Rep. Maestas
Democrats may be playing with political dynamite as they go into special session in Santa Fe today to try to resolve a budget shortfall for the year that starts July 1 and that could be as much as $800 million.

The dynamite sticks are a quarter cent increase in the gross receipts tax and a reinstatement of the taxon food while leaving untouched the tax bills of the state's most wealthy residents.

This will be the second bite out of the budget apple. Lawmakers failed to reach an agreement in the regular 30 day session. And if they've again underestimated the revenue picture, as has happened time and again, yet another special session awaits us later in the year. And maybe more trainwrecks, too.

All 70 members of the state House are up for re-election this year and there is nervousness among some of them over the direction of the NM Democratic Party. The state Senate--ruled by a coalition of Republicans and conservative Dems-- is locked down on not raising taxes on the well-off. In the recent regular session, the House passed a temporary surtax on high wage earners, but it appears to be off the table as the special starts today--or is it?

Some House Dems want it back on the table, fearing a backlash in the June primaries or the November election if Democratic voters see no difference in the economic policy between the two parties.

ABQ Dem State Rep. Antonio "Moe" Maestas points out it would take only 10 of the House Dems to join with the R's to block anything from coming out of the House. You have to think that means any kind of food tax is going to have a difficult time.

The newspaper reports on the latest plan on the controversial food tax : "Municipalities would impose their local gross receipts tax rate on the purchase of food items. The state portion of the gross receipts tax on food wouldn't be imposed, and the state would stop compensating cities for their lost food tax revenue. This change would generate about $71 million for the state.

Meanwhile, Maestas has sponsored a measure to slightly raise the tax brackets on the highest earning taxpayers that would bring in $70 million a year (For example, taxpayers with income of $250,000 to $500,000 would pay a rate of 5.9%). Maestas notes that the highest bracket is 4.9%--a rate that applies whether you are making $500,000 a year or $50,000. The ABQ West Side lawmaker wisecracked:

I've always wanted to break into a higher tax bracket. Under current law I'm unable to.

AN R ROMP?

Anxious Dems fear the R's will have a field day with any reinstatement of the food tax, even on junk food. They say that would be portrayed as a slap against working mothers who buy their kids a candy bar. Maestas agrees it's too hot to handle and besides, he rejects the notion of the state trying to get people to eat or not eat particular food items. "That's a nanny state mentality," he argues.

The food tax was killed in the recent session, but it's a favorite of Senate Finance Chairman John Arthur Smith who is also a refusenik when it comes to the surtax on high wage earners. The chairman's insistence on this perplexes some. His daddy was an itinerant road repair worker during the Great Depression. What would he think?

Any increase in the gross receipts tax will impact lower income households most. Soon to be Dem Guv nominee Diane Denish has come out in opposition to raising the tax, knowing she would be lambasted for it during the fall campaign.

But Denish and House Democrats who are on precarious political footing have no fall back position. If the Legislature approved that surtax on the wealthy as well as a small gross receipts increase, they could tell their base voters--thousands of low-paid working class New Mexicans and progressives--that they are indeed spreading the budget pain around. But what do they tell them when they don't?

A TRUE TEST

Democrats are facing their first true test on the tax issue in decades. They have been able to ride in the low-tax parade all these years because there was such an abundance of cash. Big Bill's 2003 rollback of the state's tax brackets was nearly universally embraced during the Great Bull Market. Now during this Great Recession, the Dems are being asked to pivot, but Richardson, aligned with conservative state Senators, is unwilling to make the move. And so far, Denish is also stuck.

Not that the Republicans aren't also suffering from myopia when it comes to taxes. No matter the economic environment they have a simple mantra of tax cuts all the time. But Democrats in the Legislature may be setting themselves up for a fall by keeping the GOP base vote out of their sights and punishing their own. Don't say we didn't tell you.

YES, WE NEED BIG CUTS
Rep. Miera
Of course, we need more than tax increases. We need a lot more spending cuts. But how do you do that when over half the state budget funds public education and the education lobby has a stranglehold on the state House?

Educators have opposed an even 1% cut in funding. And the Legislature has been woefully ineffective in eliminating the administrative overhead in the schools that is one of the longest running jokes in the state.

Which leads to the question: Why is ABQ State Rep. Rick Miera, chairman of the House Education Committee, included as a top representative in the budget negotiations between the House and Senate? That role is traditionally reserved for the legislative leadership and chairs of the finance committees. But there Friday was Rick front and center coming out of the Guv's office with House leaders.

If the reason he is there is because so much of the budget is education, then why isn't Senate Education Committee Chair Cynthia Nava part of the budget talks? Or is Miera's presence a sign of just how out sized the muscle of the public education lobby has grown?

We're just asking...

IF WE RULED THE WORLD

With the start of the special session today we find it timely for another of our periodic installments of "If We Ruled the World." However, it’s not that much different from previous editions, so forgive any repetition.

For brevity’s sake, we’ve deleted the parts about winning the lottery, getting the girl and mandating that all restaurants carry flavored San Pellegrino (in the can).

First, pass a surtax on high income taxpayers that generates $80 million a year, then approve a quarter cent increase in the statewide gross receipts tax that effects everyone and will take in about $125 million; Fix that corporate tax loophole for Wal-Mart and other big box stores, raising around $50 million a year. We're now up to around $255 million.

If we must, do a quarter, not a dollar tax, on a pack of cigarettes. And beef up tax collections on out of state taxpayers that Speaker Lujan has talked about. And continue to redirect unspent capital outlay money to the general fund. We did about $150 million during the regular session. Let's go for another $100 million during the special. We still have well over a billion dollars of capital outlay, much of it unspent, sitting in state coffers.

We're now at about $400 million, and it's time for the spending cuts--if we ruled the world. We'd start with the sacred cow--public education. Cut 3% across the board and finally force the downsizing of the bloated administration at APS. If we also have to cancel some less popular school sports, so be it. The educators are probably right that the rest of it is messy and painful, but it's not exactly picnic time for thousands of New Mexicans on the firing line out here. Share the pain.

If we ruled the world we'd have the Legislature once and for all get rid of the political appointees that have become like leeches on the body politic. Cut several hundred and make it effective July 1st. While they're at it, make the state hiring freeze real--with truly no exceptions other than for real public safety concerns.

State employees are going to have take more furlough days--we have five this fiscal year--up that to eight or nine for the next year--and raise the amount they kick in for their retirement plan by another percent or so, but exempt workers making under $40,000 a year.

We'll stop there because we just realized we will not be ruling the world (geez, that stuff wears off fast) but you get the idea. Good luck, Santa Fe...

DOMENICI'S DOUGH

The bottom line when Pete Domenici Jr. reports his first round of fundraising tonight is that he is on track for having enough money to make a major TV buy for the June 1st primary.

Domenici's campaign says the GOP Guv contender raised about $200,000 since he entered the race January 17th. That's a respectable, but far from a scare the hell out of em' total for the son of retired US Senator Pete Domenici. But with his name ID already off the charts, Domenici will need less media money than a Susana Martinez or Allen Weh.

Still, the Alligators wonder, is this fella with the famous namesake capable of hitting a double or triple? So far, it's been all singles at best.

Martinez reported at the end of the year that she's raised about $300,000, but it took her five and half months compared to Domenci's $200k in six weeks. Wealthy businessman Allen Weh hasn't reported lately, but back in October he announced a loan to himself of over $250,000. He had over $370,000 cash on hand back then. Doug Turner also wrote himself a check for over $200,000. Janice Arnold-Jones last reported raising about $50,000.

Domenici's famous father has helped him raise money. And the young Domenici has grown more blatant in recent days in using his famous name as a campaign prop.

Several analysts we spoke with said there will come a time when voters begin judging Domenici separately from his father. However, they said that is more likely to happen in a general election turnout. Republican primary voters may not be as discerning, giving Domenici Jr. the benefit of the doubt as they hunger for a winner and a name that they know and like.

With about $200,000 raised, it is clear that Domenici will not go away, even if he fails to garner 20 percent of the delegates at the GOP preprimary convention March 13. He would file additional petition signatures, making him eligible for a ballot spot--and then start spending that money.

Domenici's money report comes on the heels of an independent poll showing him as the strongest contender against Dem Diane Denish (45-40). The poll and the money he has raised should aid him as he searches for elusive uncommitted preprimary delegates.

WHERE WE'RE HEADED

Weh has the money and can saturate the airwaves and mailboxes. But does he have the message and personality? Political pros like Turner's profile for the general election, but he has to make the 20 percent mark at the preprimary or he may be gone. Martinez is showing persistence, but needs more money to get herself known and then go after Domenici. Same for Arnold-Jones.

Domenici's foes tried to raise expectations for him and claimed they expected him to pick up $500,000 in six weeks. That, of course, was an unrealistic number especially given this economic backdrop. One question they have that will be answered later today: Did Domenici loan himself much money to reach the $200k mark? If he did, his detractors are sure to point it out.

As we've blogged, Domenici has stumbled out of the gate, but he ambles along with that neon name flashing wherever he roams. Expect the opposition campaigns to hit hard to disrupt that stride shortly after the preprimary.

CARILLO COMING BACK

We already have a spirited contest for the Dem nomination for Bernalillo County sheriff and now we're going to get one for county assessor. Former three term assessor Mark Carillo, who we mentioned has been eyeing the race, is now all in. Carillo, 56, says he will challenge incumbent Dem Karen Montoya who is seeking the nomination for a second term. The office traditionally goes Democratic in November, although not always.

The office has received a lot more attention than normal because of the controversy over "tax lightning," in which the property tax of new homeowners skyrockets.

MAYOR ACTION

Santa Fe Mayor David Coss is at 52% in the final New Mexican poll before tomorrow's city election. Challenger Asenath Kepler garners 28%. City Councilor Miguel Chavez scores 8% and undecided comes in at 9%. Coss has led throughout the campaign, but he kept the heat on in the final days, sending out a piece of lit that twice mentioned that Kepler, a former city manager, was a Republican. Santa Fe is one of the most Democratic cities in the state. The poll was taken last Tuesday and Wednesday

In Rio Rancho, Mayor Tom Swisstack is being challenged by former Mayor Jim Owen. We haven't seen anything that would lead you to believe Swisstack won't win re-election.

BETTY FIORINA

That's a cool retro picture of Betty Fiorina, the three term NM Secretary of State who died last week. If you're of a certain age it may remind you of the style of your mother or grandmother.

Democrat Fiorina served eight years. She won two terms at two years apiece and, in 1970, was the first SOS to win a four year term. One of her sons, Tom Fiorina, became a well-known Santa Fe municipal judge. He recalls his mother as a pacesetter for women in politics back in her day, as well as a lover of dogs.

She probably would have preferred that we mention the dogs first.

Betty Fiorina was 90.

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(c)NM POLITICS WITH JOE MONAHAN 2009
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