Missed Opportunities

New Mexico Business Journal, June, 2001 by John A. Carey

THE ONGOING STRUGGLE FOR POWER IN THE SENATE, the recent election of a new House Speaker, and the challenge of redistricting facing the Legislature this fall illustrate that we have a Legislature in transition. There will still be 70 House districts and 42 Senate districts after the September realignment, but their boundaries will undergo a profound transformation. Perhaps in one sense, we have a Legislature that accurately reflects the condition of the state. Both are at the crossroads of major change.

There are reasons to applaud the Legislature for its efforts this year. Electricity deregulation has been delayed, teacher salaries have been increased, gambling compacts are more solidified, and the governor signed a comprehensive state budget.

But there were also missed opportunities.

There was bipartisan support for a personal income tax reduction; however, the version sent to the governor was vetoed. There was bipartisan support for education reform; however, the version sent to the governor was rejected as well. There was bipartisan support for a $15 million in plant training budget; that too, did not materialize. Nor did $259 million of statewide capital outlay projects that would have stimulated economic activity in parts of the state.

This year, a few brave lawmakers made an attempt to end the traditional politics of capital outlay spending and move to an allocation process based on statewide needs and priorities. But the politics of the current capital outlay system prevailed.

Before the start of the legislative session, the statewide business community identified five top issues of concern: education, taxes, telecommunications, health care, and water.

With respect to education reform, the governor vetoed a comprehensive package that was studied for two years by a legislative task force. The reform measures were too expensive for the governor's taste, especially in years to come. The lack of a consensus definition among the business community as to what constitutes "real education reform" also became a stumbling block.

The governor was adamant about receiving an across-the-board personal income tax cut from the Legislature. What the governor got instead was an omnibus conglomeration of tax deductions and incentives, cuts for some and rebates for others. The vetoed package contained no relief for the middle class, and lowered the qualification bracket at the very top, along with the tax itself, to increase the number of people subject to the highest marginal personal income tax rate.

This was not a big year for telecommunications issues in the Legislature. However, the PRC approved Qwest's filing for an alternative form of regulation in January, and nearly $800 million of badly needed infrastructure improvements will occur throughout the state.

Health care is one of the most difficult issues facing business. Health care premiums are increasing every year at double, sometimes triple, percentage rates. At a time when health insurers are losing millions because of soaring medical costs, this is a situation that cannot be sustained.

There are two basic viewpoints on health care reform that clash each legislative session. One view is that the state's health care situation is in such a crisis that the only viable option is to allow more and more government intervention, which will ultimately lead to a health care system run entirely by government.

The other view on health care is that there is still time for market forces and private sector-driven solutions to create alternative types of coverage and financing mechanisms that will allow more people to access quality, affordable care. A bill that would have abolished health insurance companies and created a state-run single-payer health care system failed in the Senate this year by almost the exact same margin as it did two years ago. The Legislature also tried to pass a few measures that would have placed price caps on drug manufacturers and created uniform pricing mandates. Price caps create cost-shifting and reduce revenues for research and development. All of these approaches were either defeated by committees or vetoed by the governor.

One area where the Legislature deserves a lot of credit this year is water. The Legislature

appropriated millions of dollars to complete more adjudications and to help New Mexico defend itself in federal lawsuits over the Endangered Species Act. A viable statewide water plan cannot be implemented until we know who owns what, where they own it, how long they've owned it and what they use the water for.

Overall, business was on the defensive more than it should have been, trying to keep onerous legislation from going to the governor. There were more bills than ever before that sought to create new consumer rights, unique employee protections, and new legal problems for the business community. It's very difficult to improve the state's business environment when multiple distractions are placed before those who are striving for effective, positive change.