Archive for October, 2009

Well, duh.

When filming for “Due Date” closed eastbound Interstate 40 starting at 7 p.m. Saturday night, a huge traffic jam resulted. The snafu generated the lead story in today’s Albuquerque Journal. The film crew gets a kudo for wrapping production around 1:30 a.m. Sunday when they realized what was happening. The plan had been to film all night.

The Department of Transportation gets a what-were-they-thinking award for issuing the permit to close the Interstate. Traffic was diverted onto the frontage road at Paseo del Volcan. A mess was the inevitable result. Add the homeward bound crowd from a boxing match at Acoma’s casino and the mess gets bigger.

For a small idea of the cost of the disruption, review my story in the May / June Capitol Report New Mexico which is posted in the articles / issues section of this site.  My story was an analysis of filming on the Rio Grande Gorge bridge.

In August The Economist offered a film subsidy article that began, “With its deserts and slight air of decay, New Mexico is a good place to shoot a post-apocalyptic action film.”

(air of decay?)

“The continuing bidding war is likely to result in diminished returns for the states,” noting that two state have reduced rebates. “Some of the first places to offer rebates, such as New Mexico and Louisiana, now have impressive sound stages and a deep pool of production workers.”

What would be cool would for the film subsidy to generate a positive economic return for the state.

Bu so what, it was up hardly at all. See below.

The source is the Bureau of Economic Analysis (www.bea.gov). The figures were released October 16. The figures are for quarterly performance from the previous quarter. Thus the 0.6% increase during the second quarter of 2009 is an increase from the first quarter of 2009.

2008 2Q: 2%

2008 3Q: -0.3%

2008 4Q: 0%

2009 1Q: -1.1%

2009 2Q: 0.6%, which ranks tenth nationally. A 0.3% in consumer prices ate half this increase.

 Components:

Net Earnings: -0.6%.

Dividends, Interest and Rent: -2.5%

Transfer Receipts: 7.1%.

Contributions of Earnings to Percent Change in Personal Income by Industry:

Government: Federal civilian: 0.13%. Military: 0.11%. State and local: 0.17%.

Private (The figures listed below are a sampling of 21 industries. 19 industries showed a decline in income during the quarter.):

Real estate: -0.01%.

Professional services: -0.04%

Health care and social assistance: 0.03%

Accommodation and food services: 0% (This is the general tourism category.)

Arts, entertainment and recreation: -0.01% (includes movie making)

Mining: -0.22% (includes oil and gas production).

Construction: -0.26%.

Manufacturing, durable goods: -0.07%

Manufacturing, nondurable goods: 0%

The Department of Workforce Services released the September job report and it was more of the same except for an unexplained assertion that “job growth (i.e., job losses) may have reached a point from which a recovery can be staged.”

I suppose that means that with 30,900 jobs gone over the September to September year, the losses are so great that some businesses need to hire. State and local government continues to hire, even as the legislature is still in session, finally having admitted that k-12 education must take a hit. The timing of the comparison isn’t quite accurate as I think the job numbers apply to the week including October 12. Even so, state and local governments have been hiring as the state finances have gone way, way south. Talk about not getting the memo. Oh, well….

Here are the summary numbers. For details, go to the DWS site. The details are as gloomy as the rainy afternoon in southwest Wisconsin, for where I write thanks to the magic of the Internet and an Internet cafe. The comparisons are from September 2008 to September 2009.
New Mexico: 823,500 wage jobs. One year job loss: 30,900. Unemployment: 7.4%.

Albuquerque: 382,700 wage jobs. One year job loss: 15,000. Unemployment 7.4%.

Farmington: 51,400 wage jobs. One year job loss: 2,500. Unemployment: 8.3%.

Las Cruces: 68,100 wage jobs. One year job loss: 1,800. Unemployment: 6.9%.

Santa Fe: 62,600. One year job loss: 2,700. Unemployment: 6.5%.

We have three counties with an unemployment rate greater than 10%, up from none a year ago. The counties are Luna (13.4%), Mora (13.1%), Grant (12.3%).

The metro Albuquerque real estate market continued to improve during September.

The 661 single family detached homes sold during the month represented a 9.4% increase as compared to September 2008. September was the second month in 2009 during which sales increased over the previous year. Detached home sales rose 10.2% from August and were the second highest of 2009, after only July.

Sales of attached homes—townhouses and condominiums—were up 34% over September 2008, the third consecutive month with year over year sales growth.  Improvement in the attached home market added a new dimension in September. Not only did sales increase, so did median and average prices, the first month during 2009 to see price appreciation. The median attached home price, $142,500 for September, was up 5.6% over September 2008. The average price increased 0.6% to $152,094.

For detached homes, two key indicators of the future market brightened during September.

The 923 pending sales for detached homes during September were 31% more than September 2008, suggesting that the number of sales closed during October should improve from the previous year. The pending sales figure was the highest for the month of September since 2006. For attached homes, September pending sales were up 44% over a year ago.

During September, 5,156 homes were offered for sale, the lowest figure of 2009 and 16.6% fewer than September 2008. The inventory of homes for sale has dropped, on a year over year basis, for every month of 2009.  Total new listings were 1,375 during September, down 8.5% from September 2008. As inventory drops, homes can be expected to sell faster.

Metro Albuquerque had a 6.5 month supply of inventory during September.

Prices for detached homes declined again during September. However, the rate of the decline is dropping, indicating that the increased demand for homes will start to push up prices.

New Mexico’s budget situation has gone theatrical while a key question remains unasked. Meanwhile, Gov. Bill Richardson, not content to fiddle while Santa Fe burns, left town again. Richardson was in Connecticut chatting up General Electric Chairman and CEO Jeffry Immelt as the pro-tax coalition held a rally.

The theater came courtesy of the American Federation of Teachers – New Mexico, one of the two big teacher’s unions in the state, and source of major campaign contributions for Richardson. Around 1,000 people, including “many teachers,” said my Albuquerque Journal, met Thursday, October 8, on the Capitol steps in Santa Fe to pitch not cutting K-12 education. AFT is one of the major groups in the 33-member pro-tax Better Choices New Mexico Coalition.

For parents the events had an interesting calculus: My kid’s teacher took the day off to go to Santa Fe on a lovely fall day. My kid’s teacher taking the day off meant my kid had a substitute that day, which meant a wasted day for my kid. What is the priority here?

The unasked question is simple: Why? Why is this happening so fast?

We know what has happened. A deficit for the current budget year estimated at $433 million in August has turned into maybe $700 million less than two months later. That’s about a 50% increase. The easy conclusion is that the people putting the numbers together have no idea what’s happening. Maybe. Maybe there’s more to it.

In a long, thorough analysis published today, Walt Rubel, managing editor of the Las Cruces Sun-News, said, “It is expected that a deficit of some $450 million based on the last projection will climb to more than $600 million when the new numbers come out. (this Wednesday, October 14.) ‘We’re still dropping revenue to the tune $80 (million) to $100 million a month, and have been for some time,’ said Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee.’”

The speed of the change is amazing. The administration wants to blame everything on the national economy. For sure, that’s not true.

Some or all of the following may explain:

The forecasting models are not equipped to handle the deterioration of the New Mexico economy. Note that for much of 2009 news claims for unemployment compensation have run from a third to a half ahead of 2008.

The forecasters are incompetent. This I doubt, having known the forecasters over the years. I suspect that of all the groups unhappy about the state’s deficit, the forecasters may lead.

The administration is cooking the books.

The administration is incompetent. Consider this: At the Legislative Finance Committee meeting in Angel Fire in mid-August, the administration hadn’t yet closed the books on the fiscal year that ended June 30. Yet Bank of America, a much bigger outfit than the state of New Mexico, manages to close the books and announce earnings in 17 days.

The reaction to R.J. Berry winning the Albuquerque mayor’s race has mostly been: Holy Moly, the Republican won.

The reaction overlooks a fundamental point, an error perhaps forgivable because of the lack of institutional memory. For the first time in a long time, the people on the right and the center-right of the political spectrum had a real choice, a candidate more or less representing their views and who could walk and chew gun at the same time. Given the option of four more years of Martin Chavez or voting for R.J. Berry, well, gosh, folks opted for Berry.

Four years ago, the Republican candidate against Chavez was Brad Winter, an administrator with the Albuquerque Public Schools. Being an APS administrator made Winter not an option by definition.

The last time the center people had an option, as I remember, three candidates split the center vote and nearly tied, overall getting more than half, but behind the winner. Those candidates, again as I remember, were Pauline Gubbels, Harry Kinney and Art Schreiber. I didn’t remember the date. But after investing much too much time, I finally figured out that the Schreiber in the race was Art, not George. George Schreiber was the PNM CEO long ago. Without a date, the City Clerk’s office refused to look. Too hard, I guess.

This was the 1993 election, won by Martin Chavez. Now that I have the date, maybe the City Clerk will check the results, if it’s not too hard.

Last month, in the space of eight days, Santa Fe and northern New Mexico were covered in four articles by the Watt Street Journal.

Two of the reports were travel pieces.

For the Off The Beaten Track column, reporter Neil King, Jr., went to Taos which he called “this artsy New Mexican town… funkier and less crowded than Santa Fe.” Tough duty.

King touched on the Harwood Museum, the Parsons Gallery, the Rio Grande Gorge, rafting, the earthship development, “the tiny celebrity-strewn village of Arroyo Seco,” the  San Francisco de Asis church in Ranchos de Taos, the El Monte Sagarado hotel and the Mabel Dodge Lujan House. For food, King listed the Ranchos Plaza Grill, The Old Blinking Light, Orlando’s New Mexico Café and Taos Out Back Pizza. Live celebrities mentioned were Julia Roberts and Dennis Hopper.

The second travel piece told of a guided tour of the Abiquiu area which brought Georgia O’Keefe fans an on-location opportunity to gush over the land that O’Keefe turned into landscapes.

The other two tales offered new versions of that old New Mexico phenomenon—really, really rich folks bringing their money and often non-mainstream views to northern New Mexico to save the world and/or save New Mexicans from themselves and/or perpetuate the rural ghetto status of the north.

The odder tale of the two actually isn’t odd at all if you grant holiness as a basic industry or export product in the economic development sense. The story also is a basic NIMBY land use battle. A church, officially recognized by the U.S. Supreme Court and called Centro Espirita Beneficente Uniao do Vegetal, wants to build a church building in a more-than-upscale neighborhood. For the church, a key ingredient is a psychedelic tea. The local church leader and owner of the land proposed for the church is Jeffrey Bronfman, a member of the Canadian big business family. Besides a level of discomfort about the tea, neighbors pose the usual objections—traffic and commercialization of the rural neighborhood with million dollar homes.

Then there is the investment philosophy called Slow Money, which drew 400 people to a conference in Santa Fe. The idea is that investors go for small, local stuff with small returns on the investment, maybe 3% and 6% over the long term.

An heir to the Rockefeller fortune, Christopher Lindstrom, told the Wall Street Journal he likes the idea and is committed to putting his entire portfolio into such projects.

Ed and Michael Lobaugh of Estancia are considering a slow money investment for their goat cheese production business, the Old Windmill Dairy, the story says. However, they are concerned about hassle such as investors demanding detailed involvement in the business.

PNM Resources, Inc., the holding company for the electric company servicing much of New Mexico, for Texas New Mexico Power and a couple of others, got thrashed in passing last Friday, October 2, by Kimberley Strassel, the Wall Street Journal’s Potomac Watch columnist. Basically, Strassel was pointing out that PNM, Pacific Gas and Electric and Exelon Corp. of Chicago, the hometown of Barack Obama, to whom the Exelon CEO and employees gave “tens of thousands of dollars,” stand to make billions of dollars over their climate change stance. The three announced last week that they would drop membership in the U.S. Chamber of Commerce because the Chamber, as Strassel put it, “demand(ed) the Environmental Protection Agency  be transparent about the science it is relying on to regulate all carbon energy use.” The Chamber was too open minded, in other words.

Strassel was really after Exelon, it appears, given the attention to the company in her column. PNM was mentioned only in the first column and then as “PNM,” not PNM Resources. 

I don’t doubt Strassel’s economic analysis, but it’s worth pointing out PNM CEO Jeff Sterba really believes this stuff. He’s kind of Al Goresq, speaking passionately and somewhat annoyingly at several annual meetings. He’s wrong, of course. But that’s another story.

Strassel said her three targets were utility giants. That’s true for the other two. But PNM Resources is small on the utility scale of things.

PNM’s U.S Chamber statement is below. I pasted it from PNM’s website. Se: http://www.pnm.com/news/2009/0929_chamber_statement.htm.

Sept. 29, 2009

At PNM Resources, we see climate change as the most pressing environmental and economic issue of our time.

Given that view, and a natural limit on both company time and resources, we have decided that we can be most productive by working with organizations that share our view on the need for thoughtful, reasonable climate change legislation and want to push that agenda forward in Congress.

These organizations include the Edison Electric Institute, the association of shareholder-owned electric companies, and the U.S. Climate Action Partnership, a group of businesses and environmental organizations of which we are a founding member.

As a result, we have decided to let our membership in the U.S. Chamber lapse when it expires at the end of this year.