On June 26, 2019 it was announced in its annual report by the National Insurance Crime Bureau (NICB) that Albuquerque metropolitan statistical area for the 3rd year in the row has ranked number #1 in auto thefts in the country. The #1 ranking is despite a 27% decrease in auto thefts. The Albuquerque metropolitan statistical area includes the 4 counties of Bernalillo, Sandoval, Torrance and Valencia counties.

The country as has seen a decrease in auto theft overall, but Albuquerque area has made even bigger and more significant gains in reducing auto thefts. According to the annual NICB report, in 2018 almost 2,700 fewer cars were stolen in the Albuquerque area than the year before, a 27% decrease. In 2017, 1,096 cars were stolen per 100,000 residents and in 2018 that figure was 780 cars stolen per 100,000 residents .

Notwithstanding the 27% decrease in auto thefts, it was not enough to reduce the Albuquerque metropolitan statistical area as the number one ranking area in the country for stolen vehicles per capita in the country. While the Albuquerque area had 27% fewer stolen vehicles in 2018 than in 2017, the city of Albuquerque saw a slightly higher decrease of 29%. According to APD data, there have been 1,135 fewer stolen vehicles so far this year over the same time period last year. (2019: 1,718 compared to 2018: 2,853)

During a June 26, 2019 news conference at the Albuquerque Police Department (APD) headquarters, law enforcement officials stressed that local and statewide agencies have made huge gains in tackling the auto theft problem which explains the 27% decrease in auto thefts.

Devin Chapman, the executive director of the Office of Superintendent of Insurance’s NM Auto Theft Prevention Authority had this to say about the auto theft statistics:

“We haven’t been emphatic enough about the hole we were in when this thing started a couple of years ago. … Our numbers in Albuquerque were so far beyond anybody else’s in the country. It’s something we’ve been digging out of ever since.”

Chapman went out of his way to point out that in 2017, in the Albuquerque area, almost 300 more vehicles were stolen per 100,000 residents than in the number two spot of Anchorage, Alaska. Chapman added that while the biggest drop has been seen in Albuquerque, auto theft numbers also declined in the 3 surrounding counties of Sandoval, Torrance and Valencia counties. APD deputy chief Harold Medina added:

“Nobody had a larger decrease in the top five and, in the top 10, only one other agency had a larger decrease.”

https://www.koat.com/article/albuquerque-comes-in-1-in-auto-thefts-nationally-again/28188855

https://www.abqjournal.com/1333048/abq-auto-thefts-drop-but-metro-still-no-1.html

HISTORY OF INCREASING AND DECLINING AUTO THEFT STATISTICS

In 2013, a total of 2,743 auto thefts were reported in Albuquerque. From 2013 to 2017, Albuquerque saw more than a three-fold increase in auto theft along with climbing rates of armed robbery, larceny and burglary. More than 20 vehicles were being stolen each day in 2016 and 2017. More than 10,000 vehicles were stolen in 2016 in Albuquerque and Bernalillo County combined or more than 27 vehicles a day. In 2016, Albuquerque accounted for approximately 65% of the stolen vehicles in the state with the city having about 30% of the state’s total population. In 2017, the number of auto thefts reported was 7,684, which was slightly down from 2016 when 7,710 vehicles were stolen. The APD initial reports for 2018 showed auto thefts were down to 5,447 auto thefts.

According to statistics released by APD and the NMSP, the number of cases generated and handled by APD and NMSP in 2018 was 200 auto theft cases with 154 felony arrests and 136 stolen vehicles recovered. The statistics released by APD and the NMSP for the first quarter of 2019 reflect 85 auto theft cases generated with 77 felony arrests and 68 stolen vehicles recovered. In the first quarter of 2019, APD reported that there were 28% fewer auto thefts, a total of 1,787, than in the same period in 2018, when there were 2,482.

LAW ENFORCEMENT RESPONDS, DEDICATES RESOURCES

The three largest law enforcement agencies in the State of New Mexico are the Albuquerque Police Department (APD), the Bernalillo County Sheriff’s Department (BCSO) and the New Mexico State Police (NMSP).

On March 21, 2018, a little more than a year ago, it was announced that APD, BCSO, NMSP were joining forces to address the city’s and the county’s out of control auto theft rates. The initiative is called the “Bernalillo County Auto Theft Suppression Effort”. The auto theft suppression effort includes tactical operations that combine technology, resources, manpower and intelligence from all three of the law enforcement agencies to arrest more suspects and recover more stolen vehicles.

APD for the past year has been concentrating on auto theft sting operations with assistance from BCSO and NMSP. In 2018, APD’s first auto theft sting resulted in 22 felony arrests and 23 recovered vehicles and in the first two months of the year the APD recovered a total of 843 vehicles and made 137 arrests. BCSO auto theft unit and its “Fugitive Apprehension & Surveillance Team” have assisted APD and the NMSP with joint operations.

In late 2017, the New Mexico Office of Superintendent of Insurance organized a metro area task force to identify repeat auto thieves. During the 2018 legislative session, legislation was enacted and signed into law giving the office authority to investigate and prosecute auto thefts.

In February 2018, Bernalillo County District Attorney Office (DA) created a team of 10 attorneys to solely focus on prosecuting car thieves. According to officials with the DA’s office, it targets defendants with multiple arrests in order to more efficiently prosecute cases. Prior to the changes in the DAs office, if a defendant had several cases against pending against them, different attorneys would be assigned to each one. Now, one prosecutor follows all of a defendant’s car theft cases.

All four law enforcement agencies have dedicated a considerable amount of resource to deal with auto thefts as has the Office of the Superintendent of Insurance Auto Theft Team and the Bernalillo county District Attorney’s Office. The breakdown is as follows:

1. The APD Auto theft Unit consists of 7 detectives, 1 sergeant and 1 lieutenant. In early 2018, APD began hiring paralegals to help APD Detectives compile all the necessary paperwork needed for a complete a final offense report file forwarded to the District Attorney’s Office.

2. The BCSO Auto Theft Unit consists of 5 detectives, 1 sergeant and 1 lieutenant.

3. The NMSP Auto Suppression Unit consists of 3 detectives, 1 sergeant and 1 lieutenant. Prior to February 2018, before the joint law enforcement effort to combat auto theft, the State Police did not have a unit dedicated specifically to auto theft.

4. The New Mexico Office of Insurance Auto Theft Team consists of 6 agents, 2 prosecutors and 2 paralegals.

https://www.abqjournal.com/1302964/tackling-albuquerques-auto-theft-problem.html

NM LEGISLATURE FAILS TO INCREASE FUNDING

During the 2018 legislative session, the New Mexico Legislature created the “Auto Theft Prevention Authority” under the Office of Superintendent of Insurance. The authority works with local, county, state and federal law enforcement agencies to tackle auto thefts. The authority asked for more funding during the 2019 legislative session, but the bill died in a Senate Committee. The Auto Theft Prevention Authority expects to close out the year with fewer than 4,000 total stolen cars, or a 30% decrease over the previous year.

COMMENTARY AND ANALYSIS

Frustration is being upset or annoyed because of an inability to change or achieve something you work so hard to achieve and not achieving it. When it comes to law enforcement in Albuquerque, the city ranking #1 one in auto thefts for the 3rd year in a row with a 27% decrease in auto thefts fits the very definition of frustration. Notwithstanding the frustration, law enforcement is making significant progress when it comes to reducing auto thefts in Albuquerque and the surrounding area.

All taxpayers and voters of Albuquerque, Bernalillo County and the State of New Mexico pay for, in one form or another, to maintain APD, BCSO, the NMSP, the DA’s Office and the New Mexico Office of Insurance. Government agencies in one form or another are in constant competition with each other for personnel, funding and resources from the State and Federal governments. Usually law enforcement agencies are highly territorial in many respects and that is to be expected and needs to be respected given the nature of law enforcement.

There are many times that three agencies of APD, BCSO and NMSP do cooperate and collaborate with each other in cases, especially cases involving SWAT call outs, high profile emergencies such as school shootings, police officer involved shootings, and with tasks forces involving federal authorities. However, the three law enforcement agencies normally do not work together to investigate day to day crime in that each law enforcement agency have their own cases to deal with exclusively.

When the all the agencies work together, exchange data and coordinate resources for a common goal, without concern the big winners are always the citizens and voters. The formation of “Bernalillo County Auto Theft Suppression Effort” is a recognition by all three agencies just how much they need each other for the common good of serving and protecting the citizens of New Mexico. The Bernalillo County Auto Theft Suppression Effort has been a major step in reducing our out of control auto theft rates. If the statistics now being reported on auto thefts are any indication of what can be accomplished with cooperation between all the agencies, the city should see even further decline in the number of auto thefts.

No doubt auto thefts are still too high in Albuquerque. When your car gets stolen you will not believe auto thefts are down and the numbers will mean absolutely nothing to you. However, the efforts to reduce the city’s auto theft rates by 27% are working and need to continue. Sooner rather than latter another city will rank number one in auto thefts.

The State of New Mexico is a “self-insured” government, generally meaning that it does not carry liability insurance to pay for claims against the state. Civil lawsuit defense and settlements are paid out of risk management funds, which is taxpayer money. The New Mexico Legislature funds each year what is known as the “Public Liability Fund” to pay claims against the state.

The Risk Management Division (RMD) is a Division of the State’s General Services Department with a Governor appointed Cabinet Secretary. The RMD has a Division Director, usually an attorney, and 6 Bureaus: Alternative Dispute Resolution, Employee Benefits, Finance, Loss Prevention & Control, Property and Casualty, and Workers Compensation. The New Mexico State Risk Management Division (RMD) provides legal representation to state agencies.

RMD insures state agencies against tort claims, claims alleging civil rights violations, personal injury claims, including Workers Compensation claims filed by state employees when injured on the job. RMD also provides insurance for some local government bodies. When it comes to defending lawsuits filed against the state, the RMD contracts with private attorneys and firms that competitively bid to provide what is considered insurance defense work. Last fiscal year upwards of $10 Million or more was paid by the state to private law firms to defend the state against claims.

https://www.generalservices.state.nm.us/riskmanagement/

The New Mexico Department of Finance and Administration (DFA) is considered one of the most powerful or influential departments in New Mexico Government which is overseen by a Governor appointed Cabinet Secretary. The DFA provides fiscal advice and problem-solving support to the Governor, and is suppose to provide budget direction and fiscal oversight to virtually all state agencies. The DFA is required to provide strict fiscal oversight of virtually every Department and Division within State Government, including the Risk Management Division.

DISCLOSURE OF SETTLEMENT PAID BY RMD

On June 23, 2019, the Albuquerque Journal did a report entitled “NM Approved at least $7.9M in settlements in 2018” on settlements paid by the state in an 9-month period. The Journal submitted an Inspection of Public Records (IPRA) request in order to review the settlement documents not readily available to the public. You can read the entire article here:

https://www.abqjournal.com/1331956/nm-approved-at-least-79m-for-settlements-in-2018.html

Frankly, the headline is very misleading when it says $7.9 million was paid during the 9-month period. The headline was misleading because buried in the article is the fact the state actually paid $32 million of taxpayer money from July 1, 2017, to June 30, 2018 on legal defense and settlements.

Highlights of State litigation settlements provided by the State Risk Management Division reveal the following approved settlements paid during the 9-month period:

1. New Mexico authorized approximately $7.9 million in settlements of at least $20,000 during a nine-month period.

2. $2.5 million was paid to resolve allegations of sexual harassment and discrimination in the Corrections Department. 6 correctional officers who worked at the state prison in Los Lunas said they endured a “sexualized, violent environment” in which male colleagues exposed themselves, made derogatory comments and inappropriately touched female officers. The suit alleged that female officers were “subject to unthinkable and constant sexually based violence and harassment.”

3. $1.5 million was paid to 1 of 6 developmentally disabled adults entrusted to state care who failed to get the protection from abuse and neglect they were entitled to. Six plaintiffs accused the state Department of Health and others of failing to provide adequate services and violating their constitutional rights. The attorneys in the case participated in an arbitration before arbitrator and retired District Court Judge William Lang to determine how much the state should pay. The range set and agreed to by the parties was at $500,000 to $1.5 million. Lange issued a $7.5 million award in the plaintiffs’ favor. The state paid $1.5 million, the maximum the parties had agreed to before the proceeding began. Former District Court Judge Lang has been recently appointed Chairman of the new Ethics Commission.

4. $775,590 was paid to Otis and Melissa Morehead, who filed a claim with the University of New Mexico Health Sciences Center concerning medical services provided to Melissa and a third family member.

5. $250,000 was paid to plaintiff Damian Horne and his attorney. Horne had worked in the Public Defender’s Office and filed a whistleblower lawsuit in 2016, contending the office had put him on leave and intended to fire him as retaliation for expressing his opinions about problems in the office.

6. $165,000 was paid to Plaintiff Diane Kretschmer to resolve claims against the state Livestock Board and several of its agents.

7. $150,000 was paid to Plaintiff Karl Rougemont, who filed a lawsuit in 2015 alleging he was injured during a defensive tactics demonstration while he was a cadet at the law enforcement academy.

8. $80,000 was paid to settle claims that then Governor Susana Martinez’s security team defamed and assaulted two people who showed up at a political event in Deming. The plaintiffs in that case run a youth ranch and wanted to deliver a petition to the governor. The allegations center on a 2014 incident at a motel in Deming. The plaintiffs said the Republican Party of Luna County had invited them and others to meet the governor that day, but State Police officers improperly threatened them with arrest when they showed up and forced them to leave, they allege. The Plaintiff’s were represented by private attorney Pete Domenici, Jr., the son of longtime New Mexico United State Senator Pete V. Domenici.

9. $25,000 was paid to settle a lawsuit filed by a woman who accused New Mexico State University of refusing to hire her because she is a Christian and heterosexual. According to the plaintiff, the school improperly rescinded an offer to make her an assistant basketball coach. The Plaintiff was a former college basketball star, and alleged she had initially been offered a job as an assistant women’s basketball coach but that the offer was rescinded after the coach saw an online interview, she’d participated in. In an interview, the Plaintiff explained that she gave up same-sex relationships because they conflicted with her Christianity, and she described homosexuality as “wrong” and sports as “evil.”

https://www.abqjournal.com/1286041/lawsuit-settled-against-nmsp-chief-department-of-public-safety.html

FACTS OF $1.7 MILLION SETTLEMENT YET TO BE FULLY DISCLOSED

Absent from the report on RMD settlements is the $1.7 million settlement in a lawsuit alleging that the former New Mexico State Police Chief Pete Kassetas engaged in “blatant, ongoing and systematic discrimination” during his time as New Mexico State Police Chief, including at one time “mooning” his employees. According to the lawsuit, Kassetas described his employees as “dumb [‘efing’] bitches” and he once sent an image of a man’s testicles blocking out the sun to a Deputy Cabinet Secretary in the Department of Public Safety, all allegations Kassetas presumably denied. The case was settled in December, 2018 after two days of negotiations.

The Plaintiff’s alleged discrimination based on gender and sexual orientation and retaliation for whistle blowing activities. The attorney representing the three law enforcement officials who filed the suit, said she could confirm there was a settlement in the case but a confidentiality clause barred her from discussing how much money was paid to each of the Plaintiffs by saying:

“There was a settlement, but they have us bound and gagged in terms of state money. I can’t tell you the amount.”

A KRQE News 13 investigation found that the Kassetas lawsuit resulted in a confidential settlement that cost taxpayers a total of $1.7 million. According to the news report, the Risk Management Division paid a group of disgruntled public employees huge sums of money in order to keep alleged compromising information about then Republican Governor. KRQE News 13 learned Risk Management officials did not assign investigators before settling the cases in the last days of the Republican administration. The settlement was fast tracked and the case settled within 30 days contrary to the normal 6 months usually taken.

https://www.krqe.com/news/larry-barker/1-7-million-paid-in-confidential-state-settlements/

WHAT WAS PAID IN SETTLEMENTS FOR A FULL FISCAL YEAR

According to the State Risk Management Department, the state’s Public Liability Fund spent approximately $32 million during the fiscal year of July 1, 2017, to June 30, 2018, on legal defense and settlements. The legal defense costs include paying outside counsel to defend the case, costs of depositions, submission of interrogatories, answering interrogatories, and assembling documents and evidence for disclosure known as discovery. The cost of defending the state in attorney fees and similar expense accounted for $10 million of the liability fund’s spending in fiscal 2018. The cost of settlements, such as “indemnity payments,” made up $22 million, according to state records.

The state’s Risk Management Division report warned that it is “highly unlikely that cost of defense trends will experience an appreciable decrease in coming years.” According to the report “the Public Liability Fund’s total spending has fluctuated over the last seven years from $28 million to $43 million. The cost of legal defense has ranged from $10 million to $15 million a year, and the cost of settlements has ranged from $16 million to $30 million a year.”

https://www.abqjournal.com/1286041/lawsuit-settled-against-nmsp-chief-department-of-public-safety.html

NONDISCLOSURE PROVISIONS

When the State Risk Management Division settles a case, it denies any and all wrongdoing, and demands that the settlement makes it clear the State is agreeing to end the case as a compromise or to avoid further litigation costs. This is standard practice in most civil lawsuit settlements and common even in the private sector. The parties usually agree to avoid disparaging each other or speaking about the terms and conditions of the settlement.

Under state law, state Risk Management Division (RMD) settlement terms and conditions cannot be disclosed to the public for 180 days, or a full six months. All too often, because of language and the terms in the settlements, it is unclear which claims have been settled or when they can be released to the public.

Under the current law, the timeline for mandatory disclosure is not clear. Current State law provides that the confidentiality period can start on 4 dates:

1. The date the settlement is signed
2. The date the claim is closed administratively by the state, or
3. The date all litigation is completed or even
4. The date all statutes of limitations have run on a claim.

EFFORTS TO DISCLOSE SETTLEMENTS TO PUBLIC

During the 2019 legislative session, a bill jointly sponsored Bernalillo County Republican State Senator Sander Rue and Santa Fe Democrat State Representative Linda Trujillo calling for the state to publish settlements in discrimination claims, the agency they were lodged against and the total amount of state money paid to settle the case, including damages and attorney fees. The legislation would have required settlements paid be published on the state’s sunshine portal after a certain amount of time elapsed. General Services Department Cabinet Secretary Ken Ortiz supported the legislation. The proposal passed the New Mexico Senate, but it did not make it through the New Mexico House of Representatives.

Cabinet Secretary for the General Services Department Ken Ortiz announced he is working with staffers to start automatically publishing the state settlement agreements. The goal is to post all settlements online as soon as the legally required confidentiality period of 180 days (6 months) expires. Secretary Ortiz supports clarifying the law that sets the initial 180 days of confidentiality with the goal to precisely define when the 180-day period starts. Ortiz wants to make making it clear the 180 days starts on the day the settlement is reached.

https://www.generalservices.state.nm.us/riskmanagement/LCPBOverview.aspx

CONFLICTS BETWEEN DFA AND RMD

Confidential sources within the Department of Finance and Administration (DFA) reported that for the entire 8 years of the former Republican Governor Administration, Republican defense lawyers who had the Governor’s ear and considered her allies and supporters were awarded lucrative defense contracts. The same confidential sources disclosed that there were times the previous Governor’s office would intervene and force the hiring of Republican political operatives who were attorneys and who had lost elections be given jobs at the State Risk Management Division.

The most disturbing information provided by DFA confidential sources is that the State Risk Management Division would often block or fail to get approval of settlements from DFA. According to the confidential sources, DFA was repeatedly and essentially left in the dark about settlements agreed to be paid by RMD. The DFA was not allowed to participate in settlement discussions nor allowed to have any say in the amount of the settlements. Further, according to one source, DFA was not allowed to participate with selection of attorney defense contracts with the RMD carrying out the orders from the former Republican Governor’s office as to who was to be chosen.

COMMENTARY AND ANALYSIS

The Albuquerque Journal headline “NM Approved at least $7.9M in settlements in 2018” is very misleading when it says $7.9 million was paid during the 9 month period because buried in the article was the truth that the state spent $32 million from July 1, 2017, to June 30, 2018, on legal defense and settlements. The Public Liability Fund’s total spending fluctuated over the last seven years from about $28 million to $43 million, all paid under the Administration of former Republican Governor “She who must not be named.” During the same time period, the cost of legal defense ranged from $10 million to $15 million a year, and the cost of settlements ranged from $16 million to $30 million a year.

The fact that former Governor “She who must not be named” was not even mentioned by the Albuquerque Journal in the article on settlements paid is truly amazing, but comes as no surprise to political observers. For the entire 8 years of the previous Republican Governor Administration, the Albuquerque Journal consistently and very openly supported most if not all of the actions of the former Republican Governor. Ditto for the full 8 years of the former Republican Mayor of Albuquerque. But the truth has a way of always coming out, such as the amounts paid in settlements by the state and the incompetence of managing a police department by a Mayor and the failure of a legacy project known as ART.

Governor Michelle Lujan Grisham should issue executive orders mandating that the Department of Finance and Administration (DFA) be given far more authority over the State Risk Management Division (RMD). In particular DFA needs to be given at a minimum some say on the final approval of all settlements negotiated by RMD as well be allowed to give input on attorneys selected to do defense work for the state. The RMD should never be used as a “dumping ground” for political operatives or cronies looking for jobs. Too much taxpayer money is at stake.

It is extremely disappointing that the 2019 New Mexico legislature failed to enact the legislation requiring the state to publish the nature of discrimination claims, the agency against whom they were lodged and the total amount of state money used to settle the allegation, including damages and attorney fees. Notwithstanding, even that legislation did not go far enough. The current state law that provides 4 separate dates when the 180 day or 6-month confidentiality period starts to run should be repealed or drastically amended by the legislature.

Six months for the public to have to wait to find out the terms and conditions of a settlement is outrageous. In the interest of full disclosure and transparency, all settlements should be posted within at least 30 days if not sooner from the date the settlement is agreed to by the parties. There should be absolutely no confidentiality clauses when it comes to the settlement. It is taxpayer money and the legislature need to act in the interest of complete transparency.

Kudos go to Governor Michelle Lujan Grisham and Cabinet Secretary Ken Ortiz working with information technology staffers to start automatically publishing the state settlement agreements with the goal to post all settlements. What should also be posted on the sunshine portal are the names of attorneys or firms awarded state contracts to defend the state, the amounts of the contracts awarded, the term of the contracts, and the hourly rate being charged.

The settlements are taxpayer money being paid as are defense fees paid to private attorneys and taxpayers have the right to know what was paid, why and to whom.

It is becoming more apparent that Governor Michelle Lujan Grisham has the Keyes to success when it comes to opening doors for economic development and diversifying New Mexico’s economy, Alicia Keyes that is.

New Mexico Economic Development Secretary Alicia Keyes was the Director of the Albuquerque Film, Television and Media Office under Albuquerque Mayor Tim Keller. During her time with Keller’s administration, Keyes was instrumental in initiating and closing deal with Netflix in which the company purchased ABQ Studios and committed to spend $1 Billion in production. Political insiders give Secretary Keyes a significant amount of credit for also convincing NBC Universal locating a production studio in Albuquerque.

https://gonm.biz/about-us/cabinet-secretary/

THE DOORS TO OPEN

In January 2019, Governor Michelle Lujan Grisham submitted to the New Mexico Legislature her executive budget recommendation for fiscal year beginning July 1, 2019 and ending June 30, 2020. You can review the entire 115-page summary and Appendix with financial charts at this link:

http://www.nmdfa.state.nm.us/uploads/files/SBD/FY%2020/Executive%20Budget%20Recommendation%20FY2020%20FINAL.pdf

According to the Governor’s executive budget summary, “in order to tackle high poverty rates, spur robust job creation, and put an end to the brain drain” the proposed budget included significant investments in the areas of employer recruitment and retention with emphasis on the following expanding sectors:

1. The Film and television industry
2. Intelligent manufacturing
3. Sustainable and green energy
4. Cyber-security aerospace
5. Sustainable and value-added agriculture bio-science
6. Tourism in relation to our outdoor economy

Funding in the amount of $75 million was included in the capital budget for “Local Economic Development Act” (LEDA) projects for the recruitment and retention of economic base jobs and an economic development “closing fund” that is intended to help lure out-of-state businesses to New Mexico. An additional $6 million in funding was included for tourism marketing with an emphasis on promoting the outdoor economy to compliment a new outdoor recreation office to be established within the Economic Development Department.

The states advertising and marketing budget went from $11 million to $17 million. Other programs that were eventually funded include:

$1.3 million for “Main Street” project programs
$140,000 for trade offices
$500,000 for the Office of Science and Technology with an additional $300,000 for the Science and Technology Research Collaborative,
$230,000 to support business incubators in rural areas and small towns, and funds to reduce the vacancy rate in the Economic Development Department specifically to improve services in rural areas.

TAX INCENTIVES TO BOLSTER STATE’S ECONOMY

On Thursday, June 20, 2019, New Mexico Economic Development Secretary Alicia Keyes told the New Mexico Legislative Finance Committee that the State intends to use tax incentives to bolster the state’s economy to attract new business, but it will do so with a totally different approach than the previous Republican Administration. Specifically, the new approach comes in the form of how tax incentives will be used and targeted. According to Keyes, the tax incentives offered will no longer be offered nor be used to lure “call centers” nor other types businesses or industries that offer low paying hourly wage jobs or minimum wage jobs.

Secretary Keyes went on to explain to the Legislative Finance Committee (LFC) the “focus is going to be the higher-paying jobs” offered by industries and companies. Secretary Keyes told the LFC that “jobs at call centers don’t generate high enough wages in general to warrant major grants under the state’s Local Economic Development Act (LEDA). At most the state will offer $1,000 per new job to offset infrastructure investments at urban offices that handle telephone calls for business customers. Recent state grants in urban areas provide about $6,000 per job created”.

For further news outlet coverage see the below links:

https://www.kob.com/new-mexico-news/new-mexico-scales-back-incentives-to-call-centers/5397946/?cat=500

https://www.abqjournal.com/1331171/nms-growing-incentives-target-highpaying-jobs.html

ECONOMIC BASE JOBS VERSUS SERVICE INDUSTRY JOBS

Keyes told the LFC that the Lujan-Grisham Administration intends to focus business incentives on sectors such as aerospace, film, cybersecurity, biosciences and clean energy that offer jobs requiring greater skill and higher pay. These are the very industries identified in the Governor’s executive budget summary to “spur robust job creation.”

When Secretary Keyes told the LFC that “jobs at call centers don’t generate high enough wages in general to warrant major grants under the state’s Local Economic Development Act” what she arguable was referring to is the State intends to concentrate on “economic base” jobs as opposed to “service base” jobs.

A service-based industry is one that offers its products, goods or services primarily within a particular region and does not supply markets outside the region nor increase the economic base of a region. In general, service base industries offer lower paying or minimum wage jobs not requiring much education or technical skills.

Economic base industries provide jobs requiring higher education and higher trained skills An economic base job is one created or needed by a business or industry that increases economic growth of a region by increasing exports of manufactured products, goods or services from the local economy or region to another region or economy thereby increasing the size of the local economy with profits and cash flow from outside the region.

The corner stone of the “economic base theory” is that an increase in economic growth of a region or economy is dependent on increase in exports, manufactured goods or services from one region or economy to another region or economy and supplying markets outside the local economy.

The new state approach of using tax incentives to attract higher paying jobs or “economic based jobs” is essentially the same strategy Secretary Keyes had been implementing for the City of Albuquerque.

NEW MEXICO’S EXPANDED TAX CREDITS FOR FILM AND TV PRODUCTION

The state’s film industry is on the verge of expanding its presence in New Mexico. The film and television industry have hit the $50 million annual cap on tax credits in recent years, a cap the previous Republican Administration refused to increase, leaving the state with a backlog of $382 million through fiscal year 2023.

On March 29, 2019, Governor Michelle Lujan Grisham signed into a law legislation expanding tax credits for film and television productions in a bid to bring more business to New Mexico’s studios, cities and small towns. The enacted legislation pays off up to $225 million in tax credits already owed to the film and television industry.

The enacted law more than doubles the original cap of $50 million to up to $110 million in in tax credits for film and television productions each year. The cap does not apply to production companies that have purchased or signed a 10-year lease for facilities, like Netflix or NBCUniversal which are setting up shop in Albuquerque. The new law also provides an additional 5% credit for productions more than 60 miles outside of Bernalillo and Santa Fe counties, a measure that proponents argued would promote the industry in cities like Las Cruces as well as in rural areas of the state. The law also requires the state to collect additional data on how the credits are used.

The state recently paid nearly $100 million in backlogged film rebates for films and television shows produced in the state. The payments were authorized by this year’s legislative film package and are intended to largely eliminate a massive backlog that built up under the previous Republican Administration that ended January 1, 2019. Even with the backlog payments authorized this week, Keyes told the Legislative Finance Committee there are still roughly $230 million in film credits claimed but not yet paid by the state.

For more on the film tax credits see:

https://www.petedinelli.com/2019/06/17/lights-camera-action-means-jobs-repeal-nm-criminal-abortion-law/

LOCAL ECONOMIC DEVELOPMENT ACT (LEDA) AND STATE CLOSING FUND

In 1994, New Mexico voters approved an amendment to the state Constitution that enabled local communities to offer limited, discretionary financial participation in qualified economic development projects in the form of closing funds. A “closing fund” is intended to help lure out of state businesses to New Mexico and assist local businesses in expanding existing businesses. The State Legislature passed the Local Economic Development Act (LEDA), which provided the legal framework for the State of New Mexico and local governments to administer their LEDA projects. Eighty-three New Mexico communities have adopted a Local Economic Development Act including the City of Albuquerque.

Those businesses who qualify for LEDA funds is explained this way by the Albuquerque Economic Development Department:

“LEDA closing funds are targeted toward employers that can demonstrate additional funding is needed to close a competitive cost gap relative to other states or cities that are vying for the same economic development project. Many factors are taken into account when determining whether to award LEDA funds, including the number of projected jobs, the amount of money a company is investing, and expenditures for local goods and services. The focus is on a “double bottom line” that takes into account the economic impact of the project as well as its benefit to the community. Ideally, there should be a 10-to-1 ratio of private investment to LEDA funds. New or existing employers may use LEDA funds to assist with land acquisition, building renovations and infrastructure needs. LEDA dollars cannot be used for working capital, operating costs or equipment. The business must create full-time, private-sector jobs”.

https://www.abq.org/uploads/files/Local%20Economic%20Development%20Act_Backgrounder.pdf

During the 2019 NM Legislative Session, the NM Legislature approved $75 million for New Mexico’s closing fund which is the highest ever approved for the fund by the State. New Mexico’s film industry is a major beneficiary of the state’s “closing fund” that is intended to help lure out-of-state businesses to New Mexico and assist local businesses in expanding. In the current fiscal year budget, New Mexico appropriated nearly $26.9 million from the LEDA fund for 15 projects around the state. Combined, the combined projects represent $1.2 billion in private investment in the State.

The $26.9 million figure includes $10 million to facilitate a Netflix studio deal in Albuquerque but does not include the $7.4 million the state has pledged for a NBCUniversal film and TV studio project, also in Albuquerque. Even without the NBCUniversal project factored in, the total amount of money spent is already higher than the amount appropriated in any of the five previous years. In the 2018 budget, New Mexico spent about $10.6 million in LEDA funds.

NEW MEXICO UNEMPLOYMENT RATES CONTINUE TO IMPROVE

In May, the national unemployment rate was 3.6% down from 3.8% in May 2018. On June 21, 2019 the New Mexico Department of Workforce Solutions reported that New Mexico’s adjusted unemployment rate was 5.0 percent in May, unchanged from the previous month and up from 4.8 percent in the same month the previous year.

On June 21, 2019 the Department of Workforce Solutions reported the total non-agricultural payroll employment in New Mexico increased by 15,900 jobs, or 1.9% between May 2018 and May 2019 with most gains from the private sector, which was up 2.3% or 15,300 jobs. Mining and construction, which includes the oil and gas industries, had the largest gains, adding 5,500 jobs, or 7.6%.

Other gains reported by the Department of Workforce Solutions in the private sector include:

Professional and Business Services Industry employment is up 3.5% or 3,700 jobs.
Education and Health Services Industry increased by 2.6% or 3,600 jobs.
The Leisure and Hospitality Industry added 3,500 jobs, or 3.5%.
Financial activities showed a gain of 600 jobs, or 1.8 percent.
Manufacturing Industry employment was up by 1.4% or 400 jobs.

Private sectors industry losing jobs included:

Trade, transportation, and utilities was down by 1.5% or 2,100 jobs
Employment in information sector was down 2.5% or 300 jobs.

In the local public or government sector, local government employment grew by a mere 0.8% or 800 jobs. All gains came from local government excluding education, with education up by 1.6%.

https://www.abqjournal.com/1331476/nm-jobless-rate-5-in-may-unchanged-from-april.html

COMMENTARY AND ANALYSIS

Kudos go to Governor Michelle Lujan Grisham along with Economic Development Secretary Alicia Keyes for actually articulating a clear vision for diversifying our economy and seeking “economic based” jobs and industries. It will take time to reverse the course of the state on many levels because of the previous 8 years of a disastrous, vindictive and confrontational Republican Governor “She Who Must Not Be Named”. With the direction New Mexico is going in expanding its economy, the unemployment rates should continue to decline, but it will take time because more is involved.

Improving our schools and vocational systems, reducing dropout rates, are critical to diversifying New Mexico’s economy. To address improving New Mexico’s education system, the 2019 Legislature enacted over a $7 billion state budget, the largest budget ever enacted in state history with the legislature appropriating a total education budget at a whopping $3.2 Billion, 16% over last year’s budget. Included in the budget is a $500 million in additional funding for K-12 education and increases in teacher pay.

Both New Mexico Governor Michelle Lujan Grisham and Secretary Alicia Keyes apparently realize that New Mexico must take bold and aggressive, calculated risks to attract and create high-paying jobs to keep our youth and talent from leaving. State and City of Albuquerque economic development efforts need to be coordinated with our vocational institutions to identify new industries that can be attracted to Albuquerque and ensure that both have the trained workforce to accommodate any new industry.

Although special emphasis and support is now being given to the film industry which is developing, expanding and proving to be very successful in providing well-paying jobs, the state needs to pursue with a vengeance the other real growth industry like heath care, transportation and manufacturing. The State should not concentrate exclusively on the film industry to diversify our economy.

On December 1, 2009, when Mayor Richard Berry was sworn in to office for his first term, APD was the best trained, best equipped, best funded department in its history and was fully staffed at 1,100 full time police officers.

Over a period of 8 years, APD went through a complete meltdown because of total mismanagement of the department by the previous Republican Administration with the hiring of political Republican operatives such as Darren White as Chief Public Safety Officer, retention of Chief Ray Schultz, who should have been fired for allowing the “culture of aggression” found by the DOJ, and the hiring of former APD Chief Gordon Eden who had absolutely no prior experience managing a municipal police department.

From December 1, 2009 to December 1, 2013 when Berry was sworn into office for a second term, APD had dropped from 1,100 sworn police officers to a low of 850 sworn police officers. In 2016, APD hit an all-time low of 821. From 2010 to 2017, the cities crime rates spiked reaching all time highs.

On June 17, 2019, the Albuquerque Police Department (APD) announced that is has hired 116 police officers during the first full budget year of the Mayor Tim Keller Administration. A very large percentage of those officers are lateral hires from other departments.

It is projected that with the additions APD will reach 957 sworn officers by the end of July, 2019 and reach 981 by the end of the summer. For the 2019-20129 fiscal year that begins July 1, 2019 APD has been is budgeted for 1,040 full time sworn officers.

According to an APD news release, about two-thirds of the 116 new officers are already patrolling the streets and taking calls for service. The remainder are expected to be on duty by the end of the summer.

Mayor Tim Keller in a TV News interview had this to say:

“All of the hard work to hire the first 100 new officers as we promised is finally coming to fruition. … We met our first-year goal, and now, most of those officers are on the streets of Albuquerque and engaging in community-based policing. We have a lot more work to do as we work to hire another 300 officers over the next three years, but we are in a much better position to attack crime from all sides.”

https://www.koat.com/article/116-new-officers-hitting-abq-streets/28069973

Of the 957 police officers APD now has, 533 are patrolling the streets taking calls for service. The breakdown of assignments for the new 116 officers are as follows:

72 are being added to the six area commands, with each area command getting 7 to 17 new officers.
3 will serve in other commands that were not specified.
13 are completing on-the-job training now.
28 which are made up of two classes, one made up of cadets and the other of lateral transfers from other police departments will be finishing their APD Academy training by the end of the summer.

According to an APD Spokesman, the new officers on patrol will allow more experienced officers to fill out positions in the homicide unit, sex crimes unit, the newly created gun violence reduction unit and the problem response teams that were created to address the needs of specific neighborhoods and areas.

https://www.abqjournal.com/1329712/apd-added-116-officers-over-past-year.html

LATERAL HIRES MAKE UP LARGE PORTION OF NEW RECRUITS

APD’s goal is to spend $88 million dollars starting last year in the 2018-2019 fiscal year, over a four-year period, with 32 million dollars of recurring expenditures, to hire 322 sworn officers and expand APD from 878 sworn police officers to 1,200 officers. The massive investment is being done in order to full fill Mayor Tim Keller’s 2017 campaign promise to increase the size of APD and return to community-based policing as a means to reduce the city’s high crime rates. Last year’s 2018-2019 fiscal year budget provided for increasing APD funding from 1,000 sworn police to 1,040. This year’s 2019-2020 fiscal year budget has funding for 1,040 sworn police.

LUCRATIVE PAY INCREASES AND RETENTION AND INCENTIVE PAY

The APD recruiting plan to grow the size of the department includes the city increasing police officer hourly pay and increasing longevity incentive pay. In 2018, the Keller Administration and the APD Union negotiated and agreed to a 2-year contract. The approved contract provides that the pay rate for officers with zero to 4 years of experience went from $28 to $29 an hour. Starting pay for an APD officer right out of the APD academy is $29 an hour. Under the two-year contract, officers with 4 to 14 years of experience are paid $30 an hour. The new contract pays senior officers between $30 to $31.50 an hour. Officers with 15 years or more experience are paid $31.50 an hour. The rate for sergeants went from $32 to $35 an hour, and lieutenants pay went from $36.70 to $40.00 an hour.

APD’s hourly pay is significantly higher than what officers and deputies make in other law enforcement agencies in the state. Notwithstanding, Bernalillo County Sheriff Officers (BCSO) are paid about the same as APD and the Santa Fe Police Department (SFPD) has raised their pay scale to match APD.

The approved longevity pay scale effective the first full pay period following July 1, 2019 is as follows:

For 5 years of experience: $100 will be paid bi-weekly, or $2,600 yearly
For 6 years of experience: $125 will be paid bi-weekly, or $3,250 yearly
For 7 to 9 years of experience: $225 will be paid bi-weekly, or $5,800 yearly
For 10 to 12 years of experience: $300 will be paid bi-weekly, or $7,800 yearly
For 13 to 15 years o experience: $350 will be paid bi-weekly, or $9,100 yearly
For 16 to 17 years or more: $450 will be paid bi-weekly, or $11,700 yearly
For 18 or more years of experience: $600 will be paid bi-weekly, 15,600 yearly.

Specialty pay and longevity bonuses offered by APD can add $100 to $600 to an officer’s paycheck. Time employed by lateral at other law enforcement agencies qualify for the APD longevity bonuses. APD announced that officers from other departments can get credit for up to 10 years of experience they have had with other law enforcement agencies which means $3,900 longevity pay after working for APD for only 1 year. In the past, lateral hires were given credit for only half of their previous work experience. That work experience directly increases an officer’s pay in the form of yearly incentive retention bonuses.

GROWING APD WITH LATERAL HIRES AND RETIREES

Deputy Police Chief Harold Medina credited the recent boost of 116 officers to the Keller Administration’s focus on recruiting officers from other departments around the state. It was estimated by Medina that of the 116 new officers, 70 were lateral hires. According to Deputy Chief Medina, the majority of the officers hired from other agencies were from the Santa Fe Police Department,the Rio Rancho Police Department and the Bernalillo County Sheriff’s Office and he stated:

“We’re paying more than anyone else in the state, in some cases substantially [more] … And it’s really led to individuals wanting to come over to the department.”

Notwithstanding Medina’s inability to provide many details on lateral hires, in November of 2018, it was reported by the media APD has recruited 59 sworn police officers as “lateral hires” from other law enforcement agencies in the State of New Mexico. In October, APD graduated a lateral academy with 29 officers. Another lateral academy with 30 officers graduated in December, 2018.

The 59 “lateral hires” from other law enforcement agencies included:

11 from the Bernalillo County Sheriff’s Office
11 from the Santa Fe Police Department
8 from the Rio Rancho Police Department
2 from the Farmington Police Department
2 from the Isleta Pueblo Police Department
2 from the Valencia County Sheriff’s Department
11 from other law enforcement agencies, including other Sheriff Departments, the Attorney General’s Office and the NM Corrections Department.
10 previously retired APD officers have been recruited to returned to work.
2 retirees from other departments have recruited to returned to work.

RECRUITING AND TRAINING A NEW GENERATION OF YOUNGER POLICE OFFICERS WILL BE DIFFICULT AT BEST

Recruiting a younger, new generation of sworn police officers and growing the size of the police department at this point will be difficult for any number of reasons including:

1. APD’s poor and negative national reputation.
2. Albuquerque’s high violent crime rates are not conducive to attracting people who want to begin a long-term career in law enforcement in Albuquerque.
3. The increased dangers of being a police officer in a violent city such as Albuquerque.
4. The DOJ oversight requirements.

APD consistently has thousands of applicants that apply to the police academy every year. The overwhelming number of police academy applicants fail to get into the academy for any number of reasons including failing to meet minimum education and entry qualifications, unable to pass criminal background checks, unable to make it through psychological background analysis, failing the polygraph tests, lying on the on the applications or failing a credit check. Once in the police academy, many cadets are unable to meet minimum physical requirements or unable to handle the training and academic requirements to graduate from the academy and drop out.

COMMENTARY AND ANALYSIS

Mayor Keller’s proclamation that he wants to hire another 300 officers over the next three years is very commendable, but he will probably have to be elected to a second term in 2021 to be able do that, saying he needs to finish the work he has started. Another term as mayor is never guaranteed, as was the case with Harry Kinney, David Rusk, Ken Schultz, Jim Baca and even Martin Chavez. Louis Saavedra left office after one term and Richard Berry left office after serving two terms but left with an approval ratting of 35% thereby ending his aspirations for higher office. APD is still under a DOJ consent decree, violent crime continues to be at unacceptable levels and political fortunes can change dramatically and swiftly over 2 years.

It is great news that APD has added 116 new police officers to its ranks and respectable progress has been made in 18 months to rebuild the department. APD’S needs to recruit another 220 police officers to get the department to a force of 1,200 which looks doable. That number of new hires will be much easier said than done and much harder for three reasons:

1. APD’s ability to attract officers from other New Mexico Law enforcement agencies probably has peaked with the other agencies also increasing their pay to compete with APD, and

2. Many recruited lateral hires may also be looking to retire sooner rather than later, coming to the City to increase their high three salary to retire with a more lucrative pension and collect the longevity pay bonuses, and

3. From a personnel management standpoint, it is highly likely that many APD police officers who are eligible for retirement now have decided to stay on and continue for a few more years with APD because of the significant increases in hourly pay and longevity pay and increasing their retirement benefits but still plan on retiring in three years once they get their high 3 years of pay.

The increases in hourly pay and longevity pay translates into being able to “grow the department” faster because of the reduced need to recruit in order replace retirees. Each year, APD has as many as 30 to 50 police officers who are eligible to retire and must be replaced once they do retire which drags down APD’s overall full-time personnel numbers.

APD’s new pay structure and increased longevity pay incentive bonuses are also allowing APD to recruit experienced police officers from other New Mexico law enforcement agencies. The law enforcement agencies APD recruited from have raised serious concerns about losing their officers to Albuquerque to the point many have also raised their pay structure to retain their officers. Police officers who are leaving other agencies to join APD are some of the more experienced and highly trained officers at the agencies they are leaving.

Keller and APD hiring so many police officers from other agencies should come as absolutely no surprise. On January 27, 2017, then New Mexico State Auditor and Albuquerque Mayor candidate Tim Keller was interviewed by the on line and now defunct Albuquerque Free Press, Keller told the Albuquerque Free Press that the solution to APD’s shortage of sworn officers is that “you poach” them from other law enforcement agencies.

The term “poaching” although somewhat insulting as an illegal hunting term when referring to law enforcement recruitment, is an accurate description of what Keller and APD Chief Geier have done with APD recruiting. The problem with “poaching” is that it increases the risk of hiring problem officers from other agencies as lateral transfers, which is what caused in part APDs problems in the first place with the Department of Justice. It also resulted in a major lawsuit and a large payout when the plaintiff’s attorney established that an inordinate number of police shootings came from a single APD class.

Keller and Geier and the command staff need to realize that APD needs to recruit a new generation of young, committed police officers to start their law enforcement careers with the city who are fully trained in constitutional policing practices. Keller and Geier are also hiring and returning to work APD retirees, with Geier himself being a retired APD Commander under Chief Ray Schultz. The danger with returning APD retired police officers is that APD may be hiring back cops that created, contributed or who did not stop the culture of aggression found by the DOJ.

APD needs to curb its efforts on hiring more lateral hires and concentrate on hiring younger new generation of police officer to begin their law enforcement career and to continue rebuilding APD from the ground up.

The Kids Count Data Book is published annually from the Annie E. Casey Foundation, a nonprofit that tracks the status of children in the United States. The 30th edition of the report was released on June 17, 2019. The report found that 18% of the nation’s children live in poverty, down from the 10 year Great Recession. However, according to the report: “The nation’s racial inequities remain deep, systemic and stubbornly persistent” and advances were not seen in the Southwest, where many children are Native Americans, Latinos and immigrants who have long faced disadvantages. You can read a summary of the report at the below link.

https://www.aecf.org/resources/2019-kids-count-data-book/?utm_source=eblast&utm_medium=email&utm_campaign=annie-e-news

According to the report, the good news is that of the 16 areas of child well-being tracked across the four domains of health, education, family and community and economic well-being, 11 have improved since the foundation published its first Kids Count Data Book 30 editions ago. According to the report:

“The data reveal, in the United States today, more parents are financially stable and living without burdensome housing costs. More teens are graduating from high school and delaying parenthood. And access to children’s health insurance has increased compared to just seven years ago. But it is not all good news. The risk of babies being born at a low weight continues to rise, racial inequities remain systemic and stubbornly persistent and 12% of kids across the country are still growing up in areas of concentrated poverty.”

According to the 2019 Kids Count Data Book, the five states with the lowest rankings for child well-being, 46-50, are the states of Arizona, Nevada, Mississippi, Louisiana, and New Mexico.

The five states with the best ranking for child-well being, 1-5 are the states of New Hampshire, Massachusetts, Iowa, Minnesota, and New Jersey.

NEW MEXICO RANKS DEAD LAST THIRD YEAR IN A ROW

Notwithstanding the good new nationally, for the third time in seven years, New Mexico came in dead last out of 50 states for child well-being. The state was ranked 50th in 2016, again in 2017 and now in 2018 continuing in to this year. According to the study, Louisiana was ranked 49th this year, bumping Mississippi up to 48th. Not at all surprising, it is New Mexico’s widespread poverty and lagging education among Native American and rural Hispanics that brings down the state’s overall rankings.

The Kids Count Data Book rankings are based on 16 indicators under four major domains:

1. Economic well-being
2. Education
3. Health and
4. Family and community.

ECONOMIC WELL BEING

Under the rating category for economic well-being indicators, the statistics break down as follows:

27% of New Mexico children are living in poverty which was a 3% improvement from last year
28% of New Mexico children live in homes where an unusually large portion of family income goes toward housing costs, a 4% percentage point improvement.
36% of New Mexico children live in homes where parents lack secure employment which is virtually the same from last year.
10% of teens are neither working nor attending school, up 1% point from the previous year.

EDUCATION

Under education indicators, not much has changed from last year. The following statistics were reported:

56% of young children are not in school, a 1% point improvement.
75% of fourth graders are not proficient in reading, unchanged from the previous year.
80% of eighth graders are not proficient in math, unchanged from the previous year.
29% of high school students do not graduate on time, unchanged from the previous year.

HEALTH INDICATORS:

Under health indicators, the following statistics were reported:
9.5% of babies are born with low birth weight, a half percentage point worse than last year.
5% of children have no health insurance, unchanged from the previous year.
There are 32 child and teen deaths per 100,000 which is a 1 percentage point improvement.
6% of teens report abusing drugs or alcohol, a 1 percentage point improvement.

FAMILY AND COMMUNITY INDICATORS

Under Family and Community Indicators the following statistics were reported:

45% of children live in single-parent families, a 3% increase from last year.
16% of children live in families where the head of household lacks a high school diploma, a 2% increase from last year.
24% of children live in homes in high poverty areas of the state, 2% worse than last year.
28 babies are born to teens per 1,000 births, a 2% point improvement over last year.

REACTION TO THE 2019 KIDS COUNT DATA BOOK REPORT

Amber Wallin, deputy director for New Mexico Voices for Children, had this to say about the 2019 Kids Count Data Book report:

“We made some real strides toward increasing our investments in children during the 2019 legislative session. … However, it takes some time before improvements in public policy show up in measurable changes to child well-being. Our ranking is also dependent upon how well other states are doing, and most states made the kinds of investments during the recession that led to quicker, more robust recoveries than New Mexico … .”

James Jimenez, executive director of New Mexico Voices for Children, which runs the state’s Kids Count program, had this to say about this years report:

“It’s disappointing, but not terribly surprising to see New Mexico ranked at the bottom again, given the last 10 years [meaning the great recession] It is going to take sustained investment to undo the damage from a decade of under-funding all of our child-serving programs and services like health care, child care and K-12 education. … We started making progress in 2019, but clearly much more needs to be done”

https://www.abqjournal.com/1329692/new-mexico-again-ranks-dead-last-in-child-well-being.html

EDUCATION BUDGET ENACTMENT

On March 15, 2019, Democratic Governor Michelle Lujan Grisham finished her very first 60-day Legislative session as Governor. By all accounts, it was one of the most productive sessions in a long time when it comes to the future well being of New Mexico children.

Financial stress over the budget process was greatly reduced from years past by a nearly $2 Billion in additional revenue generated by the Southern New Mexico oil boom and increased royalties filling the state coffers. The 2019 Legislature enacted over a $7 billion state budget, the largest budget ever enacted in state history. The legislature appropriated a total education budget at a whopping $3.2 Billion, 16% over last year’s budget, out of the total budget of $7 Billion.

Included in the budget is a $500 million in additional funding for K-12 education and increases in teacher pay. The massive infusion of funding to public education is the result of a District Court ruling that ruled the state of New Mexico is violating the constitutional rights of at-risk students by failing to provide them with a sufficient education. The District Court found that many New Mexico students are not receiving the basic education in reading, writing and math they should be receiving in our public-school system.

Early childhood programs will be given a major increase in funding. Under the enacted 2019-2020 budget, every public-school district will be allocated significantly more funding. Teachers and school administrators will be given 6% pay raises or more with more money to hire more teachers.

DEPARTMENT OF EARLY CHILDHOOD

A new “Early Childhood Department” was created by the 2019 New Mexico Legislature starting in January 2020. This was a major priority of Governor Lujan Grisham. The new department will focus state resources on children from birth to 5 years of age. A major goal of the new department, coupled with other investments, will be more New Mexico children growing up to secure gainful employment as adults who don’t require government services.

PROTECTING CHILDREN

Albuquerque and New Mexico for the last 4 years have been shocked and haunted with the news of the tragic and brutal killing of children by their own parents. Media reports all too often have included reports where those children had fallen through the cracks of law enforcement and the New Mexico’s Children, Youth and Families Department. Lujan Grisham’s recommendation calls for an additional $36.5 million for the chronically understaffed Children, Youth and Families Department. Under the enacted budget, 102 new social workers are to be hired by the agency’s child’s Protective Services Division.

NEW MEXICO UNEMPLOYMENT DOWN

In April 2019 17, 2019, the New Mexico Department of Workforce Solutions reported that New Mexico’s adjusted unemployment rate was 4.3 percent, down from 5.1 percent in March 2019. The national unemployment rate in April was 3.6 percent, down from 3.8 percent in March 2019 and 3.9 percent in April 2018.
The economic update for May 17, 2019 from Workforce Solutions States:

“The total non agricultural payroll employment grew by 13,000 jobs, or 1.5 percent, between April 2018 and April 2019. All aggregate gains came from the private sector, which was up 13,800 jobs, or 2.1 percent. The public sector was down 800 jobs, or 0.4 percent. Growth was reported in both components of the private sector. The private service-providing industries were up 8,000 jobs, or 1.4 percent, while the goods-producing industries were up 5,800 jobs, representing a gain of 5.9 percent. Six private industries added jobs, two lost jobs, and one reported employment that was unchanged from its April 2018 level.

Mining and construction reported the largest employment increase with a gain of 5,500 jobs, or 7.7 percent. Within mining and construction, mining added 3,000 jobs, which represented over-the-year growth of 12.4 percent. Construction was up 2,500 jobs, or 5.3 percent. Leisure and hospitality employment increased by 4,600 jobs, or 4.7 percent. Employment in education and health services increased by 3,100 jobs, or 2.2 percent. Most growth in the industry occurred within health care and social assistance, which was up 2,500 jobs, or 2.1 percent; educational services employment was up 600 jobs, or 2.9 percent. Professional and business services employment was up 1,200 jobs, or 1.1 percent. Employment in miscellaneous other services increased by 600 jobs, or 2.1 percent. Aggregate manufacturing employment was up 300 jobs, or 1.1 percent, from its April 2018 level. Within this industry, durable goods manufacturing was up 200 jobs, or 1.3 percent, and non-durable goods manufacturing was up 100 jobs, or 0.9 percent.

Trade, transportation, and utilities was down 1,300 jobs, or 1.0 percent. Within the industry, employment in each of wholesale trade (down 3.8 percent) and retail trade (down 0.9 percent) decreased by 800 jobs; transportation, warehousing, and utilities reported a gain of 300 jobs, or 1.2 percent. Employment in information was down 200 jobs, or 1.7 percent. Employment in financial activities was unchanged from its level in April 2018.

Within the public sector, local government employment grew by 1,000 jobs, or 1.0 percent, with all gains coming from local government excluding education. Federal government reported a gain of 100 jobs, or 0.3 percent. State government employment decreased by 1,900 jobs, or 3.3 percent. Within state government, state government excluding education was up 300 jobs, or 1.0 percent, with state government education posting a loss of 2,200 jobs, or 8.3 percent.”

https://www.jobs.state.nm.us/gsipub/index.asp?enc=JdKtFhuODzQ+aO5C6MuCGQ==

ECONOMIC DEVELOPMENT AND JOB CREATION

According to the Governor’s executive 2019-2020 budget summary, “in order to tackle high poverty rates, spur robust job creation, and put an end to the brain drain” the budget includes significant investments in the areas of employer recruitment and retention with emphasis on the following expanding sectors:

1. The Film and television industry
2. Intelligent manufacturing
3. Sustainable and green energy
4. Cybersecurity aerospace
5. Sustainable and value-added agriculture bioscience
6. Tourism in relation to our outdoor economy

COMMENTARY AND ANALYSIS

It is very difficult to read, let alone accept, that New Mexico ranks dead last the third year in a row for child well-being. With that in mind, the state now has only one direction to go now and that is up when it comes to the welfare of our children.

There is a direct correlation between a family’s overall income and child well being. When employment rates go up, child well being also goes up. Both the City of Albuquerque’s and the State of New Mexico’s Economic Development Departments need to pay far more attention to the growth industries if the city and the state are going to continue turning our economy around.

With NBC Universal coming to Albuquerque and the purchase of Albuquerque Studios by Netflix, the film industry is clearly in the future of Albuquerque and the best hope at this point in diversifying our economy. Last year alone, the film and TV production industry brought in over $180 million of direct spending to the city and state. Far more important, jobs that will be provided by both NBC Universal and NETFLEX are a far cry from the hourly wage jobs provided by the “call centers” that the city has become accustomed to being announced.

Albuquerque and New Mexico need to pursue with a vengeance the real growth industry like heath care, transportation and manufacturing, and the film industry to diversify our economy. Public-private partnerships in the growth industries where ever possible should be encouraged and developed. Special emphasis and support should be given to Albuquerque’s and New Mexico’s film industry which is developing, expanding and proving to be very successful in providing well-paying jobs.

The City and the State need to continue with efforts that will insure that our education institutions such as the New Mexico Community College continue to offer a trained work force. Both the City and the State need to create more incentives to build and guarantee that the growth industries continue to prosper in New Mexico.

The 16% increase in the education budget, the creation of the Department of Early Childhood, the $36.5 million increase for the understaffed Children, Youth and Families Department which includes funding for 102 new social workers for the agency’s child’s Protective Services Division, and the decline in New Mexico’s unemployment rate, reflects that progress is indeed being made towards improving the future of New Mexico’s Children.

Notwithstanding, it will take time before New Mexico’s child well being ranking are made better. For that reason, the debate over using a small portion of the state’s $17 billion Land Grant Permanent fund for early childhood education, care and intervention needs to continue. Governor Michelle Lujan Grisham should continue her efforts to give major attention to use of the State’s Land Grant and Permanent Fund to finally solve many of our early childhood education, care and intervention problems.

The Public Employees Retirement Association (PERA) is the legislative created and state regulated retirement association for all government employees. PERA pays pensions to more than 40,000 retirees and also has a public employee plan for about 49,000 active members. PERA manages a $15 billion pension fund.

PERA administers the pension funds for active, inactive, and retired public employees in New Mexico. PERA includes state, county and municipal plans, firefighters, police officers, blue collar workers and various municipal plans. PERA has an Executive Board duly elected by the members of the Association.

Over the last few years, it has been reported that the state’s two major pension funds, the Public Employees Retirement Association (PERA) and the Educational Retirement Board (ERB), are in serious financial trouble because of long term liabilities of benefits to paid retirees in the future will exceed literally by the billions the funds that are available.

TARGET INVESTMENT RETURNS DOWN

In May, financial experts warned New Mexico officials to prepare for the possibility of poor investment returns or other circumstances that could damage the pension systems further.

On June 12, 2019, the New Mexico Legislature’s Investments and Pensions Oversight Committee were warned that PERA is not on track to hit the target for investment returns this year. PERA’S goal is to reach 100% funding of liabilities by 2043.

PERA Executive Director Wayne Propst told the committee that PERA thus far this year is missing the investment target by 2.25% points. Further, the committee was told that investment gains this year might come in at 3% to 5% and not the standard 7.25% target used by many pension plans throughout the United States.

The committee was warned it could have a serious impact on the long-term financial projection for PERA. According to Propst, a 5% return would be enough to reduce the projected funding ratio in 2043 from 74% to 69%. The challenge, Propst said, isn’t unique to PERA and he said:
“This has been a very volatile year in the markets for public pension plans across the country.”

POTENTIAL SOURCE TO SHORE UP SAGGING PENSION RETURNS

On June 16, 2017, State Senate Finance Committee Chairman John Author Smith told an interim legislative committee that if the price of oil does not change drastically, the State could once again receive between $1.1 billion to $1.3 billion in additional tax dollars next year. If that happens, it will be the second year in a row that the state will get a $1 billion plus windfall. The oil boom in Southern New Mexico is going strong and royalties paid to the state continue to increase. The additional revenues could be relied upon to invest more in the PERA and ERB pension funds to make sure they become 100% solvent.

https://www.apnews.com/d06489c30b714ff3a7f758226f8205d2

GOVERNOR’S PERA SOLVENCY TASK FORCE

Financial warnings to the New Mexico Legislature’s Investments and Pensions Oversight Committee come as a task force established by Governor Michelle Lujan Grisham works on recommendations to improve the financial health of PERA.

Governor Michelle Lujan Grisham announced a “solvency task force” for PERA. The 19-member task force includes PERA officials, labor union leaders, retiree representatives and others. The committee is tasked with providing recommendations to the governor by August 30, 2019. The task force will make recommendations on contributions and payouts and a plan will be presented to the 2020 New Mexico legislative session.

https://www.abqjournal.com/1282402/governor-creates-task-force-to-study-pension-issues.html

PERA’s Board Chair, Jacquelin Kohlasch, along with Executive Director Wayne Propst and Chief Investment Officer Dominic Garcia serve as Task Force members.

Other Task Force members include a representative from the following entities:

New Mexico House of Representatives
New Mexico State Senate
New Mexico Investments & Pensions Oversight Committee
Retired Public Employees of New Mexico
Fraternal Order of Police
National Association of Police Organizations
New Mexico State Police Association
New Mexico Sheriffs’ Association
New Mexico Professional Fire Fighters Association
Albuquerque Fire Department Retirees’ Association
American Federation of State County & Municipal Employees
Communication Workers of America
New Mexico Counties
New Mexico Municipal League

IMPLODING RETIREMENT FUNDS

In a February meeting of the PERA board, Chief Investment Officer Dominic Garcia, reported that PERA’s investment funds suffered a 2.5 percent loss in 2018. In comparison, the teacher ERB retirement fund earned 6 percent return during 2018. The PERA fund fell from $15 billion to $14.6 billion.

Both PERA and ERB retirement systems requested a one-time infusion of funds during the 2019 New Mexico legislative session, but the legislature resisted it as not being a truly viable solution to the projected insolvency of the retirement plans.

In 2013, the New Mexico legislature tackled pension reform. The changes made have not been enough to make the pensions fully solvent. A shrinking government workforce as a result of government cuts and a sluggish economy over the last 8 years has dragged down New Mexico’s largest pension program. It is estimated that between 4,000 and 5,000 state government employee vacancies and eliminated positions have occurred over the last 8 years resulting in fewer employee and employer contributions made to the funds and effective solvency. Another factor contributing to insolvency is that people are living much longer and are collecting their pensions for longer periods of time.

http://www.santafenewmexican.com/news/local_news/lawmakers-tie-pension-shortfall-to-fewer-state-employees/article_d23fe441-eb6a-5aff-ad32-3c776b042553.html

Despite changes enacted in 2013, PERA’s estimated unfunded liability which is the gap between future retirement benefits owed and expected future assets on hand, has increased over the past four years from $4.6 billion to $4.8 billion.

Decreases in the ERB’s expected investment returns and inflation calculations have caused the system’s unfunded liability to rise to $7.4 billion, an increase of more than $1 billion since 2014 and its funded ratio to drop to 61.5 percent. The ERB pension fund is not expected to reach 100 percent funded status for 84 years or until the year 2100.

https://www.abqjournal.com/1075327/viability-of-state-pension-funds-questioned-%C2%AD-again.html

DEFINED CONTRIBUTION PLANS

A “defined contribution” plan is a type of retirement plan where employers, employees, or both regularly make contributions to the plan and future employee retirement benefits are based on the dollar amount of contributions made and the final value based on “investment growth”.

A defined contribution plan does not guarantee a specific benefit to be paid in the future. With a defined contribution plan, individual employees assume all of the investment risk involved. The most common type of defined contribution plan is the 401(k), where employees contribute a portion of their earnings and invest their money so it grows over time.

In the private sector, it is common with defined contribution plans for employers to offer to match a portion of employee contributions, but most of the burden of funding 401(k)s falls at the individual employee level. With defined contribution plans, most associated administration fees are passed on to the employees who participate.

PERA PLANS ARE DEFINED BENEFIT PLANS

Most if not all of PERA’s pension plans it administers are “defined benefit” plans as opposed to “defined contribution” plans. With a “defined benefit plan”, the state, county or municipality government entity promises the government employees a specific payout upon retirement and guaranteed for life. Further, a person can designate a spouse as a beneficiary and the spouse can be paid the pension for the rest of their life.

The pension payout is based on a formula that accounts for factors such as length of service, age, and earnings history. With a defined benefit plan, PERA is responsible for making sure there’s enough money to pay employee benefits as scheduled, and PERA assumes all of the investment risk involved in the plan.

Under the PERA system, the formula used for a very large portion of retirees is 25 years of total service multiplied by 3 for each year of service applied to the average high 3 years of pay. A person’s age can also allow a person to retire before the age of 67, but it reduces the benefits where the total years of service is less than 25 years.

(EXAMPLE: Government employee works a full 25 years and is paid an average of $50,000 each year of last 3 years of service. A multiplier of 3% is given each year of service or 75% of high three average yearly pay of $50,000 = $37,500 pension). Law enforcement officers have a separate retirement formula and can retire with 25 years of service and can be paid 90% of their high 3 years of pay.

All of the PERA pensions are funded by government employer contributions usually matching the employee contributing a portion of their earnings. Defined benefit plans are considered riskier for employers and they are more expensive to maintain. For this reasons, defined benefit plans have become far less popular in the private sector.

In 1998, 60% of Fortune 500 companies offered defined benefit plans to new hires, but by the end of 2013, that number fell to just 24%. This absence of defined benefit plans has left more and more employees in a less secure spot financially with regard to retirement.

Under the PERA Pension plans, retirees have been given cost of living raises (COLA) that have been anywhere from 2% to 3% over the years and were considered guaranteed and paid after a few years in retirement. During the 2019 New Mexico Legislative session that ended on March 15, 2019, the legislature considered legislation that would have eliminated all cost of living adjustments or suspend the COLA for a period of years, but the legislation failed.

Governor Michelle Lujan Grisham’s 2019- 2020 approved budget attempted to shore up New Mexico’s two major pension funds by increasing how much the state pays into workers’ retirement accounts with $13.7 million in funding.

COMMENTARY AND ANALYSIS

There are 6 representatives from public safety out of 16 on the Governor’s PERA Solvency Task Force: the Fraternal Order of Police, National Association of Police Organizations, New Mexico State Police Association, New Mexico Sheriffs’ Association, New Mexico Professional Fire Fighters Association, Albuquerque Fire Department Retirees’ Association. The Governor’s PERA Solvency Task force is very top heavy with public safety representatives. The Chair of the Task Force is the former President of the Albuquerque Fire Fighters union who has retired from the Albuquerque Fire Department. Public Safety retirees have far more lucrative retirement benefits when it comes to years of service required to retire and the amount of pension benefits that they will paid once retired.

The fact that PERA’s Board Chair, Jacquelin Kohlasch, along with Executive Director Wayne Propst and Chief Investment Officer Dominic Garcia serve as Task Force members is no consolation given the fact that all three are somewhat controversial with many retirees who have been highly critical of the management of the PERA funds. Executive Director Wayne Propst is currently being investigated by the New Mexico Attorney General for improprieties of giving himself a raise along with many of his staff without PERA Board approval. The Attorney General has yet to announce if there was anything improper about the raises.

There are 40,000 PERA retirees and the overwhelming majority of those retirees are not public safety retirees. The Governor needs to increase the representation on the PERA Solvency Task Force Task Force with far more voting members that are at least equal, and preferably more, to the public safety representatives from other retirement sectors of the PERA system, including blue collar and white-collar employees that have retired. Otherwise, serious doubts will be raised by the majority of the stakeholder retirees that they were not fairly and equitably represented when it comes to any changes in the PERA benefits and that public safety representatives will protect their own benefits over other retirees.

The financial problems PERA is experiencing can be directly related to the type of pensions offered to government employees as well as what many PERA retirees feel has been mismanagement of the pension funds. Public school teacher and employee retirement and pension funds are separate and not managed PERA but by Education Retirement Board (ERB).

Governor Michelle Lujan Grisham and New Mexico legislature have a looming financial crisis that needs to be resolved sooner rather than later. While the State is experiencing a windfall in increased revenues, the New Mexico Legislature should use the opportunity to increase funding to the PERA funds significantly more than the $13 million approved being, but such an expenditure is not going to be a long-term solution but the beginning of it.

The New Mexico Legislature needs to consider pension reform measures once again but during a special session where a solution can be hammered out without the distractions of a general session. It is likely the New Mexico legislature will need to consider pension reform in the form of including “defined contribution plans” in one form or another for future government employees, increasing employer and employee contribution plans under the defined benefit plans or modifying the multipliers and increasing years of service or age before retirement.

What is needed is a special session the sooner the better to deal with pension reform measures that will work. Ultimately, the lives of 90,000 New Mexicans and their families, currently employed or retired, will be affected by the decisions made with the PERA pension system.