Archive for September, 2009

New Mexico dropped 12 places in the latest Forbes.com “Best States For Business” ranking. We ranked 27th in the latest report, released September 23. In 2006 study, New Mexico was 15th.

Of the study, Forbes says, “Our Best States ranking measures six vital categories for businesses: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life. We factor in 33 different points of data to determine the ranks in the six main areas. Business costs that include labor, energy and taxes are weighted the most heavily. We relied on nine different data providers. Moody’s Economy.com is the most utilized resource.”

Find the report at Forbes, http://www.forbes.com/2009/09/23/best-states-for-business-beltway-best-states_table.html.

New Mexico ranks highest for growth prospects—sixth—and is eleventh for economic climate. The state’s hit comes from quality of life where we are 48th. This category is an “index of schools, health, crime, cost of living and poverty rates.” The data gatherers, it appears, read those numbers about school graduation, the uninsured and poverty. 

Wrapped around New Mexico’s quality of life rank are two of the usual suspects and two surprises. the usual suspects are Mississippi, 46th, and Louisiana, 50th. The surprises, until you think about it, are Arizona, 47th, and Nevada, 49th. After California, those two state have suffered the most from real estate the past few years.

Today, the day after the Legislative Finance Committee heard the news that the state may be in the hole by $800 million or so (see yesterday’s post), Gov. Bill Richardson set an example of engagement by the boss by doing something cool—being in Kuala Lumpur, Malaysia, for the Forbes Global CEO Conference. The news report said Forbes is paying Richardson’s expenses for the trip. Like Richardson’s recent “trade mission” to Cuba, there was no mention of security personnel going along, nor who paid for them, if any went.

The math: $550 million + $113 million + $113 million.

In Santa Fe today the Legislative Finance Committee got a first look at proposed “solvency” measures to deal with the state’s shortfalls. Right. That’s plural, meaning two budget years. The state hasn’t yet closed the books on the 2009 budget year that ended 90 days ago. That’s 30 days longer than it used to take, a former state budget official told me. Further—and amazingly to me—the state is not sure how much more money it needs to pay the FY 09 bills. It might be $113 million. It might be twice that or $226 million.

The ever-practical Sen. John Arthur Smith, D-Deming, wants to cut enough from the current budget year (FY 10) spending—$550 million he says—or find money to plug gaps to be reasonably sure of not having to revisit FY 10 during the 2010 legislative session. For now the trouble is that the House, the Senate and the administration don’t agree on what to do.

All this is not new, I was told in Santa Fe. Maybe. But unless one is in the Group of 12 budget negotiating group or in the slightly larger cocoon around the group, it’s probably news.

A friend of ours, Mario D. Pardo-Friedman, is controller for Sacred Wind Communications. John Badal, a co-founder and CEO,has been one of the good guys around the New Mexico business scene for decades. 

Sacred Wind is trying to raise capital by winning a lottery. That means Sacred Wind is one of 3 finalists for a $100,000 marketing grant, sponsored by American Express and NBC. Sacred Wind has beaten hundreds of nominees to get this far. In an unusual wrinkle, Sacred Wind needs outside support in the form of votes. So go to: http://shinealight.ivillage.com/ and vote. You will have to register at the site.

Mario Pardo-Friedman told us about the contest and provided some background about Sacred Wind and the contest, “There is information available about who we are, and what we are doing, but this is what you  need to know: the Navajo Nation has the poorest availability of basic telephone service in the  country. The national average ‘penetration rate’ (the measure of the number of people with  telephone service relative to the population at large) is 95-97%. On the Navajo reservation it averages just 35%, and in our service territory it is even less (and availability tends to concentrate only in areas close to interstate highways and “dense” population centers).

“Despite the fact that the  United States is the world’s largest economy and is frequently the envy of the entire world for our technological prowess, the Navajo people have been left FAR behind the rest of the country. This great ‘digital divide’ is just one of the many barriers the Navajo people face as they work towards improved sovereignty and integration into the rest of the US, and it is a barrier that we are working tirelessly to overcome on their behalf. There have been many obstacles, including doubt and skepticism among the Navajo people (many have promised such advances before yet never delivered) and some of the worst ‘red tape’ one could imagine, but we remain committed to this cause and to improving the lives of the 6,000 or so households in our territory.”

So go to  http://shinealight.ivillage.com   and vote for Sacred Wind. They are the good guys and they are New Mexico guys.

Sacred Wind’s website is: http://company.sacredwindcommunications.com.

From being the worst job performance in a half century, the New Mexico employment picture has moved to being the worst in 65 years. It was January 1944 when the state last showed a 3.7% year over year job decline, the Department of Workforce Services said this morning. New Mexico lost 30,900 wage jobs between August 2008 and August 2009. DWS notes that the unemployment rate is “only” at a 12.5 year low which seems here to likely have something to do with the unemployment being a funky number.

Retail trade, with 11% of the state’s wage jobs, has taken 20% of the job losses with a 6,300 job decline.

Construction leads the job losses, down 8,500. The Professional and Business Services sector is down 6,600.

The home for movie making jobs, the Arts, Entertainment and Recreation sector, broke even for the year, which is good on the scale of things, but speaks volumes about the jobs produced from the massive movie making subsidy.

Metro Albuquerque tied the state job-loss rate with a 3.7% one year drop, a 14,500 job loss.

Santa Fe led the job loss race among the state’s three smaller metros with a 2,200 job drop. That’s a 3.3% loss.

Las Cruces, which has 67,000 wage jobs as of August, lost 2,000 jobs over the year for a for a 2.9% decline.

Farmington grabbed the percentage job loss crown with a 3.8% decline and 2,000 wage jobs one over the year.

Job losses in the four metros totaled 20,700, just over two-thirds of the total lost since August 2008. A year ago the four metros had 69% of the wage jobs, which means that the 26 rural counties have fared a bit worse that the seven metro counties.

The administration’s approach to dealing with the massive shortfall in revenue continues to be: do as I say, not as I do.

News of a contract for ecotourism promotion surfaced last Thursday on the website of the New Mexico Business Weekly. The contract to EcoNewMexico LLC of Santa Fe is for $242,500 with three one-year extensions possible. The work doesn’t seem to mean much promotion, but rather things preliminary promotion such as  inventorying ecotourism assets.

In these financially tough days for state government, the first thing to consider about this new effort is that we have somehow muddled through without spending extra money on ecotourism. On the list of new things New Mexico doesn’t need as this point, an inventory of ecotourism assets would seem in the top five. 

On the other hand, in an amazing demonstration of not getting it morally, the state Department of Health is refusing to spend $9.4 million appropriated by the 2009 legislature to expand services to the developmentally disabled. Alfredo Vigil, health department secretary, told The New Mexican that the economic situation made spending the money impossible. The New Mexican’s story ran last Friday, the 18th.

Se. Tim Jennings, Senate Pro Tem and Roswell Democrat, begged to differ. “I was always taught that you take care of the people who can’t take care of themselves,” Jennings told The New Mexican. 

This is not the first time the administration has eliminated spending for the disabled. Capital spending for dental equipment at Carrie Tingley Hospital was vetoed a couple of years ago.

A halt to nearly all new contracts for state services would seem an obvious step in dealing with the shortfall.

New Mexico’s 0.5% unemployment rate increase from July led the nation. The change brought the unemployment rate to 7.5%.

Employment in New Mexico took another statistically significant dive in August.  New Mexico has lost 33,900 jobs in the past year. The numbers, released Friday by the Bureau of Labor Statistics, are seasonally adjusted. August 2008 employment, 849,200, is down to 815,300. 

In August New Mexico’s labor force was 957,700. That was up 4,300 from July but still down 4,000 from August 2009. There were 71,300 unemployed, up 4,600 from July and up 30,000 from August 2008. 

For the news release see: http://www.bls.gov/news.release/laus.nr0.htm.

Lest anyone think things are getting better in New Mexico, the week ending September 5 showed 1,707 new claims for unemployment compensation in the state. That was not quite triple the 570 new claims for the same week in 2008.

Happy Monday.

“Budgets are the ultimate in the theory of unintended consequences,” Lt. Gen. Paul Selva told the Domenici Public Policy Conference yesterday in Las Cruces. Selva explained that when there isn’t enough money, we defend our programs to the death. When there is too much money, we get sloppy.

A guess is that what we most vigorously defend are new programs and program extensions. The sloppy stuff, in other words.

Selva’s insight, as amended, suggests an approach to New Mexico $432.6 million forecast shortfall for the current budget year. That problem will get the attention of a special session of the legislature next month.

Probably this approach would not solve the problem, but it would make a dent and any dent counts.

New Mexico’s state government was rolling in money until about a year ago, certainly through June 30, 2008. New stuff was added, sloppy stuff, some large, some small.

One approach to cutting state spending would be to make go away nearly all new programs and program extensions added in the three years ending in June 2008 and any added sense.

Cutting new stuff would avoid the mindless inefficiency of an across the board X% cut. It might make it easier to keep critical programs whole such as support of the developmentally disabled.

Well, like what?

Last time I looked the new state park in Pecos was still alive. Development should stop. Purchase of any new big bucks software should stop. A program seeking to grant $160,000 in $20,000 increments to makers of small films should stop. Probably the shared economic development and tourism advertising programs should stop, at least for grants below, say, $10,000. Purchase of the ridiculous should stop, however possibly cool. New electronic signs for schools come to mind. Nearly all advertising by state agencies should stop.

Spending of any money on Albuquerque’s balloon museum should stop. So should development of the proposed veteran’s museum. Probably the El Camino Real International Heritage Center, a state monument, should close. It is in the middle of nowhere about halfway between Socorro and Truth of Consequences.

Gov. Bill Richardson should show some leadership by example, though probably he is unable to do so due to long habit and DNA wiring.  He should cut the parties. He should cut the Cuba trips.

Of course the movie subsidy should stop. So should Railrunner, but that’s too much to ask of even the most rational legislator.

Public sector managers, in recent chats, tell me they have cut all the little stuff. Maybe. But driving to Las Cruces this week offered opportunities. These examples will be highway examples, having nothing to do with the general fund which is not the point. Besides the highway folks seemed to show little initiative in doing something about their claimed $500 million deficit.

For example, nearly mowing of the shoulders and medians of our highways should stop.

South of Socorro along I-25, one begins to see the painting of the concrete parts of bridges and sometimes the metal parts. This painting is not limited to new construction. Long existing structures have been painted. Not only that, the colors are ghastly—pink, a yellow that had faded to near nothing, an awful turquoise.

New bridge painting should stop. Any repainting should stop, not that repainting ever happens.

Look around citizens and legislators. Opportunity knocks.

Thursday, September 11, was the fitting choice for the annual report to the community by the installation commander at Kirtland Air Force Base. The Kirtland Partnership Committee sponsors the free breakfast event, which was held this week at the Embassy Suites hotel in Albuquerque and attended by several hundred civic types.

On September 11, 2001, Col. Michael Duvall, now Kirtland commander, was an F-15E instructor pilot and commander, stationed at Nellis AFB in Florida. The plan for that was a training exercise to shoot down drones with live missiles. As his group was checking out their plans, the mission was cancelled. The group was told to wait, “on alert,” and that live missiles and ammunition was being loaded onto the fighters. They were told to wait and see if unknown airliners were discovered heading toward the southeast U.S. If any such planes were found, Duvall said, the group might well be instructed to shoot them down. That potential order provoked considerable discussion in the briefing room, but there no reluctance to follow the order, should it come.

In July 2008, Duvall became commander of the 377^th Air Base Wing, the unit that runs Kirtland.

The report to Albuquerque began with a video highlighting Kirtland personnel killed in the line of duty since 9/11. There aren’t many because few Kirtland units deploy and only in small numbers, often only one of two people.

The nature of Kirtland explains the limited deployment. With more than 100 organizations calling Kirtland home—“mission partners” in the military jargon. Kirtland is an unusual beast, a multi-mission base. Most bases, including Cannon Air Force Base in Clovis and Holloman Air Force base near Alamogordo, have just one or a handful of tasks.

Further, training and science (my word, not Duvall’s) are the work of most of the people on Kirtland. Of the roughly 20,000 people working on Kirtland, Sandia National Laboratories accounts for nearly half. There are just over 3,000 active duty military personnel. The training includes pararescue and combat rescue officers and nearly all Air Force special operations personnel.

Space and nuclear, which overlap, are the big science topics. Organization titles suggest the work: Air Force Research Laboratory Directed Energy Directorate and Air Force Research Laboratory Space Vehicles Directorate. “Directed energy” means lasers.

The various Kirtland organizations spend around $5.6 billion annually. About $3 billion sticks around metro Albuquerque for a while. The estimate is 1.3 for the local job creation multiplier, a reasonable estimate according to economic development literature and quite different from the five or seven or whatever claimed by politicians for endeavors such as movie making.

The recent “trade mission” to Cuba by Gov. Bill Richardson and a team of state officials with responsibilities having little to do with trade raises the questions of which New Mexico products are shipped internationally, what is the value and where do they go.

The short answers are:

- Mostly electronics, in particular integrated circuits (Think Intel).

 - $2.8 billion in 2008.

- Asia, to be put into computers and such.

With $1.4 billion in exports during 2008, integrated circuits accounted for nearly half of New Mexico’s exports. Only three other categories had more than 2% of the of the total value—crude oil, chemicals used in electronics, and civilian aircraft, engines equipment and parts (Eclipse Aviation, perhaps). 

The Cuba trip claimed to focus on developing agricultural exports. Four agricultural products were among the state’s top 25 exports in 2008, according to the numbers provided by the Census Bureau. Those commodities and the export value were: Cheese ($28 million); cotton ($24 million); fructose ($19 million); cereal ($18 million); and, 25th in value, milk ($12 million).

China and Malaysia just about split 46% of the state’s 2008 exports with China grabbing first place by $800,000. Mexico and Canada ranked third and fourth with 13.8% of the state’s exports going to Mexico and 12.3% to Canada. No other country had more than 4.5% of the exports. Honduras ranked 25th with exports worth $9 million in 2008. India and Brazil, both countries rather larger than Cuba, ranked 23rd and 24th.