Tuesday, January 13, 2009

Dr. Bill's Budget Prognosis: No Amputation; Apply Bandages To Stop Bleeding, Plus: Where Bill Stands Now, And: Guv's Quiet Meeting With Senate Dems 

No tax increases. No layoffs of state employees. A hit to education, but not Draconian. And no money out of the state's cash reserves--for now. Just how much money is stuffed under those Santa Fe mattresses, anyway? Well, enough for Big Bill to wave away those "The End is Near" signs being paraded about by the Cassandra classes. The Guv's cure for our state's budget woes--if it sticks---would inflict only minor pain--and only if the oil and gas markets don't tank further.

Maybe Bill thought we had suffered enough, being forced as we were to sit through the melodrama he caused by overstuffing his campaign coffers and setting off a federal grand jury investigation. Whatever the reason, the budget bandages he announced Monday may cause more trouble with the 112 legislators than the general public. The Guv is asking them to redirect money meant for building projects into the general fund to make up for the budget shortfall brought on by the bear market in oil and gas prices.

Over $260 million of this "pork" money is targeted by Bill to get us out of the nearly half-billion dollar mess for the fiscal year that ends June 30. Which projects go to their death beds will prompt sparks to fly when the Legislature convenes for its sixty day session a week from today. But as long as Bill throws some of his wish list onto the funeral pyre, the lawmakers will be hard-pressed to say no to sacrificing their pork, too.

That the state has a billion dollars of unspent capital outlay money hiding in bank accounts is a testament to how outdated and politicized the system has become. But Mr. and Mrs. New Mexico are happy for the moment that it can be called on to avoid a raid on their wallets. As for the capital outlay hogs, now they know what "use it or lose it" means.


It's the world after July 1, 2009 that is of most concern to the capital bean counters. What if energy prices take another dive and don't stay near the optimistic levels--well above $50 buck a barrel for oil--that they are projecting? (Oil is currently trading below $40.) Well, there are those cash reserves of $600 million. Bill and the Legislature are poised to dig into them to the tune of $100 million or so for the budget year that begins July 1, 2009. If that budget year is even worse, pressure will grow to draw the reserve down further. Also, we could again see pork money redirected into the general fund. We could also see serious talk about raising taxes. But that's for the worrywarts. The Santa Fe crowd will pass a budget for fiscal 2010 that cuts spending a couple of percent, but predicts favorable energy prices and then be on their way. Isn't it amazing what a cheap pair of rose-colored glasses can do?


We've often speculated how Big Bill would govern in bad budget times. After all, he has presided in years when state budget surpluses were the largest in history. With leftover capital outlay money and ample fat that can be peeled from the budget without laying off workers, the Guv still has not been faced with make or break choices. He is going to take some hits from the educators who gobble up budget bucks like kids with a bag of bizcochitos, but his escape hatch is an economy that doesn't completely tip over. He also hopes, that eventually, funds from Washington ease the pain here.

(Hey, is the Bill Beard coming back? He looked shadowy--not in a legal sense--on the TV screens last night. Beard bloggers, please report.)


Our top sources have the inside info on the state Senate Democratic caucus that took place in ABQ Sunday and where Big Bill appeared for an hour to detail his plan to cover the budget shortfall. Here is a compilation of their quotable quotes.

"It was an amiable meeting. There were even a few senators who told him: 'It's good your staying around.' And they said it with a straight face."

"The liberals seemed calm. They don't want to overreach. There are no new programs in the budget, but they seem aware that there is simply no money. They hope for federal funds to come through, but it appears they are supportive of Bill's plan"

"(Conservative Democrats who have tangled with Richardson) John Arthur Smith and Mary Kay Papen were not at the meeting. Senator Jennings did attend. It will be interesting to see how they react to the plan, but it doesn't contain any tax increases and there are lots of spending cuts, so conservatives may like it more than the liberals who are tolerating it.

For the journalism majors out there, that is the kind of story where anonymous sources are the only way to get it, but you're all going to be bloggers, anyway....


New Mexico is one of the few states where there are two budgets submitted--one by the Guv and the other by the Legislative Finance Committee on behalf of the Legislature. The LFC plan also calls for no tax increases and does not talk overtly of any state layoffs. The two budgets usually end up melded, with the LFC's being the starting point. The AP has highlights of the two budgets.


Coverage of the federal grand jury investigation into the state pay to play allegations has peaked--for now. From a PR standpoint, the legislative session comes just in time for the Guv. He can immerse himself in the sixty day run and generate news that finally does not include the initials--CDR--the financial company at the center of the storm. Unless the Governor is indicted, damage to his reputation is contained. Richardson's relationship with the state Senate has already crashed. The surprise this session could be that it does not crash more.

The consensus we've found in the legal and political community is that Richardson is unlikely to be indicted by the federal grand jury, at least not based on what has been reported in the press. There's been a lot of sizzle, but no steak yet. That Richardson's hubris led him to raise gazillions of dollars among folks who do business with the state is unquestioned. He went over the top and it cost him his national reputation and a cabinet post. But a criminal act? That is an entirely different matter.


There is no crisis of confidence in the New Mexican government. The Governor, as demonstrated Monday, is more than capable of playing the political cards and then some. Lieutenant Governor Diane Denish remains in the rumble seat, and as she recently displayed, ready to drive if need be. The Legislative Finance Committee is providing its traditonal checks and balance. There is, however, a crisis at all levels of government on whether laws are being passed and contracts awarded because of political contributions. But this is not an overnight development--it is a systemic rot that has advanced in recent years. In that context, Richardson's rule has been diminished by the allegations, but not crippled.

We know that federal prosecutors are not on any timetable, but that doesn't mean they operate in a vacuum. The pay to play charges are not only a cloud hanging over the Governor's head, but New Mexico's. Attracting business and investment here is effected by the national headlines. No one wants to rush justice, but wanting the case resolved as quickly as possible--one way or the other--is a natural hope for all of those who care about New Mexico's future.


ABQ City Councilor Ike Benton is squirming after characterizing the Israeli invasion of Gaza as "genocide." He wants to retract his use of the word made at a weekend rally. Benton doesn't need any new political foes. Watching over his shoulder is former ABQ City Councilor Alan Armijo who is off and running for Benton's downtown/Barelas/university area seat (The Alligators report he is not running for mayor). Ethnic politics are already a tricky issue for the first term councilor whose colleagues named him council president for 2009. Benton is the first Anglo to represent his heavily Hispanic district since we went to the council-mayor form of government in '74. Best for Ike to leave Middle East diplomacy to Hillary.


It's a second home for New Mexico congressmen, and newbie Martin Heinrich has joined the club. The ABQ Dem has been named to the House Resources Committee which deals with Native American issues, national parks and wilderness, among other things. Former NM Reps Steve Pearce, Tom Udall, Manuel Lujan, Harold Runnels and Bill Richardson all sat on the committee, once known as House Interior. We wouldn't be surprised to see another NM rep named to the panel.

Heinrich's big committee assignment is House Armed Services. His work there could help him appeal to conservative Dems, but already the liberals are asking that he start cutting what they see as outdated military hardware. Being ABQ's US Rep is truly a balancing act and it's Heinrich's turn on the tightrope.

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