Wednesday, January 20, 2010

My Take in Capitol Report New Mexico

The January 2010 issue of Capitol Report New Mexico, edited by Harold Morgan, provides an outstanding summary of the state's fiscal crisis, filled with reliable facts and figures, and different perspectives. If you want to track what the legislature does with our crisis in the next 30 days, consider this edition required reading. To see the entire PDF version click here or go directly to the site and bookmark here . My contribution to this edition follows.

The State as 2010 Begins

As everyone knows, the state is in terrible financial shape. What started out as a fiscal crisis in state government caused by a sudden decline in oil and gas revenues, has ballooned into a full-scale economic recession as New Mexico catches up to the economic woes of the rest of the nation. Unemployment in New Mexico has been rising steadily for two full years now, and stands at 7.9%, a figure not reached since April of 1988. Unemployment in Albuquerque and Las Cruces stands at 8.2%, better than the national average of 10% but not by much if you take out California and Michigan, with unemployment rates of 12.5% and 15.1%, respectively. Major real estate markets in New Mexico still show declining prices and larger-than-normal inventories. Judging from the past couple of national recessions we’ve had, even if normal growth rates resume it may take another two years for employment to recover. The LFC doesn’t expect state revenues to recover back to 2008 levels in New Mexico until 2013, a lapse of five years. Brace yourself, this is a serious storm.

After a six-year period of lavish state government spending, which increased 36% from 2004-2009 while revenues went up only 24% (the difference was made up, unwisely, by dipping into reserves), the state is embarrassed for funds. Even after gobbling up federal stimulus money, the state will be $500 to $600 million short of revenues for FY 2011 which starts next July, just to maintain a flat budget of about $5.6 billion. And unlike the federal government, states cannot finance deficits, so something has to give.

Dealing with all of this will require leadership, and the state is currently suffering from a leadership deficit. Turning to the governor, as Speaker Ben Lujan did during the special session in October, is tantamount to declaring chapter eleven bankruptcy for legislative stewardship of state affairs. The governor, still plagued by scandals and impatient to leave the state, is the lamest of ducks. But after years of slavish adulation leadership muscles have atrophied and many legislators, including Republicans, are still cowed at the thought of challenging his power. Moreover, under present conditions leadership requires making cuts and raising taxes—and neither sounds good in a 30-second spot. The best solution, perhaps, would be for the legislature to delegate the fiscal crisis to LFC leaders Lucky Varela and John Arthur Smith, grownups who have the stature in their respective bodies to make the needed changes. They know where the money is, they love the state and will treat it gingerly, and neither is running for higher office this year.

There is a saying among sculptors that a Michelangelo lies hidden in every slab of rock. The trick for the sculptor is finding it. Similarly, there is a future governorship in every political crisis. So maybe there is a glimmer of hope. Until now, many legislators (and, by extension, the lobbyists they tend to represent) still refuse to understand a year after it became obvious, is that the public is paying attention, not only to pay-to-play scandals and economic downturns, but also to them, and their actions and inactions. State government has been managed poorly the past few years. Legislators are supposed to be our watchdogs, and a serious display of leadership now, after years of inaction, might be well rewarded by a public that is paying more attention now than at any time in recent memory.

Does anyone seriously believe the governor’s race next year will be won by the biggest fundraiser? Or the slickest mail-outs? Or an appeal to partisan clichés? Both parties will have plenty of money; New Mexico is on the radar screen at the national level precisely because it pays attention during troubled times. The candidate who wins next year will be the one who offers the most credible approach to solving New Mexico’s problems—lack of jobs, improving student scores, managing a six billion dollar budget responsibly. After a long period in which we—all of us—allowed the institutions of state government to serve the insatiable personal ambitions and whims of a single individual, we are also likely to elect someone who actually seems to care about the kind of society and government we leave behind.

No comments: