New Mexico: Will It Go The Way Of Oregon and California?


Last week we were in New Mexico and during our visit I was invited to a meeting between local business leaders in Santa Fe and the chairman of the Finance Committee for the New Mexico State Senate, Sen. John Arthur Smith (D-Deming). The subject was New Mexico’s Public Employee Retirement System (PERS) and the fact that, like Oregon, the unfunded future liability exceeds the state’s general fund. And I was privileged to engage in a private conversation with Sen. Smith prior to the meeting in which we discussed the overall financial picture of New Mexico.

I thought of the states west of the Mississippi, only California and Oregon had entered the race to drive the bus over the cliff, but it appears that New Mexico is in serious contention and may even overtake Oregon. It is a disaster and, like California and Oregon, the Democrats have refused to take any serious steps towards fiscal responsibility. Unemployment in New Mexico stands at 8.3 percent in August compared to Oregon’s 10.6. However, that rise in unemployment started from a figure of about 3.5 percent compared to Oregon’s habitual 5.5 percent.

Like Oregon, New Mexico’s projected budget deficit for the next biennium is closing on nearly twenty-five percent. However, New Mexico is the twelfth poorest state in the nation with a median income of about $43,700 while Oregon is thirty-second with a median income of about $50,900. For those of you who have had to endure a public education in Portland’ schools, that means that the resources available from New Mexicans to make up the budget deficit are materially lower than those available in Oregon.

But there are some critical differences that suggest that New Mexico may be more apt to weather the storm than Oregon. First, Sen. Smith, while a Democrat, is a fiscal conservative and has been calling on his fellow legislators for quite a number of years to address their free spending ways. He is particularly critical of the legislature’s disregard for fiscal integrity in dealing with both the numbers of, and the benefits for, public employees. Contrast that with Oregon’s Democrat Party who continue to increase budgeted spending by double digit amounts each biennium without a single dissenting voice.

Second, New Mexico has already made substantial cuts in spending in the last biennium whereas Oregon increased its spending and, of late, has simply substituted federal dollars for state revenue shortfalls to substantially continue its reckless ways. Neither the Democrat candidate for governor nor the Democrat legislative leadership in Oregon has provided any guidance in dealing with the budgetary problems other than raising taxes or hoping for more federal funding.

Third, the reckless spending by Democrats in New Mexico is coupled with a history and culture of corruption. Budgetary shortfalls have been coupled with missing money – tens of millions of dollars of missing money. New Mexico newspapers regularly carry stories of politicians arrested, accused, convicted and jailed. The current governor, Bill Richardson, was under federal investigation in connection with a pay-to-play scheme that cost him an Obama nomination for Secretary of Commerce. The investigation was subsequently squashed by the Obama Department of Justice. But both the Democrat candidate for Attorney General and the Republican candidate for Governor (both leading in local polls) have taken square aim at the corruption and vowed to end this checkered part of New Mexico history.

And fourth, the New Mexico Supreme Court, unlike the Oregon Supreme Court, has not yet declared that public employees have a constitutional lifetime right to PERS which cannot be altered or terminated. In fact, Sen. Smith speaks freely about the need to terminate the existing PERS defined benefit program and to adopt a defined contribution plan on a going forward basis and is even open to exploring bankruptcy as the “nuclear option.”

And finally, New Mexico’s major newspaper, the Albuquerque Journal, unlike the Oregonian, appears to recognize that the free spending liberal policies are not working – not at a local level, not at a state level and most certainly, not at a national level. In an October 14, 2010, entitled Learn Lessons From Cuba, Spain, Greece, the Journal opined:

“Passing in the dark night of recession, the United States and its long-time Caribbean nemesis, Cuba, seem to be drifting closer to each other’s ideology.

“The Obama administration in its short time at the helm has grown government — and the national debt — by jaw-dropping leaps and bounds. More social programs, billions in stimulus handouts with little permanent job creation to show for it, a confusing health care overhaul that will increase costs, and unemployment refusing to budge from 9.6 percent all signal it’s time to pause and think about the consequences of where the U.S. is heading.

“Meanwhile, consider these recent developments in Cuba and elsewhere:
• Cuba plans to lay off half a million state employees in an attempt to salvage its troubled economy by creating a private sector and introducing some semblance of capitalism. This is a sea change for the communist country and a recognition that its “government as nanny” economic model isn’t working.
• Greece and Spain are mired in debt and saddled by union benefits they simply cannot afford to the extent that some observers fear their economic crises and high unemployment rates could threaten the euro. Workers in France are striking at the possibility of raising the retirement age to 62 and moving up to a 40-hour work week. Mon Dieu!

“There are lessons to be learned here, but it seems like folks in Washington aren’t paying much attention. Cuban President Raul Castro is. In a major speech, he noted: “We have to erase forever the notion that Cuba is the only country in the world where one can live without working.”

“So are some leaders in Europe who have finally come to grips with the concept of unsustainability.

“Which begs the question: How far down this tack of bloated government, high unemployment and public employee union self-largesse do we want to go here in the USA?

“It’s time to turn the ship of state around and head back to sounder financial and philosophical waters.”

I’m not sure what it took to rattle the confidence in liberalism that has been a trademark of the Albuquerque Journal but it should be packaged and sent out to all of America’s major newspapers.

There is no question that New Mexico is in a race with Oregon to self destruct; however the winds of change – reform and fiscal responsibility – appear to be blowing stronger in New Mexico than Oregon. November 2 is a critical date for both states – let’s see which path the each take.

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  • Rupert in Springfield

    >however the winds of change – reform and fiscal responsibility – appear to be blowing stronger in New Mexico than Oregon.

    In Oregon we blow wind, not the winds of change. The biggest indicator of that right now is the governors race. One thing all can agree on is that whatever the results of the Oregon governors race, it will be close.

    The issue for the last three election cycles has been for decreased government spending. Democrats won in 06 in that message, Obama won in 08 on that message, and Democrats look poised to lose in 10 for failure to deliver on that message.

    Yet in Oregon John Kitzhaber might very well walk into office on the promise of spend spend spend. Free college for anyone for two years, and we all know he will rubber stamp whatever our states biggest expense, public employee unions, demand of him.

    That tells you that Oregon has not hit bottom to that extent which people are prepared to turn it around. No one argues that we can continue in the direction we have been going. We are very likely to elect a man who has promised to do just that. I personally will be stunned if Kitzhaber doesn’t win.

    • valley p

      “Democrats won in 06 in that message, Obama won in 08 on that message,”

      Democrats ran and won on decreasing government spending? Huh? What planet do you actually inhabit Rupert?

      And Kitzahber is is promising to spend? Again…on what planet? Dudley is the one calling for free tuition, the Oregon Future Fund Scholarship. And increased participation in Head start, which costs money. And expanding 1 on 1 tutoring programs for reading. Costs money. Increased professional development for teachers. Costs money. Improved dropout prevention measures. Costs money. Improved state universities. Also costs money.

      Dudley is the latest in a line of Republicans who talk out of both sides of their mouths. Cut government in general and increase spending on the popular stuff.

      Look, whoever gets elected governor is going to have to sign a balanced budget. That is the law. That budget will be based on how much the state takes in, primarily through the income tax. Neither Dudley nor Kitzhaber will be able to change how much money the state has to spend. They can promise whatever, but reality begins in January 2011.

      • Rupert in Springfield

        >Democrats ran and won on decreasing government spending? Huh? What planet do you actually inhabit Rupert?

        Yep, ran on Bush’s runaway spending in 06, obviously you were unaware of that. It was a fairly major issue, guess you missed it.

        Frankly thats understandable, you just look for the candidate with a D after their name and vote for them. After all, you were the guy who didnt think Obama was a liberal during the 2008 election. He’s a Democrat and thats about as far as you look.

        *WARNING* – If you argue may statement about the 2006 campaign is untrue you will set yourself up for a logical position regarding your entire view on the economy now that is untenable in one iteration.

        repeat

        *WARNING* – If you argue may statement about the 2006 campaign is untrue you will set yourself up for a logical position regarding your entire view on the economy now that is untenable in one iteration.

        Not much more here is you are going to babble against that basic reality.

        Oh well.

        • valley p

          Gee Rupert, thanks for the warning. And thanks for the warning again. But the Democrats won back Congress in 2006 primarily, and nearly completely, based on the Iraq war having gone south. That plus the Bush response to Katrina. Plus Bush’s ham-handed effort to privatize social security. Runaway spending? Not so much.

          But on the planet you occupy, it may be that runaway spending was the big issue of the day. Nothing I can do about alternative realities. I acknowledge they exist in your head and leave it at that.

          • Rupert in Springfield

            >Runaway spending? Not so much.

            Thank you.

            You have just entirely defeated your argument that Bush is responsible for the lousy economy and excessive spending.

            After all, if it is your contention that such did not even register on the radar that the Democrats could even raise it as an issue, then Bush’s spending could hardly be considered notable.

            Sorry Dean – I warned you about this.

            Don’t ever bring up Bush’s spending on this blog again,

            From now on you will accept blame for spending under Bush.

            After all, if it wasn’t even notable until after you guys took over congress, you get the blame.

            How could you be so foolish? I warned you twice I was setting you up and you fell for it.

          • valley p

            You are occasionally amusing Rupert…I’ll grant you that. Delusional…but that can be amusing in small doses.

  • Bob Clark

    It’s also interesting internationally. In France, government leaders are trying to raise the retirement age from 60 to 62, and it is causing a nationwide strikes and some 70% of the people oppose the move. On the otherhand, the United Kingdom is cutting the federal workforce by an immediate 8% and taking an axe to the federal budget, and the populace seems accepting. Oregonians seem to tend towards stubornness, and so, the process of resetting government while inducing a vibrant private sector probably is slow.

    I think if the likes of TriMet succumbs to financial insolvency then Oregonians might wake up sooner than later to the indebtness their political leaders have been piling up for the past two decades. This especially might occur if the federal government turns towards a more austere budget, eliminating many of the subsidies that are keeping the likes of the city of Portland afloat. To counter this austerity, Oregon should move towards deregulation and loosening its restrictions on economic development. Reducing business costs will spur a dynamic recovery in the private sector while the public sector is cut back or at least fixed.

  • Beverly Garcia

    Stick to writing about Oregon and not New Mexico because you obviously don’t know what you’re talking about. Your statement that “the reckless spending by Democrats in New Mexico is coupled with a history and culture of corruption” is just repeating what someone told you. I guess if you repeat it often enough . . . . The truth is that Republicans have held the Governor’s seat in N.M. as much as Democrats and whatever “history” and “culture” there is that may have resulted in “corruption” can been equally shared by both parties. It is as easy to scream “corruption” as it is to scream “fire” especially in an election year, but the corruption accusations in N.M. are grossly exaggerated and have risen to the level of absurdity. Most of our public officials are honest and hardworking and not what you described in your article.

    • Cassandra R.F.

      Beverly, you are the one who doesn’t know what you are talking about. Hear this from a New Mexican and a life-long Democrat! Any New Mexican who doesn’t live in a cave knows that New Mexico is one of the most, if not the most, corrupt state in the Union. How our current Governor Bill Richardson has escaped criminal indictment is a constant source of amazement throughout the State. This morning’s headlines are filled with stories of how the husband of our Lt. Gov. Dianne Denish (and Gubernatorial candidate) has lobbied for one big land deal after another through his consulting company, while pretending that it is all OK because he doesn’t have any real influence with elected officials. Meanwhile Dianne Denish (who sat for 8 years in silent agreement with Bill Richardson’s abuse of power) is running around “distancing” herself from him. I say distancing loosely, because everyone knows that Denish has allowed Richardson’s corrupt pals to wine and dine her with big fundraising events. And Denish doesn’t mind telling the voters that she is going to get rid of drivers’ licenses for illegals, while sending the message through the Democrat grapevine that she doesn’t really mean it. This is the same old crap that we have dealt with in New Mexico for decades. The major newspaper in New Mexico, which is liberal, and Steven Moise, Executive Director of the State Investment Council,(a Democrat) are not wrong when they finally have the fortitude to stand up and tell New Mexicans how DECADES of one-party (DEMOCRAT) domination have resulted in greed and corruption in every nook and cranny of government in New Mexico. On the rare occasions in which any Republican has managed to become Governor of New Mexico, he has found himself dealing with a Democratic dominated Legislature and Democrats sitting in the other State elected top offices. Those of us living in Northern New Mexico have suffered incompetence, greed and politcal abuse for generations from Democrat politicans who are nothing more than a bunch of mafia thugs. No, Beverly, it is time some of us who are Democrats get some backbone and say enough is enough. We need to give this State a good housecleaning and get some people elected who are going to get New Mexico back on track. It it people like you, Beverly, who look the other way while the politicans steal us blind that allow this corruption to continue. You need to start asking hard questions and demanding straight answers and stop voting for bad people just because they happen to have a D after their name!

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