State revenue is up

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Question remains whether debt can be paid

By Harold Morgan

Reports and reality checks about the New Mexico economy bring us to survey what’s happening.
Start with the most recent news, that revenue to state government (that means taxes paid) is running ahead of the December 2010 forecast.
The estimated growth was eight percent through the first ten months of FY 11, the budget year that ended June 30.
The forecast was for 6.8 percent. Estimated income to the state’s general fund, the main pot of operating money, was $4.25 billion, up a nice $313 million over the first 10 months of FY 10.
The news came in the June issue of the Legislative Finance Committee’s monthly revenue report. See www.nmlegis.gov/lcs/lfc/lfcrevreports.aspx for the reports.
The LFC said, “The major contributor to the surplus is the Gross Receipts Tax, with revenues exceeding expectations by $56.8 million.”
The industries with “the most growth are Mining and Oil and Gas Extraction, Educational Services, Information and Cultural Services, and Manufacturing,” the report said.
The LFC doesn’t mention retail, but it seems plausible that to some degree the gross receipts tax growth reflects the growth in retail trade employment during the first four months of 2011.
The Department of Workforce Services reported that retail employment grew 3.5 percent from May 2010 to May 2011, the largest year-over-year increase “in nearly 15 years.”
Four months of retail job growth seems amazing in the face of 31 months of job losses statewide. Someone must be buying something, but who has any money?
Reality checks came from higher education and the Railrunner railroad.
David Schmidly, University of New Mexico president, and Kate O’Neill, executive director of UNM’s Taos campus, wrote their defense of UNM’s branch campuses in an Albuquerque Journal op-ed piece.
I’ll bet they didn’t intend expose weaknesses, but they did.
UNM Taos has a credibility problem by the fact of its location on County Road 110, way, way south of Taos between the National Guard Armory and the amazing Taos Country Club golf course.
UNM Taos cannot claim to do anything efficiently from such a spot, much less execute the usual college pretensions of, say, commuting by bicycle.
Oddly, the library is in downtown Taos, miles and miles from campus.
O’Neill plays the usual New Mexico victim cards of “small, isolated, rural communities” and “rural, minority, often first-generation, students who may” have family commitments.
Note, she says, “may.” So she’s not sure. Eventually, O’Neill shines the reality light on branch campuses, justifying them as “major employers in small communities.”
The job thing shouldn’t matter. Educational performance should.
Another op-ed brought serious reality to railroad finances and, by extension, to the state’s public finances.
The op-ed writer, Larry Abraham, is mayor of Los Ranchos de Albuquerque and member of the Rio Metro Regional Transit District board that has partial planning oversight for the railroad. Abraham knows financial disasters.
He was a board member of the Albuquerque Moncor Bank when that high flyer from Hobbs hit the wall and disappeared in the 1980s.
The rail finances, ultimately, are simple and ugly.
“Over the span of 20 years, the true cost of the Rail Runner is close to $1.3 billion, with revenues of only $60 million,”
Abraham says, all for serving “approximately 2,250 individuals per weekday.”
The bigger question is, what about the rest of the state’s obligations?
We know there are pension fund problems and the Legislature keeps kicking the can into the future. The Department of Transportation has borrowed huge amounts.
State government operations are on a cash basis and get the attention.
The debt is off to the side in terms of public attention. We need a state balance sheet that includes everything.
Then we could start dealing with our obligations.

Harold Morgan
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