Speaker Egolf

Special Legislative Session '17 will trickle into next Tuesday but the precarious budget deal is done.  Gov. Martinez is signaling she is satisfied with the budget sent to her because she can sign it without authorizing any of the tax increases approved by the Democratic majority,  although not doing so may send the state's cash reserves perilously low in the months ahead.

(AP coverage here, New Mexican coverage here and Journal coverage here.)

The Tuesday session is expected to last all of a couple of hours, so with the heavy lifting done who were the winners and losers of Special Session '17? We're glad you asked:

WINNER--State House Speaker Brian Egolf. He laid down the law at the get-go, declaring that the gross receipts overhaul bill so dear to the Governor was dead on arrival. He added that he expected the special session to last 24 hours which it basically did. And he made sure the Governor was again sent revenue raising measures that she vetoed in the regular session and thus forced the special session.

Egolf was accused of being squishy in his maiden outing as speaker in January. But his backbone has stiffened since. He now appears to realize the broad powers this new position gives him. He seems more comfortable assuming those powers and that paid off for him as he came across cool and confident and won the respect of his caucus as well as the Republicans and Governor.

LOSER--Rio Rancho GOP Rep. Jason Harper has become a household name among the insiders of La Politica as his bill to reform the state's gross receipts tax structure garners the headlines. But Democratic lawmakers had enough of the measure which ran over 400 pages and the experts said was still incomplete because no one could say what impact it would have on state revenues. Harper kept pushing (along with the governor) and it cast him in a more partisan light. Speaker Egolf agreed to $400,000 to further study the plan but if the Democrats are going to win back the economic narrative they need to come with their own reform bill and with a name from their own party on it. Harper had his day.

WINNER AND LOSER--Gov. Martinez ended up a winner when the Legislature sent her a $6.1 billion budget she could sign while still vetoing a tax hike package. She gets to keep her bragging rights of never raising taxes. But she gets labeled a loser for pushing a widely critiqued plan to effectively borrow over $70 million in bond money to balance the budget--money that will now have to be paid back.

The amount of tax increases needed was piddling but by refusing to endorse any, Martinez forced lawmakers into the borrowing scheme which sets a terrible precedent because future Governors could now use the same trick. It was an abandonment of conservative financial principles she and the GOP loudly claim they prize. Hopefully, state revenues will pop up and the plan will not have to be executed.

WINNER--ABQ GOP State Rep. Sarah Maestas Barnes abandoned the Governor and her party on several key budget votes and ends up on the winners list for doing so. Barnes represents a key swing district in ABQ's NE Heights. If she had stuck with GOP orthodoxy she could have taken on major baggage to be exploited by a Democratic rival. Her votes give her a lot of insurance going into the '18 cycle.

WINNER--Former NM Governor and current NMSU Chancellor Garrey Carruthers appeared before the legislature and prodded lawmakers into undoing Gov. Martinez's veto of the entire higher education budget. They responded in bipartisan fashion, showing that there are still a few leaders who wield moral authority in these divided times.

PEARCE CHALLENGERS

We blogged this week that three were no announced Dem candidates to run against GOP Congressman Steve Pearce, but a number of readers pointed out there apparently are:

Ron Fitzherbert~ Health Care Clinic Compliance Office; Madeline "Mad" Hildebrandt~ College Instructor, Coast Guard Veteran

Okay, but that doesn't sound like major threatsto Steve. What else you got, Dems?

And reader John Dyrcz writes:

I definitely raised my eyebrows when I saw the Democratic Congressional Campaign Committee (DCCC) was again targeting NM's CD-2, but how many times have we heard that refrain? You note in 2014 Roxanne Lara's campaign ended in "disaster," but I wouldn't use that word. Rocky did everything asked of her in that campaign -- raising about $1.8 million dollars, going up on television, and jumping through every other hoop the DCCC put in front of her -- in short, she was a serious candidate by any measure and also a Democrat who fit the district, despite receiving little support from the DPNM. The trouble with the DCCC is their support is often fleeting, and despite all of their promises to up-and-coming candidates, they can reverse course and pull out all resources at a moments notice. (They did the same in 2010 with then-Congressman Teague.) There are plenty of good candidates in CD-2, but I think there is a real fatigue with the DCCC's perpetual lip service.

MEMORIAL WEEKEND

Reader Eric Lucero is off to the movies this weekend and he says "Norman" is his top pick:

The Moderate Rise and Tragic Fall of a New York Fixer (R) ***1/2 Stars out of 5.  Richard Gere, you could say, has been waiting a lifetime for this transitional role. Retrograde back to his earlier conflicted roles; American Gigolo (1980), or An Officer and A Gentleman (1982); then advance the clock to his clearly honed, sharpened Billy Flynn role in Chicago (2002); advance now, to his titular portrayal of Norman Oppenheimer- a very flawed, dated, lonely, yet fiercely loyal Jewish New Yorker hustler.
Gere plays Norman with panache, audacity, and with a believable emotive mendacity! The supporting cast is notable and outstanding! Norman is a gem! Israeli writer/director Joseph Cedar (Beaufort & Footnote) adeptly rolls out Norman’s later life & times in three dramatic & dialog heavy acts. What you will find most satisfying about Norman’s descent, is that despite his tragic fall, he both manages to exit smelling like a rose and with his honor intact!

Thanks for stopping by this week.

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Could you imagine if Bill Richardson proposed that the state borrow nearly $100 million to balance its budget and replenish its reserves? They would probably hang him in effigy the same night they burned Zozobra. But Republican Governor Susana Martinez--she of the never, ever raise taxes school of thinking (expect if it's a food tax to slam the poor)--is backing this borrow from Peter to pay Paul scheme at the special legislative session and is getting the support of not only her fellow R's but weary Democrats:

New Mexico could end up borrowing money to help it survive a budget crisis. The state Senate voted 38-3 on Wednesday to pass a proposal that could raise about $100 million for the general fund — in part by borrowing the money. The complex bond transaction would essentially take the state’s capacity to borrow money to build big capital projects and convert it into cash to help boost reserves or pay operating expenses. No one seemed to liked the idea. But senators on both sides of the aisle said the state’s financial crisis demanded action and that Gov. Martinez’s administration had pushed for the move.

What happened to the fiscally conservative Republicans who abhor such debt maneuvers? Well, they dislike even more the prospect of taxing their wealthy contributors and constituencies. With the weary Democrats unable to fend her off, it will be future taxpayers who are saddled with the irresponsibility of the chief executive and the acquiescence of the Dems and get stuck with paying the bill. But, hey, everyone gets home in time for the Memorial Day barbecue.

As Dem Senator Joe Cervantes tweeted:

We can't muster 2/3 of Legislators to pay current expenses of State. So tonight we're bonding 10 yrs to finance the budget on the backs of our kids.

That two-thirds vote he refers to is the number needed to override the Governor's vetoes and implement mild tax increases to raise the money to balance the budget. Instead, we get years of debt to pay off. Go home, Santa Fe, go home.

TARGETING PEARCE

The national Dems said this week they are "targeting" the seat held by GOP southern NM Congressman Steve Pearce, but they aren't saying who will be aiming at the target.

He does seem more vulnerable than years past, given his vote to repeal Obamacare and his general allegiance to the president who is having popularity troubles but could recover by late next year when voters trek to the polls.

Ejecting a sitting congressman will take millions of dollars and a charismatic challenger. The Dems previously targeted the seat in 2014 but the candidacy of onetime Eddy County Commissioner Rocky Lara ended in disaster. Pearce says he's toying with running for Governor in '18 but one of the factors that will probably keep him put is the much better Democratic chances of taking over his district when he does leave the seat. (In a May 9 blog we incorrectly reported the registration figures for the southern 2nd congressional district. They are: 41% Dem, 36% Republican and 19% independent.

SOMETHING TO CELEBRATE

There has been very little for the minority Democrats in DC to celebrate in these early months of the Trump presidency, but Jon Goldstein, director of legislative affairs for the Environmental Defense Fund wants to point out one rare Dem win that he says will have great impact on New Mexico:

Great news for New Mexico as a vote to repeal the BLM methane waste rule failed on the Senate floor This means the rule limiting methane waste and pollution on federal and tribal lands remains in effect. It’s a huge victory for New Mexico especially where more natural gas is wasted ($100 million worth) from these lands each year than in any other state. More natural gas captured means more royalty revenue to the state budget where it is sorely needed right now.

This was also a victory for Senator Tom Udall who led the effort over many months to protect the rule from repeal. And Senator Udall wasn’t alone. Senator Heinrich was right there with him. Also worth noting, the earlier fight against the repeal in the House was led by Congresswoman Lujan Grisham and Congressman Ben Ray Lujan while Attorney General Hector Balderas and State Auditor Tim Keller have championed the issue back home in New Mexico as well.

THE BOTTOM LINES

Reader Tom Miles mulls over the recent scandal at the UNM athletic department in which the school spent $64,000 to send the department director, staffers and local businessmen on a Scottish golf vacation:

It seems like almost all institutions refuse to consider any change that goes against preconceived notions and habits. UNM and lots of others either refused to consider, or ignored willfully, the demographic tectonic shift of retiring baby boomers. Every university “knows” and acts like big-10 football income is as important as higher education for students … and raises tuition, woo’s wealthy sports contributions, and treats f’ball coaches like untouchable Saudi princes accordingly. NM planned as though $100 barrel oil was the new normal and we got huge tax cuts and RailRunner.Way back when, GM “knew” what kinds of cars were best for Americans. That worked for a long while … until it didn’t.

The State Auditor is reviewing the money spent on the Scotland golf junket.

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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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There seems to be some confusion regarding the political backdrop that faces the New Mexico Legislature as it prepares to gavel itself into a special session Wednesday. Let's see if we can clear it up by beginning with a faulty premise that is blocking an easy resolution to achieving a state budget. That premise is presented by ABQ GOP State Rep. Jimmie Hall:

If you want to play chicken, I don’t think (the governor) is going to blink. I don’t think the Democrats want to be the ones to shut state government down.

The "game of chicken," of course, is over Martinez's insistence that an overhaul of the state's gross receipts tax structure be approved as the price for agreeing to a state budget with the Democrats.

The problem that Representative Hall and other radical House Republicans don't recognize--or prefer not to--is that the political cost of failure at this special session would rest with them and the Republican Governor, not the Democrats. Why?

First, for some reason it's rarely referenced in legislative reporting but it's a crucial fact. Governor Martinez's approval rating is at an anemic 43 percent and perhaps lower considering the chaos in the wake of the recent legislative session. She is deeply under water with New Mexican voters and has lost the power of the bully pulpit, a key element for any Governor's success.

Second, the Republicans failed in their effort to keep control of the state House at last November's election. It sounds obvious, but many legislative R's and the Fourth Floor are acting as if it didn't happen.

Third, the GOP is saddled with a President whose unpopularity has Democrats salivating over the prospect of using him to leverage further gains in the state House next year.

Fourth, the reality is that the Republicans do not have one major candidate on the field for their 2018 gubernatorial nomination, signaling a party in retreat and on the defense.

Fifth, Gov. Martinez's petulant veto of the entire higher education budget further injured her popularity and has forced her to the negotiating table. The Democrats sat back and waited and did so without panicking. She did not come with an acceptable plan but it was she who blinked when the Democrats refused to offer a replacement plan for the one she vetoed.

Given these realities the Democratic position of resisting a hasty overhaul of the state's gross receipts structure is not only the most rational policy but their most politically feasible path.

SEEING THE LIGHT

Sen. Sharer

State Senate Republicans long ago saw the light and one of them, Farmington Senator Bill Sharer, has even offered a fig leaf to the Governor in which the legislature would agree to a 90 day study of the tax overhaul. It's important to remember that Sharer is the Godfather of the current movement to rid the state of its many tax exemptions and lower the state GRT down to 2 percent. He was at this in 2013, long before Rep. Jason Harper who has taken the role of Governor's pet and joins her in insisting that the tax overhaul must be approved before the state's thousands of college students can receive an education.

It is that unreasonableness that gave majority Democrats in the Senate the needed Republican votes to override the Governor's veto of higher ed funding and which they did. The House R's would not go along and here we are.

Representatives Hall and Harper et al. fail to grasp the fundamental political change that has occurred. At this juncture the state, suffering from the highest unemployment rate in America, is not clamoring for more tax cuts or tax overhauls but simply to keep open the doors of the universities and colleges and to keep government funding flowing, even if it is at levels comparable to what they were in the budget of a decade ago.

Perhaps the past weakness of the Democrats in challenging Martinez has led them and their allies in the conservative media to pretend that nothing has changed--the old "perception is reality" argument.

Also, Hall, Harper and the other Republicans radicalized on economic matters still seem hypnotized by this lame duck Governor and Jay McCleskey, her political consultant, who they fear and swear allegiance to. It's like hostages who have become comfortable with their captivity even as the doors of freedom have been opened to them.

But the page has indeed turned and the parade is moving on. To reiterate: Senate Democrats have just won four year terms. They have nothing to fear. The House is firmly Democratic again. The House Republican agenda has been rejected and the public has tired of the Republican chief executive.

Democrats have the high cards and it is their responsibility to play them as directed by the electorate. That means resisting any efforts to blackmail them into approving a minority Republican agenda by holding hostage the state's higher education system. It is incumbent upon them to make the minority "blink" and if they don't to ensure they assume the blame if Rep. Hall's forecast of a government shutdown comes to fruition,

REDEFINING REALITY

The state GOP is joining in the effort to try to redefine the current political realities by sending a missive urging New Mexicans to contact a list of Democrats in swing House districts to either sign up for the Republicans budget or face the consequences.

Democrats in Santa Fe has (sic) proved once again that they are out of touch with the needs of New Mexicans. They have proposed a "business as usual" budget that protects their bloated and over-funded legislative retirement accounts but slashes education funding. Please call these legislators to tell them that you mean business and that if they don’t vote for the House Republican budget we will SEND THEM PACKING!

That brought a chuckle from the Alligators and insiders who are more than aware that it is actually the top R in the state House--Minority Leader Rep. Nate Gentry--rather than any Democrats--who could be most imperiled by a government shutdown. His ABQ NE Heights district is turning increasingly moderate.

But let's not forget "The Nate Nine," identified here as possible swing House R votes to get a budget quickly and forget about the Martinez/Harper GRT deal. The Nate Nine are from the ABQ metro with the exception of Rep. Yvette Herrell of Alamogordo. The others are: Gentry, Reps. Dines, Larranaga, Fajardo, Rehm, Powdrell, Tim Lewis and Maestas-Barnes. They've shown signs of moderation and independence from the Governor's political machine.

Rep. Candie Sweetser of Deming was one of the swing seat Dems targeted in that GOP email but it didn't take. She authored an op-ed sticking by the Democratic plan to pass a budget and approve only a study of the tax overhaul. We suspect it will be her view that will have prevailed when the special session packs up and leaves town.

SETTLEMENT OFFER

How about we take a stab at settling that brouhaha over how much the new mayor of Santa Fe should be paid? The top salary proposed is the way-too-high $175,000 plus benefits. On the low side is the proposed $74,000. The midway point between the two is $101,000. How's that sound? Aah, if it only it were that easy.

Speaking of salaries, here are the latest for some of the highest paid at ABQ's city hall:

--Chief Administrative Officer Rob Perry, paid $92.29 an hour or $191,963.20 a year.

--APD Chief Gordon Eden, paid $81.00 an hour or $168,480 a year.

--BioPark Chief Executive Officer James Allen, paid $77.48 an hour or $161,158.40 a year.

--Chief Operations Officer Michael Riordan, paid $73.53 an hour or $152,942.40 a year.

--City Attorney Jessica M. Hernandez, paid $72.99 an hour or $151,819.20 a year.

--Fire Chief David W. Downey, paid $64.09 an hour or $134,992 a year.

--Mayor’s Chief of Staff Gilbert A. Montano, paid $61.27 an hour or $127,441 a year.

Now all you Alligators looking for jobs with the new mayor when he or she takes office in December know what kind of pay to ask for. Hey, we're here to serve. . .

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