Posts Tagged ‘Budget’

New Mexico Commission on the Status of Women

Tuesday, January 25th, 2011

Let the cutting begin. Or, better yet, let the cutting continue. I’m all for this elimination of wasteful spending:

The state’s first elected female governor says the state should stop funding the New Mexico Commission on the Status of Women.

As part of her plan for covering a large projected shortfall in the state budget, Gov. Susana Martinez recommends eliminating state spending for the 37-year-old program.

In response, commission officials have launched a campaign to lobby legislators and the Governor’s Office to keep state money flowing.

In fact, I’ve given reasons before for eliminating this Commission. It’s nice to have a Governor willing to make sound fiscal decisions.

Unions Take Note

Monday, December 20th, 2010

As the legislative session quickly approaches, everyone in state government might want to take a look at this 60 minutes article and video. Pay particular attention to what Governor Christie of New Jersey has to say:

Asked if he wants the public employee unions to share the pain, Christie told Kroft, “You bet. I want them to share in the sacrifice. And this is what I say to public sector unions: ‘Listen you can boo me now, but I’m the first governor who has walked into this room in ten years and told you the truth. And here is the truth. If you don’t partner with me to get this done in ten years you won’t have a pension.’ And that’s the truth.”

The truth may not be pretty, but running a government on the assumption that the pot of gold at the end of the rainbow that is going to solve all of our problems is just a couple of more months away is ridiculous. Worse, it’s potentially even more economically devastating than the decisions that led to our current predicament. We should especially be wary of those that advocate raiding the permanent fund by arguing semantics and proposing “creative” financial schemes:

That is not to suggest that assets be sold or diminished. Rather, leveraging assets to produce additional revenue, such as selling bonds against the permanent fund, needs to be fully explored.

We got here by living beyond our means through a spending addiction, and like a break from any addiction, there are going to be withdrawal pains, but ultimately, we’ll be better off.

Economic Woes a Thing of the Past

Wednesday, 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.

Is the Worst Behind Us?

Monday, April 5th, 2010

On April Fools Day I received an email newsletter from David Murphy of Salestraq, which unfortunately wasn’t an April Fools joke. In it, he tells anecdotes of people he knows who have not paid their mortgage for 11 months and yet have not been foreclosed by their financial institutions. That’s pretty scary in that it means there is potentially a second shoe yet to fall.

And, the link he provides to the dynamic TransUnion Data Map seems to confirm that the worse is not yet behind us. It shows the national average 60-Day mortgage delinquency rate at 6.89%.  But, if you factor in many people are not being foreclosed that are significantly beyond this, it is not unreasonable to expect this to get much worse before it gets better.

The other thing that jumps out at anyone looking at the TransUnion map is that credit card defaults are much, much lower with the 90-Day Delinquency rate at 1.21%.  That really doesn’t make sense when you think about it. So, where does this leave us?

Well, we already know that the state, despite its recent special session to deal with budget shortfalls, is still in trouble:

Revenue collections for the current budget year are running $76 million below what had been anticipated, according to the Legislative Finance Committee.       

That spells potential trouble for public schools, colleges, courts and state agencies, although it could be July or August before it’s clear if weak revenues will force more budget reductions.   

If revenues fall short for the fiscal year ending in June, then New Mexico’s cash reserves must make up the difference to balance the budget.

Those reserves are the state’s financial safety net. 

Now, consider that mortgage foreclosures mean less property tax revenue collected, and if unsecured debt defaults increases it means less consumer spending and lower GRT. On top of all this consider that unemployment in the state continues to increase, and I hate be all doom  and gloom, but I don’t see how this means the worse is behind us.

It’s All About the Benefits

Wednesday, March 31st, 2010

Reading article after article about the budget crises facing state, county and municipal governments, and one culprit becomes clear – budget busting benefits.  When people in government find themselves furloughed or worse, they ought to take a moment to consider they may be the victims of their own success. Think I’m exaggerating? I’m not. Consider the courts:

Now, Metro Court employees are looking at furloughs for the first time, while 2nd Judicial District Court employees are likely to go from the equivalent of about half a week a year to a total of about eight days unless more money is found somewhere.

“Ninety-five percent of our budget is people — salary and benefits,” state District Court executive officer Juanita Duran said. “There’s only one answer: furloughs.”

 Of course, the benefits problem is not just limited to the courts. Schools have the same problem:

One reason for the Albuquerque school district’s budget crisis: Officials miscalculated the amount of money needed for employee salaries and benefits during the past two years.

Superintendent Winston Brooks announced last week that the district must cut $43 million from next year’s budget, likely requiring hundreds of layoffs.

About $24 million of the required cuts is due to a reduction in state funding.

The remaining, however, is to make up for nearly $20 million in underestimated employee salary and benefit costs over the past two years.

Every time their unions sat down to the bargaining table, they pushed for increasingly more attractive benefit packages.  And, when the financial screws are turned, they do everything in their power to protect those unsustainable benefits:

The teachers’ union and other advocates are exhorting state lawmakers to repeal state income tax cuts passed earlier this decade — and to pass other tax-side measures – rather than rely on cuts and the increased contributions law to address New Mexico’s budgetary shortfall. Recent projections show the state with a $441 million shortfall for the year that ends July 1, 2010.

Of course, this problem is not limited to state provided benefit entitlements.  We’ve known for years, and are now reminded with increasingly frequency, that nearly every entitlement program introduced at the federal level is unsustainable:

The trust funds for both Medicare and Social Security will run out of money earlier than expected because of the recession, the trustees reported today. The Medicare Trust Fund will run out of money by 2017 two years earlier than forecast last year. The Social Security Trust Fund’s life has been shortened by four years and is expected to run out by 2037.

Yet, despite this knowledge, our elected officials keep introducing more budget breaking “benefits” to the mix. It makes absolutely no sense at all.

Tax Them Not Me

Wednesday, March 10th, 2010

There is a troubling trend I’m seeing during this economic crisis, and I guess the best way to sum it up is a “Tax Them Not Me” attitude that is prevalent throughout the state. I’ve never been one to say that we should have no taxes and no government.  Quite the opposite.  I believe that we should have limited taxes thereby limiting the size of government.

I firmly believe that our current tax structure, particularly during good economic times, is generating too much revenue, and in turn, needlessly growing the size of government. Unfortunately, the result of this is that when the economy turns south, the self-preservation tendencies of those in government is to raise taxes in order to protect their pet projects, and in many cases, irrelevant jobs (e.g. film museum director positions in non-existent film museums):

The film museum is perhaps New Mexico’s most unusual cultural property. It’s not in the phone book, and there are no exhibits, no visitors and no staff. In fact, there’s no museum.

What they do have, however, is an executive director. Last year, the governor put Maloof in charge of a staff of none at a nonexistent museum paying her $88,000 a year. Maloof became the highest-paid museum director in the state system administered by Cultural Affairs Secretary Stuart Ashman, a member of Richardson’s cabinet.

Now, historically my limited taxes / limited government stance has put me in the camp of the business community and those who have worked, saved and invested to accumulate wealth.  However, during this economic downturn, a surprising number of those same folks have now taken a stance that is truly troubling. Namely, rather than fighting and unneeded tax increases and pushing for a leaner, more productive government, they’ve become advocates of increasing taxes on the poor:

TERRI COLE, president and CEO, Greater Albuquerque Chamber of Commerce:

Now, back to food. Yes. The Guv should sign the partial reinstatement of the food tax. Signing it gets us closer to the fact that it should never have been repealed in the first place. It was bad tax policy. We need broad based taxes so that they can be kept low and fair to all. We should, however, use effective programs like LICTR (Low Income Comprehensive Tax Rebate) to help New Mexicans neediest families.

The Greater Albuquerque Chamber of Commerce is not alone in taking this stance. Other special interest and business groups have also endorsed the idea of taxing starving families to protect their subsidies and keep their profit taxes in check.  Personally, I just can’t get behind that idea.

First, let’s deal with the obvious.  Like the Earned Income Tax Credit on the federal level, the neediest families don’t take advantage of things like LICTR because they can’t afford to have tax consultants  on a retainer to tell them how to get their money out of the system.  And, generally speaking, the way that the government communicates those credit opportunities is nonsensical even to the most educated amongst us. In fact, government and those pushing policies like these count on large numbers of people not taking advantage of what is available to them.

So, if an industry cluster is going to push for tax increases to balance the budget, they should adopt an attitude of tax me first, as opposed to tax them not me. Or, alternately, they could, like me, say enough is enough.  Get serious about reining in the spending and eliminating unnecessary jobs and programs before we consider raising taxes.

What’s That You Feel in Your Pocket

Wednesday, March 3rd, 2010

Near as I can tell that hand you feel in your back pocket belongs to the NM Senate:

The Senate-passed tax increase package would raise the statewide gross receipts tax rate — now 5 percent — by one-eighth percentage point, yielding almost $60 million a year.

The bill also would reimpose part of the gross receipts tax, or sales tax, on food. The rate would vary, depending on the local gross receipts tax rate of the city or county in which the food was bought, but average about 2 percent. The change would bring in an estimated $68 million.

Another $66 million would be gained from eliminating the deductions that some New Mexicans can now take on their state tax returns for the state and local taxes they’ve paid. That would increase their taxable income.

And the state would get $11.6 million from a newly imposed compensating tax on out-of-state companies that sell products to New Mexico businesses but have no physical presence in the state.

Oh, I know that some you will say that the legislature has no choice.  They have to raise taxes to get us out of this pickle. But, that’s not true.  There are other options:

The numbers are big and the money bigger, but the bottom line is New Mexico could find $280 million to help fix its budget.  Rep. Dennis Roch, R-Tucumcari will try to bring an amendment to the state budget bill that will simply cut those state positions which are currently vacant.

Roch points to a report he requested from the Legislative Council Service (LCS) outlining the job vacancies in state government. The report says as of January 4th, there were 4369 vacancies in state government. The problem according to Roch is that the proposed budget lawmakers are trying to tackle would fund 3396 of those positions. Roch argues if the state can function now without those positions filled, then it can function by eliminating them altogether.

But hey, that makes too much sense, right? Cut non-existent jobs over increasing taxes on struggling families.

I’ve got to run, but you can catch me today at 3:00 pm on Jim Villannucci’s show on 700 KKOB discussing this and other issues with Carter Bundy.

New Mexico Democrats Have a Problem

Monday, March 1st, 2010

Last week, I attended an event that had, among others, Lt. Governor Diane Denish as a speaker. To the delight of myself and the small business audience in attendance, the Lt Governor said, and I paraphrase, “Now is not the time to raise taxes. It is time for the government to do what the private sector has been forced to do and control spending.”

Now considering that Lt. Governor Denish is usually considerably to the left of me, and that her campaign for Governor is well-funded, it can only be concluded that her internal polling is telling her that supporting tax increase, any tax increases, right now would be the equivalent to political suicide.

And, herein lies the problem

More details on tax hikes and spending cuts in a new state budget plan emerged Sunday as New Mexico lawmakers prepared to return to the Capitol today for a special session on the budget.

The plan, hammered out behind closed doors by top-ranking House and Senate Democrats, would increase the state’s gross receipts tax, raise the tax on cigarettes and have New Mexico cities reinstate a portion of the gross receipts tax on food items that was repealed six years ago. 

Yup, leave it to the Democrats to propose a slew of new taxes as families are struggling to survive. If these tax increases are passed, they are going to hurt campaign efforts of every Democrat running for office during this election cycle. Mind you, that’s not something that’s particularly upsetting to me, but for a strategic standpoint its interesting to watch how this is playing out. 

As a limited government guy, I wouldn’t mind seeing some taxes cut for a variety of reasons I’ve outlined over the years.  But, in the current economy, I would be willing to settle for no new taxes. The Democrats seem to be operating as though it is business as usual (i.e. let’s find another incremental tax to pass).  But, there is nothing usual about the situation in which we all find ourselves.

Right now, Lt. Governor Denish is trying to emerge from Governor Richardson’s shadow and define herself as a leader in her own right. Of course, taking a stand against new taxes when her Democratic colleagues are pushing for them is setting her up to appear either:

a) Lacking in leadership and the ability to influence policy.


b) Saying what the people want to hear in public and privately supporting the taxation of the masses.

Either way, New Mexico Democrats, from the Lt. Governor on down, have a big problem.

Revenue Growth Predictions

Friday, February 26th, 2010

It looks like all of the movie magic in the Land of Enchantment has begun influencing financial projections by the Richardson Administration:

Economic analysts for Gov. Bill Richardson’s administration said Thursday they remain confident that New Mexico revenues will increase by nearly $300 million next year, a day after legislators voiced doubts about significant rebounds in the state’s economy.

The revenue estimates, which don’t factor in proposed tax increases, are key to ongoing budget negotiations between top-ranking Democrats in the House and Senate. 

 That’s a pretty amazing prediction. I’m wondering what the Administration’s position is on Tooth Fairy and Santa Claus?

Elect Officials Fail New Mexico

Friday, February 19th, 2010

When the Legislature meets during the 30 day session, the constitutional mandate is clear:

B. Every regular session of the legislature convening during an even-numbered year shall consider only the following:

  (1) budgets, appropriations and revenue bills;

  (2) bills drawn pursuant to special messages of the governor; and

  (3) bills of the last previous regular session vetoed by the governor.