Big Bill

The State Capitol was rocked by the following news late Wednesday:

N.M.REVENUE OUTLOOK BRIGHTENS BECAUSE OF NATURAL GAS PRICES
By: Associated Press
(Santa Fe-AP) -- "New Mexico's financial outlook next year is brighter thanks to strong prices for natural gas and oil. Top budget and tax officials in Governor Bill Richardson's administration delivered a new revenue forecast to the Legislative Finance Committee Wednesday. It shows an improvement over revenue estimates made in August. Lawmakers can expect about $153 million in so-called 'new money' for the upcoming budget year, which will start next July. That's how much projected revenues in the 2005 fiscal year are expected to outpace current spending."

MY ANALYSIS--This changes the entire political dynamic of the special legislative session set for October 27th on tax reform. Some of the "in-the-know' crowd told me that Big Bill should consider canceling the special session by saying the state's finances are ok for the short term and that since he disagrees with the proposals from his Tax Reform Commission, he will fight that fight another day. It just might be the smart thing to do because it appeared the Commission's proposals, rather than being long-range, were formed with the immediate fiscal shortfall of over $120 million in mind. Now that that shortfall is apparently behind us, the many tax INCREASE proposals the panel made look even more feeble and will be fought harder than ever by the GOP. Richardson was accused by the GOP of speeding up tax reform so he could carry it into any national campaign he might enter. But he is not going to get the reform he wants so this news could be Big Bill's way out of the special. After all, it took New York state several years to come up with a tax reform plan, not several months.

The tax panel quickly turned into a tax increase panel and is drawing sneers and derision from conservatives and moderates statewide. The Guv has washed his hands of it. So, the politicos ask, what's to talk about in a special session, except odds and ends? It's a good point. The tax panel did not come up with any far-reaching proposals to improve the economy. Is a session that could last up to 15 days (according to my experts) worth it just to handle a few minor items? The guv would probably not be hurt, but what's the point?

Another impact of this late breaking good money news is on Big Bill's tax cuts. Sources at the Capitol told me they were sure to come under fire in the special, with possibly Senator Manny leading the charge. But with this huge projected revenue increase, being against the guv's tax cuts just lost a lot of its impact. While the new money is welcome, the long-range structural problem of the state's Medicaid program, which is exploding the budget, remains to be solved. It's now put off for another day while the politicos wallow in all the fresh cash. This, on top of the millions flowing into the coffers from the recently passed Conny Two amendment for education spending. Raise taxes now? Not a chance. The tax bonzana from oil and gas will not solve our long-term issues but it sure will keep the legislators out of our wallets. After all, every lawmaker stands for re-election in 2004.

And how about the PR pop for the oil and gas industry? Sure, prices are high and you are paying more for gas at the pump and to heat your home, so it is a bit of a hidden tax increase. But without those monies coming into the state, I hate to think what kind of tax bill we would face.

The Bottom Line: Oil and gas revenues have bailed Big Bill and NM out for another year, a day of reckoning is postponed and a governorship from which big things could be launched is kept afloat.

Thanks for tuning in. Be sure to listen for us ABQ Election Night, October 28 at 6:30 p.m. on KANW 89.1 FM. It's "New Mexico's Best Political Broadcast" with exclusive early returns and the top experts. KANW-FM is heard all over north central New Mexico.