LFC Revenue Hearing Quiet, Brief. Deficit is $200 Million or $400 Million

A crowd appeared for this morning’s Legislative Finance Committee General Fund Revenue Projection hearing. All 16 LFC members were there. Eight other legislators had a chair at the front of Room 307 in the Capitol in Santa Fe. The temptation is to say that House Speaker Ben Lujan hovered in the corner. Lujan was in a corner, but not hovering, rather he sat, almost hidden. The corner was dark.
Room 307 wasn’t full, as in wall-to-wall full. The audience, scattered across the room, included lobbyists, state staff, and business types such as Albuquerque Chamber exec Terri Cole.
Some key elements of LFC revenue projection meetings the past few years were missing today. The administration’s presentation lacked the gratuitous claims that Gov. Bill Richardson had built a grandly better economy for New Mexico. There was no defense of the movie subsidies. While revenue shortage estimates from the executive and the LFC remain far apart, the differences come from making reasoned assumptions one way or the other, so there was no need for the presenters to suggest one or the other was smoking something in creating revenue assumptions.
After the presentation, two things did not happen: many questions from LFC members, many of them harsh, and lectures from LFC members to the effect that administration projections were fantasy. For example, after past presentations, Sen. John Arthur Smith (D-Deming) has commonly wondered about the logic behind administration projection. Rep. Don Bratton (R-Hobbs) has repeatedly observed that oil and gas price assumptions had no basis.
The only post-presentation question came from Sen. Sue Wilson Beffort and was about the effect on the state of the federal government raising income tax rates by not extending the Bush tax cut. Wilson’s point was that a huge proportion of the state’s business are very small, either proprietorships or subchapter S corporations and the owners pay taxes as individuals. LFC staff lacked an answer and will do an analysis, but suspected the effect would be nasty.
With just the one question and no lectures, the presentation ended 45 minutes short of the scheduled two hours. Surprise.
The harmony was unexplained. Maybe—speculating here—it had something to do with being in transition to a new administration, which hasn’t yet revealed plans. Brian Moore, incoming deputy chief of staff and legislative director for Gov.-Elect Susana Martinez, did stop by and shake a few hands as the hearing began. Moore was an LFC member during his time in the legislature.
The only laugh-line of the day came with the report that bringing New Mexico’s unemployment down to 4.5% (assuming no labor force growth) would require employing 37,343 people, “the approximate number that would normally attend a football game at the University of New Mexico’s Lobo Stadium.” The chuckles (and more) at this analogy elicited an explanation. “Well, maybe not this year.” (UNM’s stadium has a capacity of 39,224, had held 44,000 and properly is called, “University Stadium.”)
Forecast revenue remains well short of “maintaining current services,” as the wonks like to say. The shortage is around $200 million (LFC), or maybe $400 million (administration), depending on assumptions.
The only annoying item in the executive branch presentation was a comment attributed to UNM’s Bureau of Business and Economic Research. The comment, standard BBER doublespeak as I see it, was “that New Mexico’s economy continued to improve during the third quarter of 2010.”
The truth is that our state’s economy deteriorated at a slower rate during the third quarter. However, that is not improvement and any description of slower deterioration as “improvement” is misleading at best.