By Sherry Robinson
What’s next for the Escalante Generating Station?
A bill to create an economic district around the Escalante Generating Facility following its closure passed its first committee on Friday.
HB 8, by Democratic Reps. Patty Lundstrom, Harry Garcia, Eliseo Alcon, Wonda Johnson, and Joseph Sanchez, would create the Electric Generating Facility Economic District. Lundstrom and Johnson are from Gallup, Garcia and Alcon are from Grants, and Sanchez is from Alcalde.
The district could make contracts, borrow money, exercise eminent domain, sell property, and issue revenue bonds and pay them off with its own gross receipts tax. Sales and bonds would be exempt from state taxes.
Tri-State Generation and Transmission Association recently announced plans to shut down the 253-megawatt, coal-fired plant near Pruitt by the end of 2020. The closure will cost 107 jobs at the plant and another 100 at the coal mine. It would also jeopardize jobs at the paper mill, which buys steam from the utility.
Lundstrom explained to the House Commerce and Economic Development Committee, that although the bill responds to the recent announcement, a local group has worked for the previous five years to prepare for such an event.
With HB 8, she said, “the idea is to set up a special financial district to redevelop and reuse this industrial site. It’s not unlike a strip mall or anything else. We’ve got strong studies supporting the work we’re doing.”
Impacts from the closure will be severe. One-sixth of the McKinley County budget comes from the plant, Lundstrom said. “This is the poorest county in the poorest state,” she said.
“Grants is in bad shape,” said Garcia.
Evan Williams, deputy director of the Northwest New Mexico Council of Governments, pointed out that the plant’s workforce comes from Cibola County, and the payroll totals $14 million.
“Once the workforce leaves, they’re gone. They’re not coming back,” he said.
Rhonda Mitchell, of Tri-State, said through tears: “These people are friends. The decision came quicker than we thought it would.”
Tri-State intends to replace 200 MW of power at the site with solar and has set aside $5 million for redevelopment.
Lundstrom said the district would provide a mechanism to take the necessary next steps toward decommissioning the plant, cleaning up the site, and identifying companies that would be a good fit at the site.
The district would be governed by a board with five to nine members. Lundstrom wrote in a “no politicians” rule because the board should be apolitical, she said.
This year’s general appropriations bill has $15 million in special appropriations for the bill, which is a compromise between $20 offered by the governor and $10 by the Legislative Finance Committee.
The committee passed the bill unanimously.
In a related development, Sen. Clemente Sanchez, D-Grants, met with NMSU Chancellor Dan Arvizu to discuss the closure.
“We are part of this community with our NMSU Grants campus and we stand ready to help by offering educational programs tailored to those who have been impacted and in support of economic development in this region,” Arvizu said.
Sanchez and Sen. George Muñoz, D-Gallup, also plan to introduce bills to address the closure.
Public pensions, 1-17
By Sherry Robinson
Public-employee pensions will be a hot topic in this year’s 30-day legislative session, which starts Tuesday.
Sen. George Munoz, D-Gallup, who chaired the interim Investments and Pensions Oversight Committee, is carrying four bills developed by his committee and the governor’s Pension Solvency Task Force, organized last year to address the solvency of the Public Employees Retirement Association (PERA).
The PERA covers firefighters, police officers, local government workers, and state employees.
The anchor is the 91-page SB 72, proposed by the task force, which would relieve the PERA’s unfunded liability by $700 million. Currently the plan’s available money is just 70 percent of what it owes. SB 72 could eliminate the unfunded liability within 25 years.
“The most important thing is, if there’s a recession, those funds become almost unrecoverable,” said Munoz. “This shores up the fund for future retirees. That’s the big picture. My biggest worry is recession pressure.”
SB 72 would also:
To take the pain out of a temporary reduction in COLA increases, retirees would receive 2% of their pension in a lump sum for three years, paid for by $76 million from the state.
Supporters note the steps to protect the most vulnerable retirees and say the plan will ultimately save money by improving the state’s credit rating. Moody’s Credit Service mentioned the liability in its June credit analysis of New Mexico.
“We pay about $1.2 billion to retirees – about $600 million from the corpus and $600 million in investment returns,” Munoz said. “We can’t continue doing that.”
Some retirees, including members of the Retired Public Employees of New Mexico, aren’t so sure. They have taken issue with the COLA changes, arguing that it’s one of the most important pieces of the state’s pension system and changes fall on those least able to adjust to the changes.
Currently, employees provide 12% of contributions and employers (local and state government) provide 14.88%. The shortfall is 6.51 percent, according to the PERA.
The task force recommendations were endorsed by AFSCME Council 18, Communication Workers of America, New Mexico Professional Firefighters Association, Fraternal Order of Police, National Association of Police Officers, and the Albuquerque Fire Department Retirees’ Association.
“We’ve got to show leadership and compassion to fix the problems we face,” Munoz said last month. “The governor’s leadership on this legislation shows she is willing to do what is right and fair and work with the Legislature to get it done.”
Rep. Patricia Lundstrom, chair of the House Appropriations and Finance Committee, said, “I support the bill and hope my colleagues will also support it.”
Munoz’s second bill, SB 60, is his attempt to reform the PERA board by increasing qualifications for board members and changing the board’s composition. Currently members aren’t required to have a background in finance or investment management, even though they oversee a $15.8 billion fund for 90,000 public workers and retirees.
“The PERA board is completely dysfunctional,” said the nonpartisan Think New Mexico, “and research shows that poor governance can cost pensions 1 to 2% annually. Just a 1% reduction means the dysfunction on the current PERA board could cost the fund nearly $160 million dollars a year.”
“I think every board has its quirks,” Munoz said. “What I learned is that a good functioning board with knowledge can help the fun by a half percent.”
News accounts and Munoz himself have described unprofessional and even childish behavior on the part of some board members.
SB 60 would remove the Secretary of State, the State Treasurer, four members of a municipal coverage plan elected by members, and two retired members elected by their association and replace them with one member of a state general coverage plan appointed by the personnel board, one active county member of a municipal general coverage plan appointed by counties, one member appointed by the New Mexico Municipal League, two non-members with experience in retirement investing or plan designs appointed by the House Speaker and Senate President, the state Secretary of Finance and Administration, and two retired members appointed by retiree associations (one must have financial knowledge).
Two other bills by Munoz are SB 71, which calls for PERA and ERB staff compensation to be performance based, and SB 62, which would change the definition of “salary” for public employees to include overtime pay required for a regular scheduled tour of duty.
Opening day, 1-21
By Sherry Robinson
Gov. Michelle Lujan Grisham, in her second State of the State speech, called on legislators to maintain the momentum -- and spending -- of 2019.
And Sen. George Munoz is the new vice chairman of the Senate Finance Committee. He replaces Sen. Carlos Cisneros, D-Taos, who died last year. The post makes Munoz the heir apparent to Sen. John Arthur Smith, 77, who chairs the powerful committee.
Smith, elected to the Senate in 1989, had passed on more of the committee's heavy lifting to Cisneros in recent years, and it was assumed Cisneros would be chair when Smith eventually steps down. Munoz, like Smith, is a Democratic moderate with a good grasp of numbers.
"Year One: I’d call it a very, very good start," the governor said.
Lujan Grisham said nobody has patted her on the back for a job well done, but in her conversations with people around the state, many have said, "Keep going."
The governor opened by celebrating 15,000 new jobs in the state since she took office, "the best year for job growth in the state since 2005," she said. Businesses are investing in the state, one-third of newcomers to the state came here for jobs, and New Mexico is 8th nationally in job growth.
State government is stronger. December's rapid-hire events drew 3,700 job seekers. The Children, Youth and Families Department reduced the average wait time on its Child Abuse Hotline from over an hour to less than five minutes. The Corrections Department took over management of the private prison in Clayton. Her task force crafted public pension system reform that "protects New Mexico taxpayers and respects retirees."
"We are fixing what was left broken and addressing urgent needs and turning the corner into the bright future," she said.
Lujan Grisham referred to last year's Energy Transition Act, saying, "We put New Mexico on a direct path to being the nation’s clean energy leader."
The ETA is a bitter pill locally because it was tied in some conversations with the planned closure of the Escalante Generating Station. However, local legislators don't blame the ETA.
"The gut feeling I got was they were going to shut down anyway," said Rep. Eliseo Alcon, D-Grants. It was a business decision, he said.
Although the plant's owner said even months ago that the plant had years of operations, its sudden announcement this month took lawmakers by surprise.
Munoz said, "It wasn't driven by the ETA but by outside forces and the political environment in the country. The writing was on the wall."
Munoz, Lundstrom, Alcon, and Grants Democrats Sen. Clemente Sanchez, and Rep. Harry Garcia have introduced or will introduce bills to help existing area industries.
Lujan Grisham admitted that "the economic growth we’ve seen has not touched families in every part of the state." The needed diversification and expansion is still a work in progress.
So is the governor's "educational moonshot," as she termed her reforms. "Transforming our public education ecosystem is no less than a moral mandate, an imperative that found us, this group of legislative leaders who are obligated and, I believe, destined to deliver the single best cradle-to-career educational system in the country."
Lujan Grisham said she insists, along with parents and reformers, "that we get it right, right now," but "a moonshot doesn't occur overnight."
She repeated her demand for higher teacher pay and more teachers. Last year, schools cut the teacher vacancy rate by 13 percent. "After 8 years of neglect and disrespect, New Mexico values and supports its world-class educators once again," she said. She expects lawmakers to deliver another pay raise this year and stay the course with programs like extended learning and K-5 Plus.
Early childhood education and care is a priority this session, as is tuition-free college. She encouraged legislators to pass support both bills. "If we build it, they will stay," she said of the state's young people.
"Students want it. Parents want it. Let’s give them the opportunity," she said.
Lujan Grisham said the state set a record last year for film and television shoots, with more productions in rural communities. The state Economic Development Department is investing in homegrown businesses around the state.
"We are rapidly climbing out of the lost decade of job growth, the stagnation and forced austerity of the last administration," she said.
The governor also pitched legislators on legalizing recreational marijuana, "the next frontier of our economic expansion." She added that 75 percent of New Mexicans support legalized cannabis.
"Every year we’ve said, 'No, not yet, it’s not for us.' Well, it’s easy to get to 'no.' It’s harder to stand up and create something good and new."
Lujan Grisham called attention to SB 1, which would allow the importation of wholesale prescription drugs from Canada to cut healthcare costs. She supports capping co-pays and out-of-pocket costs for chronic conditions like diabetes, asthma and COPD.
She proposed the Kiki Saavedra Senior Dignity Fund, named for the late chairman of the House Appropriations and Finance Committee, to provide services for the elderly and for caregivers.
Finally, she advocated for a package of criminal justice bills that would catch and hold repeat offenders.
"In these next 30 days, I will be who you know me to be: Relentless, competitive, and caffeinated. I will be tireless on behalf of the New Mexicans who have not yet felt the effect of our changing fortunes."
Munoz said he appreciated the plan to reduce drug prices but didn't hear any targets for new job creation. Legalization of marijuana, he said, still faced a long road.
Sanchez said the governor has an ambitious agenda. "I was kind of surprised there wasn't a whole lot on the budget," he said. The cannabis bill is huge, he said, and he’s reserving judgment until he reads it.