Westland DevCo/SunCal Bankruptcy Was No Surprise To TIDD Opponents

Opponents of a state-backed tax scheme to help develop a parcel of land on Albuquerque’s West Mesa say they aren’t surprised by news that the company behind the plan has filed for bankruptcy.

Here’s a copy of the bankruptcy filing.

“What we all said was going to happen and what we knew was going to happen finally happened,” said Rep. Ben Rodefer, a Democrat from Corrales. “They were not viable financially and not of the caliber we should want to be in a relationship with.”

One year ago, Rodefer was one of the strongest voices against California-based Westland DevCo/SunCal’s quest for legislative approval of a plan to tap future state tax receipts to develop a 55,000-acre parcel of land into a master-planned community on Albuquerque’s West Side.

The funding scheme, called a tax increment development district, or TIDD, is supposed to be used to spur revitalization of historic districts or other infill development within cities – not to aid companies who want to build up previously undeveloped tracts of land.

Westland DevCo/SunCal announced this week that it has filed for bankruptcy on its New Mexico properties after defaulting on $188 million in loans. A number of the company’s developments in other states have also gone bankrupt.

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Higher Taxes For New Mexico’s Wealthy?

After a vigorous debate and much input from big business lobbyists and advocates for social services, healthcare and education, the House Taxation and Revenue Committee on Monday approved a measure that would levy a 1.5 percent surtax on wealthy New Mexicans.

Specifically, the surtax would affect single state tax filers who make more than $133,000 in taxable income, married separate filers who make more than $100,000 in taxable income and married joint filers who make more than $200,000 in taxable income.

If approved, the tax would sunset after three years.

The original proposal, HB 9, was brought to the committee by Rep. Ed Sandoval, who said the move is painful but necessary for the state to be able to provide vital services to its residents.

Rep. Ben Rodefer moved to amend the amount of the surtax to 1.5 percent. It’s been estimated that levying a 1 percent surcharge would generate about $48 million – a 1.5 percent change would generate about $74 million.

Speaker Lujan spoke strongly in favor of the 1.5 surtax.

“People recognize the need for additional revenue if we are going to keep viable services,” said Lujan.

A number of lobbyists for various businesses interests spoke strongly against the measure, including Art Hull from the Association of Commerce and Industry, Terri Cole from the Greater Albuquerque Chamber of Commerce.

Hull argued that wealthy people tend to spend their money on goods and services that benefit New Mexico. They also make investments and donate to charitable organizations. Raising the tax would cause the well-off to cut back on hiring and salaries, not to mention to reduce charitable donations to the very organizations that are advocating for the tax hike.

“It is easy for us to stereotype high-income individuals as people who hide their money away in jars and mattresses, and as people who have unduly benefitted from tax breaks,” said Hull. “We need to be careful to not assume that these are just wealthy people with extra money laying around.”

Later in the meeting, Speaker Lujan directly addressed Cole, asking her if she’d heard about last week’s referendum in Oregon that saw people approving tax increases for corporations and wealthy Oregonians.

Cole told Lujan she’d heard of the election.

“I think when people recognize that there is a need for revenue to sustain the viability of education and other needs, they are willing to tax themselves a little bit,” Lujan replied. “When the referendum (to raise taxes) went to the people, the people passed it.”

Rep. Rodefer also spoke in favor of the amended measure.

“When times were good, we gave these people tax breaks. And if you look at the measure, these people will still be paying significantly less than were before they got the tax breaks in 2003, he said. “And we were fine. Businesses didn’t shut down or stop hiring. We succeeded. “

In the end, the amended measure passed by vote of 10-6 along party lines.

Stay tuned to this spot or track the progress of HB 9 at the New Mexico Legislature web site.

In the meantime, check out this quote from Nobel Prize-winning economist Joseph Stiglitz about how high-income families tend to spend their money:

“Every dollar of state and local government spending enters the local economy right away, generating a greater economic impact. The impact is especially large when the money goes for salaries of teachers, policemenand firemen, doctors and nurses and others that provide vital services to our communities.”  In contrast, “raising taxes on high income households also will reduce spending, but by less than the amount of the tax increase since those with plenty of income typically spend only a fraction of their income – and some of what they spend is spent on luxury goods made abroad.” Furthermore, lower-income families tend to spend more of their incomes locally than higher-income families.”

Rep. Ben Rodefer Interview: “School funding cuts affect whole community”

RodeferOn Sept. 22, Sen. John Arthur Smith (D-Deming) and Sen. Tim Jennings (D-Roswell) sent out an “Open Letter to the Citizens of New Mexico” warning school districts in New Mexico to prepare themselves for significant cuts to allow the state to balance the FY2010 budget.

The letter went out on Senate stationary – and attached was a chart showing 5 to 10 percent across-the-board cuts for every school district in the state.

“It scared the beejeezus out of everybody,” said Rep. Benjamin Rodefer, who was angered at the notion that Smith and Jennings would propose such a drastic statewide slash in education without consulting the rest of the Senate – much less the entire 112-member Legislature.  “And it wasn’t really their place.”

So Rodefer wrote his own letter – to the superintendents of New Mexico’s 89 school districts.

In it, Rodefer pledged to “fight with every political breath I have to kill in the House of Representatives any public school cuts whatsoever, whether they be statewide or specific to your district.”

From his letter:

There is nothing more important than our children, their education and their future. Education is the greatest form of long-term economic development. I find it unconscionable that so many in the State Senate want to compromise New Mexico’s future by further challenging our already financially strained school districts, and the vital services and jobs they provide.

We cannot throw away the intellectual and economic future of our children and our state to cover up an inability in our legislature to do the difficult work of addressing our need for strengthened revenue streams and for finding specific statewide funding cuts that are viable, not directly damaging our citizens or communities, and that just make more common sense than crippling our schools as a short term fix.

Rodefer noted that the Legislature already cut school funding earlier this year – and studies have since shown that New Mexico is underfunding its schools by 15 percent.

Cutting funding to schools doesn’t just hurt students – it affects the whole community, he said.

“There are so many rural communities where the school is the main economic driver for the entire community. The school district employs people and purchases services and goods. And we’re not even talking yet about hurting our children and their education and their futures.”

Rodefer pledged to continue to consolidate votes in the House to oppose public education cuts.

Sadly, the state budget shortfall for this year alone is astronomical – up to $200 million, said Rodefer.  Some cuts in education may have to be made, but they shouldn’t be across the board and they shouldn’t apply to every district, he said. And there should be a mighty effort made to keep cuts away from kids, teachers and classrooms.

“If the (shortfall) number keeps ballooning, we’re going to have to make some cuts. But I’m going to make damn sure it’s not 10 percent.  If the superintendents come out and say they can cut three percent and still live with that, then I’ll go along with that.

But if (Smith and Jennings) keep pushing 10 percent, then I’m going to go with zero.”