Archive for November, 2009

I guess it’s the old cup half full, half empty drill. But it is interesting how one can look at the same document and draw different conclusions. In this case the document is from the Pew Center on the states. It takes a variety of measures and ranks the states according to “fiscal peril.” The document is posted in the documents section. Look for State Fiscal Rank, 2009 2Q.

The New Mexico Independent (newmexicoindependent.com) drops into the half-full mode in a Friday, November 27, post, saying in the headline, “ Yes, NM’s Budget Woes are bad. But the pain is relative.” In particular the Independent cites the Pew report that Arizona, Nevada and California are doing worse than New Mexico.

This cup-half-full theme has wandered through media and Richardson administration spin for some time. It misses the point something fierce. With regard to Arizona, Nevada and California, they are three of the four states hit the worst by the bursting of the real estate bubble.

The real point of interest, to me, is with those states doing better than New Mexico by any measure. New Mexico gets a B- rank from Pew. In the Pew report, better performing states include Texas, Utah, Pennsylvania, North Dakota, Nebraska, Montana, Iowa, Indiana, Wyoming and more.

Well, why? What have these folks done that New Mexico hasn’t done? Maybe they haven’t built deficit generating commuter railroads. Maybe they haven’t offered the most generous film subsidies in the nation. Etc.

We should ask. And learn. And take no comfort in those doing worse than New Mexico.

In today’s news release about New Mexico’s employment (non)performance the Department of Workforce Services claims, “New Mexico may have reached a statistical low point in August from which a slow recovery can be staged.” The only trouble is that DWS fails to explain why the situation may be ripe for improvement.

One thing did improve in October even as the unemployment rate headed even higher, to 7.9% from 7.7% in September. That faint and fleeting glimmer is that a job sector other than government and health services gained employment. It was information services, which is up 1,800 jobs over October 2008, “presumably from work on several major film productions,” DWS claims. As we approach the end of November, those project jobs may already be gone. In any case, with regard to films, as was reported to the legislature’s Revenue Stabilization and Tax Policy Committee today, the state’s film subsidy is a net loser, generating only fifty cents in economic activity per dollar of subsidy.

Metro Albuquerque lost 900 jobs between September and October for an October to October loss of 14,800 wage jobs. Albuquerque has lost jobs for 13 months.

Construction is 3,900 wage jobs, year over year, and has lost jobs for 34 months. For manufacturing, the one year loss is 3,300 jobs and a 15.3% one-year loss, which leads all metro job sectors.

Las Cruces tied Albuquerque with an unemployment rate of 8.2%. Over the year, Las Cruces’ wage employment is down 2.6%, or 1,800 jobs, with eight months of losses.

Metro Santa Fe is down 3,000 jobs, year over year. That’s a 4.6% one-year loss.

Farmington’s unemployment rate jumped to 9.6% in October. That reflects a loss of 2,800 jobs, a 5.2% one-year drop.
DWS offers this outlook, “The job losses already recorded will remain with us for a long time. Improvement in the numbers may simply reflect comparisons to the record-low levels reported last year. The extent of the losses is such that it will likely be four years until employment reaches pre-recession levels again.”

New Mexico’s unemployment rate continued up in October, rising from 7.7% in September to 7.9% on a seasonally adjusted basis, the Bureau of Labor Statistics reported today. (All numbers in the post will be seasonally adjusted.) “Employment,” as opposed to non-agricultural wage employment, dropped 2,400 from 885,100 in September to 882,700 in October.

Employment is down 38,600 year-over-year while unemployment is up 32,000. The labor force has declined by 6,600 from October 2008 to October 2009.

Non-agricultural wage employment did bump up by 700 from September to 818,000 in October. The increase of less than one-tenth of one percent can be considered statistically less than insignificant.

The argument here has long been that the unemployment rate is a poor number for various reasons. It nice to have some credentialed validation for that view. Speaking yesterday to the Economic Forum in Albuquerque, Mark Snead, a Federal Reserve Bank of Kansas City economist, called the unemployment a “dirty” number. “Federal unemployment numbers ‘tend to be very wrong in energy states,’” the Albuquerque Journal report quoted Snead. 

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

In an afternoon meeting today in a drafty pavilion at the state fairgrounds (oops, Expo New Mexico) in Albuquerque, about 30 members of the Budget Balancing Task Force stepped through 18 options for balancing the state’s budget by raising taxes. Cutting spending seems not an option for this group.

The first obvious question is, “Is this exercise real?” Fred Nathan of Think of New Mexico got to the issue by noting that the Blue Ribbon Task Force of some years ago had 23 members and six months. This year’s group has six weeks and more than 40 people. Task Force chair Rick Homans, the Taxation and Revenue Secretary, didn’t want to consider the notion. 

A senior watcher of such exercises said that getting 40 rookies and expecting anything substantive makes no sense. Point well taken, though it should be noted that ten or 15 of the group have substantial experience in policy discussions. Still, there are a lot of well-intended rookies and not much time.

The first of four public commenters illustrated tax anger. He wore a blue t-shirt and jeans. He said he wasn’t rich, but did own one rental house. “The first tax I get raised,” he said, “I’m hauling them into court. I want to know that Santa Fe’s going to cut” spending.

So there.

The next meeting is December 1 in Las Cruces. The schedule is posted at www.nmrevenueoptions.com. The materials are supposed to be there too.

On Friday Gov. Bill Richardson announced 41 people as members of a “Budget Balancing Task Force.” My guess is that the group’s purpose is to provide political cover for tax increase proposals during the next regular session of the legislature that will begin in January. The group’s very nice website is www.nmrevenueoptions.com.

My analysis bases both on people I know and on organizational inclination. I don’t know that any of the people are Republicans, but it doesn’t matter. I suspect that those who might be Republicans will be bound by a transcending organizational allegiance, especially the 15 business organization representatives. This group, the largest among the members, will be most interested in minimizing damage. The business community seldom stands on principle, being motivated mainly by seeking a stable atmosphere in which to do business. I put nine in the pro-tax group including the representative of Voices for Children which led the pro-tax drive ahead of the special session. Five others represent governments or groups of government such as the Municipal League. These five live from taxes and can be expected to be amenable to getting more money in the till. Only four might be expected to draw the line against tax increases. Three of the four would draw an anti-tax line based on their personal politics. The fourth one represents an organization badly damaged by the administration. All four, though, probably will be bound by organizational interests which likely have as a key tenant to not make the administration angry. Two, Bob Barberousse and Fred O’Chesky, represent organizations that would be hit by sin taxes. Their stance will likely be, “Tax the other guy.”

Overall, my guess is that the pro-tax folks will drive the group. As we found before the special session, Voices for Children and friends on the left are organized, vigorous and noisy.

The time for the tax force is much, much too short to do anything comprehensive, much less address is proclaimed mission:  improve the state’s tax system; promote good tax policies; maintain the competitiveness of New Mexico’s economy; and address the state’s long-term solvency challenges. To provide real analysis would take a year. And then maybe another year to have the proper statewide conversation.

I’ve learned three new things about Albuquerque’s Mayor-elect R. J. Berry. All, perhaps, might have surfaced earlier had my attention to the recent mayor’s race been more in depth.

To start, Berry is a small town guy from the Midwest, born in Iowa and raised in Nebraska. He graduated from Beatrice (Nebraska) High School in 1981. For those unfamiliar with Beatrice, population around 12,500, it is about as far from Lincoln as is Omaha, except Beatrice is due south of Lincoln. e graduated HGrowing up on a farm or a ranch instills proper values, a product of that environment commented recently. I tend to agree.

Second, while it became well known that Berry was a track athlete at the University of New Mexico, the overlooked detail is his specialty in decathlon, a ten-event marathon over two days. Folks who merely “run track,” as the phrase goes, don’t do decathlon.

Finally, Berry was an Eagle Scout. If not quite at the level of decathlon, completing the Eagle award is a significant task.

Berry’s Midwestern straightforwardness was in evidence today when he spoke to the Albuquerque Press Women meeting. Berry began by saying he wasn’t going to say anything, at least nothing specific, to the chagrin perhaps of the working journalists covering his presentation. He went on to describe his transition process and said he was “meeting a lot of great people” at city hall.

Last week the Beatrice Daily Sun ran a feature on the local boy who made good as the mayor-to-be of Albuquerque. The story said that as a teenager Berry painted houses, did lawn service and “even worked at Alco for a while.” (In small towns, Alco is a big deal.) More excerpts follow.

“’It was a great place to be a young man and grow up,’ he said.

“In 2006, he was elected to the New Mexico House of Representatives.

“’I was always an entrepreneur in the business world,’ Berry said. ’I talked with my family about how I could possibly do more service for our community. I had a lot of business experience and a lot of energy, so I felt like I could give back.’

“Berry credited his victory to his pledges to run city hall more like a business and focus on crime prevention and economics.

“’I was the new guy,’ Berry said. ‘This town is full of great people and I think people really liked the idea of fresh ideas.’

“Berry said he occasionally returns to Beatrice for reunions or to see old friends. When he does, he loves to drive around and look at things that remind him of the past, like his home and the school. But he also enjoys looking at new things and said he toured the high school on a recent visit.”

As the New Mexico economy has gone further and further into the tank over the past two years, the number of people filing personal bankruptcy has gone the other direction. No surprise, of course.

October numbers were released yesterday by the American Bankruptcy Institute. For October, filings nationally were up 28% from October 2008.

State figures are released quarterly.

New Mexicans filed 1,503 bankruptcies during the second quarter of 2009, up 24% from 1,209 a year before. In turn, those 1,209 filings were up 47% from 824 filings during the second quarter of 2007.

The rate of increase has slowed, But then the number of filings in third quarter of 2008—1,159—was below the 1,209 filings during the second quarter of 2008. That drop in filings during the third quarter of 2008 was the first time in two years that filings had dropped from the previous quarter.

Go to http://www.abiworld.org. Then click on “newsroom.” The bankruptcy statistics section is found on the left side of the newsroom page.