© 2020 NEW MEXICO NEWS SERVICES 4/20/20
Equations, variables and guesses produce model results
By Harold Morgan
New Mexico Progress
Mathematical modeling gets headlines these surreal days. Actually, the results of running models get headlines. The models themselves get little attention.
The appeal to headline writers and their editors comes, I think, from models offering something definite—a number—as together we face the COVID-19 virus. A number in an awful situation is a headline writer’s grist.
A model projects a high death toll. OMG, we think, something horrible to worry about. Then the same model projects a lower death toll. Whew! Not so bad. In the headlines recently is the Institute for Health Metrics and Evaluation at the University of Washington (www.healthdata.org), which created an early model (maybe the first) of the virus situation in the United States.
For some perspective, let’s drop back to Modeling 101. The following discussion shares my understanding, gathered from bits and pieces over a long time. The thoughts apply to situations beyond COVID-19, such as, say, climate change. The difference is that while virus models land in the headlines and generate questions, asking questions about climate models is forbidden or a sin or something because all climate details are settled, thank you.
A model presents something. Could be the plastic airplanes or ships I assembled as a kid in the ‘50s. Or maybe an auto manufacturer’s half-size prototype. Or a three-dimensional drawing, using a computer, of an auto part or a house. Or a set of equations, which is where it gets murky for many of us. In terms of actually doing the math, I hit the wall in calculus as a high school senior. My daughter brings hope; she majored in math and physics.
Equations are a way of saying something, expressing relationships. Instead of words, the statement is done using numbers and letters standing in for ideas. A simple equation states the relationship of oil revenue to the state’s general fund: (oil price) plus or minus $1 equals (general fund revenue) plus or minus $22 million. The oil price/revenue equation is easy because it is based on data. The relationship has a history.
Saying something more complicated requires more and more complicated equations. These more complex equations must start somewhere, namely with people. People might say, I think this result depends on three things (called variables) happening. The result might be producing a certain number of newspapers during an eight-hour work shift. One variable might be the number of pages in the issue relative to the maximum number of pages the press can produce all at once. Probably a press will have a maximum of pages it can produce while running full speed; more pages will mean a slower speed. Color will be another variable; more color use will mean fewer pages because part of the press must print the color. People will be a further variable; does everyone on the press crew come to work? If, say, just two of the three press crew people appear, can the two run the press and at what speed? Management makes some assumptions, guesses, that this is about what might happen.
Each variable will be expressed as an equation; each equation will affect the others. The more variables, the more complex it gets. Together the equations model the process. Necessarily the model will be on a computer. Change a variable such as population density and the result changes.
When things get really, really complex, as in the case of the coronavirus pandemic, making new assumptions can produce very large changes in the results.
One thing we all must remember is that the results from running a model are a range of numbers, much more than just one number.
© 2020 NEW MEXICO NEWS SERVICES 4/6/20
Jobs: Good year in 2019 shows that we can grow again
By Harold Morgan
New Mexico Progress
“The way we were,” Barbra Streisand sang. “Can it be that it was all so simple then.”
Then was seven weeks ago. The legislative session ended Feb. 20 after doing what I called “Democrat stuff,” namely spending the gushers of money on all those “needs” ignored by Susana Martinez administration and filling those jobs left vacant but, clumsily, left on the books as authorized.
Then things changed. Yes, we know that, you say. The COVID-19 virus and oil. In price terms, oil, which especially affects New Mexico state revenues, is set for the worst year since 2003, reported the Wall Street Journal in the March 28-29 edition. The Journal’s prediction comes from a poll of 11 banks.
It is useful to review the 2019 revised average job figures, both to prod the memory and to think about where the state might be when things might be “all so simple.” The thing also to remember is that the state got lucky with the boom. For growth the past few years in travel and tourism, we benefitted from the now-ended national economic expansion and the “New Mexico True” marketing campaign that lured visitors and their spare money. Good news continued in January with a 13,400 job, or 1.6 percent, increase from January 2019.
Each year economists in the Department of Workforce Solutions review the previous year’s wage job estimates, add reports from sources releasing data after the original unveiling and produce new, presumably better, estimates that provide a benchmark for the coming year. The numbers, all annual averages, are in the January issue of DWS’ Labor Market Review newsletter
Overall, the wage job growth was 1.6 percent in 2019 over 2018. The original estimate was 1.7 percent, so the total percentage change isn’t much. The state added 11,600 jobs, 900 fewer than during 2018. Estimated government gains increased as the private sector estimates shrank.
Of the statewide sectors in 2019, manufacturing was revised upward by 4 percent or 1,100 jobs. Leisure and hospitality was cut by 3,300 jobs or 3.2 percent.
Metro Albuquerque and Santa Fe were the statistical winners from benchmarking. The Duke City was given another 3,200 jobs monthly, bringing the estimated 2019 increase to a decent 1.3 percent instead of a so-so 0.7 percent. Santa Fe’s monthly average job total grew 1,000 jobs to make the increase 1.7 percent instead 0.3 percent.
The wage job estimates were revised downward for the Farmington and Las Cruces metro areas. Las Cruces was cut 200 jobs per month or 0.3 percent. The Farmington estimate dropped 500 jobs or 1 percent.
The February jobs report showed continued good growth with 12,000 new jobs year over year. March was different. The new claims for unemployment compensation show that the job situation hit the wall during the week of March 21 with 18,105 New Mexicans filing for unemployment. That was more than 20 times the 869 filing during the week of March 14. Claims jumped to 28,182 the week of March 28.
The past couple of years show the state can grow, can produce more good jobs, even if concentrated in a couple of counties. The oil and virus blows show us yet again that depending on luck is a bad plan. Instead, we need hard work on the basics. Here’s one small example. The Labor Market Review reported that in Mora and Catron counties all of the out-of-school 16 to 29-year-olds were neither employed nor in the labor force. With 73.3 percent, Mora led in the percentage of young adults ages 20 to 24 who were unemployed.
Yes, these are small population rural counties. But we can’t write them off.
© 2020 NEW MEXICO NEWS SERVICES 3/23/20
Oil disruption will spark special session, and abandoned mines pose dangers
By Harold Morgan
New Mexico Progress
“A surreal juncture” was the phrase an email writer used the other day. Further comment on the COVID-19 virus is best left to others because of the rapid movement of events. But things continue to happen. Two will get a mention—oil and abandoned mines.
The big picture of oil, gas and especially the shale business has gotten attention in this column, mostly through passing along national headlines about volatility and the fact that a whole lot of the companies, the small and mid-size ones especially, aren’t making any money.
While the Delaware Basin subset of the Permian may be the best basin ever, things have changed. The point is that our massive actual and proposed increases in state spending the past two years (the current budget year that ends June 30 and the next one) are built on forecasts, not cash. The forecasts no longer work.
On March 16 oil prices on the New York Mercantile Exchange dropped to $28.70 per barrel, a four-year low, reported the Wall Street Journal. “Oil is caught in a severe demand and supply shock, both of which have an uncertain future,” the Journal quoted JPMorgan Chase analysts. A new element, the Journal reported the day before, is a Russian “strategic campaign to cripple U.S. shale-oil production.”
A special session of the Legislature looms.
Mining comes from outgoing Sen. Tom Udall, who is closing his Senate career with reports, news releases, conferences and such about mining matters and Native American issues. The latter I applaud. Udall approaches mining from the view that miners are bad guys.
Udall’s March 11 release covered a new report, “Abandoned Hard Rock Mines” (www.gao.gov/products/GAO-20-238), from the General Accounting Office. Hard rock mining involves 11 minerals including copper, molybdenum, potash, silver, gold and uranium. Coal is a “soft” rock.
The GAO calls itself “the audit, evaluation, and investigative arm of Congress, (which) exists to support Congress in meeting its constitutional responsibilities…” That means the GAO works for Congress. Udall attached the GAO report to a March 11 release. The report was addressed to the Ranking Member of the Subcommittee on Interior, Environment, and Related Agencies of the Senate Committee on Appropriations. That means Udall.
The abandoned mine situation seems a little like what my cousin the dentist observed decades ago about my wisdom teeth; Don’t bother them unless they bother you. Think Gold King.
The GAO took 21 months to do the report. It covered 13 western states including New Mexico.
Mine sites come with “features.” Apparently, though, there is no agreed definition of a “site” or a “feature.” This throws uncertainty into the numbers. Features can be mine openings, pits, buildings, and/or leftover materials called tailings. In addition to the physical and environmental hazards at a site, young men, alcohol and nearness to more populated areas can bring in the “stupidity factor.”
Four federal agencies found “at least” 140,000 features at abandoned mines on the agency’s land. The four were the Forest Service, the Bureau of Land Management, the National Park Service and the Environmental Protection Agency. Of those, 67,000 might be safety hazards and 22,500 might be environmental hazards. Actual confirmed hazards are 6,439 for physical safety and 1,363 for environmental. While these numbers are large, the federal four think there might be another 390,000 problems not yet in federal databases. Then there are state and private lands.
From the 2008 budget year to 2017, New Mexico spent $4.3 million “to address” environmental hazards at abandoned mines and nothing on safety hazards, the report said. The feds spent $64.5 million.
Udall’s solution: a royalty to be paid by future mines and a reclamation fee for existing and future mines.
© 2020 NEW MEXICO NEWS SERVICES 3/9/20
Lobbyists, trade groups essential for government functioning
By Harold Morgan
New Mexico Progress
Bill Fulginiti was a lobbyist. He was also executive director of the New Mexico Municipal League and had been director for more than 40 years when he died February 26. The League, as one might deduce from the name, is the trade organization of city governments. These are generally referred to as “incorporated municipalities.”
Part of his job was to maintain contact with the Legislature, attending relevant interim committee meetings and organization gatherings and working on policy development. At last December’s legislative forecast conference of the New Mexico Tax Research Institute, Fulginiti discussed “diversification of our revenue sources.”
“That’s been our policy for some time,” he said. He pointed out that the state has 106 municipalities with 106 economies and no access to income tax revenue. Only 21 cities have more than 10,000 people. He was happy with the capital spending approved in the 2019 legislative session, “but it comes with some issues. You have to go through many permit systems.”
The League’s office is at 1229 Paseo de Peralta in Santa Fe. That puts it in the ring of trade associations, businesses, lawyers (some of whom are lobbyists) and lobbying firms surrounding the Capitol. As the Municipal League does for cities, trade associations talk to state government and then talk to members on behalf of the government.
Sometimes they spend money. On Feb. 13, well into the 2020 session, the League bought dinner for the Senate Finance Committee. The price was $2,904.57, according to the Report of Expenditures Form B Expenditures. Fulginiti filed this report as an individual lobbyist with the spending done on behalf the League.
Fulginiti was part of the group that is critical to the functioning of our state government. Call them the “expert systems” group. These are people who know how things work; they have the knowledge of the system in their head.
Lobbyists are an essential piece of the interface between government and citizens and organizations both public and private. They convey information both ways. This is both necessary and efficient. Like any other specialized function, government and the Legislature come with their own approaches.
Dealing with this world can mystify the uninitiated, especially during the semi-organized chaos of a session. I remember a senior banker, a marine veteran, and a very precise individual, who left his first exposure to a session mumbling to himself. There is some irony with one government lobbying another government, but that’s the way it is.
A New Mexican story in January talked about “the enormous influence that lobbyists have over lawmakers” and “reforms” that New Mexico Ethics Watch (nmethicswatch.org), a bunch of lawyers, claims would do something about the influence. The organization has a 55-page report about their proposals.
The New Mexican reported Feb. 27 that lobbyists spent about $195,000 “on legislators” during the session. That’s the kind of headline number sure to gain attention. But is the influence really “enormous?”
The spending comes to $1,741 for each of our 112 legislators. If you’re selling your soul, that’s a pretty low price. And what exactly does it mean to spend money “on legislators.”
Our citizen legislators tend to be partial to subjects where they have some background. Thus, legislators from Lea and Eddy counties tend to be fond of oil and gas. A legislator from the University of New Mexico’s law school turns out to be “progressive,” not that “progressive” means progress.
Here’s an example of lobbyist spending. The National Dance Institute in Albuquerque has five registered lobbyists including the executive director, Russell Baker. Three of the people are listed at the same post office box in Santa Fe. The group’s Dec. 31 report showed spending of $17.31. Lunch for a legislator, maybe?
© 2020 NEW MEXICO NEWS SERVICES 2/24/20
Private sector Good Samaritans needed to help clean up mines
By Harold Morgan
New Mexico Progress
The full glory of the 2015 Gold King Mine spill of three million gallons of toxin-laden water into the Animas River fills a full page opposite the title of a new report about cleaning up abandoned mines: “Prospecting for Pollution: The Need for Better Incentives to Clean Up Abandoned Mines.” The author is Jonathan Wood, a Property and Environment Research Center (PERC) research fellow and an attorney at Pacific Legal Foundation.
Immediately after the spill Rep. Ben Ray Lujan, now a Senate candidate, declined to stand up for his constituents as the yellow squash-colored Animas flowed across his congressional district. But enough of that.
PERC, of Bozeman, Montana, calls itself the “home of free market environmentalism.” The notion of free markets and environmentalism might be considered an oxymoron by religious enviro types. Read on.
The state’s Mining and Minerals Division says on its website that “there are over 15,000 abandoned mine features in the State of New Mexico. They range from shallow prospect pits to 500 feet deep mine shafts to piles of coal gob (mine waste).” Tunnels and air vents are features.
New Mexico is one of five states with more than 6,500 abandoned mines. The Navajo Nation, much of which is in Arizona, has more than 500 abandoned uranium mines. A $600 million cleanup program for 94 mines was approved in 2017. The deal is between the EPA, the Navajo Nation and Freeport-McMoRan, a Phoenix-based mining firm. More to come.
Abandoned mines remaining untended or sloppily and carelessly tended (think Gold King) can generate all sorts of nasty problems. The EPA is generally responsible for cleaning up the messes, a situation that does not produce happiness. Remember, the EPA caused the Gold King spill. Worse, the PERC report says, the EPA gets only a small part of the money needed to have any effect. Yet estimated cleanup costs are in the tens of billions.
Enter markets and the private sector, maybe.
In general conversations, markets are black boxes of sorts. Stuff is mysteriously produced. The left (Bernie Sanders) claims markets are a conspiracy and all rigged. Economist Deidre McCloskey offers a better explanation. Markets comprise free people with ideas, which are thought useful and are embraced by other free people who agree the ideas are useful. Value (money) is exchanged and life for both is improved. There is a “betterment,” as McCloskey puts it.
Possible betterments from abandoned mines can exist. Minerals that are economically viable today remain in mines. Such minerals could not be profitably mined using the technologies of a century ago. Mine waste may also contain previously unknown minerals that are profitable today. Utilities might find it cheaper to do a one-off cleanup than paying for water treatment until the end of time. Conservation groups such as Trout Unlimited have helped financially with mine cleanup. The report calls such groups “Good Samaritans.” Those who would benefit from cleanups represent “a large, untapped source for additional funds,” Wood says.
But then enter the regulators. Catch 22 appears to be the uniting principle for constructing rules. “Federal regulations erect substantial obstacles... (and) make voluntary participation in any cleanup a risky proposition,” Wood says. He examines two huge sets of regulations: the Superfund and the Clean Water Act.
They are a mess. Examples include an EPA rule that could snare someone buying a polluted property. The buyer can become responsible for all past pollution even if having nothing to do with past sins.
Legislative solutions require eliminating disincentives, limiting red tape, reducing litigation risk for both Good Samaritans and the feds, creating water quality trading schemes.
Want to know more? Wood provides five pages of endnotes.
© 2020 NEW MEXICO NEWS SERVICES 2/10/20
HSD Data Book offers sprinkling of basics plus budget pitch
By Harold Morgan
New Mexico Progress
The introduction to the Human Services Department’s new State of New Mexico Data Book says it is “a summary of social, economic and health statistics of our state.” There is “a diversity of information.”
Strip away everything else and find a sales pitch for the department’s budget requests for fiscal year 2021, the budget year starting July 1. Of the 186 pages, 26 are devoted to the money. Another 37 pages go to HSD’s programs.
The book opens with 31 pages of economic statistics. It presents data in map format plus a bar graph showing the rank of each state or county for the particular factor. To start the stats, a page claims to explain things. One illuminating item is new to me; maps can have numerators and denominators. Remember elementary school, remember fractions? The numerator in the fraction goes on top. The denominator goes on the bottom. (Yes, I had to look it up.)
“Food insecurity” gets four pages of the 31 pages of economic numbers. For those not having the term on the tip of their tongue, a definition is provided.
“The U.S. Department of Agriculture defines food insecurity as a lack of consistent access to enough food for an active healthy life.” Looking around the Department of Agriculture site (ers.usda.gov), food insecurity emerges as a complex idea wrapped around “state of the art statistical methods.”
“Living wage” as a term, it appears to me, spends more time in the public dialogue than food security. You’ve heard, “Raise the minimum wage so people can earn a living wage.” Again, there is the question of meaning.
“Living wage is an alternative measure of basic needs, drawing upon geographically specific expenditure data related to an individual's/family’s likely minimum food, childcare, health insurance, housing, transportation, and other basic necessities (clothing, personal care items) costs,” the book says. “Living wage draws on these cost elements and the rough effects of income and payroll taxes to determine the minimum employment earnings necessary to meet basic needs while also maintaining self-sufficiency.”
As a term, “living wage” contains a lot of ideology.
The remaining economic statistics cover a sprinkling of the basics: population, income, unemployment and poverty rates. Four stand out starting with Native American population by county. Hispanics, African Americans and Asians don’t get maps. So much for “a diversity of information.”
The other data points are single parent households with children by state and county, drug overdose deaths and suicides.
What the book does not do is provide any insight about our economy, about how people earn a living and provide for their children. It’s like saying, as does the Albuquerque Community Foundation, that poverty is the problem without considering the causes of poverty.
Colorado is comprehensive, considering causes for all 50 states. Start at page 22 of the 2017 edition of Toward a More Competitive Colorado, a publication of the Metro Denver Chamber of Commerce. Page 22 has the state competitiveness index where New Mexico is 49th and Colorado is 14th. Every third year the report is a comprehensive edition with hundreds of data points. In between 30 key indicators are summarized to see if anything has changed significantly. These scatter among economic vitality, innovation, taxes, livability, preschool through 12th grade education, higher education, health, infrastructure. Colorado is compared with seven “competitor” states, a group including Arizona and Utah, but not New Mexico.
The best number is single parent households with children. Of New Mexico’s households with children, 42.9 percent have only one parent, third largest in the nation. Look to the counties and find a high correlation with poverty. Maybe HSD should have a program to encourage marriage.
© 2020 NEW MEXICO NEWS SERVICES 1/13/20
The Legislature: Spending real money on needs
By Harold Morgan
New Mexico Progress
Illinois Sen. Everett Dirksen didn’t say what I thought would be a good introduction to state spending and legislative direction set for consideration during the session starting Jan. 21. Dirksen did not say, “A billion here, a billion there and pretty soon you’re talking real money,” according to wikiquote.org. Maybe the misattribution is appropriate. With all those billions, fog develops.
Certainly the session will discuss and allocate real money‚ billions of dollars.
Gov. Michelle Lujan Grisham’s Jan. 6 news release sketched an overall general fund budget of $7.68 billion for the 2021 budget year starting July 1. That’s roughly $4,800 for each of the 1.6 million New Mexicans over 17.
We just crossed the $7 billion spending threshold this year. Give politicians money and they will spend it. On “needs.” Of course, all spending is needed; there is no unneeded public spending. Democrats are better at finding needs, but Republicans cannot claim purity.
At last month’s New Mexico Tax Research Institute Tax Policy Conference, the Legislative Finance Committee provided its usual stellar summary of state finances and issues. The bi-partisan LFC prepares a budget for legislative consideration as does the executive branch under the governor. The budgets normally differ a little at the margins, but mostly go in similar directions.
Hydrocarbons, aka oil and gas, set the scene for state finances. Production from the light oil in shale deposits declines quickly, said LFC Director David Abbey. “In 12 months we lose 75 % of the productivity from a new well.” Thus, drilling must grow just to keep present production levels. There is “great volatility and great downside risk,” Abbey said. A treadmill it seems.
The built-in volatility, said Rep. Patty Lundstrom, Gallup Democrat and LFC chair, means “we’ve got to make sure we have strong savings.” The governor’s answer is a 25 % general fund reserve target.
The budget builder’s task was matching the average agency’s 17% increase in spending for the 2021 budget year against the forecast 10% income increase.
The Legislature’s focus starts with public education, with a $3.2 billion recurring budget for the current year, which includes a $448 million, or 16%, hike from the year before. The governor wants another $200.3 million. The spending goes to needs and to responding to a lawsuit judgment saying the state is doing a rotten job for at-risk kids. Approaches include a longer school day and a longer year.
Work will continue on the public employee pension funds, which “face large and growing unfunded liabilities,” the LFC presentation said. A proposal for the Public Employees Retirement Association seeks “to balance the responsibility for pension liabilities across the state, retirees, and current and future workers through COLA reductions and contribution increases.”
Transportation is a topic “near and dear” to Lundstrom’s heart. Her McKinley County home, where she is the economic developer, has both an interstate highway (I-40) and much that is very rural.
Getting it done is another story. The state has appropriated but not spent $1.8 billion supposedly to pay for 3,135 projects. Just buying road right of way is a challenge. Money is appropriated for only part of a project, requiring another appropriation the next year. Inflation raises project cost. Planning is inadequate. Lundstrom will propose a highway stabilization fund.
Healthcare work starts with New Mexico having the nation’s highest percentage of the population covered by Medicaid, the health insurance program for low-income families and individuals. Proposals include a replacement management information system, behavioral health reforms and improving services for people with developmental disabilities.
Other topics include early childhood education and state government financial stability.
All to be done in 30 days. Somehow it will get done. Pretty much.
© 2020 NEW MEXICO NEWS SERVICES 12/30/20
Oil boom to ease, and what about rest of state?
By Harold Morgan
New Mexico Progress
Some concise economic numbers were the Dec. 23 present from the New Mexico Economic Databook, published by the Federal Reserve Bank of Kansas City. All the numbers here are as compared to the same period in 2018 (third quarter to third quarter).
The unemployment rate was 4.8 percent in November, and total payroll employment was up 1.9 percent. Employment growth was broad-based across industries but strongest in construction, mining and logging. Nominal personal income grew 5 percent in the third quarter. Workplace earnings rose 5.4 percent. Home prices increased 6.4 percent in the third quarter, but single-family and multifamily were down 6.7 and 27.5 percent, respectively, year-to-date through October. In September 2019, crude oil production was up 30.2 percent, and rig counts down. Exports were 18.3 percent higher in the third quarter.
A broader view came Dec. 20 at the New Mexico Tax Research Institute Tax Policy Conference. Jeffrey Mitchell, director of the University of New Mexico’s Bureau of Business and Economic Research, expanded on fed numbers. BBER provides economic data and forecasting for the economics group that produces state revenue estimates. Of the three possible outcomes for BBER’s forecast, a recession in 2021 carries the highest probability, at 35 percent.
Two Wall Street Journal stories provide national context. The Dec. 16 story was datelined Midland, Texas, 98 miles southeast of Hobbs. The headline: “Companies Suffer as Shale (Oil) Cools.” A week later, a story discussed banks tightening credit criteria on small and mid-size producers.
Bankruptcies loom, the stories said. More than 30 oil firms went down during 2019. The good news is that much of our production comes from the Delaware Basin, the fabulously productive subset of the Permian Basin. The Delaware “is not a national phenomenon,” Mitchell said. It has to do with geology and drilling technology. The high productivity offers a cushion to the national recession expected by the end of 2020.
“Our current situation,” Mitchell said, is that “we are doing—and will be doing—very well, almost entirely due to the oil and gas sector. (But) the boom as we have gotten to know it… is starting to slow.”
Oil production has grown 140 percent the past three years. For 2020, Mitchell sees 11 percent and four percent average annual growth from 2021 to 2024.
“Doing well” meant 1.3 percent job growth, or 10,600 jobs, for the second quarter of 2019. That growth rate was down from 1.5 percent, or 12,500 jobs, during the first quarter, which was the best performance since 2007. Eddy and Lea counties produced a third of the second quarter job growth.
“We are in a situation where we are at a pivot point,” Mitchell said. In the current budget year, FY 20, and in FY 21, infrastructure construction, paid for by oil income to state government, will drive job growth. The construction stimulus will end with 2021, dropping job growth to around 6,000 each quarter, about half the rate of 2019. Growth in the metro areas will continue; the Farmington metro will continue “struggling mightily… a pattern we’ve seen for some time,” Mitchell said.
The “significant outflow” from 2012 to 2018 from the state has been of people in their twenties and thirties with children and bachelor’s degrees. With the oil boom, the migration flow has reversed, but different people are coming. They are young, much earlier in their professions, and with much broader education. This migration seems directly tied to oil and may be temporary.
Mitchell’s suspicion poses a huge challenge to the administration, the private sector, the Legislature and anyone interested in economic development.
© 2019 NEW MEXICO NEWS SERVICES 12/23/19
Efforts start to save Gila River from self-appointed saviors
By Harold Morgan
New Mexico Progress
Some topics in our public discussions generate no controversy; it’s God, mother and apple pie. National parks and wild and scenic rivers are that way. Only grumpy people like me wonder, for example, if it wouldn’t be a good thing to clear the maintenance agenda at Bandelier National Monument before making it a national park.
Haydn Forward doesn’t seem grumpy. During our brief conversation he was pretty much on an even keel, though he did pause now and again to pick his words carefully when talking about his passion—the imperfections of the Wild and Scenic Rivers Act and designating the Gila and San Francisco Rivers in southwest New Mexico as wild and scenic.
Forward comes to this passion in a manner that may seem unusual these days; he took an oath as part of becoming vice chairman of the San Francisco Soil and Water Conservation District, which is based in Glenwood.
New Mexico has 47 districts. As independent divisions of state government with elected boards of supervisors, the districts are central to local government, especially in rural areas. According to the Department of Agriculture website, the districts “conserve and develop the natural resources of the state, provide for flood control, preserve wildlife, and protect the tax base.“ The objective is “to develop locally driven solutions to natural resource concerns.“
When something threatens districts, the people involved object. Here the “something” is the move to designate the Gila and San Francisco Rivers as officially wild and scenic. Forman objects. His mission is “balancing the scale about the truth.”
The truth may be out there, but for now it isn’t much involved in the Gila-San Francisco discussion, which Forward says the New Mexico Wilderness Alliance (aka NM Wild) is driving. NM Wild is even writing the legislation for the wild and scenic designation, local offices of Sens. Heinrich and Udall “have confirmed to me,” Forward says. He sees the task as properly the purview of the senators.
I was unable to reach the New Mexico Wilderness Alliance at the numbers listed on its website, and the email would not transmit.
He came to Albuquerque recently for two presentations at the Joint Stockmen Convention. After he made the case to board of the Coalition of Arizona-New Mexico Counties it passed a motion to “oppose any Wild, Scenic and Recreation River designations in Arizona and New Mexico.“ The coalition consists of ten New Mexico counties and six from Arizona.
With Wild and Scenic designation, control of the land and water goes to the federal government, Forward says. The feds would appoint a custodian, possibly located in the U. S. Forest Service, possibly in the U. S. Park Service -- Forward doesn’t know, which worries him. This control would apply within municipalities. It isn’t just the river, designation includes a quarter mile on both sides up to the high water mark and likely would affect proposed uses above and below the Wild and Scenic section. The custodian would specify zoning standards.
Forward reviewed the language in the act. He concluded that “any tributary and associated property that the custodian deems will impact the scenic or recreational meaning of the act will not be allowed to use their water or make land improvements.” The scary caveat is the statement about affecting the meaning of the act. It is totally a judgment call. A good guess of the regulatory tilt comes from the growth of the number of Wild and Scenic rivers -- now 209, including four in New Mexico, after starting with ten rivers in 1968.
For more information, Forward suggests calling the Catron County Commissioners’ office at 575-533-6423.
© 2019 NEW MEXICO NEWS SERVICES 12/2/19
2000 to 2018: A lost eight years
By Harold Morgan
New Mexico Progress
As the end of 2019 approaches, a look at New Mexico’s population and earnings performances will provide a base for digesting the effects of the oil boom of the past couple of years. That nothing much happened is the story from the most recent data. “Most recent” means 2017 and 2018.
The population data show a lost decade. Not exactly news, but something worth remembering. Harkin back to the thrilling days of late 2016 (with apologies to the Lone Ranger).
At the December 2016 conference of the New Mexico Tax Research Institute, David Abbey, director of the Legislative Finance Committee, talked of zero job growth and state government maybe not having enough cash to pay its bills. How soon we forget as we slosh around in oil revenue.
Something did happen in 2017, a singular accomplishment that must have Mississippi saying, “Thank God for New Mexico.”
In that year New Mexico slipped ahead, actually below, Mississippi to claim the nation’s lowest real (meaning statistically adjusted for inflation) income per person: $40,255, just $98 below Mississippi’s $40,353. We managed this by having income growth of 0.6 percent for the year, less than half of Mississippi’s 1.3 percent.
In regular dollars we escaped the bottom with a personal income of $39,709, putting us $1,245 ahead of West Virginia and $3,132 over Mississippi.
The income figures reflect what New Mexicans have been doing all decade: Leaving, taking their money, and moving to other states. Between 2013 and 2018 the state population grew to 2.095 million. The six-year increase was 2,636 people, a miniscule rate of just over one tenth of one percent. The growth rate has picked up the past two years. We added 606 people in 2017 and 1,853 in 2018.
Note that these population figures are net numbers. People come and go; our concern is the difference. Our neighbors are more populous and getting more so. Arizona’s 2018 population was 7,171,646 in 2018 with 5,695,564 in Colorado.
New Mexico added 36,249, or 1.7 percent, between the April 2010 census and 2018.
New Mexico is losing ground. In 2018, we were the 36th largest state, placing between Kansas and Nebraska. States with fewer people than New Mexico include Wyoming (with 577,737 people, the smallest population state), Vermont, both Dakotas and Montana.
Between 2017 and 2018, we were 39th in population growth with 2,033 more residents and 40th in the percentage of growth. Our increase was just shy of one percent. Arizona was fourth and Colorado seventh in growth percentage.
The components of population change are natural increase (births and deaths) and migration (people coming and going). “Negative natural increase” is the awkward jargon for more people dying in an area than being born. “Negative net migration” is the slightly less awkward term for more leaving than coming.
Domestic migration, meaning to elsewhere in the United States, is our key number. Between the 2000 census and 2018, a net of 62,051 people picked up and left New Mexico. Other countries supplied us 27,423. Small population states losing people to domestic migration during the period include Wyoming, Wisconsin, Rhode Island, Vermont, Nebraska, Kansas (96,461 left), Iowa, and Alaska. No states lost people to international migration.
There were 142,845 deaths for the eight-year period, partly offsetting 213,795 births for a natural increase of 70,950.
New census numbers will appear next year. If job growth is any proxy, Eddy and Lea counties will be very happy due to oil. Albuquerque will be somewhat pleased. The other metro areas—Santa Fe, Las Cruces and Farmington—it’s hard to say. Rural counties are an even bigger question.
© 2019 NEW MEXICO NEWS SERVICES 11/18/19
To know the essential New Mexico, all you need is love
By Harold Morgan
New Mexico Progress
In thinking about New Mexico, the question of the state’s essence—the spirit—is constant. Here is one view.
“Like O’Keeffe, (Rebecca Salsbury) felt deeply inspired by the culture and landscape of New Mexico.”
Salsbury was the wife of Paul Strand, a great photographer of the early 1900s. The observation is from Carolyn Burke’s review in the New York Review of Books of “Foursome: Alfred Stieglitz, Georgia O’Keeffe, Paul Strand, Rebecca Salsbury.” (O’Keeffe was married to Stieglitz.)
O’Keeffe first visited New Mexico in 1929. Twenty years later she moved here permanently.
Consider the source here. Granting culture and landscape as a critical insight is required by O’Keeffe’s place as a premier artist of the 20th century. But what is beyond culture and landscape? After all, the culture(s) were already here. So was the landscape. The native cultures were and are rich and complex. The O’Keeffe-Salsbury inspirations certainly brought far more depth than did the approach of Mabel Dodge Luhan, who responded to a letter from her husband saying, “Save the Indians.”
The sky raised O’Keeffe’s inspiration level. She started painting clouds around 1960. A new show, “Seeing Beyond” at the Georgia O’Keeffe Museum in Santa Fe, explores this work. You’ve got to be good to get your own museum.
The question reappears. What is beyond? What’s next? Light, for one thing. Organized religion for another.
These days the state is home to a number of organized religious groups. That means the state counts holiness as what economic developers call an “export product,” one drawing money from elsewhere and sending its output of nourished souls to other places. These groups are not the mainstream mass market churches. Rather these are specifically organized, even if affiliated with a broader group.
Start with monasteries. The Catholic Church calls them “religious life communities.” New Mexico has 11, according to a directory (deoestgloria.com/us). They’re scattered around the state with nine in the north, where such groups tend to locate. The Benedictines’ Our Lady of Guadalupe Monastery is in Silver City. The Franciscans’ Poor Clare Nuns is in Roswell. All have websites.
Dar al Islam, founded in 1979 across the valley from Abiquiu, just calls itself “a non-profit organization.” The mission is “to present Islam to all peoples of North America.” The website, daralislam.org, may offer an answer to what is beyond cultures and landscape. It says the location is “among the most pristine and tranquil spaces in all of North America.”
The Lama Foundation near San Cristobal, which is up the road north from Questa, isn’t exactly a religious community, but it is “a landmark for spiritual renewal and discovery,” says lamafoundation.org. It “embraces all spiritual traditions.”
Lama is famous for the book “Be Here Now,” which tells the story of Richard Alpert who became Ram Dass.
Hanuman Temple (nkbashram.org), west of the Taos plaza, is called the Neem Karoli Baba Ashram. It celebrates Neem Karoli Baba, “a great Indian saint of the Humalayan lineage.”
Two outlets (if that’s the word) of Sufi Ruhaniat International are in Silver City. Sufism is called Islamic mysticism.
The Presbyterians have operated Ghost Ranch near Abiquiu as an education and retreat center since 1955. O’Keeffe first visited Ghost Ranch in 1934 and bought a house there in 1940.
What was for decades the Glorieta Baptist Assembly near Santa Fe is now a Christian camp operated by Glorieta 2.0.
Still the question remains. What else? A suggestion comes from the Proceedings of the Santa Fe Institute’s First Interplanetary Festival. Also from the Beatles. All you need is love.
© 2019 NEW MEXICO NEWS SERVICES 11/4/19
Businesses already tend to “stakeholders” because it’s the right thing to do
By Harold Morgan
New Mexico Progress
Profit is almost the first responsibility of a business. First is economic performance, which profit measures, management guru Peter Drucker said 45 years ago. “Only business has economic performance as its specific mission,” he said early in his classic, “Management.” That means everyone from home-based individuals to mega-corporations in New York, Chicago, Los Angeles, Silicon Valley, and elsewhere.
In August the Business Roundtable, a club of very large companies, threw what was called new stuff into the responsibility equation when it issued a “New Statement on the Purpose of a Corporation” that was signed by 181 CEOs. From my view the statement—heavily criticized by the right as a copout and lauded by the left—simply wrote down what businesses already do.
These huge companies and their statement do affect New Mexico. A good many (I have no idea how many) operate in the state. McDonald’s is everywhere, often operated by franchises owned by local residents. There are the big banks—Wells Fargo and Bank of America. Exxon Mobil in the Permian Basin. Facebook in Los Lunas. Also, Best Buy, AT&T, ConocoPhillips, Caterpillar, Union Pacific, Target. Plus, we are all customers of the companies, so we can’t ignore what they say.
Extend the concept just a little to include nonprofits and government entities. The concept extension recasts profit to mean having some money left over at the end of the accounting period. We all are bound by accounting systems starting with individual checkbooks and becoming large and complex for the big guys. If the organization doesn’t have any money left over and continues not having any money left over, eventually the organization will run out of money.
Nonprofits, which supposedly have superior moral character, will seek more donors, which amounts to selling stock, except the donors, small ones, anyway, will have no control over the organization. Government organizations will appeal to legislative bodies. If these organizations fail to solve the money availability problem, they will disappear.
The words in the statement are weaselly, gathering all the buzzwords of public dialogue and corporate mission statements: “sustainability” (of course!), “stakeholders,” “diversity,” “inclusion,” “transparency.” Drucker is direct. One of management’s three tasks, he said, is “managing social impacts and social responsibilities.”
The word “profit” does not appear in the statement. This is strange; the corporate big guys of the Business Roundtable are afraid of talking about profit. Yet profit makes possible the taxes paying for government and the philanthropy financing nonprofits.
Businesses cannot not do the things the statement discusses. Here’s an example from a long time ago. A junior employee of an Albuquerque company was found to have walked away from a Los Angeles prison farm. He had to return to jail for a few months. The company kept his job open.
Look around at the activities of New Mexico companies. They maintain street and highway medians. They get a little advertising by posting a sign in the median. Seems a fair exchange to me. Companies support youth athletics. Maybe the company name appears on the back of the jersey. People give time to all sorts of activities.
Smith’s is hardly a New Mexico company; it is part of Kroger, the nation’s largest grocer. But it does local things. My neighborhood Smith’s sometimes collects spare change at the register for charities. Smith’s and others, such as Wal-Mart, provide a spot by the door for Girl Scouts to sell cookies in the early spring.
While a good many of the people in our citizen legislature are retired, others have jobs. The employer figures out how to accommodate the public service. They just do it without any push from Elizabeth Warren, Bernie Sanders or the Business Roundtable.
© 2019 NEW MEXICO NEWS SERVICES 10/21/19
Considering Senate candidates: Toulouse Oliver doesn’t believe female senator, Lujan “beat Trump”
By Harold Morgan
New Mexico Progress
Democrats and Republicans have problems in the 2020 race for the U. S. Senate seat being vacated by Tom Udall. Their respective problems are quite different.
Let’s assume that political races are about the candidate’s ideas and persona, with money as a key variable. A candidate must also have some ego, enough self-regard to do the work.
The idea is to sell the candidate’s ideas and persona to the voters. To have something to sell, a candidate needs an unknown “it,” a quality of magnetism that draws people and lights up a room. The selling requires money.
The further assumption is that voters, being rational, will go with what is known and acceptable, barring an alternative being offered. The source here, as before when considering candidate ideas, is the emails sent asking for money.
Ben Ray Lujan, incumbent congressman from the north, has most of the money, no ideas, and what ought to be one huge liability—copping out of representing his constituents in the Gold King Mine spill.
I have kept 65 Lujan emails since June. Lujan is running against Senate Majority Leader Mitch McConnell and President Trump. Lujan seldom varies. There is no discussion of ideas about the future of America. A few messages condemn Trump’s September rally in Rio Rancho.
Best of all, Lujan says, “I beat Trump in 2018.” At what, I wonder? Did you not know that?
An alternative exists. The other Democratic candidate is Secretary of State Maggie Toulouse Oliver. From what I’ve seen in the media, she seems to offer a reasonable persona. Ideas are another matter. She is a radical.
On Oct. 7, Toulouse proclaimed, “Brand New Congress, the organization that endorsed and backed 30 change-making candidates in 2018, including Representative Alexandria Ocasio-Cortez—has endorsed Maggie’s campaign!... Maggie is the most progressive candidate in this race by far, and she doesn't buckle when it comes to her values.”
A Sept. 30 email said, “We won't back down on demanding action in Washington to solve our most pressing issues.” Not Santa Fe?
The Oct. 6 message was, “Votes like (confirming Brett Kavanaugh to the Supreme Court) have real consequences when not enough women are in a position of power to be heard and to influence our democracy… And that's exactly what happened: Instead of believing women, the United States Senate confirmed Brett Kavanaugh…”
Toulouse Oliver conveniently and hypocritically ignored the 45-minute Senate floor speech by Republican Sen. Susan Collins, of Maine, detailing her vote for Kavanaugh. It came down to “lack of corroborating evidence” for the accusations, Collins said. “But certain fundamentally legal principles about due process, the presumption of innocence, and fairness do bear on my thinking, and I cannot abandon them,” she said.
The two Republicans in the race, Mick Rich and Gavin Clarkson, are unknown. Before considering candidate ideas, voters must have some sense of the candidate. Voters get that sense from the candidate communicating with them, which requires money – a lot of it, maybe a million dollars, maybe much more. The spending must happen well before the election—that means this year—in order to allow to move to talking about candidate ideas.
The two Republicans are not spending the communications money. They lack the money to spend, both having raised just a few hundred thousand dollars as of Sept. 30, according to the Federal Election Commission.
I assume these two men are sincere and want to be taken seriously. Another candidate motivator exists. Candidates, however frivolous, are indeed taken seriously. After all, one of those guys might be our United States Senator. That seriousness feels good. It brings a glow of importance.
© 2019 NEW MEXICO NEWS SERVICES 10/7/19
Uncertainties, both good and bad, seen in NM finances
By Harold Morgan
New Mexico Progress
With this column, we return to the August meeting of the Legislative Finance Committee about handling the oil money filling the state’s bank accounts.
The one certainty expressed during the three hours of presentations is that there will be a recession. But when? Welcome back to uncertainty.
As the record national economic expansion continues, Dan White, director of fiscal policy research for Moody’s Analytics, a national economic consulting firm, said, “We are very near the time when we should be seeing the next recession.” Still, if one is to forecast, decisions are required. Moody’s current forecast assumes a recession by the end of calendar year 2020.
For states, keeping 5 percent of annual recurring spending in reserve has been the rule, White said. Moody’s research about the source of the rule found it was an offhand comment a few years ago that just “felt right.” An 11 percent reserve is a better plan, Moody’s research indicates, though “all states are different,” White said.
Volatility in New Mexico’s economy is much reduced the past 40 years. White cited economic diversification and the state’s long-term slow growth, which means there is less to vary from.
However—and a big however—volatility of state revenue is high compared to other energy producing states.
Medicaid, pensions and interest are the future ringers. Medicaid costs will become more of a problem, White said. Medicaid costs are projected to grow 6.5 percent annually while state revenue growth is estimated at 5 percent, a gap that can’t continue forever.
Other uncertainty looms in good and bad ways. A Sept. 30 page one Wall Street Journal headline said, “U.S. Shale Boom Slows Down Amid Worries Over Oil Supply.” The accompanying story noted that “major oil companies such as Exxon Mobil Corp. and Chevron Corp.” are “investing heavily in factory-style shale production” in the Permian Basin.
The state’s consensus forecast shows 1.5 percent wage job growth for fiscal 2019, just completed, and 1.6 percent for fiscal 2020.
A senior economist from the Federal Reserve Bank of Dallas, Mine Yücel, translated 2019 job growth to an annualized basis and estimates the state could add about 22,000 jobs in 2019, a 2.6 percent increase. Yücel spoke September 27 to the legislative Revenue Stabilization and Tax Policy Committee.
For decades, comments that people don’t want to hear about the conventional wisdom have come from Jim Peach, retired New Mexico State economics professor. Before Peach spoke, that approach drew praise from Sen. John Arthur Smith, Deming Democrat, who is well known for injecting reality into the conventional thinking.
For Peach the leading indicator of a coming recession is when corporate executives and leading economists say the economy is sound.
Peach added his support to reforming the state’s tax system. “It’s time to do something now when times are good. New Mexico’s tax system was designed decades ago by Franklin Jones (a tax attorney) and others. Marginal changes won’t fix things. What I would do now is fix the tax system.”
Considering the state’s current economic performance without Eddy and Lea counties substantially drops the growth rates. Over the year from August 2018 to August 2019, job growth in the state’s four metro areas was 56 percent of the 5,318 new jobs in much less populous Eddy and Lea counties.
New revenue could come from increasing the fuel tax. “We need to do that,” Peach said. A tax on electric vehicles probably is needed.
While Peach believes that “by some measures, New Mexico already has a diversified economy,” he also believes, “there is little to suggest that New Mexico can grow its way out of these economic issues.”
Big challenges exist. But they are happier challenges than a few years ago.
© 2019 NEW MEXICO NEWS SERVICES 9/23/19
LFC brings North Dakota official for oil boom perspective
By Harold Morgan
New Mexico Progress
When it comes to oil revenue booms and busts affecting state government, North Dakota has been there and done that and has gotten a couple of t-shirts. This experience made it totally appropriate that the Legislative Finance Committee invited Allen Knudson, fiscal director of the North Dakota Legislative Council, to last month’s meeting in Red River.
For the roughly 30 legislators and the audience of lobbyists, staff and two or three citizens, Knudsen offered four general lessons from his state’s experience over the past 30 years. The lessons sounded familiar.
The oil experience is a roller coaster ride. Oil projections are “never right (and) sometimes not even close.” Don’t always count on experts. “Try to plan for the expected unexpected,” which sounds like the factors called “known unknowns” by former Secretary of Defense and sometime Taos resident Donald Rumsfeld.
A recurring theme, which Knudsen didn’t explicitly state, is to spend the money when it is there, not when it is only expected.
North Dakota uses a two-year budget cycle called a “biennium.” For the current cycle, 2019 to 2021, general fund revenue is estimated at $4.89 billion, or around $2.45 billion a year. Sales, use and motor vehicle taxes provide 43 percent of the money. (“Use” taxes apply to large things purchased out of state, such as furniture or vehicles.) Oil and coal taxes provide 9 percent.
The three oil taxes are royalties and then 5 percent on both gross production and extraction. Oil and gas tax collections first peaked $340 million in the 1981-1983 cycle, then dropped to $80 million in the mid-1990s, came back to $360 million in 2005-2007, blew out to $6 billion in 2013-2015 and dropped by more than half. Oil tax revenue was more than 20 percent of the general fund in the 1980s and now is just under 10 percent.
In the 1980s boom, the Legislature put the oil revenue into the general fund. Then came the 1986 bust. “Major budget reductions” affected schools. Housing developments weren’t completed. Drought made it worse.
The 1990s plan had a constitutional stabilization fund for school spending and a “permanent” oil tax trust fund, which turned out not to be permanent.
The 2008 boom came as the nation entered the Great Recession. The pressure was to cut taxes and spend on infrastructure, roads, schools, public safety and human services. The Strategic Investment and Improvements Fund was “to be used for one-time expenditures to improve state infrastructure and effectiveness of state government.”
With that 50 percent oil revenue crash in 2015-2017, general fund revenue dropped 30 percent. A special session of the Legislature cut spending by 7 percent and raided every available bucket of money. The 2017 legislative session brought another 7 percent spending cut.
Today North Dakota finds itself in the trap of having increased recurring spending beyond the trend of long-term revenue growth. Trend aside, with hydrocarbon tax collections back up, there is pressure to spend.
The newest plan includes budget stabilization, limiting ongoing general fund reliance on oil, and spending money only after it is collected. (Wow!). There are funds for tax relief, strategic investment and a constitutionally protected “Legacy Fund” with earnings to the general fund. This latter fund sounds like New Mexico’s permanent fund, which the left wants to raid.
As the policy contemplation continues, on Sept. 17 Gov. Michelle Lujan Grisham went a full Bernie Sanders by proposing a really terrible idea: completely “free” college in the state for everyone. The quotes, called scare quotes, are around “free” because nothing is free. Such a move would completely blow the trend of state spending from its current track.
Legislative worry is well founded.
© 2019 NEW MEXICO NEWS SERVICES 9/9/19
LFC considers all that oil money
By Harold Morgan
New Mexico Progress
A warm, sunny, late August greeted the Legislative Finance Committee in Red River for a meeting to do what the LFC does best—consider longer term matters facing the state. In this case the question was handling all that money that the Permian Basin shale oil boom has brought to state coffers. The topic got more than six hours of the scheduled session.
This column and the next one will summarize the presentations. It was a joint meeting with the Revenue Stabilization and Tax Policy Committee. That and the topic drew about 30 legislators.
The LFC builds one of two budgets prepared each year for state government. The executive branch, led by the governor, builds the other. During the legislative session, the two are merged.
As do other interim committees, the LFC travels during the summer. The LFC went to Portales in June and Cloudcroft in July. Group dinners allow more relaxed conversation, not that policy differences disappear. The environment may ease the workload of three-day meetings (plus travel time) starting in June and then extending to four and five days as the session approaches. The demanding schedule belies the notion that lawmakers meet only in Santa Fe and only for the legislative session.
The LFC membership mixes parties, regions, philosophies, age and gender. It provides a useful framework for policy debate given the dominance of the Democrats.
As for the topic, first and overall, the bloom is very much on the rose of New Mexico’s oil production and the associated monies flowing to the state. But away from the semi-frenzy of Santa Fe, the occasional headline wanders by, creating questions to be remembered.
In the House, the Republican numbers spell irrelevance, but the Rs still get to talk. Rep. Phelps Anderson, a Roswell Republican in his third stint as a freshman, said, “The revenue forecast is all blue sky.” He worries about what is “below the horizon,” noting that major oil companies make decisions on a much longer planning horizon than government, perhaps two years or more.
Anderson is interested finding new state revenue sources from renewable energy production, which, after all, is supposed to replace hydrocarbons. To his perspective, Anderson brings the real world of an oilman.
Rep. Rod Montoya, Farmington Republican, shares the worries. The Legislature can’t control external factors, he observed
“Heavy Debt Drags Down Shale-Oil Producers,” read the August 31 – September 1 Wall Street Journal headline. The August 10 Economist said, “Earnings of energy producers reliant on shale take a tumble.”
It’s a chicken-egg problem of needing to maintain production levels, but the shale wells have short production lives, which means more drilling, which means more borrowing. Smaller publicly held and private companies are getting the squeeze. In the meantime, the big guys, the Exxon-Mobils, with more capital and a longer planning horizon, are moving forward. Stay tuned.
Context for the LFC thinking comes from the 2019 session, which mostly did Democrat stuff under first-year Gov. Michelle Lujan Grisham, with an astounding 11 percent hike in general fund spending for the 2020 fiscal year that started July 1. Much of that increase came in public education, responding to a lawsuit.
Big changes can suddenly disrupt the energy flow of money to state government and the associated jobs. On July 1 two of the dozen coal mines in the Powder River Basin of northeast Wyoming closed and laid off 600 miners. Traditionally energy—coal and oil and gas— has generated more than half of Wyoming’s general fund revenue, reported the Wall Street Journal.
The LFC’s studious approach to New Mexico’s happy situation appears more than justified.
© 2019 NEW MEXICO NEWS SERVICES 8/26/19
SFI party brings “deep ideas,” rock ‘n’ roll to Santa Fe
By Harold Morgan
New Mexico Progress
Our topic here is either 14 months late, two months late, or totally timely. It depends on perspective.
My choice is timeliness, thanks to the recent arrival of “Interplanetary Transmissions: Genesis, Proceedings of the Santa Fe Institute’s First InterPlanetary Festival.”
This sounds really far out, man.
The first InterPlanetary Festival was in June 2018. I didn’t go because I didn’t know about it. The second was in June. I planned to go but got distracted by a medical problem that is now being managed. Maybe in 2020.
As befits a party, the festival offers rock ‘n’ roll and discussions of ideas—big, interplanetary ideas—from a truly diverse set of people tending toward multiple degrees from MIT but also the University of Arizona, plus art in the form of Burning Man-esque pieces and more.
The difference for the festival, writes director Caitlin McShea in the book’s introduction, is that instead of sitting in some hotel conference room, you can hang out munching an ice cream cone and hear from, for example, an architect building lunar habitats or a virtual reality artist considering the experience of falling between Saturn and its rings.
Challenging, for sure, but also fascinating.
A comfort is that there are people thinking about these problems and much more. A further comfort is that the thinking happens here. About 8,000 people attended the festival both years.
SFI is a natural for this sort of thing. Its Santa Fe location traces, as much as anything, to it coming from people at Los Alamos National Laboratory and their friends, a group sprinkled with Nobel prize winners. Besides, Santa Fe is a pretty good place to think, businessman and politico John Dendahl once observed.
McShea says SFI is “a complexity science research center and educational facility.”
“The festival as a medium allows SFI’s perspective on planetary success—the complexity of our living planet and the systems that govern its fitness—to be contextualized, considered and criticized at times by groups of very cool and very different people.”
For New Mexicans the festival is another of those world-class elements that are part of our enchantment but are not sunsets. It should be remembered and celebrated.
The 2018 festival had ten panels. One considered social and economic engineering. The context came from the many attempts, through history, to orchestrate social outcomes and engineer social interactions. One was Chaco Canyon’s efforts to control planting and water distribution. Voting systems and the civil rights movement are others. Panel participants were Robert Gehorsam, former director of the Institute of Play (instituteofplay.org) and involved in virtual and augmented reality; D.A. Wallach, musician and venture capitalist; and Cory Doctorow, science fiction novelist.
Wallach suggested, “We should have some sort of provisional holding period that we subject new knowledge to.”
Another panel considered time design. (Can one design time?) Participants were Van Savage of UCLA, a theoretical physicist who switched to biology; Martine Rothblatt, founder of SiriusXM Satellite Radio and chair of United Therapeutics; Stephani Crabtree, an archeologist at the Pennsylvania State University Human Environment Dynamics Laboratory.
Time, the panelists say, is a nontrivial matter. Time isn’t necessarily linear; check Einstein. A mouse’s biological clock ticks much faster than an elephant’s. The larger the city, the faster the clock. Or, at least, people do things faster in bigger cities – one reason my daughter moved to Nevada from mega-metro New England.
Other general panel topics included planetary policy and regulation, autonomous ecosystems, living in space, intelligent systems and visualization and designing the impossible.
The general themes come from SFI president David Krakauer. Next year is “Voyager,” following “Stardust” this year and “Genesis” in 2018. The phrase “deep ideas” is from Krakauer.
Find SFI at santafe.edu and the festival at interplanetaryfest.org.
© 2019 NEW MEXICO NEWS SERVICES 8/12/19
Cultural attractions show long-term visitor decline
By Harold Morgan
New Mexico Progress
New Mexico’s cultural attractions seem to have missed the Instagram popularity driving huge increases in national park attendance the past few years. The park situation was discussed here in May. (See nmopinions.com.)
This conclusion comes from reviewing visitor numbers at the eight museums and seven historic sites run by the state’s Department of Cultural Affairs. (Most of the historic sites used to be called state monuments.) The visitor total for the 2019 budget year that ended June 30 was 992,574, down 2 percent from 1,014,041 but still above 939,159 in 2017.
The number of people visiting these institutions is worth some thought in the short term just to review year-over-year performance. More important, however, is the long term. Cultural Affairs could reasonably be considered the custodian of New Mexico’s Enchantment, that ambiguous mix of exoticness defining the state as much as does anything.
Four museums are in Santa Fe: International Folk Art, Indian Arts and Culture, Art, and History. The others are Natural History and Science and the Hispanic Cultural Center in Albuquerque; Space History in Alamogordo and Farm and Ranch in Las Cruces. The sites are Coronado (Bernalillo), Lincoln, Jemez, Fort Sumner/Bosque Redondo and Fort Stanton. Fort Selden, called “seldom” in honor of its system-low number of visitors (4,370 in FY 2019), is in Radium Springs.
Santa Fe has the most museums, but the Albuquerque pair dominated on the people side with 490,000 visitors during 2019. In Santa Fe, the four, together, attracted 254,000. The differences are a lot more people in Albuquerque, suggesting that locals are a much bigger piece of the museum pie. In Santa Fe, the reasonable guess is that tourists are the bigger group.
The Sacramento Mountains have a cluster of four attractions with the Museum of Space History in Alamogordo, Lincoln, Fort Stanton, and the Farm and Ranch Heritage Museum in Las Cruces. White Sands National Monument, roughly in the center of the cluster, drew 603,008 in 2018, a 46,823, or 8 percent increase over 2017. Around 209,000 made it to the other four.
Overall attendance seems to vary a few percent one way or the other with bigger effects from major shows, such as the heavily hyped Da Vinci event at the Natural History Museum in 2018. Year-to-year reporting misses the long term and, with it, understanding the effect on the enchantment.
It’s nice that the Santa Fe four drew 254,000 last year. In 1989 the four attracted 432,436. That’s a three-decade drop of 178,436, or 41 percent. (I have the old numbers handy in a report produced for Sunwest Bank.) The Museum of Space History is down 50 percent. Coronado attendance dropped 85 percent.
What happened? No clue. In theory the History Museum, which opened in 2009 and swallowed the Palace of the Governors, should have lured more people.
The White Sands visitor increase offers a thought if not an answer. White Sands is a giant sandbox with grills. That’s a long way from Indian Arts and Culture of Art or History. What is our job here, our mission?
Side note: The Albuquerque Journal quoted a Cultural Affairs official as saying, “Fort Sumner/Bosque Redondo celebrated the 150th anniversary of the signing of the Treaty of Bosque Redondo last June, which made FY18 numbers unusually high for them.” Two problems here. The site itself, Bosque Redondo, “celebrated” nothing. It was a commemoration, a remembrance, by Navajo and Mescalero Apache people of five years in a concentration camp. The tribal people at the event made the distinction quite clear. No wonder they feel disrespected by the mainstream White society.
© 2019 NEW MEXICO NEWS SERVICES 7/29/19
Multi-talented Paddy Martinez, who discovered uranium, died 50 years ago
By Harold Morgan
New Mexico Progress
Paddy Martinez, of San Mateo, died August 26, 1969, almost 50 years ago. He was 91. His moment of fame—actually a six-month moment—came in the July 1950 when he found rocks that were revealed months later as the first discovery of uranium ore found in New Mexico.
These days the Martinez story has faded to three words: “a Navajo sheepherder.” This is the designation of the Grants Chamber of Commerce.
Paddy was more than a sheepherder. He was something of a non-academic polymath, one of those people who knew and did everything.
To start, he was smart enough to recognize that the rocks he saw might be (a) uranium and (b) of value and then (c) to do something about his discovery. These connections had escaped crowds of educated types scouring the area northwest of Grants to supply the federal government’s post World War II and Cold War uranium demand.
The government had declared itself the only buyer. Martinez learned about the potential value of uranium by overhearing conversations, possibly at the Lux Motel or the Yucca Hotel.
The number of sheep he had make him a rancher. He took the rocks to Grants businessman Carrol Gunderson, who forwarded them to the Santa Fe Railway, owner of the mineral rights.
Paddy Martinez was tall, half Irish, a medicine man, a judge, a policeman, father of 24, a provider of labor for the carrot harvest, and facilitator of development of uranium properties, and he had a flair for languages. He brought people in to vote, too.
The building that houses the New Mexico Mining Museum in Grants is now called the Uranium Miners Building. This, effective in June, came after several years’ discussion between the museum board and the state of New Mexico, which owns the building. (The Grants Chamber should quit calling the museum “a simulated mining museum.” I’ve never heard of a simulated museum. The museum does have a simulated mine.)
Martinez was born in 1878, just ten years after Navajos were released from the concentration camp at Bosque Redondo near Fort Sumner. My best guess is that he was a multi-talented man of his times, scrambling to survive in a poor area where Navajos were at the bottom of the economic ladder.
His third wife was Flora Hudson Martinez, who died in 2006 at 104. Her obituary from Compassion Mortuary in Grants said she was “born into the Sleeping Rock People and for the Red Running into the Water People.” I have spoken to three of her surviving children: Juan Martinez, and Flora Dimitriou and Mae Lynch, both of Prewitt. Flora and Mae provided the tally of 24 children.
Paddy’s name is one of the details commonly lost. His full name, the obituary said, was, “Patricio ‘Paddy’ Martinez.” My investigations are part of developing a book about New Mexico’s early uranium mining days (1946 to 1957).
His courthouse was Charley’s Automotive Service in Grants. The exact functions and duties of a Navajo judge remain obscure.
Before uranium came to Grants, there were carrots in Milan. Come harvest time, Martinez would find people to work the harvest. “Some found love right there in the carrot fields,” Flora said. When the newly attached couples had no place to stay, Paddy would invite them to camp on his land, Flora said. Such generosity was typical. Albuquerque Tribune reporter Howard Bryan, called Martinez “the patriarch of all Navajos in the Grants area.”
Martinez is one of two full-time New Mexicans in the Mining Hall of Fame. The other is Maxie Anderson, head of Ranchers Exploration and Development Corporation. Anderson has a museum, the Anderson Abruzzo Albuquerque International Balloon Museum.
© 2019 NEW MEXICO NEWS SERVICES 7/15/19
2019 Legislature Supports Soil, Parks, Babies, Little League. New License Plates Needed
By Harold Morgan
New Mexico Progress
One Catch 22 was removed from state government during the 60-day 2019 legislative session (maybe more, I don’t know).
Public safety officers, people who work for police departments but aren’t full-fledged cops and who get to take intoxicated and/or incapacitated people to treatment centers or jails, can now ask the facilities to take the individuals. Curious situation for the public safety officer—being employed to take people to the facility but unable to seek commitment to the facility.
This enlightenment, via House Bill 234, is one result of the session that saw 309 bills passed with 281 signed by new Governor Michelle Lujan Grisham, double the approvals compared to former Gov. Susana Martinez in 2017, Martinez’ final 60-day session. These new laws are now in effect. The numbers come from the Legislative Council Service’s annual “Highlights” publication that, LCS says, “summarizes much, but not all, of the legislative action.”
“Busy” is the LCS word for the session. Indeed. Lots of new money from the Permian Basin oil boom explains the activity.
For the budget year that started July 1, the budget calls for spending $7.3 billion from the general fund, the operating cache. Throw in all the money and the spending total goes to $19.4 billion. Much of the additional money comes from the feds and goes to human services tasks.
The big stuff has been reported elsewhere. I will review some little things to illustrate the scope of state government.
Hiring people to fill vacant but approved jobs is happening across government. The assumption has to be that the work allocated to the approved positions was somehow essential. The Martinez administration had left the jobs vacant, a sort passive aggressive approach to reducing government, but the world hadn’t ended, for the most part, with the undone work.
However, for sure, too few people in areas such as children’s services has meant people being hurt.
There is the Healthy Soil Act (HB 204), a new department of agriculture program to “increase soil organic matter,” among other things. Outdoor tourism now is a division in the Economic Development Department (SB 462).
The list of capital outlay projects continues the mystery of using state money for local items such as parks and parking lots. The Manuelito Chapter House will get a land use master plan for $100,000 and a $60,000 motor grader. A $220,000 multipurpose building is set for the Mariano Chapter House. In Albuquerque it will be $160,000 for improvements at Sunrise Terrace Park with $100,000 for construction at the Westgate Little League fields and $120,000 for improvements at Zia Little League. So far as I know, little league organizations are private, non-profit entities. Why the state money?
One vetoed project was $60,000 for roof repair at the Catron County Sheriff’s office. Tough luck, guys, you’re a long way from anywhere.
Water isn’t usually legislatively interesting, but 2019 “saw an abundance of bills.” One, SB 12, made “nuanced changes” in the rules for publishing notices affecting water rights.
Local building departments “must” now require baby-changing tables in all restrooms (HB 205). The Gender-Free Restrooms Act is HB 388.
The 2018 session repealed certain requirements that the Department of Transportation maintain “fencing and signs related to cattle on highways.” This year SB 121 reinstated the rules including cattle underpasses.
My suggestion is to spend some of the new money to replace the faded license plates across the state that are annoying and a safety hazard because cops can’t read the plates. The Taxation and Revenue Department, parent to the Motor Vehicle Department, is thinking about it. This would affect everyone, not just little leaguers.© 2019
NEW MEXICO NEWS SERVICES 7-1-19
Lujan emails obsess over McConnell. What about New Mexico and Gold King?
By Harold Morgan
New Mexico Progress
“I’m so humbled,” Ben Ray said in the first of two emails June 24.
Oh, puhleeze, Ben Ray. Or should I say, Congressman Lujan. Or Rep. Lujan. Keep it respectful.
Borrowing from Winston Churchill, Ben Ray has much to be humble about.
He’s running for the U. S. Senate. He seeks to replace Sen. Tom Udall, who is retiring. There is an opponent – a real one – Secretary of State Maggie Toulouse Oliver.
I get emails from candidates, masses of them. Some I save. A compulsion, I suspect. Sometimes it’s worth taking a deep breath and looking at the saved group, just to see what is said. That’s today’s agenda. Full disclosure: I’m no Ben Ray fan.
Campaign emails, besides being a pain for recipients, provide insight into the candidate and the campaign, which tells about the candidate. I saved 14 emails sent between June 4 and 14. One day had two emails. June 24 generated three.
The first two emails, sent June 4 and 5, were preposterous at best and probably, it seems to me, not true. These two emails were duplicates, which seems sloppy. The absurd part was the claim, “My race was just named the most competitive Senate race in the entire country.”
The absurdity starts with New Mexico tilting Democratic, “not quite solidly blue,” but seven percentage points more Democratic than the nation, said fivethirtyeight.com in March.
Then there is the problem of needing at least two candidates to have a race at all. The only declared Republican is Gavin Clarkson, who managed to lose twice in 2016, a congressional primary and the Secretary of State race in the general election. From my distant view the guess is that the Republicans will offer a ghost candidate, Clarkson or whomever, to fill the Mick Rich role from 2018.
As Lujan’s primary opponent, Toulouse Oliver seems intelligent, personable, way liberal (that means “progressive,” I guess) and a record of running something, namely the Secretary of State’s office and the Bernalillo County Clerk’s office.
The June 18 and 19 emails were also duplicates. Punching the “send” button a second time must be easy. These two were about what must be a Democratic national obsession—removing Senate Majority Leader Mitch McConnell of Kentucky. The email says Lujan is “17 gifts short” of keeping his ads (which ads?) running. “Will you help me before midnight?” Nine of the period’s 14 emails were about McConnell.
The idea, the June 24 email said, is “to defeat Mitch McConnell’s Senate and elect me.”
Lujan’s resume includes night shifts as a blackjack dealer during what the Los Angeles Times called his “circuitous route through college.” His degree, from New Mexico Highlands, is in business.
My Lujan problem is substantive, well beyond dumb emails. It is his inaction over the August 2015 EPA spill of toxic waste from the Gold King mine into a tributary of the Animas River.
KOB TV’s Chris Ramirez introduced his August 13, 2015, interview with, “We ask Ben Ray Lujan how he plans to hold the EPA accountable.” Lujan’s response, ““We can always do better… there has to be full accountability with the EPA…” But was Ben Ray going to take action, lead the charge, fight for his constituents, be “the policing agent on the EPA,” as Ramirez put it? Naw.
Lujan’s other legacy stems from his father, Ben Lujan, being speaker of the state House of Representatives for 11 years.
For Ben Ray Lujan, it seems to be all about Ben Ray and Mitch. But what about the people of New Mexico? And the nation?
Much more fun to be Nancy Pelosi’s poodle.
© 2019 NEW MEXICO NEWS SERVICES 6-3-19
Before changing national monuments to parks, do deferred maintenance
By Harold Morgan
New Mexico Progress
Turning Bandelier and White Sands national monuments into national parks isn’t just a feel-good deal. There are questions to ask, especially in light of the crowds overwhelming parks such as Zion in Utah, which I discussed in the previous column.
The proposals come from Sen. Martin Heinrich.
Bandelier is near Los Alamos and White Sands is southwest of Alamogordo and within the much larger White Sands Missile Range. Bandelier is about cliff dwellings; White Sands is a giant box of white sand.
More people have come to both monuments the past few years, though both remain well below the record visitor numbers of decades back. For White Sands, the visitor record was 666,879 in 1986. The visitor count was 603,008 in 2018, up from 490,506 in 2013.
For Bandelier, 2001 was the most recent year with more than 300,000 visitors when 313,850 came. In 2018, it was 198,441. The record was 430,138 in 1994.
If parks and monuments are all about attracting visitors, Bandelier and White Sands are simply not in the game. Zion attracted 4.5 million in 2017 and 6.3 million came to the Grand Canyon.
Like the parks with many more people, Bandelier and White Sands have deferred maintenance. The dollar figures are modest compared to the big guys, but are hardly trivial. The maintenance deferred at Bandelier is $14.6 million, with $3.1 million deferred at White Sands. Deferred maintenance at Carlsbad Caverns is almost $40 million.
For questions, start with these: Do national parks emphasize different things from monuments? What is the maintenance that has been deferred?
Similar sounding studies from Headwater Economics in Montana tout the wonders of turning the monuments into parks. Actually the benefits aren’t that great. Bandelier anticipates perhaps 35 new jobs and additional spending of $2.5 million. Bandelier is in Los Alamos County, which had 2.9 percent unemployment in April, which means full employment with about 9,000 jobs.
In Otero County, home to White Sands, employment is about 24,000 with an April unemployment rate of 4.3 percent. Turning White Sands into a national park might mean 100 new jobs, nice but hardly significant.
Another question: what will be the work done by the people holding these jobs?
One highlight of the Bandelier experience is climbing a traditional wooden ladder to get a better look at dwellings cut into the side of the cliff. Has the risk of many more people been analyzed? Hazards? Damage to dwellings?
White Sands has what is called the “Roadrunner Picnic Area” with about a dozen “picnic pavilions” with grills and plenty of room for cars. The sand bordering this area is perhaps ten feet high.
For this column, monument staff reviewed the picnic area history. Apparently it has always been roughly in the current location, dating to the 1930s. The staff says such attractions are built between dunes to minimize disturbance. Today, maybe, but were people that pure in the 1930s? This area appears excavated to me. The steep dunes look as if they had help from bulldozers. Staff assures me I’m wrong.
The main thing to remember about White Sands, whether park or monument, is that it gets really hot and people die—a French couple in 2015 and a man in 2018 on the same trail.
If White Sands becomes a park, what happens to the Roadrunner Picnic area? Expansion? More generally, what is the point of White Sands? Conservation? Playland?
White Sands does have a continuing cultural legacy; “Tank Girl,” one of the worst movies ever, was partly filmed there in 1994.
Sen. Heinrich should have the Park Service fix the deferred stuff and only then consider status changes.
© 2019 NEW MEXICO NEWS SERVICES 5-20-19
Crowds overwhelm national parks, deferred maintenance shows incompetence to international visitors
By Harold Morgan
New Mexico Progress
We went to Zion National Park on a Tuesday a few weeks ago. We won’t be going back.
The problem wasn’t the park itself—it was magnificent—nor was there trouble with the detail-level operations. The crowds were the problem, the numbers of people.
Zion had 4.5 million visits during 2017, according to a U. S. Park Service news release. That puts Zion at third for park visits. The Great Smoky Mountains National Park led with 11.4 million, followed by the Grand Canyon at 6.3 million.
Zion is handy, in southwest Utah, 165 miles from Las Vegas. The Zion problem is that nearly all those visitors go into a small space—the Virgin River Canyon.
In presenting numbers, the Park Service does something amazing. Figures for deferred maintenance are listed along with visitation figures. The listing looks like a passive-aggressive way to inspire repair money. Such things are usually avoided.
The deferral for Zion is $65.3 million. Almost trivial compared to $215.4 million for Great Smoky and $329.4 million at the Grand Canyon. I already had the general sense that the park system was a mess.
The trash bins tell a story. Zion visitors come from around the world, judging from the languages I heard and from the trash bins. The bins were labeled “trash” in ten languages (I counted). The labels used perhaps five alphabets.
People come to see these attractions, lots of people, enough that park management apply crowd control measures.
Buses are the appropriate Zion transport into Virgin Canyon. Buses were full on our Tuesday. We waited an hour to get on. Aisles were also full. Straphangers, they are called in big cities. One managed, by chance I hope, to position her butt two inches from my face.
Through these attractions and cities such as Washington D. C., New York and San Francisco, we collectively are presenting our country to the world. The international visitors will be among their country’s elite. To the extent we do a marginal job with our attractions, we are saying the United States is a marginal country. That’s stupid. Maybe even dangerous.
Zion attracted 483,487 people during April 2018, averaging 16,116 per day. The June daily average was 18,048, eight times the number coming to White Sands National Monument.
Two new national parks are proposed for New Mexico, elevations of monuments to park status. New Mexico parks are relatively ignored. “Only” 603,009 people game to White Sands during 2018.
The massive crowds are relatively new. Since 2010 the number visiting Zion has increased 62 percent, or 1.66 million, from 2.7 million, hardly a small figure, to 4.3 million in 2018. Social media, Instagram, in particular, explains the growth, says an excellent team-written article in The Guardian, a British publication.
New amenities draw people, The Guardian says. Wifi, for example. The internet in Yelowstone? The crowds create pressures. Traffic. The crowds mass in the small communities next to parks. Around three million people cruise Estes Park, Colo., heading to adjacent Rocky Mountain Nation Park.
The masses generate byproducts—sewage, crime, fights in parking lots. Toilets are one infrastructure item not repaired with the millions of deferred maintenance dollars. What to do? Cope in the short term. Possible tactics include requiring reservations, restricting parking, eliminating street parking.
An article published at PERC.com suggests higher fees. The article compares park fees—either free or low—with Disneyland at $100 person per day. Such a move would increase the economic value of a park visit.
We need many creative approaches to fix our parks, both for Americans and for our visitors from around the world.
© 2019 NEW MEXICO NEWS SERVICES 5-6-19
Oil money gusher to continue, policy care needed
By Harold Morgan
New Mexico Progress
The gusher of oil money into state government looks to continue for the immediate future. And, by the way, a few billion for wind farms will transform parts of very rural New Mexico over the next few years. South of Clines Corners lies the third best wind energy resource area (meaning lots of wind) in the nation.
ven so, there is “significant unfinished business,” David Abbey, Legislative Finance Committee (LFC) director, told the New Mexico Tax Research Institute Tax Policy Conference in Albuquerque May 2.
State government’s revenue future is tied to oil and gas, John Tysseling, of the accounting firm Moss Adams, told the audience of 125. “That future is very bright. Oil and gas revenues have just simply exploded.” Tysseling reported the results of an oil and gas revenue study his firm has done for the institute.
In one sense, an element of luck enters government’s oil and gas revenue happiness. The element is not with the production, but where it comes from. The Moss Adams study compared nine oil producing states, including the Dakotas. More than 80 percent of New Mexico production is from state and federal land, which generates revenue such as rents and royalties for the state. Other than Colorado, the mineral production was substantially on private land in the other states studied.
Not only is production increasing, the rate of monthly year-over-year production growth keeps increasing, Tysseling said.
“This merger and acquisition thing” is amazing, he said. The fight over Anadarko Petroleum between Chevron and Occidental Petroleum is one example. Anadarko has substantial shale oil assets in the Permian Basin that includes Eddy and Lea counties.
Economic projections suggest that Permian Basin production could double in the next five years, said Rep. Patricia Lundstrom, Gallup Democrat and LFC vice chair. “We just don’t know where it’s going to stop,” she said.
The oil boom has pushed the direct revenues from oil and gas to an estimated 35 percent of the state’s general fund for the 2019 budget year (FY 19), which ends June 30. Recurring revenue will pass $7.5 billion for FY 19. Monthly wage job totals—848,300 in March—are approaching the pre-recession peaks of ten years ago.
The compound annual oil production growth rate has been about 20 percent from 2012 to 2019.
“We do have some concerns about capital outlay,” Lundstrom said. That seems an understatement. There about 1,608 projects undone with $640 million allocated but not spent. In the southeast, “infrastructure is crumbling,” she said.
“We were behind the day we walked in the door” for the 2019 legislature, Lundstrom said, because 200 bills had already been filed. The ultimate outcome of the session was an FY 20 budget topping $7 billion, something that Lundstrom thought she would never see in her wildest dreams. That budget includes $3.2 billion for public education with “an unprecedented” $448 billion increase. Early childhood programs get $438 billion, with a $125 million, or 40 percent increase.
Taxation and Revenue Secretary Stephanie Schardin Clarke summarized her department’s work. Each week the department sends 51,500 letters, receives 24,500 pieces of mail, processes 16,500 checks and banks $160 million. There are nearly three million tax returns each year. Around $8 billion to $9 billion is distributed each year to state, local and tribal governments.
The unfinished business includes unfunded pension liability, capital outlay, gross receipts taxes, and fiscal stabilization, which Abbey called “a relatively new topic.” Topics worth studying include the policies of North Dakota, which has had massive oil revenue, and additional reserve funds.
All this good news is a challenge for our citizen legislators. As Lundstrom said, “We have to be very careful” about what we do.
© 2019 NEW MEXICO NEWS SERVICES 4-22-19
NM banking world shrinking, real wealth found in Wyoming
By Harold Morgan
New Mexico Progress
Ya gotta have money to make money. So it is said. That’s not always true, but a quick review of my past entrepreneurial ventures confirms that it is far more difficult to start a company without money.
Still, money must be around for the society to function. Retailers must do something with the non-electronic cash at the end of the day. People trade money for stuff. Banks, mostly, are not in the venture business.
Without a bank in a community, these societal basics get more complicated. The retailer must drive 20 miles to deposit cash. That costs time and gas money.
These financial basics aren’t wealth. In New Mexico when we think “wealth” the tendency is to think Los Alamos, the county with the state’s highest per capita income in 2017. Each person in Los Alamos County earned, on average, $68,053. Santa Fe was second at $55,553.
For some reason, in writing about county incomes in New Mexico, I never thought to look at counties in nearby states until recently. Oops.
Real wealth is found in Teton County, Wyoming, home to the Jackson Hole valley, traffic jams and two national parks. The U. S. Bureau of Economic Analysis shows Teton County’s 2017 per capital income of $233,860, the nation’s highest. That’s amazing. Locals suspect the rich guys are gaming tax residence rules, putting their income into Wyoming and not in, say, California with higher tax rates, while not living in Wyoming full time.
The Colorado high is $143,812 in the Rocky Mountain county of Pitkin, which contains Aspen. In Utah it is Summit County, immediately east of Salt Lake City, at $121,952 and home to the Sundance Film Festival.
New Mexico lacks wealth; that’s the story from the four numbers.
Speaking last year to the Bill Lane Center for the American West 2018 State of the West symposium, Randal Quarles, Federal Reserve Board vice chairman for supervision, stressed the importance of competition in banking and financial services to rural western communities, where "small businesses are key drivers of growth." These communities have about 20 percent fewer banks than in the East.
To help foster competition in the rural west, Quarles advocated easing a number of regulations. Some of that may be developing.
Meanwhile, New Mexico’s banking world continues shrinking. The ability of New Mexico firms to operate shrinks also, though no numbers exist to measure the situation other than the state’s continuing non-oil slump.
Some numbers: As of June 30, 2013, the Federal Deposit Insurance Corporation reported that New Mexico had 63 financial institutions (banks and savings and loans) operating 514 offices. By mid-2017, it was 58 firms operating 472 offices. A year later, the 58 firms were still here, but five more offices had disappeared, bringing the total 467. Deposits were $31.3 billion as of June 30, 2018, up a grand 2.5 percent from mid-2017.
Wells Fargo remained the state’s largest, but grew just 1.9 percent over the 2017-2018 year and dropped market share a bit. Wells closed five offices during the year. Wells Fargo staff must deal with the continuing fallout from corporate errors a few years back. Most recently Wells CEO Timothy Sloan quit in late March.
With the sale of Los Alamos National Bank to Enterprise Financial Services of Clayton, Mo., the largest New Mexico-owned bank became First American Bank whose parent is First American Bancshares of Artesia. First American, with 13 branches across southern New Mexico and two more in Albuquerque, was the state’s seventh largest as of mid-2018. Greg Marrs of Artesia is First American president. With firms such as First American, plus oil, the Eddy County income was third in the state in 2017.