Padilla and Martinez

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. Journalistic warhorse Dennis Domrzalski came with this tight and eye-opening lead at the ABQ Free Press:

Padilla resigned Thursday, the day after the Attorney General’s office filed a search warrant alleging that she and her husband embezzled more than $50,000 from one of Padilla’s former clients, and that Padilla might not have reported $128,000 in income in addition to her state salary. The warrant also alleged that Padilla did work for the former client up until 2013 and didn’t report either the income or the work on her financial disclosure statement as required by state law. The warrant said that of the $128,763 in income that Padilla might not have reported, $47,753 came from QC Holdings, which “appears to be a short-term lending institution, catering to individuals needing income to sustain until their next paycheck.”

QC Holdings? A payday lending company? Say what? We offer this reader email with caution but she is a longtime reader and reliable political source:

About a year ago I was playing a slot machine at Route 66 Casino when Demesia Padilla sat down next to me. I recognized her, but did not say anything. She began small talk with me: "These slots aren't paying. Are you winning?" and I responded accordingly. This went on for about twenty minutes when my husband came up to me, saw Demesia and said, "Hello, Demesia!" She looked at him startled, looked at me incredulously, then cashed out of her slot machine. She grabbed the voucher from the slot machine and said, "I think you have me confused with someone else," and hurried off without looking back. This was after the Diana Duran debacle, so maybe she didn't want to be painted with the same brush.

Republican Secretary of State Duran resigned after pleading guilty to corruption charges that resulted from a gambling addiction. No one is saying that's the case here but the payday lending reference in the search warrant is bound to raise the issue. Well, it just did.

DECEMBER BLUES

December has been a month fraught with peril for the Martinez administration. The Padilla scandal went viral nearly a year to the day of Susana's infamous Dec. 13. 2015 holiday pizza party replete with bottles being thrown from the balcony and the Governor intimidating hotel staff and police responding to noise. That was, as we predicted at the time, her political undoing. This month's development sounds like a death knell. Susana's nightmares must have Christmas trees in them.

BIG PROBLEM; BIG LAWYER

Paul Kennedy

Now the fear on the Fourth Floor has to be what Padilla tells investigators as she labors to avoid a criminal indictment and/or time behind bars. Will the Governor be dragged into this? On that point, readers immediately pointed out that the former cabinet secretary has signed up an attorney who has a deep and personal connection to the Governor, Albuquerque's Paul Kennedy. Alligator analysis of that is imperative and here it is:

Paul Kennedy has been attached at the hip to Gov. Martinez throughout her two terms, and he has consistently represented Martinez in most if not all legal or potentially legal matters that have touched or come near her. He's a sharp-elbowed guy and a top-notch attorney. No coincidence therefore that Demesia Padilla's case is characterized by the kind of foot-dragging and prevaricating that is Martinez's hallmark, or that Martinez defended Padilla. Also it's no coincidence that Paul Kennedy now pops up as the attorney for Padilla et al., a sure sign that the one person he's actually protecting from flack of any kind is Gov. Martinez. An example: after vocally defending Padilla, suddenly Padilla "resigns" and there's claimed to have been no discussion between Padilla and Martinez, the world's biggest control freak. Sure. I guess you could sort of "thuthily" say there was no discussion between Padilla and Martinez if Kennedy was the conduit between them.

FOUR KEY POINTS

Balderas

Here's what we see as four key political points about this scandal:

First, it is a body blow to Gov. Martinez. With her approval ratings already plummeting below 40 percent in one poll and the state budget 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.

Here's what is really damaging to the chief executive's credibility and that will likely cause further erosion in her approval rating. Look at what Martinez's office first said when they circled the wagons over the corruption allegations when they 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.

Keller

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. One reader reacted this way:

I know every once in a while a cabinet secretary goes bad, but the Guv has failed to perform her due diligence, she owns this. A reasonable executive would have gotten to the bottom of this internally when it first came to light and dealt with it. The Martinez administration is as incompetent as I have ever seen.

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

As the ink was drying on Padilla's resignation, Balderas' agents were raiding 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."

Remember, when Balderas prosecuted Sec. of State Duran on corruption charges? She received only 30 days in jail, a sentence that was widely derided but the public and did not help Balderas' image as one who treads lightly when it comes to Martinez and her allies. Now he faces another test.

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. Balderas did not appear on TV news to talk about the scandal. That was the right call. His search warrant said it all. Keller did appear on TV and benefitted.

Fourth, this is more bad news for Lt. Governor John Sanchez who is tied inextricably 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 considering some kind of exit strategy from the governor's race.

Thanks for stopping by this week.

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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?

It's your move, Hector. And whichever way he moves his chess piece could very well tell the tale of the 2018 New Mexico race for governor.

By announcing her candidacy Tuesday for the Democratic gubernatorial nomination ABQ Dem Congresswoman Michelle Lujan Grisham is forcing the hand of the attorney general. He, too, will have to move relatively early if he is to keep her from gaining momentum and cornering campaign money.

In fact, if Balderas, 43, doesn't get in the race political pros of a variety of stripes are scratching their heads wondering how Lujan Grisham can be stopped. Here's how it's coming down in the incisive words of a Senior Alligator:

Joe, the game for Governor has changed since the old days. It is no longer a level playing field where you have there or four top tier candidates contending for a party nomination. This is a game of big money, organizational ability, and national consultants. It is intimidating for most politicians. Lujan Grisham is able to put those three ingredients together. Balderas is the only other candidate we hear being mentioned that might be able to do the same.

Besides Balderas, state Senator Joe Cervantes, Santa Fe businessman Alan Webber and businessman Jeff Apodaca are the others putting out early feelers. But none are top tier candidates and it gives the ABQ congresswoman plenty of room to run. And running she is.

She spent some $500,000 on TV ads in her recent re-election bid which expanded her statewide name ID. She won with a resounding 65 percent of the vote, giving her a solid base in important Bernalillo County.  And she hired the national media firm Putnam Partners, who number among their clients President Obama, to up her media game.

Balderas

In announcing for governor she put out a bare bones website and a two minute and 39 second video that showed polish. Most important, the video, without mentioning Republican Governor Martinez by name, unloaded on the incumbent for the death spiral standings the state has in education, poverty, drug addiction and jobs. That's critical because the nominating wing of the Democratic Party is not going to give Martinez a pass. If Balderas is not willing to go there--and thus far he hasn't been--his chase for the nomination could be slowed significantly.

Here now is keen analysis of the Lujan Grisham video from another Senior Alligator with Washington and local experience. It's the stuff you will only get at NM Politics with Joe Monahan:

Whoever worked with her got rid of her hyperactive, over-aggressive tendencies and got her to slow down, pace her speech patterns and really raise the bar on her on-camera performance. As someone that is concerned about her attention span, maturity and ability to see things through, I saw an ad that is presenting someone calmer and more considerate. She has dropped the attitude of someone that is fighting for attention among hundreds in the US House and has become someone who is more self confident and assured and ready to be a chief executive. She was wise to hire the firm that did this ad. However, this is just the first ad and knowing that her unscripted persona is much different than what is presented here, opponents will be looking to catch her off-guard and show that the person in this ad is not who she really is. Should be an interesting campaign.

It was a shift of gears indeed. She sat in a living room wearing a dark blue dress and set off with four strings of pearls. No roller skates for this one. A good start but a long way to go, as Republicans were quick to point out. Veteran GOP political consultant Bob Cornelius came with the down side:

She has been a government employee her entire adult life. She has never created a job or signed a paycheck. In that way, she's the Democrat version of Governor Martinez. She is too far to the left for most New Mexicans when it comes to Second Amendment (Gun control) and social issues. 

ON THE R SIDE

Rep. Pearce

On the Republican side of the aisle there is uncertainty but there is new information to report.

Yet another Senior Alligator (we pull them off their couches for the big stories) says southern GOP Congressman Steve Pearce recently conducted a poll on the governor's race and it showed him as the far and away front-runner against potential nomination rivals Lt. Governor John Sanchez and ABQ Mayor RJ Berry. That's not surprising as conservative Pearce, re-elected in November in a landslide, is very popular with the nominating wing of the GOP.  But will he run? Our Gator reports:

Steve has over a million in cash on hand and would swat away any rivals. But the general election remains the problem. He is too conservative to win statewide, unless there was some kind of change in the political environment at the time of the election, something unusual.

Hmm. Something like what Trump tapped into? Sounds like a tough decision for Pearce who has been renewed by the Trump win and should have more power in Washington as a result. If Pearce doesn't go for the nomination, the GOP race would be wide open. But after eight years of unsuccessful rule, the voters are prone to a send the pendulum back the Dems way. And that's why everyone is more anxious to see their final field. Lujan Grisham is the beginning.

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So far, Pearce is the go-to guy in the state for the Trumpsters. He showed up at Trump's last NM rally and he threw his support (but not his endorsement) behind the billionaire businessman. Also, Pearce is tight with VP-elect Pence who served in the US House with Pearce and shares his socially conservative views.

Wilson on the other hand has been allied with Gov. Martinez--she ran her transition committee for a time in 2010. Martinez refused to endorse Trump and was often critical of his campaign.

(During that 2010 transition insiders say Wilson had a falling out with Martinez political Svengali Jay McCleskey who was basically running the show. Wilson's husband, attorney Jay Hone, currently works in the state's risk management division.)

Wilson, who lost the 2008 GOP US Senate primary to Pearce, has a strong foreign policy background. She has expertise in European and Soviet affairs, having worked in the DC defense establishment before getting elected to the US House in 1998. From that standpoint her being mentioned for a job with Trump is understandable but analyzing what the Trump folks do in any greater detail is a fool's errand.

Pearce

One of the Alligators came with a wild guess that maybe Republican US House Speaker Paul Ryan put Wilson in touch with Trump world, reminding all that Ryan is no pal of Pearce's. But as we warned, analyzing any of Trump's moves subjects you to getting egg on your face, eating crow or perhaps even ten lashes with the dreaded wet noodle.

It is interesting that Wilson resurfaces in the political world shortly after her old patron and mentor, former GOP US Senator Pete Domenici, announced that at the age of 84 he was taking a job as an adviser to the state land commissioner. For the supporters of this duo it's all welcome news. For others (perhaps Pearce) it's like watching bad pennies popping back up.

Wilson's competition for the sensitive intelligence post is stiff. It includes former Hewlett-Packard executive and GOP presidential candidate Carly Fiorina.

One other note on this. A national security scandal brushed up against Wilson a few years back. You wonder if that might tarnish her brand if the intelligence job talk gets more serious:

The world’s largest defense contractor has agreed to pay $4.7 million to settle charges that it illegally used government money to lobby top federal officials to extend its contract to run Sandia Laboratories.  Over five years starting in 2009, top executives for Lockheed Martin--who were being paid by the federal government to run Sandia--ran a fierce campaign to lobby members of Congress and senior Obama administration officials for a seven-year extension of their contract, according to the settlement the Justice Department announced. Lockheed executives, who hired former New Mexico Congresswoman Heather Wilson to help them, didn’t just press people with influence to rehire them for a deal worth $2.4 billion a year. . . They urged them to close the bidding to competition.

The intelligence position requires US Senate confirmation. Republicans now control the Senate with two votes to spare.

THE BOTTOM LINES

Joe Monahan

NM Attorney General and possible '18 Dem Guv candidate Hector Balderas gets a splash in the NYT this month:

A New Mexico businessman claimed to help low-income Spanish-speaking families by finding them foreclosed homes to buy and, in some cases, financing the deals. But Balderas said that Jesus Cano of Albuquerque deceived dozens of consumers by misrepresenting the conditions of the often poorly maintained homes he sold. Sometimes Mr. Cano sold houses he did not even own, the attorney general said, and at other times he tried to sell the same property to more than one family simultaneously. Cano and his firm, JSS, were sued by the attorney general in state court. 

How is NM Dem US Rep. Ben Ray Lujan doing in his job as head of the DCCC considering the D's only picked up six House seats in the November election? This piece takes on that matter and inform us there's some intrigue surrounding the northern congressman. Meantime, Lujan recently named Santa Fe politico Dan Sena as the new executive director the DCCC. . .

How about if Dems Brian Colon and Deanna Archuleta forgo a race for ABQ Mayor in '17 and take a look at running for the US House seat that Michelle Lujan Grisham occupies but is preparing to give up to run for the '18 Dem Guv nomination? It's a scenario the other Dems in the mayoral field would surely welcome. . .

Some belated "thank yous" to Congregation Albert in ABQ and NM AARP for inviting us to speak before them about the November election. They were stimulating sessions. . .

The correct age of new NM GOP Chairman Ryan Cangiolosi is 45. We had it otherwise in a first draft Monday. And the headline on the Monday blog should have read "Heinrich Has Work To Do." We had a typo in the first draft.

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Ryan Cangiolosi

Ryan Cangiolosi scored an easy win over John Rockwell Sunday as the GOP State Central Committee voted 251-156 to name the 45 year old as the new chairman of the New Mexico Republican Party. So, what does his 62% to 38% victory  mean? . . .

It means the Harvey Yates-Steve Pearce faction continues to consolidate GOP power as the party moves away from Gov. Martinez and her political adviser Jay McCleskey who have alienated many of their party brethren. Martinez officially became a lame duck Governor following the November election and McCleskey's client potential is drastically diminished after six years of war with fellow Republicans.

Cangiolosi, a businessman and longtime political operative who had a falling out with Martinez and McCleskey following a stint as her deputy chief of staff, follows in the footsteps of Yates, a former GOP chairman who this year defeated Martinez acolyte Pat Rogers when Rogers sought re-election as GOP national committeeman.

Despite his decisive margin of victory the Martinez/McCleskey Machine was in no mood to let bygones be bygones. On social media former Roswell GOP state Senator Rod Adair, a longtime ally of Martinez's, scorned Cangiolosi's win:

How does a "team" that is put together strictly on grievances, and hatred of the Republican governor, succeed in putting together a winning strategy and tactics? We asked how this was going to work last spring when Harvey Yates and, frankly, Steve Pearce, assembled all these naysayers. We got the answer on November 8: It does not work. 

Republicans lost the state House to the Dems in November and the Dems added to their state senate majority while also easily beating Trump in NM.

Cangiolosi urged party unity but it's doubtful the Martinez crowd, known to carry a grudge, will ever be in his corner. He said:

We need to unite the party behind our common goal of electing Republicans across the state and promoting our shared message of economic prosperity, safer communities and an education system that truly prepares our children for the future. I have been active in the party for the past ten years and am excited to continue fighting for those principles in my new role as Chairman.”

Party insiders say with Cangiolosi as chairman for the next two years the tone but not the substance of state GOP politics will change. They say there will be less personal vitriol and vindictiveness, hallmarks of the Martinez years (which also had significant electoral success). They add that Cangiolosi's big win will lessen factional strife in the GOP. (The only fly in that formula would be the unlikely ascension of ABQ Mayor Berry as the R's '18 governor candidate. He is a client of McCleskey's.

Cangiolosi, a former employee of Yates' Jalapeno Corporation and a naval reserve officer,  now works as executive project director at the UNM Health Sciences Center.  His foes said he would have to give up that job to be chair, but he says he will keep the six figure gig and UNM is not protesting.

Cangiolosi will not preside over a party starved for funds. Yates as well as Rep. Pearce will ensure that.

With SuperPacs and independent consultants creating their own fiefdoms political parties don't matter as much as they once did, but they are still important vehicles for messaging. And with races for mayor, governor and US Senate fast approaching, there will be plenty of messaging awaiting the new chairman's attention.

HEINRICH'S HOUSE

Speaking of that '18 Senate race, it will be Martin Heinrich, a Democrat, seeking re-election. And that brings us to this reader email:

Joe, Any idea what’s behind Sen. Martin Heinrich’s petition drive? Nearly every day he posts a Facebook link to a petition on his website protesting something President-elect Trump is doing or might do. The querulous petitions seem like an unusual political tactic: a backward step from senator to community organizer.

Heinrich is what political pros call "in cycle," meaning his re-election campaign is now activated. He has two Facebook pages his official US Senate page and his campaign Facebook. Where you are seeing the political stuff (the Trump bashing etc.) is on the campaign site.

One of the reasons he may be trying to gin up the anti-Trump crowd is to have Democrats forget that he was among the earliest senate supporters of the failed candidacy of Hillary Clinton. Heinrich correctly bet that Sanders would lose the Dem prez nomination, but he was caught by surprise when Sanders surged and only narrowly lost the NM presidential primary to Clinton. That has created friction for Heinrich among his fellow Dems. He has fence mending to do as well as building up his bona fides with the Sanders followers, They hear Heinrich talk a lot about defense spending and the like but not so much about the Sanders economic agenda (or the economy in general) that they prize so much.

Heinrich begins the '18 cycle favored for re-election, but it's unclear how aggressive the R's will be in trying to take back the seat. There are no major names circulating at this point. But they are closely watching Heinrich's polling numbers which are relatively okay, but certainly not gangbusters. In a poll conducted May through September Heinrich's approval rating was at 46 percent, below the key 50 percent mark.

Historically, Senate incumbents have an easy time of it in New Mexico, with the last one losing his seat in 1982. But these are different times indeed. Loyalties can be quickly frayed by economic distress and a distaste and lack of respect for all things political. Heinrich knows he has some work in front of him.

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