New Mexico’s Budget Crisis: “It’s No Laughing Matter” (RADIO SPOT)

With the prospect of a special session of the legislature fast approaching to address a looming budget crisis, the Center for Civic Policy is running this radio ad in selected areas of the state which offers our take on the issue and calls upon constituents to take action:

A thirty-second radio spot can hardly do justice to this fiscal train wreck. A bit of context is in order.

The State of New Mexico faces a serious budget deficit as the result of a shortfall in revenues. Revenue projections made back in January were overly optimistic, it seems. It now appears certain that Governor Martinez soon will call a special session of the legislature to fix a growing budget crisis.

The Governor’s answer is a 5 percent across the board cut in funding for state agencies. New revenues are off the table, she says.

To call this approach unwise would be an understatement. How about unconscionable.

Consider these facts about the quagmire in which New Mexico finds itself:

  • 49th in child poverty
  • K-12 funding is nearly 11% less per student than pre-2008 recession levels
  • 7,000 fewer children fewer children receive child care assistance than in 2010
  • Medicaid was already underfunded this year by $86 million, causing cuts of over $400 million in health care services when lost federal matching dollars are included.
  • Low- and middle-income New Mexicans pay twice the rate in state and local taxes as the richest 1 percent.

We could go on and on.

Low oil prices are cited as the cause of the crisis. But overlooked in the midst of all the hand-wringing, are the horribly irresponsible tax policies enacted in recent years.

The cold hard truth of the matter is this: The Governor is determined to protect her prized corporate tax giveaways by making New Mexico’s working families pay for them.

In 2013 Governor Martinez and the legislature gave huge tax cuts and tax breaks to large corporations, many of them out-of-state. These so-called “business incentives” were supposed to cause an explosion of job creation.

Well, it hasn’t worked. They just took the money and ran.

Today New Mexico has the 3rd highest jobless rate in the nation.

It stands to reason that our continuing underinvestment in education and healthcare is making New Mexico a less than desirable place for companies that are looking for a place to relocate.

A better answer is for legislators to say “no” to more cuts. It’s time to make corporations and the well-connected pay their fair share.

 

What’s really behind New Mexico’s budget woes

By Bill Jordan, senior policy adviser and government relations officer for NM Voices for Children.

Most complex systems — like airplanes, for example — have built-in redundancies. So for a catastrophic failure to occur — such as falling from the sky — there generally have to be several things going wrong. Usually all at once. The state budget is a complex system, too. Sadly, it’s plunging toward disaster. To fix it, we need to look at all the things that are going wrong.

Most news outlets and the pundits they quote have only been focusing on one problem: low oil and gas prices. If we’re going to be successful in fixing this thing before it crashes and burns, we need to look at the other failing pieces. Namely, that the state hasn’t been collecting enough money to cover all of its important expenses like education, health care and public safety.

We’ve been passing big tax cuts since 2003. Tax cuts have been thrown at profitable corporations and the people earning the most money. These tax cuts were supposed to create jobs. They didn’t. Back in 2003, before the recession, this wasn’t so much of a problem. Oil and gas prices were steady and the economy was strong. Today, however, New Mexico’s economic recovery crawls along, we’re still waiting on those promised jobs to materialize, and bargain-basement oil and gas prices don’t look like they’re going back up any time soon. It’s time to take a second look at all those tax cuts.

Let’s start with the personal income tax rate cut for those at the very top of the scale. Since 2003, the wealthiest New Mexicans have seen their income tax rate cut almost in half. These days, for all practical purposes, we have just one income tax rate, and it’s the same whether you earn $16,000 or $16 million. Then there’s the very generous deduction for capital gains income. Capital gains is the money people make on the stock market and in real estate deals. People with capital gains income get to deduct half of that income for tax purposes. When was the last time you got to subtract half of every paycheck from your income tax bill? I’ll tell you when: never.

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Tax Expenditure Budget: Does Governor’s executive order do the job?

By Matthew Reichbach

Senator Tim Keller

Clearly New Mexico spoke with Sen. Tim Keller, D-Albuquerque, about tax expenditure budgets. A tax expenditure budget would review all of the tax breaks that the state gives to different portions of the population — which adds up to around a billion dollars annually. The annual state budget is $5.4 billion.

A bill in the 2011 session sponsored by Keller that would require a tax expenditure budget, or a review of all tax loopholes and carveouts, passed both chambers of the New Mexico Legislature without opposition this year. The bill was then vetoed by Gov. Susana Martinez. A similar bill, sponsored by former state Rep. Brian Moore, R-Clayton, was vetoed by then-Gov. Bill Richardson in 2007.

Earlier this month, Martinez issued an executive order where she ordered a review of the tax expenditures.

Martinez said in a statement when ordering the review, “A thorough account of the state’s tax system will give us a better idea of what works, what doesn’t, and what we need to change in order to encourage greater job creation and economic growth through our tax structure.”

Keller, however, said in an interview with Clearly New Mexico that the bill that Martinez vetoed would have been preferable to Martinez’s approach for three reasons.

One is that Martinez’s executive order is not as comprehensive as the bill Keller would have passed, so Martinez can “pick and choose which [tax breaks] to investigate and report on.”

Another is that Keller’s bill would have had the Legislature and the Tax and Revenue Department work together on the tax expenditure budget. Martinez’s executive order will only have the Tax and Revenue Department, which is part of the executive branch, carry out the tax expenditure budget.

“And the third difference, which is probably the most important, is that it’s not a law,” Kellers aid. “So that at any given time she can decide not to do it and there is no accountability if she doesn’t do it.”

Keller also noted that it would not be binding to when a new governor enters office, which will happen in either 2015 or 2019.

“So we’re looking at this taking place for a couple of years then going away,” Keller said.

Keller said he would likely not introduce the bill again. However, he warned that if the report to look at all of the effects tax deductions, exemptions and credits is not sufficient, “a [veto] override is always a consideration.”

Veto overrides are uncommon in New Mexico, though the Senate voted to override a veto of Gov. Richardson’s in the 2010 session. The attempt failed in the House.

At the time, The New Mexico Independent reported, “According to the Legislative Council Service, the Senate’s override vote was the first time that body had ever voted to override Richardson on legislation. The House of Representatives did it once, in 2004.”

Two-thirds of both chambers must vote to override a veto for the override to become valid.

So what will Keller look for to see if the report is sufficient?

“It’s got to be as comprehensive as possible,” Keller said. “There are 109 of these different carveouts, or loopholes, so we want to look at all of them and not play favorites.”

Another key part of a successful report would be to track the benefits of each of the tax breaks, for example, jobs created or looking at which segment of the population that is helped.

Finally, he says the report should “recommend actions” and make judgments on whether the programs “are worth the taxpayers’ money.” For example, he believes the report should list whether the program deserves to have more money put in it, kept the same, reduced or even eliminated.

Keller believes it is important to find out which of these tax breaks are actually useful to the state. “Over time they, in aggregate, become a huge amount of money that the state doesn’t collect in taxes.”

Without such a report, it wouldn’t be clear the effects of these tax breaks on the economy and the state will not be able to see which tax breaks are valuable to the state’s economy.

For earlier Clearly NM coverage of the tax expenditure budget:

Gov. Can Still Sign Tax Expenditure Bill For Maximum Transparency and Taxpayer Accountability – April 8, 2011


Major Transparency and Accountability Measures Head to the Governor’s Desk
– March 18, 2011

Getting Corped: Their Legislature at Work – Feb. 16, 2011

Why Gov. Martinez Should Support a Tax Expenditure Budget – January 24, 2011

Time to track state tax expenditures – April 21, 2009

 

Funding for crime victim notification system hard to find

By Matthew Reichbach

A system that keeps victims of crimes up to date on the status and court hearings of jailed offenders is still up and running in New Mexico — but for how long is not known.

The state’s district attorneys voted to continue the Victim Information and Notification Everyday, or VINE, system which was nearly a victim of shrinking budgets. Gov. Susana Martinez pocket vetoed a funding bill for VINE causing the scramble among district attorneys to keep the program for victims of crimes going.

The legislature passed a measure that would have funded “double what VINE costs by adding 10-to -35-cent-per-minute charges to inmates’ phone calls” according to the Las Cruces Sun-News.

The legislation passed the Senate on a 25-14 vote and passed the House on a unanimous 46-0 vote. The legislation was sponsored by conservative Sen. Rod Adair, R-Roswell. Companion legislation was sponsored by Rep. Mimi Stewart, D-Albuquerque.

The fiscal impact report on the legislation said that VINE actually would save money for taxpayers.

“VINE saves taxpayers money by eliminating the need to manually notify victims, allowing staff to focus on their core responsibilities; victim advocates currently mail notices to victims each time a change occurs in their case,” the Fiscal Impact Report stated. “Districts report that 40-50% of these notices are returned undelivered and that advocates spend nearly half of their work time on notifications. This cost staff hours, supplies and postage – and limits the protections envisioned by victim notification.”

Martinez argued that the bill which provided money for notifying victims of crimes through VINE would have created new and “arguably unnecessary state jobs.”

The Sun-News further quoted a statement from Martinez:

“As district attorney, she used the VINE system to supplement, not replace, the victim advocates in her office and wants to ensure that current and future DA offices cannot replace relationship with an automated system. The Governor supports efforts that will provide sustained funding for the VINE system to include potential partnerships with local and county entities.”

The burden on funding for the program now goes down the line to local areas in a time where government budgets are already facing shortfalls and reductions in services across the country.

The Sun-News reports that Doña Ana County will get by with local funding but it is not clear how other parts of the state will fund the program.

The system in in use around the country. Even conservative Republican Gov. Scott Walker of Wisconsin, whose push to eliminate collective bargaining for public employees is the impetus for historic recall elections in Wisconsin, has praised the system and approved funding as part of the state budget.

Faux Deficit Hawks and Pantsuits on Fire

Plum Line deconstructs the contemporary (and quite bogus) definition of the term “deficit hawk”:

“…the term “deficit hawk,” as it’s commonly used in Beltway discourse, simply doesn’t mean “someone who fully committed to reducing the deficit by any means necessary, even if it means tax hikes and — paradoxically enough — new government programs.” Rather, it means “someone who is fully committed to reducing the deficit through tax cuts, entitlement reform and an unswerving adherence to general hostility towards expansive government.”

Oh, there are still some genuine deficit hawks out there – like Ronald Reagan’s Budget Director, David Stockman. Here’s what he said on ABC’s This Week last Sunday:


 

How big was that fish, Governor?

Speaking of fiscal fish stories, blogger Joe Monahan caught Governor Susana Martinez using some “funny numbers” to tell a real whopper about the recently passed state budget.

It seems Our Lady of the Perpetual Campaign has taken to telling audiences that the budget she signed this year closed a whale of a revenue shortfall — $420 million to be exact.

However, a fact check by Joe shows that the budget she actually signed cuts state spending by 3% — or a total of $156 million.

That would earn the Gov a “Pants on Fire” designation from Politifact.

 

 

If you want “serious,” then consider the People’s Budget

For weeks, we’ve been listening to a back and forth debate about how Congress should move forward in addressing the nation’s projected budget deficit.

We’ve heard about the Ryan budget plan, supported by New Mexico Congressman Steve Pearce.

In it, major cuts would be made to Medicare and Medicaid, as well as to infrastructure spending and funds for Pell Grants for college tuition. Despite these cuts, the Ryan plan would add $6 trillion more to the national debt over the next ten years before it would begin to start paying it down.

That’s because, under the Ryan plan, the cuts to the social safety net and other programs are necessary to pay for more tax reductions for the rich — to the tune of $125,000 for individuals who have an annual income of more than $1 million a year.

We’ve also heard quite a bit about President Obama’s proposal. Compared to Ryan’s plan, it advocates a more balanced approach that would include negotiated cuts while making the rich pay their fair share on the revenue side.

But, there is a third proposal that hasn’t received as much attention in the mainstream media. It was prepared by the Progressive Caucus and is being called “The People’s Budget.” Watch this 90-second summary.

Is your head ready to explode yet, Susana?

It’s another day in the movie entitled, “Cursed to Live in Interesting Times.”

For the Memo to Governor Martinez entitled, “New Mexico’s Race to the Bottom”, there’s this tidbit:

Five Reasons Why States Can’t Create Jobs by Cutting Business Taxes from the Center for Budget and Policy Priorities.

In the “Baby, It Hurts So Good Department”, tough economic times couldn’t be working out better for Big Oil. Despite all those regulatory fetters, today Exxon Mobil reported a first quarter profit jump of 69%.

In view of the pain that motorists are feeling at the gas pump, along with the alleged focus of some in Congress to attacking the deficit, one would think Speaker John Boehner and GOP budget master Paul Ryan would be on the same page. But apparently, someone didn’t get the memo:

While Boehner rejects request to end subsidies for oil firms (The Hill)

Rep. Paul Ryan says it’s time to do just that. (Politico)

And what about “Drill Baby Drill” as a way out of the crisis?  Former Bush-McCain economic advisor admitted it wouldn’t make a dime’s worth of difference.

Meanwhile, don’t cry for Massachusetts! Despite being burdened with a state-imposed universal health insurance mandate (RomneyCare), the Bay State experienced an economic growth surge ahead of the overall United States in the first quarter of 2011. Oh, and as an added bonus (or rather “fetter”), the state’s uninsured rate is below 5%.

Back here in New Mexico, we’re bracing for the cut-off of federal stimulus funds that, according to UNM economists, paid for as many as 23,000 jobs through June of last year.

Tick, tick, tick.

 

Two Truths and a Lie

You know that fun (OK, somewhat corny) icebreaker game people play, usually at work conferences or meetings?  It’s called “Two Truths and a Lie.”  Everyone in the group is instructed to come up with three stories about themselves, one of which is completely fabricated.

The object of the game is for the remaining members of the group to call out the falsehood.  In the process of playing this game – theoretically – people have a little fun, they relax a bit and they learn a bit more about each other.

It’s now time to plan Two Truths and a Lie, Clearly New Mexico style.

Here’s how it works.  We’ll give you three news items and then you guess (to yourself, or in the comment section if you’d like) which of the three news items is based on a lie.

Let’s get to it!

First, Congressman Paul Ryan’s budget isn’t very fiscally responsible.

Second, the head of Tea Party Nation is still skeptical about President Obama’s “eligibility.”

Finally, Medicare will not “go bankrupt” in nine years.

So, which two are factual statements and which statement is based on a lie?

 

 

Ryan Plan: What’s so bad about raising Medicare eligibility age?

Plenty, it would seem.

For those of you that have been tracking the federal budget debate, The New Republic blog has an interesting post that examines this largely overlooked component of the Ryan Budget.

Jonathan Cohn writes,

So just to sum up: Raising the age at which Americans become eligible for Medicare, or whatever program Republicans put in its place, would make health insurance more expensive for businesses, workers, and their employees, all while leaving one-fifth of future 65- and 66-year-olds with too little insurance or none at all. And oh, by the way, this is all part of a Republican budget that enacts huge tax breaks for the wealthy. You don’t have to be a senior citizen to get grumpy about that.

Perhaps we should start calling this the “Oh By The Way Budget.”

Night of the Living Budget: Senate Passes HB2

By Claus Whiteacre

In the early hours of Wednesday morning with the legislative session heading into its final three days, the Senate passed its amended version of the General Appropriation Act of 2011, AKA House Bill 2. The state budget.

Uncharacteristically, introduction of the bill, amendments, and final vote took less then 30 minutes. The final vote was 27-14.

Going into this session, the legislature faced the task the task of closing a looming budget gap of about $250 million, due in part to a loss of federal stimulus funds. From the outset, the leadership opted for an approach that concentrated solely on the spending side — taking the revenue part of the equation off the table completely.

Sen. John Arthur Smith (D-Deming), Finance Committee Chair, proudly announced that the resulting legislation produced a balanced budget without layoffs, furloughs, or across-the-board cuts. Under the proposal, overall state spending will decrease by about 2.7 percent.

Not all senators agreed on this one-sided attempt to balance the budget – especially in the wake of almost a billion dollars in expenditure cuts already on the books. Three Democrats offered amendments. While acknowledging the gargantuan task of coming up with a balanced budget in tough economic times, they maintained that the discussion had neglected a more balanced approach.

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