Wednesday, June 24, 2009

Summer Comes to the Valle

The summer solstice has passed. The days get shorter and the weather turns hotter.

Corruption: Bernie Madoff, who made off (no pun intended;-) with billions of other peoples' money, will be sentenced on Monday. It will not be a light sentence: you don't hoodwink half of Wall Street, not to mention the thousands of persons and institutions that lost some or much of their holdings, without facing the wrath of a federal judge. For Wall Street, the greatest sin committed by Madoff surely is that he exposed the shoddy, lazy work of many investment bankers, basking in six-and seven-figure incomes, who--full of formulas and computer-driven algorithms designed to convey the impression that each penny of your hard-earned cash is invested only after scrupulous, ivy league graduate-school level mathematical calculation with proprietary software, yes sir, minimizing risk and maximizing long-term return tailored to your specific individualized portfolio profile--invested in good ol' Bernie long after red flags were flying. Turns out a lot of investment bankers put other peoples' money into Bernie with a due diligence that amounted to taking the word of golfing partners and country club buddies that Bernie always turns in 10%, don't know how he does it but he does, just like clockwork, yes sir.

More locally, Attorney General Gary King has indicted Smiley Gallegos and Dennis Kennedy, an accountant for Region III, for their roles in defrauding the public of millions in public funds designed to be used to build affordable housing for needy families. An Albuquerque bond attorney, Robert Strumer, was also indicted, accused of fraud and money laundering, as well as attorney David Hernandez, accused of tampering with evidence. State Auditor Hector Balderas, given $200,000 by the state legislature to investigate the Housing scandal, came out with a report earlier this year in which he suggested the problem was a lack of proper fiscal controls. Frances Williams, who blew the whistle against Smiley's operation three years ago, severely criticized the Balderas report for being misleading. For her full report, click here. This indictment suggests that there might have been more going on than just a lack of control in the use of taxpayer funds.

The Latest Outrage: Thomas J. Cole (Albuquerque Journal) this morning informs us the Bureau of Taxation and Revenue is refusing to reveal where $8.5 million of our taxpayer money went when they wrote out a check to a film production company for some of their New Mexico expenses when they were filming here last year. From July 1 2008 until March 16 of this year, according to Cole, in the middle of a major statewide recession, the state forked out over $86 million to 70 different production companies under a law that enables the state to reimburse up to 25% of what movie makers spend in the state. But taxpayers are not allowed to see what the money was used for? What happened to public accountability? It is particularly shameful for an agency with a name like Taxation and Revenue to be hiding taxpayer expenditures from the public.

Last year a study done for the Legislative Finance Committee by two reputable economists at NMSU, concluded the state recovers only 14 cents for every dollar spent attracting movies to New Mexico, in other words, a huge drain. The widespread criticism of the giveaways to movie producers that resulted from this study prompted the New Mexico State Film Office and the State Investment Council (both controlled by Governor Richardson, who supports the give-aways to movie producers) to commission a for-profit firm, Ernst and Young, to do another study which concluded after presenting a confusing set of data and slippery assumptions, that the film industry was (surprise, surprise!) an asset to the New Mexico economy. Read them yourself and reach your own conclusion about who is right.

Regardless of the strict economic impact of our taxpayer dollars on the New Mexico economy, we have a right as taxpayers to know what we've spent our money on. As Cole points out, a few years ago our state paid out $25,000 out of $100,00 that it cost to charter a jet for Richard Gere, who owned the airplane. So he made $25,000 in addition to the profit he made for the flight. In addition to the millions he was paid for acting in the movie. Is this really how we want to spend New Mexico taxpayer money? You wanna take Tax and Revenue's word for it that the $86 million spent in nine months was all legit this go-around? This subsidy to the movie industry should be scrutinized carefully by the legislature. It's beginning to have the familiar smell of other investments controlled by politically appointed bureaucrats who played around with taxpayer money in recent years and took us to the cleaners.

1 comment:

Anonymous said...

Very interesting post!

My comment has to do with the subsidies to the film industry. New Mexico provides dazzling vistas for films, so dazzling in fact, that one wonders why producers need a stimulus package to film here. The analogy that comes to mind is the cities who give all sorts of tax exemptions to lure in manufacturing and other industries. They typically lose money on the deals, and when a better deal is offered elsewhere, it's good-bye.