I have been surprised at the minimal attention given to the recent indictment of the heads of CDR, David Rubin, Zevi Wolmark and Evan Zarefsky, all of California.
CDR was the focus of attention when Gov. Bill Richardson’s nomination to be Secretary of Commerce was derailed. The governor’s name was withdrawn after it became known there was an ongoing federal probe into the relationship between CDR and the New Mexico Finance Authority (NMFA) and contributions to PACs controlled by Gov. Richardson.
That investigation was concluded in the late summer of 2009. U.S. Attorney Greg Fouratt sent a private letter to attorneys representing individuals under investigation, stating no charges would be filed. The letter, which was leaked to the news media and for which Mr. Fouratt was criticized, contained the little noted clause that it was “limited solely to each party’s conduct in NMFA’s award of financial work to CDR in 2004.” In light of the indictments returned in the Southern District of New York, it appears the clause was underappreciated.
The entire CDR controversy is long, complex and, for many, just too hard to understand. That is unfortunate, as I believe it is a significant issue that could have tremendous impact on New Mexico. Previous news articles have focused on the activities of NMFA, GRIP Bonds, friends of the governor, and contributions to political funds controlled by Gov. Richardson.
Indictment Basics
At this time I would like to look closely at the actual indictment returned on Oct. 29 in the Southern District of New York (SDNY). An indictment is a formal, written accusation of wrongdoing.
The SDNY is a federal court that covers a portion of the State of New York. The SDNY includes Manhattan, the Bronx and other counties near New York City. Populous states like New York often have multiple federal court districts, but here in New Mexico we have one federal district for the entire state.
The U.S. Attorney’s Office for the SDNY has long been considered a flagship office for the prosecution of federal financial crimes. This makes sense as Manhattan is where Wall Street and many major financial corporations are located.
This CDR indictment alleges nine specific crimes (or counts) were committed by Rubin, Wolmark and Zarefsky. The indictment is the result of an investigation by the FBI and the IRS in which evidence was presented to a federal grand jury. That grand jury concluded there is “Probable Cause” to believe the named defendants committed the specified crimes.
In my 24 years in the FBI, I have never seen a “ham sandwich” indicted as is routinely alleged by those who wish to trivialize a federal grand jury indictment. This is very serious. Top officials in the Department of Justice signed off on this document.
The CDR Indictment
The actual indictment is 39 pages long. The beginning has a very useful background section that explains the role of “brokers” in the issuance of municipal bonds.
Towns, school districts, housing authorities, and other government agencies, referred to as “issuers,” raise money for specific projects by selling bonds. These bonds are loans the agency will pay off over time. The money raised by selling these bonds is spent over time. The “issuers” will routinely invest the unneeded proceeds to earn money.
Think of it like getting a home improvement loan to cover numerous repairs, and you put the money in a savings account until you need to move it to your checking account. These “savings account” investments are done with financial institutions like banks and insurance companies, who are called “providers.” The individuals who represent these “providers” are called “marketers.”
“Brokers” like CDR are supposed to get the best deal for the “issuers” by getting multiple offers from numerous “providers” as bids submitted by “marketers.” In a perfect world a number of “marketers” send in sealed bids promising specific returns on investments to the “broker.” The “broker” then opens the bids and picks the “provider” offering the best deal.
The federal grand jury indictment charges CDR (the “broker”) rigged the bids with corrupt “providers” through crooked “marketers.” “Issuers” were cheated out of a fair return on the taxpayer’s money, while CDR and their cronies got kickbacks, the indictment alleges.
It is claimed in the indictment this scheme started back in 1998 and was ongoing until at least November 2006. The first count listed in the indictment is “restraint of interstate trade and commerce,” which addresses the bid-rigging allegation.
Counts 2 and 3 are conspiracy. “Conspiracy” is an agreement to commit an illegal act. That agreement is a crime in itself if some action occurred to fulfill the agreement, an “overt act.” Because it is an ongoing criminal enterprise, events which occur outside the statute of limitations can be presented at trial. The government must prove the agreement existed and that an “overt act” was committed (unless it’s a drug crime).
Count 2 alleges an agreement between CDR and a company only identified as “Provider A.” The overt acts allegedly involve CDR executives and “Marketer A,” the indictment says. Phone calls and events that occurred in late October 2003 are listed in the indictment.
Count 3 alleges a similar scheme involving “Provider B,” Marketers B-1 and B-2 and a “state housing agency.” This count identifies a phone call from New Mexico on May 20, 2004, as an overt act. Although reference is made to a “state housing agency” together with a call from New Mexico, there is nothing in the indictment that links this call to the ongoing Region III Housing Authority investigation and the indictment of former State Rep. Vincent “Smiley” Gallegos.
Marketer A, B-1 and B-2 are not identified, and this is usual because they are probably cooperators who have cut a deal. The identity of Marketer A, B-1, B-2 and Provider A and B will be known prior to trial. The identities of the victim “issuers” also are not revealed because that could lead to figuring out who is cooperating.
Counts 4, 5 and 6 are “Wire Fraud,” which means money allegedly was transferred electronically across state lines to further this criminal plan.
Count 7 alleges “false statements” by Evan Zarefsky to the FBI in November 2006. Two points here are:
• Never lie to the FBI. It’s a crime, even if you’re not under oath.
• This was a criminal act committed in late November 2006, which places the conspiracy well within the five-year statute of limitations and allows the prosecutors to bring in all of the criminal acts that occurred six, seven or more years ago.
Count 8 alleges interfering with administration of internal revenue laws. One of the acts presented in this count refers to a “state housing agency” and a phone call on May 19, 2004.
Finally, Count 9 alleges “Fraudulent Bank Transactions” in which the kickbacks to the CDR executives were concealed.
Conclusion
This criminal indictment paints a picture of a sophisticated criminal enterprise which operated in many states, including New Mexico.
While CDR’s involvement with NMFA was not addressed, these charges from New York suggest the existence of a pattern of criminal activity that was occurring at the same time as CDR involvement in New Mexico. So what did happen in New Mexico? Perhaps we will learn much about the inner workings of CDR as the New York case unfolds.
Significantly, Mr. Fouratt’s letter also did not “preclude the United States or the grand jury from reinstituting such an investigation without notification.”
David Rubin, Zevi Wolmark and Evan Zarefsky will be under tremendous pressure to reach a deal with federal prosecutors. As is always the case, the individuals who come forward first with the most useful testimony will get the best deal. Their attorneys know this.
These charges, together with the recent guilty plea by Saul Meyer in a case by the New York attorney general’s office, plus the Region III Housing Authority case by the New Mexico attorney general, promise to keep allegations of corruption in the forefront of the news.
The next year could be very interesting for New Mexico politicians.
Thursday, November 19, 2009
Sunday, October 25, 2009
The New Mexico Budget Mess
Budget Basics
As we are embroiled in a serious budget crisis, it is important for voters to have a clear understanding of the State budget process. Informed voters are effective advocates and the taxpayers of New Mexico must become both informed and effective.
Some very helpful information sheets have been prepared by the Legislative Finance Committee (LFC), a permanent agency of the legislature. The LFC is comprised of professional economists and analysts who work with the executive branch agencies to prepare the State budget each year. These information sheets include a Budget Glossary, “the Fiscal Structure of New Mexico”, and a collection of essays called “Finance Facts”.
The fiscal year for the State of New Mexico goes from July 1 to June 30. The fiscal year is the year in which June 30th falls. We are in FY2010. FY2009 ended on June 30, 2009, FY2008 on June 30, 2008, etc.
The terms “recurring dollars” and “one-time” dollars are used a lot. An example of a “recurring” dollar as an expense would be the salary and benefits of a state employee. A “recurring” dollar as income would be revenue from the state’s royalty from an oil well on state land. A “one-time” dollar would be the money spent or not-spent (saved) on repairing a highway. The concern is that we are using “one-time” dollars (saved by not fixing the road) to cover “recurring” expenses (the state employee salary). Eventually we run out of these “one-time” funds and we still have the “recurring” expenses.
Budget Background
A little background is appropriate at this point. In FY2004 when the first budget was passed under Governor Bill Richardson/Lt Gov Diane Denish, the State spent $ 4.127 Billion. By FY 2008, the last year before revenue began to drop, New Mexico was spending $5.994 Billion, an increase of 45 percent.
Then the economy started to collapse. Estimates of the amount of revenue the State could expect to collect began to fall. The estimate for FY 2010 dropped by $286 million between last October and December when in was projected that FY2010 would produce $5.733 Billion. The collapse in expected revenue continued and accelerated: February - $ 5.484 Billion; August - $ 5.052 Billion; this October - $ 4.833 Billion.
To put it bluntly our State tax revenue has cratered. We have gone from about $6 Billion to about $4.8 Billion, a drop of $1.2 Billion or around 20 percent in just over sixteen months. We are now expected to have the same income as we did in FY 2006 if things don’t continue to worsen.
Special Session
During this Special Session the legislature was to address two primary issues. The first was to transfer funds from the reserve accounts the State maintains to cover unexpected (by some) shortfalls for FY 2009. The final audited numbers for FY 2009 are not in yet, but it is estimated that the State needs to take about $210 million out of the reserves (think of it as a savings account) to cover operating expenses (think of this as the checking account).
The second issue was to reduce expenditures for the current fiscal year, FY2010, because tax revenue flowing into the State Treasury has failed to meet projections. This problem was not unexpected. In fact, in March 2009 ALL of the Republicans in the House of Representatives voted AGAINST the FY2010 budget. We knew then that it did not deal with the problems this State was facing.
Spending for FY 2010 was cut, but only enough to cover about a third of the shortfall in revenue. The rest is to come from “one-time” dollars. Like many others, I believe we have simply delayed dealing with the real problem, and as a result, it will get worse.
Regarding the FY 2009 shortfall, the Richardson/Denish administration wanted what amounted to a blank check to pull funds out of reserves for both FY 2009 AND FY2010. That passed, but without a two-thirds majority. Therefore, the money cannot be moved for ninety days, and many of us believe that the funds cannot be taken legally from the restricted reserves. All of the Republicans voted against this transfer. This battle did not get the attention it deserved and could be the cause of some lawsuits and/or another special session.
The Future
In January we are to prepare a budget for FY2011. Many of us fear the problems will continue to get worse. Taxes are not expected to be back to FY2008 levels until FY2015 or later. Also in FY2011 the Federal stimulus money ends. This administration has been using these dollars to cover shortfalls.
To my “Tea Party” friends, you need to make sure your voices are heard in Santa Fe before and during the thirty day session. I guarantee you that the folks who want to raise taxes are speaking often and loudly.
As we are embroiled in a serious budget crisis, it is important for voters to have a clear understanding of the State budget process. Informed voters are effective advocates and the taxpayers of New Mexico must become both informed and effective.
Some very helpful information sheets have been prepared by the Legislative Finance Committee (LFC), a permanent agency of the legislature. The LFC is comprised of professional economists and analysts who work with the executive branch agencies to prepare the State budget each year. These information sheets include a Budget Glossary, “the Fiscal Structure of New Mexico”, and a collection of essays called “Finance Facts”.
The fiscal year for the State of New Mexico goes from July 1 to June 30. The fiscal year is the year in which June 30th falls. We are in FY2010. FY2009 ended on June 30, 2009, FY2008 on June 30, 2008, etc.
The terms “recurring dollars” and “one-time” dollars are used a lot. An example of a “recurring” dollar as an expense would be the salary and benefits of a state employee. A “recurring” dollar as income would be revenue from the state’s royalty from an oil well on state land. A “one-time” dollar would be the money spent or not-spent (saved) on repairing a highway. The concern is that we are using “one-time” dollars (saved by not fixing the road) to cover “recurring” expenses (the state employee salary). Eventually we run out of these “one-time” funds and we still have the “recurring” expenses.
Budget Background
A little background is appropriate at this point. In FY2004 when the first budget was passed under Governor Bill Richardson/Lt Gov Diane Denish, the State spent $ 4.127 Billion. By FY 2008, the last year before revenue began to drop, New Mexico was spending $5.994 Billion, an increase of 45 percent.
Then the economy started to collapse. Estimates of the amount of revenue the State could expect to collect began to fall. The estimate for FY 2010 dropped by $286 million between last October and December when in was projected that FY2010 would produce $5.733 Billion. The collapse in expected revenue continued and accelerated: February - $ 5.484 Billion; August - $ 5.052 Billion; this October - $ 4.833 Billion.
To put it bluntly our State tax revenue has cratered. We have gone from about $6 Billion to about $4.8 Billion, a drop of $1.2 Billion or around 20 percent in just over sixteen months. We are now expected to have the same income as we did in FY 2006 if things don’t continue to worsen.
Special Session
During this Special Session the legislature was to address two primary issues. The first was to transfer funds from the reserve accounts the State maintains to cover unexpected (by some) shortfalls for FY 2009. The final audited numbers for FY 2009 are not in yet, but it is estimated that the State needs to take about $210 million out of the reserves (think of it as a savings account) to cover operating expenses (think of this as the checking account).
The second issue was to reduce expenditures for the current fiscal year, FY2010, because tax revenue flowing into the State Treasury has failed to meet projections. This problem was not unexpected. In fact, in March 2009 ALL of the Republicans in the House of Representatives voted AGAINST the FY2010 budget. We knew then that it did not deal with the problems this State was facing.
Spending for FY 2010 was cut, but only enough to cover about a third of the shortfall in revenue. The rest is to come from “one-time” dollars. Like many others, I believe we have simply delayed dealing with the real problem, and as a result, it will get worse.
Regarding the FY 2009 shortfall, the Richardson/Denish administration wanted what amounted to a blank check to pull funds out of reserves for both FY 2009 AND FY2010. That passed, but without a two-thirds majority. Therefore, the money cannot be moved for ninety days, and many of us believe that the funds cannot be taken legally from the restricted reserves. All of the Republicans voted against this transfer. This battle did not get the attention it deserved and could be the cause of some lawsuits and/or another special session.
The Future
In January we are to prepare a budget for FY2011. Many of us fear the problems will continue to get worse. Taxes are not expected to be back to FY2008 levels until FY2015 or later. Also in FY2011 the Federal stimulus money ends. This administration has been using these dollars to cover shortfalls.
To my “Tea Party” friends, you need to make sure your voices are heard in Santa Fe before and during the thirty day session. I guarantee you that the folks who want to raise taxes are speaking often and loudly.
Sunday, August 23, 2009
Peace?
Recently the news media has been dominated by the national health care debate and the indictment of the former Secretary of State here in New Mexico. These and other local happenings have pushed off the front page the release of Abdel Basset Ali al-Megrahi who was convicted in 2001 for the murder of 270 people in connection with the bombing of Pan Am flight 103 over Lockerbie, Scotland on December 21, 1988. He is terminally ill with cancer and is being allowed by the Scottish minister of justice to go back to Libya to die at home - an act of “compassion”.
This event went unnoticed by most individuals except for those who were directly impacted by that horrible act.
Scotbomb
In December of 1988 I was assigned to the criminal/reactive squad of the Washington field office of the FBI. At the time we were located in a ratty office building in a depressed part of Washington D.C. Squads were arranged in open bays with shoulder height partitions separating one squad from another. There was not a lot of rhyme or reason for the location of the squads and my squad was located next to one of the terrorism squads.
Pan Am 103 went down on December 21st carrying people home-bound for the Christmas holiday. Initially it was treated as a simple air disaster. Something routinely handled by the NTSB. Within a week it became obvious it was not mechanical failure that doomed those people, but rather a horrid act of terrorism and thus the responsibility of the FBI. Washington field office was designated as the “office of origin” for this investigation.
It was between Christmas and New Years, and I, unlike most of my colleagues, was working in the office. I had a minor case that had some court hearings scheduled. I remember the Supervisor of the terrorism squad stepping out of his office, looking around, seeing me and calling my name. That was how I was selected for the task force working Pan Am 103 - The case we knew as “Scotbomb”.
Over twenty years have passed and memories can fade, but some images never leave you. These events that would not make a good movie. There were no high speed chases or kicking in doors but there was drama… of the heart and soul.
I can recall sitting around the office that first Saturday, together with a couple of other agents, crafting a massive teletype to the field offices where victim’s homes were located. Within days a command post was established and a team of agents pulled together from various squads.
The plane went down in Lockerbie which is served by the Dumfries & Galloway Constabulary. This department is the smallest of the eleven law enforcement agencies covering Scotland. Scottish authorities put together a task force drawing officers from all of these departments.
A team of four or five detectives from Scotland came to Washington D.C. and were part of our command post across the hall from the SAC’s office.
I remember the Scots had at the time a very advanced data base system which was constantly updated by one detective. We, the FBI agents, were “cutting edge” in that we had all teletypes uploaded into a text searching program.
My job in those days before DNA testing was to coordinate the activities of FBI agents who went to victim’s homes to try and collect latent fingerprints which could be used to identify bodies. Eventually the officials in Scotland dispatched to the U.S. a special team of detectives lead by the commander of the Criminal Investigation Division (CID) of the Dumfries & Galloway Constabulary Their purpose was to personally tell the families of nine or so American families that they were not going to get their loved one’s complete body back. They would only get a portion. It was a “class act” and one that still impresses me today. My job was to arrange to have an FBI agent accompany each detective. While that process was going on, clearance was received to approach another ten or so families and tell them they would get nothing back.
Years later, I ran into one of the FBI agents who went out on one of those visits. He shared with me that they called one family ahead of time, told them they were coming, and when they got there, found two chairs waiting for them in the living room. Fifteen or so family members faced the agent and detective seeking answers to questions these law enforcement officers simply could not provide.
Another responsibility for me was to spend a week at the Pan Am reservation center in Northern Virginia. Every day a Pan Am employee and I went through reservation by reservation on the computer as I prepared a separate report detailing all the data for each of the reservations. Within a few years Pan Am would no longer exist as an airline, destroyed in part by trial lawyers hungry for spoils from this wounded institution of American aviation - a victim for a second time.
I recall our cramped little command post with no windows and tacky furniture was the scene of countless phone calls, meetings, and writing. On the wall was an 8 by 10 color glossy photo from the crash site of an empty shoe of a toddler. There are many other memories that all come crashing back in moments of quiet reflection.
I was released from the task force shortly after I completed the review of the reservation data. Tidbits from agents still working the case were relayed to me over the years. There was talk of a special trip to Malta and other breakthroughs.
In 1992 I transferred to the FBI office in Roswell and eight years later it looked like I might go to the Netherlands to testify in the Pan Am 103 trial. I was interviewed over the phone by a defense investigator, but I did not need to travel. One defendant, Megrahi, was convicted and another acquitted.
For me, the most compelling memory is of a conversation I had with the commander of the Dumfries & Galloway CID unit. I don’t recall if it was when he came to our home for supper one night or as we sat quietly in a bar with a cold drink, as cops often do.
The plane had crashed at night. Wreckage and bodies were strewn around the countryside. Eleven residents of Lockerbie were dead including one family completely wiped out. A local ice-skating rink was designated as a temporary morgue. The decision was made, and orders were issued, that the bodies were to be left untouched until daylight. However, the first half dozen or so bodies were all children brought in during the night. In spite of the orders to leave the corpses untouched until dawn, people would come across the body of a small child, and just could not leave them lying in the cold. They picked them up and carried them in their arms to the mortuary. I sat there frozen as this story was related to me, and it has haunted me for over twenty years.
There are good and noble people in Scotland. I have met some. Their honor has been soiled by the actions of a vile politician.
Justice
We constantly hear calls for pity, compassion, and forgiveness for criminals. These demands make a mockery of the pain and suffering of victims. Real justice demands the evil doer be held accountable. We must never forget that. Forgiveness is meant to be a personal act of release. Pity and compassion are to be reserved for the victims of misfortune. We have become uncomfortable with the task of holding people accountable for their actions. It is hard work plus we don’t want to be seen as “judgmental”.
In this day and age, we bestow compassion on the betrayers of public trust, and pity upon cold blooded killers. By doing so, we mock the grief and agony of the victims of crime. Some tell the victim to suffer in silence or just “let go”. That is wrong. The victim must be valued and vindicated if they, and the community, are to heal and know serenity or calm again. For as the saying goes “No justice, no peace”.
This event went unnoticed by most individuals except for those who were directly impacted by that horrible act.
Scotbomb
In December of 1988 I was assigned to the criminal/reactive squad of the Washington field office of the FBI. At the time we were located in a ratty office building in a depressed part of Washington D.C. Squads were arranged in open bays with shoulder height partitions separating one squad from another. There was not a lot of rhyme or reason for the location of the squads and my squad was located next to one of the terrorism squads.
Pan Am 103 went down on December 21st carrying people home-bound for the Christmas holiday. Initially it was treated as a simple air disaster. Something routinely handled by the NTSB. Within a week it became obvious it was not mechanical failure that doomed those people, but rather a horrid act of terrorism and thus the responsibility of the FBI. Washington field office was designated as the “office of origin” for this investigation.
It was between Christmas and New Years, and I, unlike most of my colleagues, was working in the office. I had a minor case that had some court hearings scheduled. I remember the Supervisor of the terrorism squad stepping out of his office, looking around, seeing me and calling my name. That was how I was selected for the task force working Pan Am 103 - The case we knew as “Scotbomb”.
Over twenty years have passed and memories can fade, but some images never leave you. These events that would not make a good movie. There were no high speed chases or kicking in doors but there was drama… of the heart and soul.
I can recall sitting around the office that first Saturday, together with a couple of other agents, crafting a massive teletype to the field offices where victim’s homes were located. Within days a command post was established and a team of agents pulled together from various squads.
The plane went down in Lockerbie which is served by the Dumfries & Galloway Constabulary. This department is the smallest of the eleven law enforcement agencies covering Scotland. Scottish authorities put together a task force drawing officers from all of these departments.
A team of four or five detectives from Scotland came to Washington D.C. and were part of our command post across the hall from the SAC’s office.
I remember the Scots had at the time a very advanced data base system which was constantly updated by one detective. We, the FBI agents, were “cutting edge” in that we had all teletypes uploaded into a text searching program.
My job in those days before DNA testing was to coordinate the activities of FBI agents who went to victim’s homes to try and collect latent fingerprints which could be used to identify bodies. Eventually the officials in Scotland dispatched to the U.S. a special team of detectives lead by the commander of the Criminal Investigation Division (CID) of the Dumfries & Galloway Constabulary Their purpose was to personally tell the families of nine or so American families that they were not going to get their loved one’s complete body back. They would only get a portion. It was a “class act” and one that still impresses me today. My job was to arrange to have an FBI agent accompany each detective. While that process was going on, clearance was received to approach another ten or so families and tell them they would get nothing back.
Years later, I ran into one of the FBI agents who went out on one of those visits. He shared with me that they called one family ahead of time, told them they were coming, and when they got there, found two chairs waiting for them in the living room. Fifteen or so family members faced the agent and detective seeking answers to questions these law enforcement officers simply could not provide.
Another responsibility for me was to spend a week at the Pan Am reservation center in Northern Virginia. Every day a Pan Am employee and I went through reservation by reservation on the computer as I prepared a separate report detailing all the data for each of the reservations. Within a few years Pan Am would no longer exist as an airline, destroyed in part by trial lawyers hungry for spoils from this wounded institution of American aviation - a victim for a second time.
I recall our cramped little command post with no windows and tacky furniture was the scene of countless phone calls, meetings, and writing. On the wall was an 8 by 10 color glossy photo from the crash site of an empty shoe of a toddler. There are many other memories that all come crashing back in moments of quiet reflection.
I was released from the task force shortly after I completed the review of the reservation data. Tidbits from agents still working the case were relayed to me over the years. There was talk of a special trip to Malta and other breakthroughs.
In 1992 I transferred to the FBI office in Roswell and eight years later it looked like I might go to the Netherlands to testify in the Pan Am 103 trial. I was interviewed over the phone by a defense investigator, but I did not need to travel. One defendant, Megrahi, was convicted and another acquitted.
For me, the most compelling memory is of a conversation I had with the commander of the Dumfries & Galloway CID unit. I don’t recall if it was when he came to our home for supper one night or as we sat quietly in a bar with a cold drink, as cops often do.
The plane had crashed at night. Wreckage and bodies were strewn around the countryside. Eleven residents of Lockerbie were dead including one family completely wiped out. A local ice-skating rink was designated as a temporary morgue. The decision was made, and orders were issued, that the bodies were to be left untouched until daylight. However, the first half dozen or so bodies were all children brought in during the night. In spite of the orders to leave the corpses untouched until dawn, people would come across the body of a small child, and just could not leave them lying in the cold. They picked them up and carried them in their arms to the mortuary. I sat there frozen as this story was related to me, and it has haunted me for over twenty years.
There are good and noble people in Scotland. I have met some. Their honor has been soiled by the actions of a vile politician.
Justice
We constantly hear calls for pity, compassion, and forgiveness for criminals. These demands make a mockery of the pain and suffering of victims. Real justice demands the evil doer be held accountable. We must never forget that. Forgiveness is meant to be a personal act of release. Pity and compassion are to be reserved for the victims of misfortune. We have become uncomfortable with the task of holding people accountable for their actions. It is hard work plus we don’t want to be seen as “judgmental”.
In this day and age, we bestow compassion on the betrayers of public trust, and pity upon cold blooded killers. By doing so, we mock the grief and agony of the victims of crime. Some tell the victim to suffer in silence or just “let go”. That is wrong. The victim must be valued and vindicated if they, and the community, are to heal and know serenity or calm again. For as the saying goes “No justice, no peace”.
Monday, June 1, 2009
Provoking Thought
As May fades into June and summer begins to really “rev-up”, I find my calendar crammed full of activities such as family events (my father-in-law turned eighty this week) and outings associated with my legislative responsibilities. On Memorial Day my wife, Carol, and I drove to Tularosa to participate in a very impressive memorial service. I was honored and privileged to have been asked to speak. Tuesday, the next day, I listened in at a regional meeting of the New Mexico Cattle Growers Association. They are a great group of people trying hard to keep the food on all of our tables. Wednesday I participated in a health care task force headed by the Mayor of Roswell. We are working on making sure rural communities have the physicians they need. Friday afternoon was consumed with a forum on juvenile detention concerns put on by CYFD. The social worker/law enforcement split was fully visible. In my mind the absolute number one responsibility is to protect the community.
All of that just in the last week!
While I could drone on with “How I spent my summer vacation” tales, I would rather offer for your consideration some works by other writers. Over the past few months I have discovered some articles that I have found particularly interesting and thought-provoking. One such essay is a piece by Bill Kristol titled “Let 1,000 Republican Flowers Bloom”. I came across this during the legislative session. I have wanted to share it for some time.
All of that just in the last week!
While I could drone on with “How I spent my summer vacation” tales, I would rather offer for your consideration some works by other writers. Over the past few months I have discovered some articles that I have found particularly interesting and thought-provoking. One such essay is a piece by Bill Kristol titled “Let 1,000 Republican Flowers Bloom”. I came across this during the legislative session. I have wanted to share it for some time.
Sunday, May 17, 2009
Taxpayers Deserve to See What They are Paying For
The following essay appeared on Heath Haussamen’ blog. It was in response to a column by Mr. Eric Witt, the Governor’s Deputy Chief of Staff. Through out this debate I have mentioned the study of the film subsidy by the Arrowhead Center of New Mexico State University. That study is available on line here. The Ernst & Young study touted by the film industry can be examined here. In addition the Legislative Finance Committee staff economist did a comparison of the two stufies. That analysis is found here. I urge every interested individual to read all three and form their own conclusions.
Taxpayers Deserve to See What They are Paying For
As a first time State Legislator, I have been surprised by the intensity of the interest in my position on the film industry subsidy, or as some call it “The Film Incentives.” The film subsidy program requires the State to pay film production operations 25% of their qualifying expenses. This program will cost New Mexico over $50 million. The question is “Is it worth it?” When my legislation to repeal the film industry subsidy died in committee on March 3rd, I expected that to be the end of the matter. However, a few days ago, Mr. Eric Witt, the Governor’s Deputy Chief of Staff, published an essay critical of my position.
The Studies
Several assertions in Mr. Witt’s column were incorrect. He touted the independence of a study done by the firm of the Ernst & Young and claimed that the study done by the Arrowhead Center at New Mexico State University is not quite as independent because its funding comes from the Legislature. But Witt fails to acknowledge that the Ernst & Young study was contracted by the New Mexico State Film Office and the State Investment Council (SIC). Both of these agencies are connected to the film subsidy program.
The Ernst & Young study claims that for every taxpayer dollar spent, the State or local government receives $1.50. Interestingly, the Ernst& Young study asserts that the film subsidies increase tourism, generating $.55 out of the $1.50, over a third of the purported benefit. However, there is no direct economic evidence to support this claim. This is just one example of the “curious” conclusions in the Ernst & Young study.
SIC Loan Program
Another part of the film subsidy program is the loan program administered by the troubled State Investment Council (SIC). Instead of interest payments to the State’s permanent funds, movie companies are to pay a percentage of the film’s profits. Amazingly, none of the films that have received “zero interest loans” have shown a profit. This SIC program cost the State over $12 Million in 2008.
Dialog
Following the debate of my legislation, I had a dialog with twenty to twenty-five individuals from the film industry. Unfortunately Mr. Witt was not present. The position of the opponents of my legislation after this two hour meeting was that there was no room for compromise with the industry. No one was willing to consider a cap on expenditures or a phase out of the program.
Secrecy
Mr. Witt is correct in stating that advocates of this program are happy to tout its reported benefits, but there is no way to obtain any real details to verify their claims. Early in the session I called and asked for data on film production reimbursements made by the Tax and Revenue Department. I received no information from my phone calls. Finally after three letters to the Secretary for Tax and Revenue, I received a list that consisted of seventy-two payments to film production companies. The Tax and Revenue Department has so far refused to provide me with the address, officers, registered agents, or owners of these film companies. Tax and Revenue has also refused to provide details regarding the qualifying expenditures made by these companies. This refusal to provide information essential to a fair evaluation of the program is the basis for my concern about secrecy.
Following my first phone call to the Tax and Revenue Department, I received a personal visit from Mr. Witt. During that visit, Mr. Witt stated it might be possible for him to arrange a situation where I could look at data unavailable to the public. However, I could not make copies, I would be prohibited from taking notes, and I would be responsible should the data make it into the public domain. I declined his offer.
The Need for Transparency
During my first session in Santa Fe, I actively pursued efforts to increase transparency in our State government. I submitted a bill to put the State budget online. This bill was tabled, but a memorial to study this concept was passed. I also did webcasting from the House Judiciary Committee. I firmly believe transparency is critical to clean, fair, and effective government. There are individuals who seriously support the incentive program for the film industry. There are others who have grave doubts about its appropriateness. The public is bombarded with conflicting claims and statements. The only real way to resolve this is with total transparency.
The Film Incentive program is estimated to cost us $50 million in 2010 at a time when state employees are taking a pay cut. The District Attorneys who are responsible for protecting us from dangerous criminals will have a 1.9 % budget cut this year. Many other agencies are also facing larger cuts. This film subsidy program is unique in that no other budget item in our state takes so much money from the public treasury with so little public accountability.
Who are getting these payments? What is the address of the production company getting the taxpayers’ money? Who are the officers/owners of these companies? Exactly what have they done to qualify for your money? Where and from whom did they make purchases and when? These are the types of questions I believe need to be answered about a subsidy program that will cost New Mexico taxpayers $50 million this year and more in the future.
The Film Incentive program demonstrates how the current lack of accountability and transparency raises doubts and concerns in the minds of the public. Whose interests are being served? New Mexico Taxpayers deserve to know the answers.
Taxpayers Deserve to See What They are Paying For
As a first time State Legislator, I have been surprised by the intensity of the interest in my position on the film industry subsidy, or as some call it “The Film Incentives.” The film subsidy program requires the State to pay film production operations 25% of their qualifying expenses. This program will cost New Mexico over $50 million. The question is “Is it worth it?” When my legislation to repeal the film industry subsidy died in committee on March 3rd, I expected that to be the end of the matter. However, a few days ago, Mr. Eric Witt, the Governor’s Deputy Chief of Staff, published an essay critical of my position.
The Studies
Several assertions in Mr. Witt’s column were incorrect. He touted the independence of a study done by the firm of the Ernst & Young and claimed that the study done by the Arrowhead Center at New Mexico State University is not quite as independent because its funding comes from the Legislature. But Witt fails to acknowledge that the Ernst & Young study was contracted by the New Mexico State Film Office and the State Investment Council (SIC). Both of these agencies are connected to the film subsidy program.
The Ernst & Young study claims that for every taxpayer dollar spent, the State or local government receives $1.50. Interestingly, the Ernst& Young study asserts that the film subsidies increase tourism, generating $.55 out of the $1.50, over a third of the purported benefit. However, there is no direct economic evidence to support this claim. This is just one example of the “curious” conclusions in the Ernst & Young study.
SIC Loan Program
Another part of the film subsidy program is the loan program administered by the troubled State Investment Council (SIC). Instead of interest payments to the State’s permanent funds, movie companies are to pay a percentage of the film’s profits. Amazingly, none of the films that have received “zero interest loans” have shown a profit. This SIC program cost the State over $12 Million in 2008.
Dialog
Following the debate of my legislation, I had a dialog with twenty to twenty-five individuals from the film industry. Unfortunately Mr. Witt was not present. The position of the opponents of my legislation after this two hour meeting was that there was no room for compromise with the industry. No one was willing to consider a cap on expenditures or a phase out of the program.
Secrecy
Mr. Witt is correct in stating that advocates of this program are happy to tout its reported benefits, but there is no way to obtain any real details to verify their claims. Early in the session I called and asked for data on film production reimbursements made by the Tax and Revenue Department. I received no information from my phone calls. Finally after three letters to the Secretary for Tax and Revenue, I received a list that consisted of seventy-two payments to film production companies. The Tax and Revenue Department has so far refused to provide me with the address, officers, registered agents, or owners of these film companies. Tax and Revenue has also refused to provide details regarding the qualifying expenditures made by these companies. This refusal to provide information essential to a fair evaluation of the program is the basis for my concern about secrecy.
Following my first phone call to the Tax and Revenue Department, I received a personal visit from Mr. Witt. During that visit, Mr. Witt stated it might be possible for him to arrange a situation where I could look at data unavailable to the public. However, I could not make copies, I would be prohibited from taking notes, and I would be responsible should the data make it into the public domain. I declined his offer.
The Need for Transparency
During my first session in Santa Fe, I actively pursued efforts to increase transparency in our State government. I submitted a bill to put the State budget online. This bill was tabled, but a memorial to study this concept was passed. I also did webcasting from the House Judiciary Committee. I firmly believe transparency is critical to clean, fair, and effective government. There are individuals who seriously support the incentive program for the film industry. There are others who have grave doubts about its appropriateness. The public is bombarded with conflicting claims and statements. The only real way to resolve this is with total transparency.
The Film Incentive program is estimated to cost us $50 million in 2010 at a time when state employees are taking a pay cut. The District Attorneys who are responsible for protecting us from dangerous criminals will have a 1.9 % budget cut this year. Many other agencies are also facing larger cuts. This film subsidy program is unique in that no other budget item in our state takes so much money from the public treasury with so little public accountability.
Who are getting these payments? What is the address of the production company getting the taxpayers’ money? Who are the officers/owners of these companies? Exactly what have they done to qualify for your money? Where and from whom did they make purchases and when? These are the types of questions I believe need to be answered about a subsidy program that will cost New Mexico taxpayers $50 million this year and more in the future.
The Film Incentive program demonstrates how the current lack of accountability and transparency raises doubts and concerns in the minds of the public. Whose interests are being served? New Mexico Taxpayers deserve to know the answers.
Monday, April 27, 2009
Let's Just Get More Information
This essay written by me was posted on Heath Haussamen’s blog and referred to in Joe Monahan’s April 22nd blog. An earlier editorial, critical of my concerns about the film industry, titled “Dumb and Dumber” appeared in certain newspapers.
Let's just get more information
At one point during this past legislative session a flood of emails, phone calls, and office visits deluged the capitol begging, pleading, and on rare occasions demanding that a particular piece of legislation be stopped. We were warned that, should this particular bill be allowed to become law, the effect would be catastrophic for New Mexico.
I am not referring to a sweeping piece of social legislation such as Domestic Partnership, the Freedom of Choice Act, or the Death Penalty. Rather the bill that produced this tsunami of reaction was a revenue bill--my revenue bill. HB 725 was a bill to repeal the Film Production Expense Rebate.
Although the bill was tabled in the first committee, some individuals (including a recent columnist) continue to demand that this subsidy must not be questioned, criticized, or touched. Any who take an opposing view are to be mocked and vilified.
Currently the State of New Mexico pays film production companies for certain activities. The most prominent part of the existing law is a 25% rebate from the State for all qualified direct production expenditures. In 2003 this program cost $1.1 Million. By 2008 the cost had increased to $47 Million, and it is expected to grow to $54 Million in 2010.
While it is obvious that certain individuals and companies have profited handsomely from these subsidies, the issue before this legislature and this administration is how to be good stewards of a dwindling supply of increasingly harder-to-produce tax dollars--dollars squeezed from a shrinking work force.
The two studies of the New Mexico Film subsidy program have produced widely differing conclusions. One study claims the return to taxpayers is $1.50 for every tax dollar paid out. The other study identifies the return to be only 14.5 cents on the dollar. There have also been additional studies of the effectiveness of these subsidies in Louisiana and California. The Louisiana study puts the return at 16 to18 cents on the dollar.
Much attention has been paid to the fact that California, in the middle of a budget crisis, has adopted new incentives to woo back film production. However, little has been said about the report from the California Legislative Analyst’s Office. The California Legislature was advised to “reject the film tax credit”. That advice was ignored.
The recently adopted New Mexico state budget shifts an increased burden onto our public workers. These workers will now have their pay reduced by 1.5% to save the state $40 Million. In addition, the budget calls for dipping into the state’s savings to the tune of $136 Million.
How can this administration call on sacrifices and savings depletion while at the same time give away $54 Million to one protected industry? How do we face the struggling small businessman, the laid-off factory worker, or the state policeman and say that he or she must sacrifice, but this program cannot be questioned?
Obviously there are different perspectives on this issue. The studies mentioned above have one showing a return TEN times greater than other studies. Which is correct? I believe the answer can be found in closely reviewing the details of this program which are now hidden in secrecy. Exactly who is getting these tax dollars? What exactly have they done to justify getting your tax money? What is the actual benefit to the taxpayers of New Mexico?
This is a serious public policy problem that must be examined and resolved. That is not done by hurling verbal abuse at those who dare to express concern or think this is a grave problem. In my prior job with law enforcement, answers to questions like these were called “evidence,” and it is so much more helpful in public debates than witty comments or vindictive insults. Let’s have an open and public examination with a sober and serious discussion. I believe that is what the public deserves, and I believe that is how effective public policy is made.
Monday, March 23, 2009
The Last Few Days Part I
Although we had been working long hours at a hectic pace, the last week is an entirely new experience. The Round House goes into high gear, and the pulse of the political process races faster and faster. Saturday noon is the deadline for all legislative activity. For some, the need is to complete the approval process for an issue they hold dear. For others, the goal is to run out the clock on bills they find unacceptable. These conflicting motives coupled with long hours create an incredible tension throughout the Capitol.
The last week began with a Sunday floor session starting early in the afternoon and going well into the evening. We continued to have daily committee hearings and floor sessions up through Thursday. On Wednesday and Thursday we worked until midnight. Friday’s floor session began at 10AM and went without break until 3:30 Saturday morning. We returned at 8:30 that same morning to deal with the last few items working until noon which is the end of the session. So much occurred in that last week that I will need to break this report into at least two parts.
Embryonic Stem Cell Research, SB 77
The final week witnessed the other great moral debate of this session. We began the session with the debate over the death penalty, and largely concluded with the debate over embryonic stem cell research.
There are honest and good people on both sides of both issues. I believe life begins at conception, and that the responsibility of government is to protect the weak and the vulnerable. SB77 would authorize embryonic stem cell research. This is different from adult or umbilical cord stem cell research which is currently legal, accepted as ethical by all, and has been actively pursed well over a decade. SB77 was presented to the House Judiciary Committee on which I sit, and we had a lengthy discussion about the bill. The sponsor of the bill was Senator John Ryan, a Republican. He authored it for very personal reasons. Senator Ryan and I had a private and candid conversation before his appearance in the Judiciary Committee. He knew I was opposed to his legislation. I have tremendous respect for Senator Ryan, but I believe he is wrong on this issue.
The bill passed through committee and proceeded to the floor of the House. Because a Senator cannot present a bill on the floor of the House, a Representative must perform that task during the floor debate. SB77 was presented to the House of Representatives by Al Park (D-26) who is the Chairman of the Judiciary Committee. The debate lasted a full three hours, and I took part in that debate. Since others eloquently put forward the moral and ethical concerns with SB77, I spent my time pointing out the problems in the way the bill was written. My intention was to try to convince any undecided representatives that the bill was flawed and should not pass into law. I do not know if I had any effect on the opinions of my colleagues, but the stem cell research bill was defeated by a vote of 38 to 30.
Private Meeting with Governor Richardson
Tuesday morning of the last week Representative Keith Gardner (R-66), the Whip for the Republican Party in the House, came up to me and said, “I need to see you in private.” My initial response was, “What have I done wrong?” Keith promptly assured me that I was not in trouble, but that he needed to share something with me. Governor Richardson wanted to have a private meeting with me, and that meeting would occur in Representative Gardner’s office which is right off the floor of the House of Representatives.
Governor Richardson asked to speak with me personally because he was preparing to make his decision on signing the death penalty repeal. He had heard about my speech on the floor of the House during our debate of the death penalty. The meeting between myself and Governor Richardson was a private meeting, and I will not share the details of what we said except that I expressed my sincere belief that the death penalty should be retained. I was extremely honored that Governor Richardson would seek me out for my opinion. He is a very prominent political figure who has played a major role on the national and international scene. He has been the dominant political figure in our State for well over a decade. I, on the other hand, am a freshman representative with the minority party. He did not have to ask for my input. Although I am disappointed with his decision, I am gratified that he sought me out and asked my opinion.
We are now home in Roswell. I will reflect on the session and post more thoughts later.
The last week began with a Sunday floor session starting early in the afternoon and going well into the evening. We continued to have daily committee hearings and floor sessions up through Thursday. On Wednesday and Thursday we worked until midnight. Friday’s floor session began at 10AM and went without break until 3:30 Saturday morning. We returned at 8:30 that same morning to deal with the last few items working until noon which is the end of the session. So much occurred in that last week that I will need to break this report into at least two parts.
Embryonic Stem Cell Research, SB 77
The final week witnessed the other great moral debate of this session. We began the session with the debate over the death penalty, and largely concluded with the debate over embryonic stem cell research.
There are honest and good people on both sides of both issues. I believe life begins at conception, and that the responsibility of government is to protect the weak and the vulnerable. SB77 would authorize embryonic stem cell research. This is different from adult or umbilical cord stem cell research which is currently legal, accepted as ethical by all, and has been actively pursed well over a decade. SB77 was presented to the House Judiciary Committee on which I sit, and we had a lengthy discussion about the bill. The sponsor of the bill was Senator John Ryan, a Republican. He authored it for very personal reasons. Senator Ryan and I had a private and candid conversation before his appearance in the Judiciary Committee. He knew I was opposed to his legislation. I have tremendous respect for Senator Ryan, but I believe he is wrong on this issue.
The bill passed through committee and proceeded to the floor of the House. Because a Senator cannot present a bill on the floor of the House, a Representative must perform that task during the floor debate. SB77 was presented to the House of Representatives by Al Park (D-26) who is the Chairman of the Judiciary Committee. The debate lasted a full three hours, and I took part in that debate. Since others eloquently put forward the moral and ethical concerns with SB77, I spent my time pointing out the problems in the way the bill was written. My intention was to try to convince any undecided representatives that the bill was flawed and should not pass into law. I do not know if I had any effect on the opinions of my colleagues, but the stem cell research bill was defeated by a vote of 38 to 30.
Private Meeting with Governor Richardson
Tuesday morning of the last week Representative Keith Gardner (R-66), the Whip for the Republican Party in the House, came up to me and said, “I need to see you in private.” My initial response was, “What have I done wrong?” Keith promptly assured me that I was not in trouble, but that he needed to share something with me. Governor Richardson wanted to have a private meeting with me, and that meeting would occur in Representative Gardner’s office which is right off the floor of the House of Representatives.
Governor Richardson asked to speak with me personally because he was preparing to make his decision on signing the death penalty repeal. He had heard about my speech on the floor of the House during our debate of the death penalty. The meeting between myself and Governor Richardson was a private meeting, and I will not share the details of what we said except that I expressed my sincere belief that the death penalty should be retained. I was extremely honored that Governor Richardson would seek me out for my opinion. He is a very prominent political figure who has played a major role on the national and international scene. He has been the dominant political figure in our State for well over a decade. I, on the other hand, am a freshman representative with the minority party. He did not have to ask for my input. Although I am disappointed with his decision, I am gratified that he sought me out and asked my opinion.
We are now home in Roswell. I will reflect on the session and post more thoughts later.
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