Economic Woes a Thing of the Past

December 8th, 2010

Read or listen to the news, and you are going to walk away thinking the worst is behind us and that the economy is rebounding. There’s been talk about same store sales from McDonald’s to Tiffany’s increasing significantly over the previous year, and even the Land of Enchantment has had “nice” surprises announced:

Figures released by both the Department of Finance and Administration and the Legislative Finance Council say the states revenue is up for the current fiscal year by about $56 million and say next years budget shortfall is predicted to be nearly $40 million less that earlier estimates.

Lawmakers say the latest revenue numbers are reason enough for what they call cautious optimism although they say revenues aren’t enough to fix the state’s significant shortfall.

Okay, reality check here folks. All of this “good” news really depends on what you are using as a baseline comparison. If you are comparing this year’s losses to last year’s losses then yeah, we’re losing less, or in budget shortfall terms, our budget shortfall is less than it was. But, this is by no means cause for celebration. Don’t kid yourselves, not only is the economic picture not rosy, it continues to be downright scary:

States are reporting billions in midyear budget shortfalls, and the crunch is likely to continue for at least several more years, a new report says.

Fifteen states are facing combined budget gaps midway through their 2011 fiscal year totaling $26.7 billion, according to a National Conference of State Legislatures report to be released Wednesday. The other 35 states say they are on target with their budgets. At this time last year, 36 states reported a combined $28.2 billion shortfall.

State government spending has begun to rise after falling sharply during the recession, in part because tax revenues are slowly on the mend as the economy recovers. Even so, revenues remain far below pre-recession levels, and many states face pressure to cut programs and raise taxes to cover yawning gaps in their budgets.

Yes, the shortfall is $1.5 Billion less than last year, but that is still a $26.7 billion budget deficit at the state level. And yes, same store sales are better than last year, but unemployment also continues to rise:

The number of unemployed persons was 15.1 million in November. The unemployment rate edged up to 9.8 percent; it was 9.6 percent in each of the prior 3 months.

So, what’s the point here? Am I simply trying to be a downer during this holiday season? No, my concern is that those now tasked with cutting the size of government to bring it back in line with economic realities are going to listen to the hype and ignore the facts. By this I mean, they are going to think that we’re on the road to recovery, and therefore, we need to only make temporary cuts. When the truth is that we need to radically cut programs because this road to recovery is going to be paved with losses for a long time still.

Just ask our biggest backer:

The U.S. dollar will be a safe investment for the next six to 12 months because global markets are focused on the euro zone’s troubles but America’s fiscal health is worse than Europe’s, an adviser to the Chinese central bank said on Wednesday.

Economic woes are NOT a thing of the past.

Observe the Blue Skies

December 7th, 2010

You may have noticed that the Land of Enchantment could also easily be called the Land of Endless Blue Skies. Having spent nine years of my life living in and around Los Angeles, the lack of smog is definitely one of the things  that separates us from that other sunshine soaked location. In fact, in the Albuquerque area there are really only two times when that beautiful blue ceiling is disturbed. The first is when those Spring winds kick up dirt from the West and slam it against the Sandia Mountains.

The other time is when a raging wildfire fills the sky with smoke. In fact, I remember at least one occasion when our skies have been filled from Arizona wildfire smoke. Nothing illustrates the absurdity of Monday’s vote by the outgoing Environmental Improvement Board (EIB) than the fact that natural or unnatural air pollution doesn’t stop at a state’s border:

One month after passing a controversial cap and trade agreement, the New Mexico Environmental Improvement Board (EIB) on Monday (Dec. 6) passed another sweeping measure aimed at lowering the state’s greenhouse gas emissions.

By a 4-1 vote, the EIB passed a statewide, New Mexico-only plan that places a cap upon the amount of emissions generated in the state. The plan was headed by the environmental group the New Energy Economy (you can see some of the details of the plan here.)

I’ve complained about the manner in which this appointed Board has conducted itself for years, and I’d like nothing more than to see it dismantled. They have served one purpose and one purpose only. Namely, they are a classic example of what happens when you form a pseudo governmental body that has nothing constructive to do.  They start creating regulations where none are needed in order to give themselves purpose. When that happens, the losers are inevitably the voting public who find themselves subject to “laws” created by unelected “representatives.” Just one more example of how freedoms taken for granted can so quickly be taken away.

That Didn’t Take Long

December 2nd, 2010

Republicans are against ObamaCare, right? Well, that’s what I thought. But, it looks like it took less than 30 days for Congressional R’s to begin softening their position:

We too don’t want to accept any insurance company’s denial of someone and coverage for that person because he or she might have a pre-existing condition,” Mr. Cantor told a town hall audience last night at American University in Washington, D.C. “Likewise, we want to make sure that someone of [college] age has the ability to access affordable care if it’s under your parent’s plan or elsewhere.”

This sounds like health-care policy as guided by public opinion surveys.

It sure as heck does sound like policy by polling. And, it makes absolutely no sense. Let’s take the sentimental part out of the equation and focus on what we’re talking about here. If instead of health care insurance we were talking about car insurance, this would mean that even if your car is banged up before buying insurance, you should be able to buy insurance that would allow you to get your car fixed to remove the pre-existing dents. That’s not insurance. That’s passing the cost of repairs along to your neighbors. It doesn’t make any sense.

Now, I know that a broken car is not the same as a sick person, but the insurance aspect is absolutely the same. I’ve noted it countless times before, insurance and health care are not synonymous. Insurance is “coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.” It is not a contract for coverage where everyone else should be forced to offset the costs of your existing health care challenges.

See, one of the problems with government mandating health care coverage for all is what it leads to next. Namely, the government starts feeling the need to legislate (read:tax or disallow) what we eat, what we drink and in general how we lead our lives. After all, they reason that certain choices put a strain on the health care system. For example, people who over indulge in sugary or fatty foods and refuse to exercise are more likely to develop diabetes and heart problems. Since we now have legislation that guarantees them health care insurance paid for by “the people,” then it only makes sense that “the people” should be allowed to minimize their future costs by legislating healthy choices. This is how freedoms are lost.

Congressional Republicans better do a reality check quickly, or they are going to find themselves back in the minority in the very near future.

Industry Specific Tax Incentives

December 1st, 2010

A little short on time this morning due to an impending East Coast conference call. So, let’s just continue yesterday’s discussion with a little homework assignment. The film industry tax credits are getting a lot of attention in the last twelve months. It was the darling of soon to be former Governor Richardson (and short list candidate for MPAA Chairman job). Of course, they’re only part of the story – albeit, a ridiculously large part.

Take some time to review the RECOMMENDATIONS OF THE BLUE RIBBON TAX REFORM COMMISSION AND REVIEW OF CREDITS AND EXEMPTIONS ADOPTED SINCE  2003 and presented to the Legislative Finance Committee on August 13, 2009. It’s got some interesting details. Of course, I’m partial to this observation:

Incentives targeted at particular industries raise concerns of adequacy – due to the potential drain on state funds — equity – the failure to treatment all businesses equally – simplicity – because businesses must jump through so many hoops to qualify – and accountability – because the Tax Department is in no way capable of insuring that funds are being used for the intended purposes. An argument can also be made that these incentives fail the efficiency principle because they substitute political decisions about the allocation of resources for decisions made in the marketplace. Offsetting these is the hope that incentives can be carefully targeted to stimulate activity that would not otherwise occur in the state, thus generating lasting long-term growth with its potential to increase private and public economic resources in the state.

But hey, that’s just me.

Take a Step Further

November 30th, 2010

If you’ve been a longtime reader of this blog, you might think there isn’t a tax cut I wouldn’t support. Well, you’d be wrong. I’ve never understood the practice of having one business subsidize the operations of another. That is precisely what happens when we give industry specific tax credits. It’s a lousy approach to economic development, and preferential tax treatment is at the root of the complicated tax system which unnecessarily burdens our businesses and citizens alike. A society based on the redistribution of wealth through taxation is as wrong at the individual level as it is at the corporate level.

Make no mistake, when we give tax exemptions to one industry, which we don’t provide to another, we are absolutely guilty of corporate welfare. Worse, there seems to be no rhyme or reason as to why some industries are favored over others. To be honest, I also think the practice of using taxation as a way to dictate “good” versus “bad” behavior is also ridiculous. That is not the purpose of a tax system.

Tax incentives, like tax policy itself, should be broad based. It should not be a system to reward or punish one industry over another. So, while Senator Tim Keller’s proposal is a step in the right direction, it doesn’t go far enough:

While tax increases are expected to be a tough sell when New Mexico lawmakers convene for the 2011 session, legislators plan to take a close look at tax exemptions and deductions already on the books and requiring more financial disclosure for tax credits.
Proposals could include imposing stricter reporting requirements on filmmakers who apply for the state’s 25 percent tax rebate on direct in-state expenses.
Sen. Tim Keller, D-Albuquerque, who will push the proposed requirements when the Legislature convenes in January, said more stringent disclosure laws would allow lawmakers to make more informed decisions.
Let’s get to where we need to be on the local, state and federal level. Rather than raise taxes on the rest of us to deal with deficits and crushing deb, let’s eliminate the tax policies subsidies that favor one industry over another.

Can Education Spending Be Cut?

November 29th, 2010


Governor-elect Martinez painted herself in a corner by pledging not to cut education spending. But, the truth is that the number of dollars spent on education DOES NOT have a direct correlation to an improved education outcome. If nothing else, the Richardson Administration deserves credit for proving this. For eight years, the Administration and a compliant State Legislature have thrown more and more money at education with absolutely no result.

Spending as the recipe for student success is an “innovation” experiment that has failed miserably. Of course, some people still don’t get it. They cling to the concept that the more you spend, the greater the outcome:

Martinez’s best bet–perhaps her only bet to deliver fundamental economic change–is to finally put the state on the path to public school success among the population groups that perennially under perform.

That’s going to cost money.

If the new administration takes this same old tact, we are doomed to continued failure and ever-increasing budget shortfalls. Increased spending hasn’t yielded positive results in the last eight years, and it will not equal improved education outcomes for our children in the next eight years. Feel good programs whose gains are lost in middle school, need to be eliminated. If we want to see real improvement, it’s time to get back to basics, and interestingly enough that will require less, not more, money.

Spreading Them This Holiday Season

November 25th, 2010

Happy Thanksgiving! And, to all of my friends traveling this holiday season, this one’s for you…

Do the Right Thing

November 24th, 2010

For years the Republicans in the state legislature have had as much impact as spectators in the galley. I don’t mean that as a derisive remark about our elected Republican representatives. It was just a fact based on the circumstances. They didn’t have enough seats to really do anything, or stop anything. Well, the tides have changed, and although we still remain in the minority, there is an opportunity to make a difference. An opportunity to work together as one, and provide leadership when the state so desperately needs it.

Alligator WranglerNow, I don’t usually put a lot of credence in the musings of the old alligator wrangler, but I know enough of the legislators on our side of the aisle to believe that some could actually be foolish enough to think this way:

We’re told the Republicans reluctant to join any coalition have several concerns. One is their hometown constituents and whether they would want them voting for a Democratic Speaker. Another is strategic and one we’ve previously mentioned. This 60 day legislative session starting January 18 is going to be about cutting budgets and taking services away from the public. Not all Republicans want ownership of that agenda and the resulting pain. If the session doesn’t go well, the majority party would be positioned to take the hit.

So if I may, let me try and put this in a different political light for any Republican legislator sitting on a fence regarding forming a coalition to get done what the Democrats failed to do when they caucused last weekend. Namely, they failed to clean their own House. Over the last few years, we’ve  seen indictment after indictment hang like a never ending storm over the Land of Enchantment. However, two slippery politicians have managed to be in the thick of things and yet emerge unscathed – or maybe better said, unjailed.  Well, term limits did for us what New Mexicans were unwilling to do for ourselves and sent one blight of the public trust packing – yet another case for term limits.

Now, it’s time for the House Republicans, and any House Democrats with cajones still intact, to remove the last remaining highly visible monument to the old way of doing politics. If your a Republican worried that you might get hurt in a primary in two years because you voted for a Democratic Speaker of the House, consider for a moment the mail piece that might go to your constituents with the headline, “Representative [Fill-in the Blank] Gave This Man [Picture of Lujan] a Pass” followed by a passage of the scandals that have  and continue to plague the Speaker’s tenure.  I can practically guarantee that if you lose your backbone and keep the current Speaker, you will lose your seat in two years. So, if self-preservation is the motivation for all of your decisions, do the right thing and form a coalition to send the current Speaker packing.

As to any Republicans that are afraid to take ownership of how to fix the pickle in which we find ourselves, I’ve only got one thing to say. Pack it up and resign now. You’ve been hiding behind the skirt of the minority excuse for so long, you’ve forgot why you ran or were elected in the first place. Make a difference, or move aside to let someone else willing to put New Mexcians before a personal agenda.

Happy Thanksgiving!

You’ve Got to Die First

November 23rd, 2010

I know the legislature has their hands full dealing with the ever-growing budget gap. But, I also know there are going to be lots of other bills introduced. So, let me suggest that we get out of this nasty habit of naming public buildings and property after the living.

The State Transportation Commission on Thursday voted unanimously to name the Interstate 40/Coors interchange in Albuquerque after Gov. Bill Richardson, citing his “vision, foresight and dedication” on transportation issues during his two terms.

A quick law ought to do it. Anyone not looking at seeing the public pay to put their name on the side of a building ought to be willing to support this. By the way, this is not a partisan issue. Both sides of the aisle still living are represented on buildings and other public projects through New Mexico.

Consider Buying TSA a One-Way Ticket

November 19th, 2010

Okay, I probably need to move off my TSA kick, but I just can’t.  It’s one of those things that just kind of eat at me every time I have to book a flight to somewhere. Ann Coultor nails the bottom line on the TSA problem:

You can’t stop a terrorist attack by searching for the explosives any more than you can stop crime by taking away everyone’s guns.

But, there’s nothing we can do, right? Wrong. If you’re under the impression that we are required to have TSA and their invasive and ever-expanding reach in our airports you are mistaken.

Did you know that the nation’s airports are not required to have Transportation Security Administration screeners checking passengers at security checkpoints? The 2001 law creating the TSA gave airports the right to opt out of the TSA program in favor of private screeners after a two-year period. Now, with the TSA engulfed in controversy and hated by millions of weary and sometimes humiliated travelers, Rep. John Mica, the Republican who will soon be chairman of the House Committee on Transportation and Infrastructure, is reminding airports that they have a choice.

We’ve got a sensible and approachable Mayor in the Duke City, and I believe a reasonable City Council. The Albuquerque Sunport is under their control. So, how about they send the TSA flying. We wouldn’t be the first city to do it:

The backlash continues over those new TSA screening measures, and now one Central Florida airport has decided to go with a private security screening firm.

Orlando Sanford International Airport has decided to opt out from TSA screening.

“All of our due diligence shows it’s the way to go,” said Larry Dale, the director of the Sanford Airport Authority. “You’re going to get better service at a better price and more accountability and better customer service.”

Dale says he will be sending a letter requesting to opt out from TSA screening, and instead the airport will choose one of the five approved private screening companies to take over.

It’s time to say enough is enough.