Posts Tagged ‘Spending’

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.

Solving Unemployment with Spoons

Tuesday, December 28th, 2010

The liberal assertion goes something like this, “If the government just increased taxes and spending, more people would be working, and everybody would be better off.” Of course, this misguided thinking is the result of a lack of understanding regarding how wealth is actually created. Consider this from Steven Horowitz:

Employing people to dig holes and fill them up again, or to build bombs that will blow up Iraqis, will certainly reduce unemployment and increase GDP, but it won’t increase wealth. The problem of economics is the problem of coordinating producers and consumers. This coordination happens when we produce what consumers want using the least valuable resources possible. That is why it is wealth-enhancing to dig a canal using earth-movers with a few drivers rather than millions of people using spoons, even though the latter would generate more jobs.

Then again, maybe we ought to listen to those advocating for the launch of a Spoon Renaissance.

Unintended Consequences of Government Actions

Tuesday, December 21st, 2010

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.

The Road Most Recently Traveled

Monday, December 13th, 2010

An interesting question:

Does a one-parent family of three, making the minimum wage of $14,500 a year, have more disposable income than a family earning $60,000 a year?

That’s the provocative claim made by pseudonymous blogger Tyler Durden at the popular finance blog Zero Hedge. Durden produces a chart that compares inputs like income, payroll and federal income taxes, child care costs, and welfare benefits from programs like Medicaid and the Children’s Health Insurance Program for theoretical families of various income levels in Mississippi.

The calculation yields an “economic benefit” of $37,777 a year for the family making minimum wage but only $34,366 for the family making $60,000 a year. The analysis also indicates that a family provider working only one week per month at minimum wage will make 92 percent as much as the provider earning $60,000 a year as a result of savings on child care and Medicaid’s low deductibles and copays.

Some questions are raised about the origins of the analysis on which this is premised, but this does seem to be the general direction in which the country has been heading.

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.

Let’s See the Proof

Monday, March 8th, 2010

The Governor’s office and Lt. Governor Diane Denish appear to be in a he said / she said squabble about the state’s failure to land a Race to the Top education reform grant from the Obama administration:

Richardson spokeswoman Alarie Ray-Garcia said that despite Denish’s interest in education, she declined repeated invitations to help develop the proposal.

“Her only involvement was to write a letter in support of the state’s proposal, which she praised as being ‘innovative,'” Ray-Garcia said.

“Now, for whatever reason, she has decided to attack the hard work of a lot of New Mexicans, including Secretary Garcia and her staff, who dedicated a lot of time and resources into this proposal. It was a strong proposal and Governor Richardson was proud to spend considerable time in Washington D.C. last week lobbying Secretary Duncan on its merits.”

Denish spokesman James Hallinan said Denish was never invited to participate in the grant-writing process. 

Now, I admit to being a bit curious as to whom is telling the truth here. And, as it was pointed out to me by one reader, this should be relatively easy to prove one way or the other. Maybe Richardson spokeswoman Alarie Ray-Garcia would like to send us a copy of the emails or memos that were sent to the Lt. Governor inviting her to help develop the proposal, or maybe a copy of one of the written responses where she “declined repeated inivtations.”

Alternately, maybe the Lt. Governor’s spokesman, James Hallinan could send us a copy of the request the Lt. Governor made to actually be involved with the proposal writing. I’m just saying, if one of you is telling the truth, please back it up with a little written evidence.

As a relative tangent, you’ve got to love the fact that teachers’ union representative actually wrote a letter AGAINST the state’s request for $160 million from the feds:

And while the state’s chances probably weren’t helped by a letter from Albuquerque Teachers Federation President Ellen Bernstein criticizing the state’s application, that likely wasn’t a determining factor. 

It may not have been a determining factor, but I do hope that when we have a second special session this year because revenue is less than projected, our state legislatures take note that the union went out of their way to keep money for education from coming into the state.  Education cuts in the amount of $160 million should absolutely be on the table if a second special session is called.

Misguided Priorities at Legislative Close

Thursday, February 18th, 2010

Huge budget issues continue to loom as the Legislature comes to a close today.  So, you’ve got to wonder how the Hispanic Education Act can be a priority:

But with only hours remaining in the legislative session at the time of the Senate’s 25-13 vote, House Bill 150 was sent back to the House, which needed to approve it before it could be forwarded to Gov. Bill Richardson.

The bill’s sponsor, Rep. Rick Miera, D-Albuquerque, was optimistic Wednesday night that the House would concur on the amendment by today’s noon adjournment.

The legislation, which is supported by Richardson, would create a Hispanic education liaison position inside the state Public Education Department. It also would require an annual report card on Hispanic performance in New Mexico schools. And it would create a Hispanic education advisory council that would provide input to the education secretary. 

 Just to refresh your memory on why this is a bizarre initiative, please go back and read my original pre-legislative session post on this purposeless political soundbite effort.

Stitching a Budget Together With Disappearing Thread

Wednesday, February 17th, 2010

They are feeling the pressure at the Roundhouse to get a budget approved before the strike of noon tomorrow.

“I’m hopeful we can come up with something (to avoid a special session),” said Senate President Pro Tem Tim Jennings, D-Roswell, who’s participated in the budget talks.

The House approved cuts of about 1 percent for public schools and government services, while the Senate budget package calls for reducing spending levels by about 3 percent.

The shallower cuts in the House plan would be made possible by more than $300 million generated by tax hikes, primarily the gross receipts increase. The Senate plan relies on $180 million in new tax revenue.

However, Jennings said he’s concerned revenue levels might end up being even lower than projected and said Richardson has criticized more tax ideas than he’s offered. 

 I’d say that Senator Jennings concerns about lower revenue levels are well founded.  Consider for a moment the source of some of the revenue being expected to help plug the gap:

The Finance Committee approved the budget on Thursday and sent it to the Senate for consideration.
The committee proposed spending about $5.5 billion in the next fiscal year, which starts in July. That includes about $200 million in federal aid that’s replacing state money for Medicaid, public schools and higher education.

 Of course, there’s one obvious problem with this plan. It seems to fail to consider the reality of what is being said about the future of federal money coming to the states:

Payments to states and individuals will fall to $11 billion, from $14 billion, per month. Much of this spending — such as Medicaid funding and additional unemployment benefits — was meant to stabilize the economy during the recession.

 Yuppers, it looks like that faucet is starting to be turned in the opposite direction. So, here’s my prediction. Assuming a state budget gets approved by noon tomorrow, we will most likely see a special session before the summer is over to deal with the “surprise” lower than expected revenues.