New Mexico State Senator Dede Feldman's Blog

Two Thumbs Up: Two Thumbs Down

Before the special session I laid out some common sense principles that I think we should use in hard budget times, which appeared on New Mexico Politics blog at http://www.nmpolitics.net/index/2009/10/commonsense-principles-for-hard-budget-times/.

         Using my own principles, I’d give the session two thumbs up, in that, for the most part, we avoided cuts that would threaten peoples lives, and did not “cut off our nose to spite our face” by cutting Medicaid, and hence loose a four federal dollars-to-one state dollar match.   But I’ve got to give two thumbs down, too, first, for our failure to even consider measures that would close loopholes which permit big companies, (like Wal-Mart ) now profiting on the recession, to escape state taxes. And I was very disappointed with the failure of an amendment I introduced which would have required any salary cuts to be proportional, rather than across-the-board. What sense does it make to cut the meager salary of an educational aide, who makes $8.00 per hour the same percentage as an administrator who makes $100 an hour? I continue to believe that those at the higher end of the pay scale should sustain a higher proportion of the cuts rather than those at the bottom. 

The New Mexico Legislative Special Session Final Wrap-up

The special session has ended painfully after applying a series of Band-Aids including funding fixes, "swaps," "sweeps," and agency cuts to the 2010 budget, which has been hemorrhaging rapidly during the past ten months. The shortfall is due to the perfect storm: low energy prices, and a steep decline in gross receipts and personal income taxes brought on by a nation wide recession.

Going into the session, we had a $650 million hole to fill, and on opening day there was no preliminary agreement between a legislative task force and the governor, always a dangerous sign of troubled waters ahead.

And trouble there was... as those who wanted the hole filled by substantial cuts to recurring spending in the schools, universities, and government programs like Medicaid, clashed with others who wanted to include tax increases or at least roll-backs of some of the revenue we've given away in the past six years in the budget fix.

In the end we dodged the bullet, holding off big cuts to education and Medicaid, but deferring tax increases until the January session. The final package included several measures:

• A bill to cut $206 in annual spending including a 2% cut to public schools, a 4% cut to higher education, a 7.5 % cut to state agencies reporting to the Governor, 2% to the courts, and 4.5% for the legislative branch, among others.
• A bill to "sweep" $116 million from various state accounts, including a college affordability fund into the general fund to help pay for on going government operations
• An amendment to cut about 102 "exempt" positions hired by the Governor outside the classification system.
• A bill to shift about $136 million slated for use to fund capital outlay projects around the state to severance tax bonds. This "swap" would free up money in the general fund (the state's major checking account)
• A measure to use federal stimulus funding to limit the cuts to education
• A bill to transfer $115 million from one of the state's cash reserve accounts to the general fund
• An amendment to have legislative staff identify $150 million in building projects and stalled capital outlay that could be scrapped. The post-session news is that the Governor is going to just identify and cut these himself.

Education cuts were held to even less than 2% by some artful dancing to give school districts access to some previously restricted funds to use to pay property taxes, a big expense. Medicaid, too, escaped immediate cuts, via a transfer of federal funds and those placed in reserve from the tobacco settlement.

Solvency was achieved, but everyone knows that this patchwork quilt of little Band-Aids won't last--especially as we face a potential $1 billion shortfall when the regular session convenes. I believe we need a much more comprehensive solution, but this was made difficult since both the Governor and legislative leaders would not allow us to even consider the other side of the ledger-tax increases or so called "revenue enhancements."

It's Time to Face Reality: We Must Raise Revenues

by Senator Dede Feldman (D-Albuquerque)

A world of hurt. Gloom and doom. Wide-spread panic. A huge mess. These are just some of the phrases lawmakers have used to describe both the current budget situation and people's reactions to it. Clearly, things are bad. But in our gloom and panic, we must make sure we don't do something that makes it worse. Relying solely on spending cuts would be that something.

We must take a balanced, even-handed approach and that includes raising new revenue. There may be a few areas of the budget where we can trim a little more, but certainly not enough to cover what could be a $650 million chasm. Economists are clear on this: cutting state spending, which is integral to the state's economy, is the worst thing to do during a recession. Money must be pumped into the economy, not siphoned out. Rolling back tax cuts for the highest income earners, withdrawing tax breaks that do not serve the best interests of the state, and making sure profitable, out-of-state corporations are paying their fair share are all ways to pump money into the economy without raiding the pockets of working families.

We are at the point where we must roll back tax breaks that were previously approved and we must do it now to make sure that it kicks in as soon as possible. During the special session starting on Saturday, the Legislature and Governor must be realistic, face up to the crisis we are already in, and not postpone necessary action for another three months. Rolling back tax cuts is inevitable come January and everyone knows it. Why lose six months of urgently needed revenue when we have the opportunity to act now?

A rollback of the tax cuts given to the wealthiest New Mexicans or instituting a personal income surtax of 3 percent on the highest income earners could be made effective on January 1, 2010. This could raise more than $100 million during the final six months of the fiscal year. We could get started right away making sure out-of-state corporations pay income tax on their New Mexico profits, just like New Mexico businesses do. Measures to ensure that out-of-state corporations pay their fair share have been introduced by Senator Peter Wirth for years, but to no avail. Measure to  tax sugary soft drinks that add to the cost of obesity in our state have been introduced by Sen. Jerry Ortiz y Pino, also to no avail.  But these two measures alone could bring in up to $76 million annually.

When times were flush, we enacted personal income tax cuts that overwhelmingly benefitted the wealthiest among us. These and other tax cuts have added up to a loss of $2 billion over the past six years. Now that times are bad, those who can most afford it need to step up to the plate and help us get out of this hole.

By relying on just spending cuts we are ensuring that those who can least afford it will be required to make the most sacrifice. These are the very people-hard working, average New Mexicans-who are already most heavily hit by the effects of the recession. Why should the budget be balanced on their backs?

Every western state except New Mexico and Alaska has already raised taxes to help deal with this devastating recession. Surtaxes on the highest income earners and increases on tobacco and alcohol taxes are among the measures that other states have recently enacted to combat their own budget shortfalls. New Mexico would be in good company in taking these responsible steps.

If we wait until January, things are only going to get worse. In the next fiscal year, starting next July, we will have to restore at least $250 million in federal stimulus money we are using to help the current budget. We will not be able to continue to divert money from the state's capital funds again without doing major harm to our school buildings, water systems, roads, and other public facilities.  Next year, our reserves will be so low that we cannot responsibly tap them again.  

We have a serious crisis on our hands and it is time to get serious about real solutions. We cannot responsibly kick the can down the road for three more months while public services fall apart. We urge Governor Richardson and all our legislators to recognize that a balanced approach to the current crisis, which includes raising revenues in the special session, is the only responsible course.

Senator Dede Feldman (D - Alb.), is the chair of the Senate Public Affairs committee and has represented the North Valley and other areas of Albuquerque for 13 years.

Tax Cuts Off the Table-For Now

It was sort of like a Sunday afternoon massacre yesterday as 8 tax bills that would have raised approximately $826 million to more than address this year's shortfall of about $650 million were, one after another, deemed "non-germane"(aka irrelevant, out-of-order, off-the-table) by the Senate's committee on committees. I was first up before the firing squad, with a bill that would have closed a loophole which allows some insurance companies to escape both the premium and gross receipts taxes. To be fair, the committee was following a very narrowly drawn, even prohibitive Proclamation for the special session drawn up by the Governor to specifically exclude consideration of new taxes.

The Guv has said he will consider new taxes during the regular session, though, and today has put out a press release that he will appoint a special task force to look over "revenue measures that can be considered during the regular session."   That's not a really big concession, though, since revenue bills are always germane in a short budget session.  Well, at least it signals he won't veto these out of hand. Good thing, we're in a deep hole and cuts to education and health care loom larger every day, without some recurring revenue.

The 30-day session is only a few months away, but it will give the special interests plenty of time to organize against the alcohol, cigarette, soda and other "sin" taxes that the public seems to accept, especially if it's earmarked for health or education.

A recent poll taken by Research and Polling for the American Federation of Teachers has 70 percent of registered voters sampled in favor of raising taxes on alcohol and tobacco, 61 percent supporting closing loopholes for corporations that don't pay state taxes on New Mexico profits and 49 per cent for repealing tax cuts for New Mexicans earning $295,000 or more a year.   81% felt the state should balance its budget without cutting public school funding.
 
The poll has received no coverage from the state's major daily and I only knew about it because  its results were handed out to me in person by a teacher on opening day.

Meanwhile, without these tax increases, we're handcuffed into doing some minor bandaids involving shifts, transfers and non-recurring money.  And that's at the very best.

Take a Short Break for More Jim Terr Health Care Humor

Here's another reminder that health care is a major national topic and it's done with Jim Terr's special touch of humor.  You can also view it by going to http://www.youtube.com/watch?v=m6BhfF_apqE .
 ---- Dede

Dede Feldman wants you to see 'Jim Terr & the Health Care Hamsters'

Here's some creative, multi media commentary on the current health care proposal now pending from Jim Terr, an independent singer songwriter in Santa Fe.  Just when we need a little humor... Jim comes through, as always. You got to love 'em.  
 --- Dede
PS - You can also view it at  http://www.youtube.com/watch?v=xTezypj0T6Q

 

Here are the lyrics so you can sing along!

"ROBUST PUBLIC OPTION"
    Jim Terr © 2009
  (tune & track of Canned Heat's Let's Work Together: http://www.youtube.com/watch?v=ZaeRPTceqsk )
 
Well we wanted single payer but nobody seemed to care,
Despite the fact it seems to work out almost everywhere.
We need a ROBUST PUBLIC OPTION.
    -"need a robust public option"
Just a robust public option
    -"modest little public option"
Don't replace private insurance but it scares 'em
    so it's good enough for me.
 
Some people fear the government, don't want 'em in their hair.
But they love Social Security, VA and Medicare.
We need a ROBUST PUBLIC OPTION
    -"modest little public option"
Fairly robust public option.
    -"no big deal, a public option"
'N if you don't) know "option" means "optional"
    then check 'em in the dic-shee-own-ay-ry.
 
I won't) blame it on campaign money, Limbaugh, Hannity or Beck.
But they make their living scarin' folks so let's beat 'em - what they heck.
Demand a ROBUST PUBLIC OPTION.
    -"modest little public option."
Yeah at least a public option.
    -"All-American public option."
Don't add nothing to the budget, so don't fudge it,
    works for you, so why not me? ("Mr. and Ms. Congressman")
 
Yeah pass the thing and pass it promptly,
    pronto, quickly, soon and expeditiously