Sunday, December 21, 2008

Legislature: Budget Outlook

Political blogger Joe Monahan asked for my two cents worth about the budget and the upcoming legislative session. The full email exchange is here. -HM

On Dec 19, 2008, at 11:10 PM, Joe Monahan wrote:

Harold--do you have any thoughts on the state budget shortfalls for this and next fiscal year and how it should be approached? (for my blog) -J

On Dec 20, 2008, at 5:51 PM, Harold Morgan wrote:

Joe: By the way, my blog is Capitol Report will return as a newspaper in January which means I'm paying close attention to the financial situation.

The LFC's approach makes sense, but then I'm a huge fan of the LFC. The "FY 09 Solvency Plan" has three general approaches: One-time revenue actions, across the board reductions (of varying percent) in FY 09 spending, and reviewing capital spending. Little things tucked into these three big groups include reviewing the extra money allocated in the 2008 special session for school bus fuel.
The hard part will be pulling state spending back to tracking personal income and back to a 5.5% growth trend. Tom Clifford of the Tax Research gets credit for these two insights.

Personally, what I see is happiness with new taxes at all levels of government—small municipalities to the state level. ACI has caved on this point. Maybe more tax money is necessary. But while most of our problems stem from, first, the national situation, and then the Richardson administration being in George Bush mode and spending all the money, a contributing factor (at some level) is that the Richardson administration has raised taxes, overall. I have reported the tax increase situation in my column for several years. Caving on the tax question means failing to do the hard work on the spending side.

What I don't see is much willingness to not do things. The $20-plus million mobile (Mesa del Sol to the fairgrounds) equestrian center has been criticized. But it is still alive until the legislature pulls the money. Unreported is the detail that there already is an equestrian center—in Las Cruces. Eastern New Mexico University wants more money (it already has some) for what I see as a true frill, a student weight room, I think. A veteran's museum is proposed for Las Cruces. This amounts to rewarding the Museum of New Mexico system for massively dropping attendance. In Albuquerque the newest "traffic calming" device is a concrete island in the middle of the street. There is one on Girard NE at about Hannet and another on Mountain NW at about 15th. I have no idea what these hazards cost, but why now? Etc., etc.

If you quote any of this, as via pasting, look for typos. There are always some. Enough. Ask questions. Link to the blog. -HM

On Dec 20, 2008, at 6:18 PM, Joe Monahan wrote:

what about 2010 fiscal?

December 21, 2008 10:27:12 AM MST

No one has talked about FY 10 much. The immediate task—FY 09—is large and challenging. The FY 2010 shortfall figures are smaller, but still large. I suspect, therefore, that the FY 10 options will remain that everything is on the table and the actions will be "all of the above."

By the way, we're not yet in a recession, statewide. BBER unveiled one of its secrets the other day—the definition of a recession in the state which is two quarters of declining wage employment. Santa Fe is on the way; wage employment has dropped for four months. Metro Albuquerque has lost jobs for two months. This means that for the FY 09 wage job forecast to come true—a 0.1% decline in FY 09—all of the statewide job losses must come during the rest of the fiscal year. In turn, that means the next six months will be ugly for wage jobs.

New job numbers are due Thursday. Merry Christmas. -HM

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