland Golf Fiasco Takes Away Goodwill Gained With Guv's Budget Veto, Also: More Analysis Of Special Session And Calling Out Cartoonist Over "The Pre-K Gang"  

Speaker Egolf (Moore, Journal)
Jason Harper takes a fall and Susana is spared egg on her face. So it went down in Santa Fe Tuesday as House Speaker Brian Egolf declared that Rep. Harper's controversial gross receipts tax overhaul bill will not be heard at the special session of the legislature that begins today at noon.

Egolf went further in throwing dirt on the tax overhaul by saying the special should last "no more than 24 hours," meaning they should be outta there with a new state budget by noon Thursday. That's just in time for the weekend Memorial Day gatherings. Pass those hot dog rolls. . .

The fig leaf given to Susana for killing the Harper bill was that it was over 400 pages and would not be ready from the printer until Thursday. But it was a deal breaker from the start, with Dems wary of a dramatic tax overhaul that no one really knew how much would cost the state.

Gov. Martinez for weeks insisted she had to have the bill if she were to agree to a state budget at the special. But the heat got to hot for her and the R's that were still with her.

(Egolf had previously pronounced a reinstatement of the food tax as part of the Harper bill that Martinez was talking up was also DOA, but groups long opposed to it will show their flags in Santa Fe today--just as a precaution.)

Martinez's veto of the entire higher ed budget had put her and the R's on the defensive and she does not appear to have the stomach for a days-long special session that would generate even more ill will (and negative political consequences) than the regular session had.

On the matter of the $6.1 billion budget, with the tax overhaul resolved Rep. Jim Trujillo, chair of House Tax and Rev, will offer the Guv two revenue raisers that should pass her test for closing loopholes and not raising taxes. One would apply the gross receipts tax to online retailers, something Amazon is already doing,  and another would extend the tax to nonprofit hospitals. That would balance the budget. Lawmakers could give her a win on a proposed "rainy day fund" that would be used to stabilize state revenues in years when oil and gas revenues fall.

We'll know soon enough how this all plays out.

Egolf says he wants that gross receipts study to end with a "bipartisan" measure but if the Dems really want to play, they will come with a bill that repeals the ill-advised corporate income tax cut they helped pass in 2013 as well as increasing the capital gains tax. But the best bet for the Speaker and Senate Majority Leader Wirth is to run the clock and wait for the next Governor on January 1, 2019 to take up comprehensive reform, more than likely it will be a Democratic governor. The flies in that ointment are conservative Dem Senators Like Arthur Smith and Cisneros who are quasi-Republicans when it comes to economic matters. Well, its not easy being Governor--whether you're an R or a D.

 GOODWILL DEFICIT

Krebs
New Mexico higher ed has gained much goodwill since Gov. Martinez vetoed the entire $745 million higher ed budgeted causing chaos and confusion on campuses across the state. But now a lot of that goodwill is being erased and on the very day the Legislature convenes in special session to hammer out a state budget agreement that was prompted by her vetoes.

We blog of the outrage over UNM Athletic Director Paul Krebs using $64,000 in school funding for an 2015 upscale golfing vacation to Scotland for himself, other athletic department staffers and businessmen who donate to the Lobos. Worse, it took Krebs two years to come clean and admit that UNM had indeed paid for the trips of those businessmen in apparent violation of the state Constitution's anti-donation clause.

So what will happen to Krebs who is paid $300,000 a year? You would think at least some harsh discipline but interim UNM President Abdallah acts as thought it's just another day at the office:

This is not where university funds should be should be spent. I want the public to know that in the future we will not be using university funds for such activities. . . I’ve worked with VP Krebs for a while and I think he is an honorable man. He’s done a lot of good for this university.

KRQE News 13 asked President Abdallah whether an ‘honorable’ man misspends tens of thousands of dollars in university funds? “Even honorable men sometimes make a mistake,” Abdallah responded.

Well, usually there's consequences for your worst "mistakes," especially if you wrongly appropriate $64,000 for a Scottish golf outing. But the pampering of the athletic department goes on even as state revenues plunge and the struggle to fund higher education grows.

The Governor's overreach in vetoing the entire higher education budget may have engendered considerable sympathy, but it doesn't erase a fundamental problem--the  resistance to rightsizing UNM for the lower enrollment of the future and adjusting to a sluggish long term economic environment that will cramp its funding. The UNM culture of the past will have to change and so will its key personnel who seem to be governing as if the go-go years never went away.

Meanwhile, Gov. Martinez finally got her way and the longest-serving UNM Regent, Farmington's Jack Fortner, has bowed to the pressure and resigned from the board. Newsman Daniel Libit has the scoop on how anonymous twitter bashing about Fortner's ethics played a role in him getting out and further paving the way for Martinez to exert more influence at UNM.

MORE SPECIAL ANALYSIS

Back to the special session that begins in Santa Fe today. Bill Hume, former ABQ Journal editorial page editor and onetime natural resources aide to Gov. Richardson, reacts to our Monday analysis of the political backdrop at the Capitol:

Joe, a very perceptive analysis on the political landscape going into the special session. One added theory concerns a possible strategic flinch by the Governor that has deepened her tactical disadvantage.

I suspect she called the special session when she did (the timing of call, not of opening date) because her lawyers feared the response of the NM Supreme Court to the Democrats' lawsuit asking that her vetoes funding higher education and the Legislature be declared illegal. Why else commit the faux pas of calling the session with no agreement in advance? I suspect it is because her lawyers theorized the call being in place highlighted her legal position that legislative remedies were not yet exhausted--a position the high court grabbed with alacrity in deciding not to hear the case. 

If the session ends in impasse -- or with another veto or two, the Democrats' legal strategy is no longer hampered with legal side road escapes. On balance, if my hypothesis is correct, it greatly increases the Democratic tactical advantage.

MAES ON TAX MAZE

Former longtime Dem State Senator Roman Maes joins the debate over the gross receipts tax overhaul from his home in Arizona:

Many for profit and non profit entities have made substantial investments in the state in reliance of existing tax policy. To remove credits, deductions and exemptions from the gross receipts tax code to the detriment of these entities is bad tax policy. More so, if the removal is done without a proper hearing and a review of evidence to support them. Yes, to remove them would broaden the tax base and allow for the overall tax rate to be lowered but such a move would signal to companies nationally and globally that New Mexico is not a place to bring business. 

Maes, an attorney, served in the Senate 20 years from Santa Fe and later went on to a lobbying career.

THE 'PRE-K' GANG

ABQ Journal cartoonist Trever might want to turn his stagecoach in a different direction.

His cartoon warns that the "Pre K Gang Hangs Out In These Parts" and is about to rob the state's stagecoach of its hefty $16 billion Land Grant Permanent School Fund.

That drew much scoffing from longtime backers (including us) of a constitutional amendmen  to ask voters to appropriate a small percentage of the fund for very early childhood education programs for ten years. ABQ Dem State Rep. Andres Romero came with this rebuttal:

The cartoon also alludes to another important factor in this discussion. The bills flying out of the treasure chest are to the tune of an estimated $400 million per year. New Mexico is getting 7 percent less in royalties than Texas for the same nonrenewable resources being extracted from the Permian Basin. The Permian Basin happens to be one of the most prolific mineral deposits in the country. This is approximately $400 million less going to New Mexico’s public schools, universities and other beneficiaries. Instead it is going directly into the pockets of the elite oil and gas businessmen.

Critics have long questioned why New Mexico's royalties are less than Texas, but you wonder if Romero has breathed new life into that argument, given the state's continuing economic woes. Stay tuned. You can bet the NM Oil and Gas Association is.

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