Ortiz y Pino
Cashing Out the Windfall
The special session wraps up with a tidy sum slated for New Mexico's pockets
There was an aura of unreality to the entire special session of the Legislature which concluded last week. Pulling legislators back to Santa Fe for an upcoming emergency, just three months before they'd have to come to town for the regular session anyhow, was a stretch of imagination that many people never could manage.
And requesting $100 million of assistance from a windfall bonanza that will soon reach $1 billion (yes, 10 times the amount of the requested relief) also seemed just a tad, er, peculiar.
A more cynical governor might have been expected to realize in advance how difficult it would be to resist the temptation to ask legislators to toss back some of the unexpected new revenue ... but not too much. Ours didn't realize that, apparently, and the result was a frenzy to cash out the oil and gas windfall.
So no one should have been too surprised that when the hard-headed negotiators for the Senate (who went into the conference asking for $200 million in payout) and those from the House (who went in seeking $130 million) emerged from the head-butting, it would be with a “compromise” figure of $254 million.
The governor hasn't signed the full rebate and tax cut package as of this writing, but he has been quoted as feeling the Senate acted in a fiscally irresponsible manner and that he's not at all sure it's wise to send back that much to the voters.
Still, he may eventually decide to sign the whole package; may even, if he is as canny a politico as I bet he is, take full credit for the complete enchilada and use it in next year's campaign as an example of just how careful a man he is with taxpayers' money.
Sure, $254 million is a lot more than he originally requested, but when the new revenue projections come out next week, he's practically assured of still having, even after passing that huge amount back to the voters, somewhere in excess of the $800 million in “unanticipated revenues” that he was looking at when he called the special session into effect.
Maybe Gov. Richardson was surprised (as he seemed to indicate) that the Senate would have seen his bet and then raised him an equal amount, and that it refused to pass even the paper-tiger price gouging bill he wanted. But before he gets too heated-up over this turn of events, he could remember just how badly the last special session turned out two years ago. That fiasco makes this year look practically like an exercise in close-order drill and discipline.
The problem with the price gouging effort was that it was modeled on an Iowa statute that even Iowa's legislators say has never been used. Trying to put as positive a spin on that irony as possible, the governor's aides averred that “it's such a strong law that it hasn't ever had to be employed.”
In reality, however, price gouging on the scale we are experiencing now is being orchestrated by giant corporations equipped with teams of lawyers antsy to contest any and all allegations of it. Flush with the enormous profits realized from those same gouging practices, they are fully capable of tying individual states' attorney generals into knots for years.
The $1,000 fines for each proven instance of gouging called for in this law would have barely drawn bored yawns from the big boys ... but could put Mom and Pop operations permanently out of business.
Is price gouging a serious issue? You bet it is. Can New Mexico (or any one state) successfully rein in this practice? Not in a world where money controls the outcome of court actions. What we need is federal legislation, but in a climate of Katie-bar-the-door deregulation such as prevails in Washington these days, don't hold your breath.
So Gov. Bill didn't get even a symbolic anti-price gouging measure this time around. He'll probably try to spruce the proposal up and resubmit it to the Legislature in January. And that's when he's also supposed to share with us all his plans for how to spend the rest of the windfall we are reaping from the sky-high oil and natural gas prices in today's market.
Some money from that pot should be transmogrified into “recurring” revenue and thereby made available to finance teacher raises, Medicaid costs, higher education growth and other “operating expenses” of state government.
If the pattern is firmly established (and it is) that we continue to enjoy enormous “unanticipated” surpluses year after year, it isn't risky to permit at least some of those dollars to be treated as likely to recur for the foreseeable future and therefore available to be budgeted.
Another strategy would be to create some new permanent funds for specific purposes. The corpus of the new fund could not be used for any current year expenditures, but the interest earned on those funds from investing them would be allowed to be spent for designated uses, as public and charter school construction; higher education stipends and scholarships; improved health care and other currently limping services provided to New Mexicans.
Oil and natural gas are an incredibly valuable resource from which we benefit in New Mexico, but this resource may become scarce or even disappear in the future. It makes sense to use it wisely now and to invest our good fortune so that its effects will extend far beyond the current fiscal year.
The opinions expressed are solely those of the writer. E-mail email@example.com.