Thursday, December 15, 2016

Scandal In Santa Fe: Taxation Secretary Resigns As Her Office Is Raided; The Political Fallout, And: With Billions Of Federal Money On The Line Udall And Heinrich ConfrontRick Perry, The Secretary Of Energy To Be, Plus: We Venture Into TheCampaign Finance Thicket 

Its been an unusually busy political December and it continued Thursday with the resignation of Secretary of Taxation and Revenue Demesia Padilla. She submitted her walking papers amid a burgeoning scandal over preferential treatment by the department of a client of Padilla's when she was in private accounting practice.

First, it is a body blow Gov. Martinez did not need. With her approval ratings already plummeting below 40 percent in one poll and the state budge crisis hovering over her like a dark rain cloud, this resignation casts the administration in the worst possible light.  Padilla is close personally to the Governor and has been with her since Martinez took office in 2011. But this is the second term of a governor and we all know in that regard this is par for the course. Look at what Martinez's office first said when the corruption allegations first surfaced last year:

We believe these are nothing more than unsubstantiated claims that are being driven by disgruntled former employees, who either work for the State Auditor or were fired for sexual harassment.

Flash forward to today:

As a former prosecutor, I take any allegations of misconduct seriously and don’t believe anyone is above the law. That is why I ordered the tax department to fully cooperate with the Attorney General’s Office during the course of their investigation.

But it was the auditor who waved the first red flag in 2015 and Martinez dismissed him as a political hack when she could have done something. Like the old saying goes:

"We heard you the first time, Governor." And so did the public.

Second, the fact that Attorney General Balderas is pursuing tax evasion and embezzlement allegations given to him by a tipster and also investigating the charge Padilla gave preferential treatment to a taxpayer that was first developed by State Auditor Tim Keller gives him some credibility on the street. There is a large faction of the Democratic Party that has said Balderas has gone easy on the administration. That will be noted if he seeks the '18 Dem gubernatorial nomination. (Rep. Michelle Lujan Grisham announced this week she would run).

Padilla resigned as Balderas' agents raided her state office seeking personal and business tax records of Padilla and her husband. Of course, a lot of the political import depends on how Balderas concludes the case. But as one of the Alligators cracked: "Hector just raided Michelle's campaign office."

Third, for Keller, a likely candidate for ABQ mayor next year, it is another notch in a belt that already has quite a few.  He has emerged as the most aggressive pursuer of the administration and could reap rewards for that when the mayoral campaign gets into high gear.

Fourth, this is more bad news for Lt. Governor John Sanchez who is tied at the hip to Martinez, even though they have no use for each other personally. What hurts her hurts him as he weighs a bid for the '18 GOP governor nomination. But hold on. . .Sanchez says he is now thinking of running for the ABQ congressional seat that will be vacated by Dem Congresswoman Lujan Grisham in '18. Considering the state of things in Santa Fe, it's no wonder that Sanchez is at least considering some kind of exit strategy from the governor's race.

Heinrich & Udall
New Mexico gets billions of dollars from the Department of Energy so if you're a US Senator from this state you want to tread carefully when it comes to how you treat the cabinet secretary for that agency. But that wasn't completely the case when news came that President-elect Trump has picked former Texas Governor Rick Perry to command the agency that oversees Sandia and Los Alamos National Laboratories.

Maybe it was a case of our two Democratic senators playing "good cop, bad cop" because Sen. Martin Heinrich unloaded both barrels on Perry, seeming to insure his relationship with the new secretary will be nearly nonexistent. On the other hand, Sen. Tom Udall chose his words more carefully and kept open at least a thin line of communication with Perry. First, here is Heinrich's statement:

The Department of Energy is New Mexico’s economic lifeblood, and the people who work at our DOE and NNSA Labs are among our nation’s greatest intellectual assets. President-elect Trump has signaled his blatant hostility to the Department and the workforce at our National Labs by nominating someone who has proposed eliminating this entire agency. I'm not confident that Rick Perry is fully cognizant of the role that DOE plays in keeping our nuclear deterrent safe, secure and reliable. He is utterly unqualified to lead this critical agency.

Perry is a big time supporter of the oil and gas industry and Heinrich is a noted enviro seeking re-election in 2018. His statement will play well with that portion of his base but will he come to regret that he completely slammed the door on Perry?

Here is Udall's more restrained comment:

I'm disappointed but not surprised that President-elect Trump intends to nominate as Secretary of Energy someone who once said he wants to eliminate the very agency he has been tapped to lead. Governor Perry's past comments show a lack of seriousness about the department's full mission, and I will be listening very closely to his current views on this matter.

With no Republican US Senator from the state and Heinrich dealing himself out, it seems it will fall on Udall to hold the line on any move to gut energy spending (the Labs) here. A continuation of Udall's "bite your tongue some" is in order.


A number of readers questioned how the over one million dollars or so Congressman Steve Pearce has in his campaign kitty could be used in a governor's race as a Senior Alligator contended Wednesday. Isn't there a prohibition against transferring federal campaign funds to a state race here?

According to finance experts we consulted, one of whom raises money for US Senate, and House candidates, Pearce could contribute money from his federal campaign fund to a state fund but he could not give more than $11,000 or else he would violate state campaign contribution limits. But here is the key part:

According to our experts (and others could differ in interpreting the arcane regulations) Pearce could transfer some or even all of that million into a Super PAC or to the state Republican Party which could spend the money on his behalf, as long as Pearce's campaign did not coordinate how the money was spent.

Pearce's brother, Philip Pearce, happens to be treasurer of the powerful GOAL WestPAC, a super PAC that has been a major player in NM legislative races the past two cycles, as well as other contests.  Isn't that convenient for Pearce? As one of our experts put it:

The Pearce campaign could not directly control it or coordinate the spending, but the money could certainly be used for independent expenditures on his behalf.

The US Supreme Court opened the campaign finance floodgates with its Citizens United decision and money finds a way to play with few regulations.

As for the state statute that prohibits the transfer of any federal funds to a state campaign, that is still on the books, but longtime observers will recall that in 2002 then-Congressman Bill Richardson challenged that law in court and it was overturned. (New Mexicans for Bill Richardson, Bill Richardson vs. Stephanie Gonzales Secretary of State.) 

Richardson then transferred $289,000 in funds from his congressional campaign account into his gubernatorial fund. There were no campaign contribution limits then. Today because of campaign spending limits you could only transfer $11,000, but why bother if you could dump it into a friendly super PAC that you were pretty sure would use it to support your campaign?

Again, that big pile of Pearce money could be used effectively against his gubernatorial opponents just not directly by Pearce.

The point is moot for freshly announced Dem Guv candidate Michelle Lujan Grisham who reports only $74,000 in cash on hand following a re-election campaign in which she spent heavily on TV ads.

This is the home of New Mexico politics.

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