Our Resident Smart Aleck Talks about ALEC (VIDEO)

Sarah Kennedy has a feast with all the products made by corporations that dropped their sponsorships of ALEC last week.

Just in case you missed the national furor about the American Legislative Exchange Council over the last week, here are a few links to bring you up to speed:

The Nation: How ALEC Took Florida’s ‘License to Kill’ Law National

NY Times: Embarrassed by Bad Laws

McClatchy: Study: ALEC has ‘secretive influence’ in Missouri statehouse

Common Cause: ALEC Exposed, for 24 Hours

(Special Bonus) Here’s an oldie, but goodie from ClearlyNM about one of ALEC’s interventions in New Mexico:

Kochtopus Bill Has Its Tentacles In The New Mexico Legislature

And speaking of the Koch brothers, this just in from Center for Media and Demoracy: ALEC Gets Support From Koch-Funded Americans for Prosperity

Countdown to Decision: Will a Martinez Veto Keep Corporate Tax Loophole in Place? (VIDEO)

Sitting on Governor Susana Martinez’s desk awaiting her signature is Senate Bill 9 — the Combined Reporting Act. It’s a long-needed tax reform that will help level the playing field for New Mexico businesses confronted with competition from those out-of-state corporate Big Box stores that are currently allowed to skip out on paying income taxes on the profits they rake in selling goods to local consumers.

The 20-day post-session deadline for Martinez to act on the bill is fast approaching. Much to the dismay of the New Mexico small business community, the smart money has Martinez vetoing this common sense reform. Say it ain’t so, Susana!

As usual, Sarah Kennedy nails the problem in her latest video:


 

That’s not all. Even the Albuquerque Journal editorial board has come to its senses on SB9. Here’s what a recent editorial from the morning daily had to say:

Editorial: Corporate Tax Change Could Benefit the State

Wedneday, Feb 15, 2012

New Mexico is known for going it alone, often with negative results. For example, take the recently struck down cap and trade regulation imposed during the Richardson administration.

New Mexico is the only Western state with a corporate income tax that doesn’t require big businesses that are based in another state to file corporate taxes here using “combined reporting.” That means such corporations would have to combine earnings from all of its subsidiaries, regardless of location, and pay New Mexico corporate income tax based on a portion of its combined earnings. Businesses now have the option of filing state taxes on income related to in-state operations or on its combined corporate income.

Proponents of combined reporting say the current code allows corporations to shift income to states with lower tax rates to reduce liability.
For the past few years, legislation to change what proponents call a tax loophole has been introduced but has failed to pass.

This year’s version, SB 9, sponsored by Sen. Peter Wirth, D-Santa Fe, would lower the top corporate tax rate from 7.6 percent to 7.5 percent, to offset the requirement that more corporations pay taxes to the state. The bill was amended so that only “big box” retailers – stores of more than 30,000 square feet under one roof – would have to file with combined reporting.

Opponents have argued the change would discourage big businesses from locating in New Mexico. However, amendments adopted this year address that, for instance, by exempting manufacturers like Intel. In fact, it targets retailers like Walmart and Target that will locate here in any case because there is a customer base for their products.

If the change will lower corporate income taxes across the board and make the tax code more equitable, it merits serious – and nonpartisan – consideration.


This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.

“Baby Step” for Big Boxes Only: Senate passes limited combined reporting bill

By Matthew Reichbach

The state Senate passed a narrow combined reporting bill (SB9) that would require so-called “big box” stores to pay taxes on income earned in New Mexico. The bill, which tracked the Senate Finance Committee substitute, exempts other businesses like multi-state banks and national fast-food and restaurant chains from combined reporting.

The measure cleared the Senate on a party line vote, with all Democrats voting for the legislation, all Republicans except for one, who was absent, voting for the legislation.

In addition to requiring the big box stores to file taxes using combined reporting, the bill drops taxes on the top corporate income tax rate from 7.6 percent to 7.5 percent. One reason, according to the bill’s sponsor Sen. Peter Wirth (D-Santa Fe), is that the Senate Finance Committee was wary of dropping the corporate tax rate too far in the current turbulent economic times.

There was a long debate on an amendment by Sen. Eric Griego (D-Albuquerque) that would have returned the bill to the original language before it was changed in the Senate Finance Committee. This would have required all out of state corporations to pay their taxes using combined reporting. This, Griego said, would have made sure that entities such as banks would pay their fair share in taxes in the state.

That amendment failed with only five Senators voting for it.

This was the first time that the legislation, which Wirth has carried since he joined the legislature in 2005, has passed the Senate. Wirth made a number of concessions to allow the bill to pass, including lowering the top corporate tax rate and restricting the combined reporting requirement to “big box” stores.

The legislation defines a “big box” store as those ” a unitary corporation that provides retail sales in a facility of more than thirty thousand square feet under one roof.”

Wirth referred to the legislation as a “baby step” a number of times and is a revenue-neutral piece of legislation. He noted that if his bill in 2009, which did not drop the top income corporate tax rate and related to all out of state corporations, it would have increased state revenues by $80 million to $90 million per year according to the fiscal impact report.

Sen. Steven Neville (R-Aztec) disputed the notion that this was a tax loophole that gave out of state corporations an edge. He said that it “is the law of the land of the state of New Mexico.”

Griego said that it was all semantics and they could debate what a loophole really is.

Allan Oliver, CEO of the New Mexico Green Chamber of Commerce, applauded the Senate vote. Oliver said, “This is a big win for New Mexico’s small businesses. This bill lowers corporate taxes for small business, requires ‘big-box’ corporations to pay their fair share and helps our small retail businesses compete on a level playing field.”

Wirth also referred to the bill being one that would help level the playing field for locally owned businesses and used it as an example of why he believed that broader tax reform is needed.

“We’ve got a tax code right now filled with winners and losers,” Wirth said.

It’s Alive: Bill to close out-of-state corporate tax loophole clears first committee

By Matthew Reichbach

A combined reporting bill that would close the loophole that allows multi-state corporations to avoid paying income tax on profits created in New Mexico, passed a key Senate committee Wednesday night, the first hurdle in its effort to become law.

After over two hours of debate, the Senate Corporations and Transportation Committee passed SB 9 on a 5-4 vote with no recommendation. Sen. Phil Griego (D-San Jose) voted along with the Republicans on the panel.

Sen. Peter Wirth (D-Santa Fe) brought the law for the fourth straight year, this time with some tweaks. In addition to calling for combined reporting, Wirth’s law would reduce the top corporate income tax rate to 7.0 percent from 7.6 percent, a difference from the past years to entice votes that otherwise have gone against the bill.

Wirth and supporters of the bill say the bill would level the playing field for small businesses in New Mexico that do not have the option of paying corporate taxes in another state. Those who oppose the bill say it would make New Mexico less competitive and stop businesses from coming to New Mexico to do business.

“These small businesses are put in a position of competing against multistate conglomerates,” Wirth said, saying the large corporations can expense profits to other states instead of paying the New Mexico taxes.

In an attempt to make the legislation hit a more narrow area of businesses, Griego proposed an amendment that would only require retail outlets of more than 30,000 square feet to comply with combined reporting. Griego called it his “big box amendment.” It was aimed squarely at corporations like Walmart and Target while attempting to exempt other businesses like Intel Corporation. But it would also have exempted large fast food chains.

Wirth called the bill a sort of “reverse carveout” which “carves everybody out except big box stores.”

The amendment ultimately failed.

A common complaint of those who were opposing the bill, who were all lobbyists for multistate corporations, is that this bill would be favoring one class of businesses (locally owned businesses) over another class of businesses (multi-state corporations).

“I’m not the one pitting businesses against businesses,” Wirth told the committee. “We already do that in our tax code.” Wirth said this bill would level the playing field.

The bill now heads to the Senate Finance Committee where it probably faces a similarly tough debate. Nevertheless, clearing Senate Corporations was a notable achievement, given the committee’s long-standing and well-deserved reputation as the home field for corporate lobbyists.

Odds and Ends

  • One problem is that no one quite knows just how much the tax loopholes and carveouts cost the state in lost revenue. A bill requiring a tax expenditure budget, which would fully account for the effects of all the tax breaks, was vetoed last year — something that Sen. Tim Keller (D-Albuquerque) called a preemptive strike against tax reform. Gov. Susana Martinez will release her own tax expenditure budget, but, due to the veto, the next governor will not be required by statute to follow her example. Former Gov. Bill Richardson also vetoed a tax expenditure budget.
  • Former Sen. Kent Cravens came back to the New Mexico legislature, this time as a lobbyist for the New Mexico Oil and Gas Association. He objected to the term “loophole” to describe businesses paying taxes in other states on the revenue created in New Mexico, saying it “demonized” businesses for filing in an appropriate fashion. Cravens probably also objects to the terminology of the “revolving door” — a reference to the practice of former legislators immediately returning to the Roundhouse as corporate lobbyists.
  • Sen. George Munoz (D-Gallup) said that the bill would ultimately make corporations layoff workers to keep their profits up.
  • Though the room cleared out because of the late start to the hearing (SB 9 was not heard until after 6:00), the room still had many supporters of the legislation. When they applauded after public comment, committee chair Griego seemed visibly upset and instructed the audience that they were not in a city council or county commission hearing and to not burst into applause. Before coming to the state Senate in 1996, Griego served on the Santa Fe City Council.
  • Supporters of the bill asked questions of Frank Katz, the former General Counsel at the New Mexico Taxation & Revenue Department. Opponents of the bill tended to direct their questions to Dick Minzner, a lobbyist who has long opposed combined reporting on behalf of his clients.

Groups to take Martinez administration to court over building code rollback

By Matthew Reichbach

The New Mexico Environmental Law Center announced Monday that a group including small businesses and energy efficiency groups are challenging the rollback of energy conservation building codes.

The action comes a month after the State Construction Industries Commission voted 7-1 to roll back the energy efficiency building codes.

Clearly New Mexico reported on the June 10 vote to roll back the energy efficiency building codes to the levels that they were at in 2009, the lowest possible to still receive funding from the Department of Energy.

“The Construction Industries Commission and the Construction Industries Division appear to have taken this action despite the absence of evidence supporting repeal of the energy conservation codes” said NMELC attorney and Executive Director Douglas Meiklejohn in a statement Monday. “We hope that the Court of Appeals will determine that decisions such as these must be supported by evidence in the record.”

One bone of contention is the process used to vote on the building codes.

Shrayas Jatkar of the Sierra Club New Mexico said in the public comment portion of the Construction Industries Commission meeting last month that there was a “stark difference” between the process used to roll back the building codes and the process that led to the building codes changes in December of 2010.

“It took 14 months to develop the code last time around and there were open meetings,” Jatkar told Clearly New Mexico in a short interview. The decision to roll back the energy efficiency building codes happened six months after Susana Martinez took office and replaced members of the commission.

The appeals were, according to a press release by NMELC, filed by NMELC “for Environment New Mexico, Southwest Energy Efficiency Project, Sundancer Creations Custom Builders, LLC, eSolved, Inc., and several individuals who supported the adoption of the codes promulgated in 2010.”

The codes would reduce energy use by about 20 percent.

Martinez’s administration said the codes were too costly for builders to implement and that would be passed on to property owners. The lawsuit says there is no evidence supporting the action that the Construction Industries Commission took.

“The Construction Industries Commission and the Construction Industries Division appear to have taken this action despite the absence of evidence supporting repeal of the energy conservation codes” said Douglas Meiklejohn, NMELC attorney and Executive Director, in a statement. “We hope that the Court of Appeals will determine that decisions such as these must be supported by evidence in the record.”

Sin of Emission on Earth Day – Good Friday Edition

In celebration of Earth Day 2011, here’s a story courtesy of the Natural Resources Defense Council:

For Earth Day, Steve Hayward of the American Enterprise Institute posted this shocker:  “Energy Fact of the Week: Sulfur Dioxide Emissions from Coal Have Declined 54 Percent.”  He includes some nice government charts…

But from Hayward’s blog, you’d think this happened by itself!

The chief causes of this decline are technology—cost-effective “scrubbers” to remove sulfur dioxide from the waste stream—and resource substitution: we started using much more low-sulfur coal from the western United States.

No mention of the Clean Air Act’s acid rain program – the limits on sulfur dioxide emissions established in the 1990 Clean Air Act.  Without the Clean Air Act’s pollution limits, this scrubber technology and switch to lower-sulfur coal would never have happened.  Why install pollution controls or use cleaner fuels if you can dump all your pollution in the atmosphere for free?

Sounds like the corporate hacks at AEI are more adept at scrubbing history than scrubbing emissions. Wouldn’t want to let actual facts get in the way of the prime narrative denying government’s necessary role in protecting public health and enforcing the rules of the road for free market capitalism in all its majesty.

It’s about “promoting the general welfare” for those of us with a constitutional bent.

All of which reminds us of a light bulb joke, free market fundamentalist edition.

Question:  “How many free market economists does it take to change a light bulb?”

Answer:  “None. They wait for the invisible hand to do it.”

And in related news, check out today’s excellent post on DFNM:

Four Corners Power Plan Leads Nation in Smog-forming Pollution

Happy Earth Day, y’all.

Rescind, Revise, Repeal: Read This if You Care About Clean Water, Air and Land in New Mexico

 

By Tracy Dingmann

Back in February, we did an Inspection of Public Records Request of Gov. Susana Martinez’s office that revealed documents showing that her “Small Business-Friendly Task Force” is packed with big-industry lobbyists who carry a distinctly anti-regulatory agenda.

 

Included in the documents was a “mid-point report” from the task force that contained a number of startling recommendations for the Governor regarding drastic rollbacks of environmental and construction rules.

The task force is due to issue a full report of recommendations to the Governor on April 1.

But just recently, our request yielded even more documents from another state agency that went into even greater detail about what the group wants the Governor to do about some very specific and crucial regulations.

Continue reading

Kochtopus Bill Has Its Tentacles In The New Mexico Legislature

By Tracy Dingmann

Error-ridden language from a bill crafted by the billionaire Koch Brothers and served up as a template for a number of states has surfaced in the New Mexico Legislature.

Language for the legislation, which would have states pull out of regional climate accords they’ve formed to reduce the effects of climate change, was created by the Koch-funded American Legislative Exchange Council (ALEC) and circulated to conservative lawmakers in a number of states.

ALEC is a powerful lobbying group that is financed by large corporations, including ExxonMobil and a number of oil and gas companies who strenuously oppose taking any action against climate change.

In New Mexico, the ALEC measure is House Joint Memorial 24 and is being carried by freshman Representative Tim Lewis (R- Rio Rancho).

Continue reading

A Follow To Our Small Business Task Force Stories: Tracking The Campaign Donations

By Tracy Dingmann

We at Clearly New Mexico would like to give a hat tip to the Estancia-based blog NM-Central.com, which did some important follow-up to our stories last week on the Governor’s Small Business-Friendly Task Force.

To recap: In one of her first acts as Governor, Susana Martinez froze all pending state regulations and created the task force to, as she said, review whether they would be good for New Mexico businesses.

An Inspection of Public Records request revealed the small business task force in charge of deciding whether to keep or scrap regulations was loaded with lobbyists for big and out-of-state corporations and other representatives from large, in-state businesses – not exactly the “mom and pop” shops Martinez said in her State of the State speech that she wanted to protect.

NM-Central.com tracked the campaign contributions of some of the folks on the task force and turned up some interesting information.

Here’s what they found:

We only looked at one lobbyist. Roxanne Rivera-Wiest is listed as representing the Associated Bulders and Contractors, Inc., New Mexico Chapter. ACBI contributed $17,000 to the Martinez campaign.

Frank Yates, past president of Yates Petroleum – Yates Petroleum is listed as a “top contributor” (number 11) and contributed $56,000 to the Martinez campaign.

Perry Bendicksen, “Albuquerque venture capitalist” – We find little on Perry Bendicksen as a venture capitalist and much on Mr. Bendicksen as an attorney representing venture capitalists for the firm Brownstein, Hyatt, Farber Shreck, LLP. His page at Brownstein et al. indicates that he is a member of the Board of Directors and Chair-Elect of the Association of Commerce and Industry of New Mexico. He is also the Honorary French Consul for New Mexico, whatever that means. He has represented Gupo Cementos de Chihuahua, the New Mexico State Investment Council, the College of Santa Fe (sale of assets to City of Santa Fe), and others.

Sarah Chavez, listed as Director of Sales and Marketing at El Pinto Foods in Albuquerque – We didn’t find any contribution information. However, “mom and pop” does not describe El Pinto Foods, which (according to their web site) produces 2,000 cases of chile sauce per day. Your editor found it in a grocery store in Sutton, West Virginia a few years ago.

Dale Dekker, listed as Albuquerque architect – Mr. Dekker is one of the principals of Dekker Perich Sabatini, with offices in Albuquerque, NM, Amarillo, TX, and Las Vegas, NV. According to the DPS web site: “Dale serves on the executive board of the Economic Forum, the boards of the NextGen Economy, the Albuquerque Economic Development (AED), the National Board of Directors for the National Association of Industrial and Office Park developers (NAIOP) and was appointed by Governor Bill Richardson to the Construction Industries Commission and the Governor’s Education Progress Agenda Task Force.” Followthemoney.org lists a modest $500 contribution to the Martinez campaign.

Kevin Yearout, listed as Albuquerque mechanical maintenance operator – This one is interesting. Kevin Yearout is listed as having donated $5,000 to the Martinez campaign as an individual. Yearout Mechanical of Albuquerque is listed as having donated $10,000 to the Martinez campaign. Cheryl Yearout donated $2,000, and according to Dexknows.com, there are a Kevin and Cheryl Yearout living at the same address in Albuquerque. Lian Yearout donated $5,000 to the Martinez campaign. We found multiple references online to a “Kevin and Lian Yearout Foundation” in Albuquerque. If these are all related, that amounts to $22,000 from the Yearout network.

Mike Unthank, listed as Independent management consultant in Albuquerque – A Robert Michael Unthank is listed here as being on the Martinez transition team for the General sErvices and Information Technology Committee, and fits the description in the Clearly New Mexico article. Followthemoney.org lists a $250 donation from a Mike Unthank of Albuquerque to the Martinez campaign and a total of $1,150 from Robert Unthank of Albuquerque, bringing the potential grand total to $1,400. Robert Michael Unthank was a registered lobbyist from 2005 to 2009, representing Santa Fe Trust, Inc. and Tetra Corp. Jigsaw.com refers to a Robert Unthank as Human Resources Manager at Tetra Corp in Albuquerque.

Carol Wight, listed as CEO of the New Mexico Restaurant Association – The NMRA donated $5,000 to the Martinez campaign.

The blog concluded:

Whether any of this seems to represent a “pay to play” situation bears some consideration. Some of it does seem to come rather close. All things considered, it certainly does seem as if “politics as usual” and “business as usual” are close companions in New Mexico, and especially in the Martinez Administration.

NM-Central.com said it used a number of online tracking sites to gather the contribution information, including the excellent site FollowTheMoney.org.

The site breaks down not only individual contributions to candidates but calculates the percentage that each industry – oil and gas, dairy, construction, real estate, unions  – has contributed to each.

So you can do your own sleuthing, here’s a link to the FollowTheMoney.org page for Susana Martinez.

We also wanted to provide a link to the FollowTheMoney.org page for Democratic gubernatorial candidate Diane Denish, so you could see the differences – and there are significant differences.

Enjoy your sleuthing – and draw your own conclusions!

Are You Sitting Down? Here Are The Recommendations From The Gov’s “Small Business-Friendly” Task Force

Gov. Susana Martinez

By Tracy Dingmann

When Gov. Susana Martinez wrote an executive order on Jan. 1 halting all pending state regulations and creating a “Small Business-Friendly Task Force” to review them, the group had 90 days to come up with a plan.

Ostensibly, the task force was to consider each regulation and rule on its merits and then submit a fair and balanced report to the governor by April 1, detailing which rules the state could keep or scrap.

Except that’s not what’s been going on.

Meeting in Secret, With an Agenda

The members of the “Small Business-Friendly Task Force” were named in secret and have been meeting in secret. Only by filing an open records request under state law have we been able to find out who is on the task force and what it is meeting about.

Through documents gained from our request, we learned the task force does not represent New Mexico’s small business community. Instead, it is packed with large-business people and lobbyists from industries that gave big to the Martinez campaign – and who have been fighting back hard against pending state regulations.

The internal documents show members were never inclined to keep any of the regulations – in fact, they are focused on devising tactics the Martinez administration can use to eliminate each one.

The Mid-Point Report

Our request turned up one particularly fascinating document – a “mid-point report” dated Feb. 18 that, based on its unguarded language, was decidedly not intended to be shared outside the Gov’s office.

From the preamble:

“The task force does not wish to present a laundry list of problems to the Governor but develop solutions (sic). The goal is to provide the Governor and/or agencies cover when repealing or revising a rule or regulation thus avoiding litigation if possible.

The final report to the Governor will include a road map of short and long-term tactics and strategies, including the use of executive orders and legislative strategies. Each troublesome regulation identified will be accompanied by a recommendation on the best way to remove their negative impacts (sic).”

The report says the task force decided to focus on two areas of regulation: construction and the environment. Specifically, the task force wants to focus on regulations in the Environment Department, the Energy, Natural Resources and Minerals Department and the Division of Game and Fish, as they are “having the most impact on economic development and the will determine (sic) the best approach to rescind or revise the troublesome rules/regulations.”

Singled out as examples of “onerous legislation” are the “Pit Rule” and the “Enforcement and Compliance Rule,” both of which apply to and have been extremely unpopular with the oil and gas industry in New Mexico.

Here’s what else is in the report:

  • The task force doesn’t want New Mexico to do any more than what’s required by the federal government.

From the report:

“The first motion of the Small Business Task Force was to propose that state rules and regulations across the board be no more stringent than federal requirements and to correct any rule or regulation that requires more regulation than federal standards.”

  • The task force recommends that the Economic Development Department develop a secret “whistleblower complaint log and phone-based hotline” for businesses who want to complain privately about NMED enforcement of rules and regulations.

From the report:

“Companies often do not want to be seen as “troublemakers” by filing public complaints. If they do have complaints about NMED, this would ensure that companies would have confidentiality if they make complaints about departmental policies or practices through the whistleblower program. The EDD Office of Business Advocacy would administer this program and investigate complaints.”

  • In what sounds awfully ominous for mid-level classified employees, the task force says it has found that even in cases where exempt department heads have been removed, those pesky classified employees who have to actually enforce the rules (and who can’t be fired without cause) are undoubtably going to let their “anti-business agenda” stand in the way of the kind of rollback they are looking at. The task force plans to come up with ways to “mitigate” that, the report says.

From the report:

“Beyond changing a rule or regulation is the enforcement and handling of regulations and rules, particularly with permitting, by mid-level classified employees. An overarching theme we have observed is working with mid-level classified managers at NMED and other departments who still have an anti-business agenda despite changes in leadership at the department level. The committee is looking for ways to mitigate this situation.”

What Else?

Here are the other recommendations from the task force:

  • Removing New Mexico from the Western Climate Initiative, a group which advocates for a coordinated Western effort to reduce carbon emissions.
  • Removing the New Mexico only “cap-and-tax.” This refers to a set of carbon emission rules that the state adopted late in the Richardson administration after an advisory board considered nearly two years worth of public and expert testimony.
  • Working with other western governors to “delay the adoption of new air standards.”
  • Having the New Mexico Environment Department develop a fast-track environmental permit process to mitigate complaints from businesses
  • Repealing, modifying or replacing the regulatory amendment implementing the collective bargaining wage rate scheme for prevailing wages provided for in 2009 amendments to the Public Works Minimum Wage Act, also known as SB 33.
  • Looking at state building codes to identify ways to “bring compliance back down to the levels of international code.”
  • Combining and reducing the number of construction permits required.