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Wed March 16, 2011
State lawmakers approve additional diversion of state workers' pay
By Jim Williams
Santa Fe, NM – Under the retirement swap proposal, the additional average take-home-pay reduction would be $650 per year. Albuquerque Democratic Senator Gerald Ortiz y Pino tried to amend the bill to end the swap after one year. He questioned why none of the measures that would have raised taxes on the wealthy or out-of-state corporations were even considered. He said the retirement swap, in his words, "taps the veins of state employees and teachers" to fill a budget gap.
"It doesn't improve their retirement package one bit," Ortiz y Pino said. "It doesn't make it one cent more solvent. It simply saves the state $110 million. And why that wasn't taken off the table, but corporate benefits have been taken off the table, the taxes for the wealthiest New Mexicans haven't even been discussed, won't be discussed in this whole session. Can't get out of a committee in this whole session."
The sponsor of the measure, Questa Democratic Senator Carlos Cisneros, opposed Ortiz y Pino's effort, saying the two-year swap is a way to keep workers, and calling it a "good fiscal, responsible venue to pursue".
"If our economy continues to go south," he argued, "then it may require the governor to instill as part of the administration, an effort to furlough employees, lay them off, and possibly even reduce their salary."
Aztec Republican Senator Steve Neville said the state retirement fund isn't solvent.
"It's going down every year," Neville said. "So we need to start putting in place some additional employee contributions, to be followed up later with additional state contributions. This is the first step. Ultimately we are going to have to put the one and a half, or a large part of the three and a quarter, whatever the total is, we're gonna have to start putting some of that in as a permanent contribution from state employees."
But Albuquerque Democratic Senator Dede Feldman said the budget the past few years has been balanced on the backs of state workers and teachers. She disagreed with Cisneros, who said state workers would feel no impact because their money would be available to them after retirement.
"There's a direct impact when your paycheck shrinks every year, and you pay more for your pension and you take home less," Feldman said. "That's what people are using in this time of recession to fill the gas tank, and those prices are going up, and to shop at the grocery store, and those prices are going up, and to pay their healthcare bills, and those prices are going up."
Ortiz y Pino's amendment failed 16 to 25, as did an attempt by Portales Republican Minority Leader Stuart Ingle to extend the swap indefinitely. Another effort to raise the contribution on higher income earners and eliminate it for those making less than $2,000 also failed. The two-year swap itself passed 29 to 12 and now heads to Governor Susana Martinez for a signature.
The other major issue in the Senate was the film industry incentives bill. The measure that came to the chamber Tuesday night limits the film tax credit claims to $50 million a year, and delays payouts of the credits according to the size of the claim. Bigger claims would be paid over three years, small ones could be paid within a year. This has been a controversial idea. Some film producers says capping credits will drive some of them out of the state. This exchange by Democratic Senators Cisco McSorley of Albuquerque, and the proposal sponsor Phil Griego of San Jose laid out the arguments.
McSorley: "This is a risk we're taking in this bill by creating this cap and creating these delayed payouts. We're taking a risk, aren't we, that some filmmakers that might have come to New Mexico won't come now, isn't that the case?" Griego: "That could be the case, you know, I don't know for sure that that is in fact the case." McSorley: "Right, we don't know. But the fact is there's virtually no upside to this in terms of job creation, is there?" Griego: "Again, I can't answer that directly because I'm not sure what your definition of 'upside' means. If the increase in jobs. The industry is going to continue to be able to at least survive somewhat here. And at least the schools, I think, that have created these programs for these students will continue to exist."
Senate Finance Committee Chairman John Arthur Smith said just doing something, including this, will give the film industry something to count on. Albuquerque Republican Senator John Ryan said the $50 million film incentive is more than is extended to other businesses in the state.
"I mean, nobody receives that kind of benefit in any industry," Ryan said. "We don't provide those kinds of incentives at that largesse to just about anybody. I mean, this is some special deal here."
But the state does, in aggregate, provide hundreds of millions of dollars a year in incentives to the oil and gas industry. Albuquerque Democratic Senator Tim Keller tried to put a 2-year sunset date on the $50 million cap on film incentives, saying the legislature should take the time to study the incentive's impacts before limiting it permanently. And he noted that other industries are getting large incentives.
"We've got potash, we've got selenium, we've got motor vehicle excise tax," Keller argued, adding, "...$47 million rolled up together in boxing tax credits, massage exemptions, you name it. And none of them have seemed to have drawn the ire of this body. And I absolutely agree. Those one billion dollars worth of exemptions should have the exact same bill that we're doing to film."
The film industry $50 million incentive cap and delayed payout schedule passed the Senate 30 to 10.