2012 Legislative Session Wrap-Up

Dear Friends and Neighbors,

I write to update you on the just-concluded session of the New Mexico legislature. I hope you find this letter informative. I also hope that you will share your views with me and let me know how I may continue to be of service to you. Representing you in the House of Representatives is a great honor that I take very seriously. Thank you for allowing me this opportunity.

As with every thirty day session, the main focus of 2012 was the state budget. This year, the legislature passed the first unanimous budget in a very great while – a tremendous moment of bi-partisan cooperation. The $5.6 billion budget is about ten percent smaller than it was when I took office in 2009, but it still makes new investments in education for early-childhood programs and programs meant to improve reading performance by our youngest students.

The legislature also tackled the urgent need to spur job creation and boost our local economy. We introduced and passed bills to invest more than $290 million in infrastructure and economic development projects statewide, including more than $25 million for projects in Santa Fe. The funding for these job creation projects will come from existing taxes on oil, gas, coal and extractive industries dedicated to funding capital outlay projects. The bills will not raise taxes. Local projects slated to receive new investment include road improvements, La Familia Medical Clinics, Women’s Health Services, the Santa Fe Farmers’ Market, and other economic development-focused initiatives.

I am proud to have had a pivotal role in the passage of several other important pieces of legislation. Below are some highlights, and a full list is available at www.nmlegis.gov:

1. A highlight of the session was the passage of Senate Bill 9. I was very glad to be the House sponsor of Senator Wirth’s bill to close the tax loophole that allows “big box” stores to evade New Mexico’s income tax. Closing the loophole eliminates big boxes’ unfair advantage over New Mexico’s home-grown businesses. The bill is now on the governor’s desk awaiting signature.

2. I was co-author of House Bill 201, which will eliminate major roadblocks preventing the development New Mexico’s geothermal resources. With the passage of this bill, New Mexico is poised to develop a clean, zero-emission, renewable energy source for electricity generation and bring new clean-energy jobs and tremendous environmental benefits for many years to come.

3. The House passed a memorial I wrote to study implementing statewide standards for safe nurse-to-patient ratios in hospitals. We know safe ratios improve patient safety, reduce health care costs and make sure patients get the quality attention and care they deserve. I introduced this memorial as a direct result of last year’s dispute between Christus St. Vincent Hospital and its nurses, and I hope that this measure will provide a constructive way forward for both parties.

4. I was able to bring new attention to how unlimited special interest money in politics jeopardizes our democracy by co-sponsoring a memorial calling for the U.S. Supreme Court to overturn the dangerous Citizens United decision. In passing this bill, the House sent a clear message of opposition to the outrageous spending by “Super PACs” around the country.

Outside of the framework of passing legislation, I was also able to advance other issues that will be the focus of my work in future legislative sessions. As chairman of the Energy and Natural Resources Committee, I held the legislature’s first hearing on hydraulic fracturing (“fracking”) and its effect on our groundwater and land. We highlighted several key issues that need further attention, and I will pursue efforts in the future to make sure that we have safe and clean water into the future

Despite these successes, many good ideas presented on both sides of the aisle failed to make progress. In fact, fewer bills passed this year than any year since 1976. The governor’s all-or-nothing approach on key issues means that no progress will be made for another year. Among these were bills to end the social promotion of 3rd graders unable to read at grade-level and to address fraud and abuse of our policy to issue driver’s licenses to foreign nationals without social security numbers.

I am deeply concerned about the poor reading performance of our students and I was eager to support many of the ideas presented in the governor’s education reform proposal. However, the bill contained a dangerous provision giving school administrators too much control and stripping parental rights to be involved in education decisions for their children. Ultimately, my opposition was based on the insufficient time allowed for remediation measures. With only 18 months to put in place early intervention programs and allow them to be effective for today’s 2nd graders, the bill carried tremendous risk that hundreds of children would be required to be held back at the end of the next school year. All of my efforts to add a small change and create a “safety valve” for children immediately affected by the bill were refused by the administration, but I look forward to revisiting this issue in the next session with the hopes that we can reach a compromise to move education reform forward.

Progress must also be made on driver’s licenses for foreign nationals. It is outrageous that “brokers” come into our state and arrange licenses for non-residents. There is far too much fraud in the system, the penalties for breaking our license laws are too lenient, and there is no way to verify the authenticity of documents submitted with an application. To address these specific problems, I sponsored legislation to impose tough new restrictions requiring finger printing, real residency verification, immediate document verification, shortened license periods, and significantly enhanced fraud penalties. These reforms would make our licenses more secure and our roads safer, but more importantly, they are not contentious. New Mexicans should be able to count on their legislature and governor to find common ground and make basic progress on fixing straight forward problems.

Again, thank you for the privilege of representing you. I hope in the future you will email me to let me know how I may be of service to you.

Sincerely,

Brian

2011 Special Session on Redistricting

Dear Friends,

I hope you are well. I am writing to give you a brief update on the recent special session of the New Mexico Legislature and what to expect in the next few months regarding job creation and redistricting.

On the important issue of jobs, the legislature was able to pass a capital outlay bill that is focused on starting new infrastructure projects immediately and state-wide. I pushed hard to get the bill passed and fought efforts by the minority party to adjourn before we could vote on the bill. Fortunately, we were able to defeat the effort to adjourn and kill the capital outlay bill, which eventually passed. I wish the bill has contained funding for more projects, but we will have a chance in the upcoming thirty-day session in January to invest in more infrastructure projects.

The legislature also passed an important bill to give New Mexico-owned businesses a real advantage over out-of-state companies when bidding on state contracts as well as a bill to preserve Medicaid funding for children and food assistance funding for our senior citizens.

I was glad that on the issue of capital outlay, in-state preference and other bills, I and the governor agreed about the importance of the proposals. It was good to work in a bi-partisan way to support the creation of jobs for New Mexico’s working families.

Also during the session, the legislature passed plans to redraw the district boundaries of the state house, the state senate, the public regulation commission, and the public education commission to account for shifts in the state’s population. Unfortunately, the governor vetoed the plans, which is regrettable because her veto has thrown redistricting to the courts at a very high cost to taxpayers.

The plans we passed are constitutionally sound, fair and protect the voting rights of Native Americans and minorities. The plans ensure that the principles of “one person, one vote” and equal representation will remain alive and well in New Mexico. Also, despite political statements to the contrary, the state house plan actually lowers the number of “safe” democratic seats by one, makes far more swing seats that could be won be either party, and brings new competition to several areas of the state.

The legislature did not pass a plan to redraw the boundaries of our US Congressional districts. There is a lot of speculation regarding why the plan failed to pass, but the fact is that the house was unable to vote on a congressional redistricting bill because the minority party was able to force the house into adjournment before action could be taken. As a result, we’ll never know what might have happened.

Finally, you may have read in the paper or seen on television that I am a plaintiff in a court case regarding redistricting. I chose to participate in this legal case because it will be the only way to achieve a redistricting plan once the governor vetoes the redistricting bills. I believe very strongly in the constitution and its promise of equal protection under the law. In order to preserve this important principle in New Mexico’s elections, I chose to go forward to fight for these important American values in court.

Thank you for your time in reading this update. If I may be of service, please visit my webpage to send me a message; I am always g;ad to hear from you.

Sincerely,
Brian

2011 Session Wrap-Up

Dear Friends,

With the end of the 2011 New Mexico Legislative Session behind us, I thought you would like to see the letter I just sent to my constituents. I hope you enjoy reading it.


Dear Constituents,

I hope this letter finds you well. I write today to update you on the recent sixty-day session of the legislature; I hope you find it informative. I am incredibly honored to represent you in the legislature and thank you for the opportunity to serve our community. I understand how difficult the economic situation is and the impact the recession is having on so many in our community. Throughout the session, I have worked with an independent mind and across the aisle to find solutions-based ways to help our economy and our schools recover from the recession. This is work that I will continue throughout my term in office.

Overall, the session had a “slow” feel, with far fewer bills introduced than usual and a great deal of uncertainty about the direction of the new administration. The slim margin in the House between both parties added another new element to our debates and committee work, leading sometimes to good compromise and other times to strenuous debate. None the less, I hope to find more common ground with the governor and the minority party in the future.

On the important issue of jobs, we delivered results in several areas. The legislature passed an extension of the important job training incentive program (JTIP), which has helped employers hire and train thousands of new employees state-wide. I sponsored in the House several bills that will help spur new investment and job creation in renewable energy, including SB 237, 266 and 549. These bills will allow colleges and other public schools to make new renewable energy investments, allocate new bonding capacity for renewable projects statewide and allow towns and counties to keep money in their communities for renewable investment instead of sending it to the state’s large electric utilities. These bills will create jobs and new work all over New Mexico.

I also sponsored a successful bill (HB 174) that will allow homeowners who successfully defend their homes in foreclosure cases their attorney’s fees from the banks who brought the flawed actions against them. While so many of our neighbors are losing their homes around our state, I believe that it is important to give homeowners upon whom the banks wrongly attempt to foreclose a tool in their toolbox against the big banks. This bill is currently awaiting action by the Governor.

Unfortunately, two significant bills to stimulate our economy failed to pass. I introduced HB 173 to move billions of state dollars out of big national banks and into our community banks and HB 290 to create a new state-owned development bank to support our states’ small businesses. I believe strongly that these ideas are good for New Mexico and I will reintroduce them and continue to fight for their passage in the future.

The state’s successful film incentive program was another major issue during the session. The governor announced in her state of the state address her desire to target the program for reduction, and possibly elimination, despite the program’s record of creating and sustaining as many as 10,000 jobs and hundreds of small businesses. This unmerited targeting of the film industry was deeply disappointing to me and to the many legislators who understand the film industry’s importance to New Mexico’s economic future.

Throughout the session, I fought to keep the film incentive program intact because so many constituents and New Mexico families depend of this industry for their jobs. I pointed out that the governor presented a false choice: our schools or the film industry. The truth is that a strong film industry is good for education in New Mexico, offering students well-paying and exciting jobs in the field and generating revenue for our schools. In future sessions, I will continue to be a strong advocate for the film industry and will work to fully restore the program.

You may know that I accepted appointment as Chairman of the House Energy and Natural Resources Committee, which put me in the middle of the debate on conservation and energy policy. This new position allows me to stand up for the conservation and environmental issues that are so important to the future of our state.

With the support of my colleagues on the committee, we were able to pass a wide range of bills to support renewable energy. We also stopped every bill that sought to roll back common sense rules protecting our air, land and water. We were the first committee to hold hearings on the natural gas crisis that struck New Mexico at the beginning of February and learned a great deal about the outage. I am committed to finding solutions to prevent future outages that threaten the lives and property of northern New Mexico families and will continue to push the committee to develop solid recommendations in collaboration with other parts of state government.

The legislature passed a balanced budget package that left me very dissatisfied. As in past sessions, revenues were down and cuts were necessary. This year’s budget will be approximately $5.4 billion, down from more than $6 billion in 2009. The state’s workforce has now shrunk by 25%, and critical services have been scaled back several years in a row.

Unlike previous sessions, however, the governor promised to veto any measure that changed rates of taxation, including a refusal to close tax loopholes that allow large out-of-state corporations to avoid paying their fair share of corporate income taxes. The governor’s pledge means that working families will have to bear the burden of cuts and reductions to basic services. In future sessions, we must begin to address our state’s structural deficit by looking to level the playing field between New Mexico’s businesses and those who come from out-of-state.

While we may not agree completely on every issue, I am eager to hear your thoughts. I remain dedicated to creating and introducing legislation to create jobs, protect our natural resources, and improve the quality of education available to all our children. For a complete list of the bills I introduced, please visit www.nmlegis.gov. You can also stay in touch via my website and blog at www.BrianForSantaFe.com. Please feel free to contact me anytime with your thoughts, concerns and input. Thanks you, again, for the opportunity to be of service.

Sincerely,
Brian

The Truth About New Mexico's "Pit Rule"

Over the past two years, a debate has raged in New Mexico between those who work protect our water and land and some irresponsible oil and gas operators who oppose common sense efforts to make oil and gas exploration safer for everyone. The subject of the debate has been New Mexico's new "Pit Rule," which requires that drilling operations follow several new procedure to ensure that groundwater doesn't become contaminated by the drilling operations.

First, the rule requires that the "mud pits" alongside drilling sites be lined for the first time to prevent contaminants from leeching into the ground. Second, the rule requires that a record be kept of where each pit is located. Third, the rule required that the toxic wastes in the lined pits be removed to a disposal facility when drilling finished. Finally, the rule requires that a "closed loop system" be used when groundwater is withing fifty feet of the service to prevent groundwater contamination.

Since the New Mexico Oil and Gas Conservation Division adopted the rule, opponents have many numerous, loud and baseless claims that the rule has cost jobs and revenue to the state. The claims are wrong and are unsupported. There is no evidence to support such claims. In fact, the truth shows that opponents of the pit rule are dead wrong.

Look this statement from Apache Corporation, a New Mexico producer. They're busier now than ever: " We expect to drill in excess of 200 new wells during 2010 and currently have five rigs running in the Permian Basin. Of the 200-plus wells expected to be drilled, 100 new wells will be drilled in New Mexico, which will represent the most wells drilled by Apache in the state in any year. Also, we’ve identified areas that can take advantage of horizontal well technology. The first of those wells is drilled and in the process of being completed." (http://www.apachecorp.com/explore/Browse_Archives/View_Article.aspx?Article.ItemID=978).

Opponents of the pit rule seem not to understand the fundamental truth of the oil and gas business: production follows opportunity, which is made or broken by the price of the commodity. It is the fall in prices since 2008, not the Pit Rule, that has affected production. I have repeatedly raised this issue in committee and on the floor. Each time I have asked for evidence to support the claims made by the rule's opponents, I have heard nothing but silence.

The funny thing is that there is a lot of evidence to contradict the opponents. Take a look at the Baker-Hughes Rig Count data from 02-08. Note that all three states saw rig counts drop in Dec. '08. Colorado saw a HUGE drop, far worse than NM or WY. New Mexico's pit rule, obviously had nothing to do with CO or WY. It was all about commodity prices. Here is the document (pay special attention to the final two pages):

2009 2-19 Baker Huges Rotary Rig Count Weekly Comparison Thru February 13, 2009

For more recent data, as of June 4, there were 67 rigs drilling in New Mexico; that's up from 50 in Feb. 09, and increase of MORE THAN THIRTY PERCENT. Colorado had 52, which is down more than twenty percent from Feb. 09. Wyoming only had 34 drilling, a huge further decrease from Feb. 09. So, since Feb. 09, only one of the three states has seen an increase in drilling: New Mexico!

So, the data show that New Mexico's production is GROWING IN SPITE OF THE PIT RULE.

Opposition to the pit rule is about politics and Republicans' opposition to common sense environmental protections.

A New Bank of New Mexico - One Step Closer to Reality!

Since the last session of the legislature, I have been working on a plan to create in New Mexico a state-owned bank for New Mexico. Today, that vision got one step closer to reality.

Today, the New Mexico Finance Authority Oversight Committee, on which I serve during the interim (the period between our legislative sessions), added the creation of a state-owned bank for New Mexico to its agenda. We are working hard on a bill and plan to present it to the committee in October.

As you may know, this idea has been incredibly successful in North Dakota, where the Bank of North Dakota has been working with that state's local economy to grow its economy and work with its local businesses for over ninety years (learn more HERE and HERE). The idea is based on the concept that we should keep New Mexico's money in New Mexico for the benefit of our citizens instead of sending our state's funds to California, North Carolina and New York.

By creating a Bank of New Mexico, we will be able to provide an important new resource for the state and critical support to our community banks and credit unions during these tumultuous times. The Bank will be able to do several key things:

1. Work with our New Mexico-based banks and credit unions to expand credit to homeowners and small businesses,
2. Maintain our state's "check book" so we don't have to hire big national banks to do it for us, and
3. Invest in our local economies statewide by leveraging state funds to make available billions of dollars in loans to worthy projects.

The new Bank of New Mexico won't compete with our community banks and credit unions. Instead, it will partner with them to assist the loan-making process and drive credit access further into New Mexico's under-served communities.

The great thing is that New Mexico already has all the building blocks we need to make this vision a reality. We have a well-run and stable Finance Authority that is already doing some of this work, though on a much smaller scale. The Finance Authority will have a surplus in excess of $100 million in the next two years that can be used to capitalize the new bank. And, we have a terrific and competent staff that can manage this new bank.

Pleas follow this blog to keep up with the project.

Earlier this week I listened to a story on This American Life about how a single Chicago-based hedge fund may have very likely been the proximate cause of the financial meltdown that nearly destroyed the global economy. That company is called Magnetar, and it is a scandal that you’ve probably never heard of it.

Magnetar played a critical role in keeping alive the market for some of the riskiest investments in 2006 and 2007. By doing so, Magnetar drove demand for riskier and riskier investments throughout the financial industry and created a market for the risky mortgage-backed securities that were the foundation for the collapse of the housing market. Here’s how they did it:

One of the biggest, if not the biggest, causes of the financial collapse in 2008 was the combined effect of two interlocking securities instruments called Credit Default Swaps (CDSs) and Collateralized Debt Obligations (CDOs). CDOs are a type of asset-back security, similar to a bond, that pays investors from the proceeds of an underlying bundle of investments. In some cases, CDOs are issued based on mortgage-backed securities. If the underlying mortgages default, the CDOs can’t pay the investors, and the CDOs collapse in stages. Failed mortgages led to a cascading series of failure of CDOs throughout the financial industry and eventually to the failure of the financial system itself.

CDSs come into play because they are like insurance. If you make a large investment, you can buy a CDS to protect, or insure, you investment in case the investment fails. You can also, unbelievably, buy a CDS on an investment even if you’re not the investor. This is exactly like taking out a life insurance policy in a stranger. In other words, you can buy a CDS for a small amount on a bet that a large instrument will fail. If it does indeed fail, you get paid the full amount of the investment.

Magnetar’s scheme was to buy the riskiest portions of the CDOs, encourage the CDO manager to place riskier and riskier securities into the CDOs (making the CDO’s failure far more likely), then bet against the success of the CDO by purchasing CDSs that paid if the CDO failed. For example, Magnetar would spend $10 million on the risky portion of the CDO, would make the CDO virtually certain to fail, would buy a CDS that pays when the CDO fails, then collect $100 million or more when the CDO fails. It makes, by doing this $90 million on a $10 million “investment.”

To make matters worse, in 2005 the CDO market was starting to dry up. Money managers and investors were starting to realize that mortgage-backed securities were getting too risky, and there was a dwinding appetite for CDOs based on them. Magnetar, however, realized that it could make a killing if the CDO market stayed alive and therefore propped up the CDO market by strategically buying the riskiest portion of the CDOs. This not only propped up the CDO market, it fueled it into record growth. This meant that a housing market that would have likely cooled off without a bubble actually sped up and grew. Along the way tens of thousands of Americans got mortgages they never should have gotten in order to supply the demand for mortgage-backed securities. When the housing bubble burst and the CDOs failed, Magnetar made billions.

The final outrage is that much of the Bush Bail Out Money went to stabilize institutions who made bad decisions in issuing CDSs. Undoubtedly some (or a lot) of Magnetar’s huge profits came from the US Government, via AIG and other financial firms.

In the final analysis, Magnetar seems to have created a scheme for huge profits based on the misfortunes of tens of thousands of Americans and the generosity of the American Taxpayer. You and I paid taxes so that Magnetar and other firms could get paid on bets that they new were sure to pay off because they had gamed the system. This is outrageous.

Please take a minute to watch this video, made by the good folks at This American Life. It sums up the story in about two minutes. CLICK HERE.

Also, please visit this page at Pro Publica CLICK HERE. They are the team of reporters who have broken the story and who have put this all together.

New Mexico Legislature Concludes its Special Session - We Have A Budget

Yesterday the New Mexico Legislature concluded the Special Session called by the Governor for the purpose of passing a budget for the new fiscal year. It was a terribly grueling process and session. I am copying below a version of the email I sent to my email distribution list yesterday that sums up what we did in the session:

Dear Friends,

I write to update you on what occurred during the recently concluded special session of the New Mexico Legislature. First, and most importantly, I am very pleased to tell you that the legislature passed a balanced budget. It was a very difficult session, but the work is complete, and I would like to share with you some of the details of the new budget.

Regarding the state’s expenditures, the new budget continues the process of cutting waste and unnecessary spending that began at this time last year. With the passage of the new budget, the legislature has reduced state spending by 12% (more than $700 million) from the spending level of just one year ago. We have cut across the board, but we have done so carefully to ensure that critical education, health and human spending has been maintained. With specific regard to education, I am very proud that in spite of the tremendous challenges facing the budget, the House passed a budget package that actually increased classroom funding by $1.7 million. This was critical to my support of the budget because education is so important to the families of our community.

Unfortunately, the Senate failed to act on the full budget package. Because of that inaction, less than the full budget package passed the legislature, and education will see a cut of approximately 1.2%. I am terribly disappointed that education will see a cut. It was not the will of the House, but the Senate simply would not agree to fully fund education.

In spite of the cuts, the legislature found it necessary to increase revenues in order to balance the budget. I voted for a limited and responsible tax package, but I did so reluctantly. I voted for the package in the firm belief that it was the only way to avoid debilitating cuts to education and other critical spending on health care. On the positive side, for the first time in memory the legislature added major progressive elements to our tax code. The inclusion of new progressivity in the tax code has been a major goal of my legislative service, and I am glad to have made significant progress on this front. The tax package includes six elements:

· First, the package includes changes to the state compensating tax, which will begin to level the playing field between New Mexico companies and out of state corporations.

· Second, the package removes the double-deduction for state income tax. This change, referred to as the PIT add-back, means New Mexico joins forty other states that implement this sound tax policy.

· Third, the package increases by 20% the low-income comprehensive tax rebate to reduce and eliminate the impact of the tax changes on low income earners.

· Fourth, the package increases the tax on a pack of cigarettes by $.75 and earmarks a third of that for education.

· Fifth, the package includes a 1/8% increase in the gross receipts tax.

· Sixth, the package includes a provision that ends the exemption food has from locally-imposed gross receipts taxes. This element also ends the outdated tax policy that has sent to city and county governments hundreds of millions of dollars that could have been better spent on important state priorities like education.

Neither the budget nor the tax package is perfect, but we made tremendous progress in making the package vastly more progressive than when the negotiations started. We also provided truly progressive solutions in both the budget and tax package.

During the regular session of the legislature that ended two weeks ago, several important initiatives passed. First, I sponsored in the House the Natural Heritage Conservation Act, which for the first time will allow the state to obtain federal funds for conservation and restoration projects statewide. I also sponsored in the House the legislation that has ended “double dipping,” the practice that used to allow state workers to retire then return to state employment with both a salary and their retirement benefits simultaneously. Both of these measures passed and went to the Governor’s office for action.

I also introduced a bill that would have moved as much as $5 billion of New Mexico’s money from large national banks into community banks and credit unions statewide. The bill, House Bill 66, received national attention and passed the House unanimously but failed to receive a vote on the Senate floor in the final hours of the session. You can read about the bill by clicking HERE. I was deeply disappointed that this bill did not pass, but I will certainly reintroduce it in future sessions if I am reelected to the House. Two other bills I worked on during the session addressed serious environmental problems in New Mexico. I carried bills that would have allowed the state to recover damages for injuries to aquifers and other types of groundwater from industrial pollution and that would have allowed the state to deny permits to “bad actors” that repeatedly violate the terms of their air quality permits. The “bad actor” bill, House Bill 276, was only one vote short of passage in the House. For a complete list of the other bills I carried in the session, including the State Ethics Commission Act and legislation designed to end pay-to-play, please visit the legislature’s website at www.NMLegis.gov.

Finally, I want to thank you for the honor and privilege of serving in the New Mexico House. I am so proud to represent Santa Fe in the House and hope that my service has lived up to the expectations of my constituents and community. Thank you for your time reading this message. Please do not hesitate to contact me if you have any questions or if I may be of service to you.

Sincerely,

Brian Egolf

New Mexico Representative, District 47