Figures recently posted show that investments in the state's various Permanent Funds hit $50 billion at the end of December, more than doubling in the last six years.
We now have the 31st largest sovereign wealth fund in the world, up from 33rd only a year ago and with even more growth, albeit a bit slower, still in store for the rest of this decade.
The Land Grant Permanent Fund (LGPF) is the granddaddy of the various funds. Its value neared $30 billion at the end of December. The Severance Tax Permanent fund had $9.5 billion. The new rainy day fund, established to put aside permanently even more oil revenues, had nearly $2.4 billion.
Interest from the funds is diverted into the state General Fund and that now totals over $1.2 billion annually in a budget that this year will go over $10 billion, a record high.
All the investments are managed by the State Investment Council with about 35 percent of the money invested in domestic and foreign stocks.
Jon Clark, a former deputy cabinet secretary at the state's Economic Development Department, became the state investment officer late last year after a 13 year run by Steven Moise who kept stock exposure limited to 40 percent of investments.
There has been an argument made for higher exposure to grow the funds even more. The state underperforms when the market goes on a run but does lose less during bear markets.
Up to date investment performance for the funds is not available on the SIC website.
AN ETHICAL DILEMMA
The SIC was established in 1958 to manage the permanent funds. During that time it was rocked by one major scandal.
Under Gov. Richardson in 2009 a pay to play scandal came to light that revealed "politically influenced investment deals involving state money." No one was charged with a crime and much of the money involved was recovered. In 2010 SIC policies were revised to prevent gubernatorial interference in the investments.
But a new ethical issue has arisen in this era of bounty.
How can a state with so much money continue to be unable to break out from generational poverty and a litany of social ills that's kept it basically stagnant in economic and population growth for over a decade?
Voters did approve in 2022 a constitutional amendment to increase funding for early childhood education with money from the LGPF. Supporters believe that will help reverse the negative trends.
Policymakers maintain other state programs funded during the oil gusher have yet to fully take hold but will also begin to chip away at the state's poor standing. But there is reason to be skeptical.
Perhaps fearful of being blamed for failure, today's political class has avoided saying where they want us to be in five or ten years as a result of this mind-boggling treasure.
So here we are with $50 billion and ranking 50th in the nation in so much that matters. This is akin to a last call for New Mexico--will she swing for the fences or sit on mattresses bulging with cash?
TIM KRAFT
From Kraft's obit:
Tim came to New Mexico in 1970. . .and fell in love with the state. He talked then N.M. Democratic Party Chair Mike Anaya into hiring him to be Executive Director. With his organizational and fundraising skills, he served in that role from 1970-1974.
In 1975, fellow New Mexican Chris Brown introduced Tim to then Gov. Jimmy Carter, who was running for President. Carter hired Tim as his Iowa Caucus campaign manager. Carter came in second to uncommitted, but well ahead of other candidates. The publicity. . .provided an essential burst of momentum to Carter's campaign, and put the Iowa caucuses on the political map. . .After winning the 1976 election, President Carter asked Tim to serve as Appointments Secretary to the President. . .
In 1979 he left the White House to serve as Campaign Manager for the Carter-Mondale campaign. He met his wife-to-be, the former Molly Manuppelli, who worked in the White House Office of Personnel, and they married in 1981. They moved to Albuquerque, where Tim started Avanti Ltd., an international consulting firm focusing on political strategy and management, public affairs and intergovernmental relations.
In New Mexico, Tim was a state and local lobbyist; he also worked on ballot proposition management in several states.
We were lucky to have an enchilada lunch with Tim a couple of months ago where we asked him to recall his exploits on the national scene and thoughts on the current state of play. As expected, he was sharp as a tack. Some may recall that one of the hats he wore during his career was that of political columnist.
We were fortunate to have him as a longtime blog reader who on occasion offered deeply appreciated encouraging words and insights.
Tim Kraft died January 21 at his ABQ home. He was 82.
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