Steve Terrell of The Santa Fe New Mexican reports that the feds are “investigating a 2002 bond sale by the University of New Mexico as part of an investigation into possible violations of securities laws.”

The Bond Buyer, a daily financial publication, reported the feds interest in a Dec. 18 story. Writers Richard Williamson and Andrew Ackerman fit the interest in the UNM bond sale into a broader context. They wrote:

In a widening look at practices in the pricing of derivatives, investigators have subpoenaed records from more than 30 banks, insurance companies, and brokers involved in interest rate swaps and contracts to invest bond-sale proceeds.

In New Mexico, officials asked for records from the 2002 sale of $96.7 million of subordinate-lien system revenue bonds issued by the UNM Regents. The bonds were sold in two tranches, $96.7 million and $37.8 million, through negotiation with JPMorgan as senior manager with RBC Capital Markets and George K. Baum & Co. as co-managers.

The university confirmed that the records were subpoenaed but said it was not a target of the investigation.

Meanwhile, in government news, New Mexico’s soon-to-be-senior U.S. Senator, Jeff Bingaman, has been picked to head up a health care reform working group in Washington, D.C., according to the Santa Fe New Mexican.

Elsewhere in the Land of Enchantment, the Albuquerque Journal reports that staff at the University of New Mexico are opposing the university’s decision to proceed with $40 million in capital projects. They say it’s bad timing given the nation’s financial situation.

And the leader of a northeastern N.M. apocalyptic sect was convicted Monday of criminal sexual contact of a minor and two lesser charges, the Associated Press reports.

State Rep. George Hanosh, a Democrat, died last weekend. According to our very own Heath Haussamen, “Hanosh, who was vice chairman of the House Business and Industry Committee and an automobile dealer, was named the 2008 citizen of the year by the Grants/Cibola Chamber of Commerce, according to the Cibola County Beacon. He had served in the Legislature since 1999.”

Also, the sale of dogs and cats from pet stores was banned last night by the Bernalillo County Commission. According to the Albuquerque Journal, the commission’s vote was unanimous and came after months of consideration. The ban only applies to stores to unincorporated areas outside city limits, however, and there is only one pet store in those areas, Ace of Hearts. The store will be allowed to continue selling the animals because it has a hobby breeder permit, an exception to the ban.

Another person with New Mexico connections appears to be under consideration for a job in Obama’s cabinet: there are whispers that Kevin Gover, who practiced law in Albuquerque for over a decade before becoming the director of the Smithsonian Institution’s National Museum of the American Indian, is being looked at for Secretary of the Interior.

In other New Mexico news, the mother of two teenage girls who “lay naked” with cult leader Wayne Bent, says (and I’m paraphrasing here) he’s a total perv; also, blood alcohol tests reveal that the lawyer who allegedly killed a man in a hit-and-run outside of WilLee’s was wasted drunk. In less depressing news: cow farts and McGruff the Crime Dog.

Illustration by Keith Lewis

ALBUQUERQUE — Once again the nature of New Mexico’s unpaid, volunteer legislature is threatening to limit the kind of people who are able to serve. Case in point: Karen Giannini, the upset Democratic winner of a House seat in Albuquerque’s Northeast Heights.

Last week she told friends that she was having trouble getting time off from work to serve in the Legislature. Her request for a 60-day leave of absence had been denied, she wrote in an e-mail.

While Giannini’s predicament is unusual, it is not unheard of. Because New Mexico’s legislators are unpaid and work only part time, it’s hard for many to figure out how to serve while earning a living and taking care of family responsibilities.

The difficulties, in turn, threaten to stifle diversity in the body, legislators and observers say. Being a senator or representative requires an extraordinary juggling act that is harder still for women than men, as they try to manage the demands of work, family and constituents.

Compared to other states with similar systems, New Mexico puts a greater squeeze on its volunteer legislators. According to the National Conference of State Legislatures, there are about a dozen states in which legislators spend about as much time on their jobs as ours do (about a half a full-time job, on average), but they receive an average of $15,984 per year for doing it.

New Mexico senators and representatives are paid a daily $144 per diem while serving in Santa Fe, money that must cover food and lodging in one of the most expensive areas in the state. New Mexico lawmakers collect the same per diem while attending interim committee meetings when the Legislature is not in session.

Of the 10 other states NCSL puts in the same category (working about half-time), New Mexico legislators have the worst compensation. Even most states whose legislators work less are paid more.

‘The age-old balance thing’

In an interview with NMI, Giannini, a single mother of three, said that while she did not talk to her supervisors about a leave of absence before running for office, she had carefully consulted the company policy and believed that she would qualify for leave. She said she is determined to work out a solution that allows her to keep her job and serve in Santa Fe.

“I fully intend to take my seat, but I also have an obligation to my family and my children,” she said. “It’s the age-old balance thing for women who are single and trying to work and raise a family.”

If Giannini were to resign her seat, formerly occupied by Republican Justine Fox-Young, a replacement would be appointed by the Bernalillo County Commission, said James Flores, a spokesman for Secretary of State Mary Herrera. But Giannini, a former Air Force officer with a degree in physics who now works as a quality assurance engineer for an aerospace firm, would not discuss the possibility of resigning.

Janice Arnold-Jones is a Republican representative who works for a nuclear fuel company and describes her job there as similar to Giannini’s. “When I was first elected, I was a part-time person, but it turned out that [allowing me to serve] cost my small company a lot of money because there was no one to take over my responsibility,” Arnold-Jones said. “Still, they didn’t fire me, and I’ve always appreciated that.”

When the small company she worked for was bought by a larger one, Arnold-Jones recalled, the new bosses weren’t quite sure how to deal with a part-time worker who needed to take off 30 or 60 days each year. But eventually they decided to keep her and allow her time to serve in the Legislature.

“I appreciate that I have access to benefits and 401(k), but I had to promise to give them a level of hours that is sometimes excruciating. When the session is in, I simply can’t work those hours, but I still have to meet deadlines,” Arnold-Jones said.

When she’s in Santa Fe for the legislative session, she must take leave without pay. She also takes unpaid leave for committee hearings and events between sessions, Arnold-Jones said.

For some, the demands of the job are best met with full-time attention. state Sen. Tim Eichenberg, an Albuquerque Democrat whose district overlaps Giannini’s, retired from his job with the state in order to focus all his effort on legislative duties. His wife still works, however.

“I’m hoping not to have to take a day job at any time in the future,” he said. “If I have to, I’ll do this full time.”

The cost of service

“For a lot of people it’s a challenge to figure out how you’re going to take off 30 or 60 days,” says Neri Holguin, a political consultant who is a veteran of many races in New Mexico.

Although some legislators’ employers allow them to take unpaid leave during legislative sessions, many potential candidates can’t afford to work without pay for weeks or months out of the year.

“This is one of the reasons we should be a paid legislature. Because [as it is] we get people who are wealthy, retired, ranchers, bankers, attorneys, all of whom who have enough time or money to do it,” said Mimi Stewart, an educator and state representative from Albuquerque.

Stewart is one of the lucky. Because of terms negotiated by the Albuquerque Teachers Federation, APS teachers who are elected to the Legislature are entitled to leave with pay for the session and committee meetings.

“Because of the way it’s set up we lose out on a diversity of people. We have either the highly paid or people with a lot of time on their hands. There’s a middle ground we’re missing, and I think that’s unfortunate,” Arnold-Jones said.

But a state law that would require employers to allow their workers leave to serve in elected office would put an undue burden on business, Arnold-Jones said. While she would not support pay for legislators, she would appreciate pay for staff members.

New Mexico legislators, unlike those in many other states, do not have any year-round paid staff.

Changing the way government works

So why don’t New Mexico representatives and senators just vote to give themselves a salary?

“There’s not a lot of public support for this… and that’s partly our fault,” said Steven Robert Allen, executive director of Common Cause, a government watchdog group.

“We really have to talk about this more and help people understand. People need to think through what it’s going to take to change the way government works in the United States, in New Mexico and on the local level. Part of that is realizing that public officials are just like everyone else. Most are good people — most want to do the right thing, and I don’t think there’s much potential for abuse if we give them some nominal amount of pay for their service,” Allen said.

In the 2008 legislative session, Sen. Leonard Lee Rawson, a Republican from southern New Mexico, sponsored a bill that would have given legislators an annual salary of approximately $25,000 (calculated as 15 percent of what members of Congress earn). The bill’s fiscal impact report noted that the 2006 Governor’s Task Force on Ethics Reform recommended $10,000 annually for legislative expense reimbursement accounts and the December 2007 Final Report of The Legislative Structure and Process Study Task Force recommended a “Legislative Compensation Commission” to set the compensation of members of the legislature every 10 years. Nevertheless, Rawson’s bill died in committee.

“We’d be talking about a barely livable wage. They would not be raking in cash hand over fist. Folks who are interested in making a lot of money have much more effective ways of doing that than becoming state legislators,” Allen said.

But even a salary wouldn’t help Karen Giannini now. With the next session little more than a month away, she still has to figure out how to persuade her bosses to let her go to Santa Fe and work for free.

Update: Rep. Mimi Stewart writes to clarify: “I have retired from APS, specifically because of the amount of work it takes to be a responsible legislator.  I was making myself sick trying to do what seems like two full time jobs.  The story makes it sound like I still work full time for APS, but I quit this past July 1.  I am working quarter time, which is all that’s allowed when you retire, coaching 12 special education teachers on how to teach reading.  I have to do this because it’s hard to live on the retirement salary.”

Meanwhile, police have arrested four men connected to a stash house in El Paso that contained cocaine bundles with an estimated street value of $400 million.

Up in northeast New Mexico, the dirty air in San Juan County has attracted federal and state environmental regulators.

And people good in math and science who also can making learning fun — even inspiring — might want to think about becoming teachers.

Saxby Chambliss, Republican Senator of Georgia, was reelected yesterday after beating Democrat challenger Jim Martin in a runoff election. Martin’s potential win had kept Dem hopes alive for a 60-vote filibuster-proof majority in the Senate. Now all eyes turn to the recount in the Minnesota race between Democrat Al Franken and Republican Norm Coleman. For more on that, check in with our sister site, the Minnesota Independent.

And just for fun, here’s an interesting tidbit: Obama has so far had five post-election press conferences, right? Bot not once has he called on a reporter from FOX News. As SusanG says on Daily Kos, “elections have consequences.” (From FishbowlDC via DailyKos)

In Albuquerque, a non-traditional drug treatment program is under fire, educational assistants are set to get a 5 percent raise, And the owner of Club 7 cut a deal and won’t go to jail because of a zillion code violations at his downtown club. The Santa Fe Reporter explores the news that the College of Santa Fe may be brought into the state higher educational system. And speaking of runoff elections, the Gallup City Council recently changed the way that city handles runoff elections. In Clovis, the cotton harvest is wrapping up, and while production here rose, the crop is down about 30 percent nationally. (Why? King Corn.) The rookie cop who manhandled a KOB-TV cameraman was fired from APD but got a new job working in the town of Bernalillo’s police department.

Photo by Mike Hensdill

ALBUQUERQUE — The New Mexico Food Gap Task Force is expected to submit its first report to Gov. Bill Richardson today. The panel’s members want the state to pay for fresh fruits and veggies in schools, and to help rural communities gain access to fresh foods. But with state revenues plummeting, will they be able to wrangle the cash?

While food banks put bags of food directly into the hands of the hungry, the Food Gap Task Force, a group appointed last year by Gov. Richardson, is charged with a more complicated mission: finding creative ways to help poor, rural areas of the state gain better access to healthy and affordable food. The task force is trying to close the “food gap” between financially comfortable city folk and cash-strapped residents of far-flung communities.

The most familiar face on the task force is activist Pam Roy, who is also a co-director of Farm to Table, and the director of the New Mexico Food and Agriculture Policy Council. As the co-founder of the Southwest Marketing Network, she has worked for years to help local farmers market their products. With the help of task force co-chair Brian Moore, a state representative and small grocery store owner from Clayton, the group’s proposals have been making the rounds of the Legislature’s interim committees, where they have drawn some significant interest.

Buy Local

Getting more locally grown produce in schools has long been is one of Roy’s goals. Buying locally helps family farmers and puts fresh fruit and vegetables on the plates of some kids who don’t eat a lot of lettuce that’s not sitting on top of a hamburger patty. Seems like a win-win for kids and schools, right? But sometimes local food costs a little more, and sometimes red tape gets in the way.

“We’re requesting a $3.3 million investment into the school meal program to purchase fresh fruits and vegetables — New Mexico-grown when possible,” Roy says.

That “when possible” thing is important. School food activists have long fought over federal policies that made it hard for school districts to request locally grown foods. The U.S. Department of Agriculture recently made it clear that districts can request local products, but districts still struggle to come up with enough money for fresh fruits and vegetables, which are a lot more expensive than macaroni and cheese.

“Schools only get $2.57 [in reimbursement from the federal government] to provide a free lunch, and it costs them about $3.07 if they put a fresh fruit or vegetable option on the plate.”

Hence the $3.3 million.

Already there are 12 school districts in the state buying local foods, up from eight last year. Most buy apples, as well as pears, melons, tomatoes, salad greens, carrots and potatoes.

It’s no secret that New Mexico is in a budget crunch, but Roy is optimistic about the group’s chances in the next session. State Sen. Pete Campos and Reps. Rhonda King, Paul Bandy and Danice Picraux are among the bipartisan legislators whom Roy calls her “champions.”

Refrigerator Madness

Besides grocery money for schools, the task force wants to create a pilot program to invest in infrastructure in rural underserved communities. OK, it’s not as exciting as giving apples to hungry kids, but a small investment in reefers — commercial refrigerators, that is — could go a long way.

“One-third of our counties are considered what we call ‘food deserts,’” Roy says.

In a typical food desert, she explains, residents have to drive more than 10 miles to a grocery store, but in New Mexico it’s often more like 25 to 100 miles round trip. And when people have to drive a long way to get to a store, they’re less likely to buy food that spoils quickly — like fresh fruits and vegetables.

“We could go into a convenience store in Vaughn and say ‘Hey, we’ll help you put a cooler in here if you’ll put salads and oranges and apples in there.’ Then the only thing to buy in Vaughn isn’t a deep-fried burrito from Allsup’s. We could buy four or five coolers for $20,000,” Moore says.

When USDA invested in two large refrigeration units in northern New Mexico, it allowed schools to buy large quantities of apples, carrots and potatoes from local farmers, more than they could use immediately. In fact, the coolers’ supply of last season’s apples lasted into March of this year, Roy says.

Distribution Solution

Broadening the food distribution network is the last priority for the Food Gap Task Force. Many small towns in New Mexico don’t have grocery stores, and most of the small, rural stores that do exist are supplied by only one distributor, Affiliated Foods, which is based in Texas.

“The challenges of rural distribution are incredible. The stats are ugly. They pay $85 for what we pay $55 for, and they have to drive 35 miles to get it,” says Steve Warshawer, Enterprise Development Manager for La Montañita Coop, a member-owned family of grocery stores based in Albuquerque.

According to Roy, La Montañita has created an excellent example of an alternative distribution network with its regional foodshed project and Cooperative Distribution Center. To help New Mexico growers bring their products to market, the Coop’s trucks crisscross the state, picking up goods and delivering them to the Cooperative Distribution Center warehouse in Albuquerque. Although some of the products are sold through the Coop, many go to other grocery stores in the area.

A pilot program to strengthen the rural distribution system could help the Coop and other organizations pick up and deliver food to underserved communities.

“It could be a USDA commodity truck, a food bank truck or a Coop truck out on certain rounds, picking up and dropping off food. And a lot of these places don’t have retail stores, but most of them have a school, a community center, a convenience store, something like that where people could come to pick up food,” Warshawer says.

The details aren’t worked out, but that’s the point of a pilot project, he says.

“We’re trying to address rural food access and the rural economy … The goal is to ferret out which methods will achieve the desired result.”

Low Cash Flow

The problem, as usual, is money.

“A small investment by the state could go a long way,” Roy says. It could also spur private investment. The task force aims to execute these projects in partnership with the N.M. Department of Agriculture.

“We’ve had a lot of nonprofits like the McCune Charitable Foundation put money towards these issues and a partnership would be able to accept that money. That’s what we’re hoping for. We just need to get in there and do something,” Moore says.

But Sen. John Arthur Smith, the Democratic Chair of the Legislative Finance Committee, is not so sanguine. How realistic is the task force’s hope that its projects be funded fully, to the tune of nearly $4 million?

“If the public wants a tax increase then there will be the money for it,” Smith says.

“And If I’m still chair then we’ll listen to it on its merit. But the only place you can find additional money now is to take it from education or health care. And that’s not a pleasant option,” he says.

Now all eyes are on the calendar as legislators wait for the next state revenue estimate, due in two weeks. It is not expected to be good.

Despite the dour forecast, Moore is hopeful that the task force’s proposals will receive some funding.

“We really just want to show people what we could do. We want to be able to say, ‘OK, here’s what we did with $25,000: We were able to provide apples for all the kids in after-school programs in Taos for one semester,’ or ‘For $5,000 we put a cooler in a chapter house [on the Navajo Reservation] and we helped them make fresh fruits and vegetables available for chapter house members,” Moore says.

“We know this has to be incremental. You can’t do it all in one chunk.”

For more on the subject of the food gap, check out “The Poor Get Diabetes, the Rich Get Local and Organic,” an excerpt from Closing the Food Gap, by Santa Fe-based author and activist Mark Winne.

Let it snow! Photo courtesy Ski New Mexico.

In national news today, President-elect Barack Obama says he plans to keep Bush’s current defense secretary, Robert Gates — at least for the time being. Nobody wants to spend any money, but food stamp usage is nearing an all-time high.

Meanwhile, in Santa Fe, Jerome Block Jr. isn’t out of the woods yet, even though he (miraculously) won a seat on the Public Regulation Commission Nov. 4. Attorney General Gary King told the Santa Fe New Mexican that he’s considering whether or not to press criminal charges against Block for campaign finance shenanigans. Also of interest in that story is this quote from King, whose father was governor three times: ”I’d love to be the governor. I’m not shy about that,” he added, “but there are lots of other considerations in running for governor other than just wanting to be it.” 

By the way, the election results are finally official with the exception of one constitutional measure. Click that link to see official results on the Secretary of State’s Web site.

Governor Bill Richardson announced yesterday that CH Johnson Consulting has been chosen to plan the redevelopment of the State Fairgrounds. The firm will be paid $50,000 to do the work and will not be eligible to bid on the redevelopment work itself. Requests for proposals for that work are expected to be  go out early next year. In addition, Richardson announced the creation of the EXPO New Mexico Redevelopment Task Force (because Lord knows we don’t have enough task forces!) to help CH Johnson with the plan. 

Darren White wants to expand the three-strikes law and state Sen. John Ryan says he’ll introduce a bill to do just that when the Legislature convenes in January.

Otherwise, there’s lots of school news in the Journal today. APS is naming a middle school for Tony Hillerman, abolishing the South Valley academies for seventh- and eighth-graders, Del Norte will become a tech magnet and the whole district is getting a new calendar that closely follows UNM’s schedule.

Ski Santa Fe, which had hoped to open this weekend, will delay opening until they get (or make) enough snow. Ski Apache, Taos and Red River are expected to kick off the season this weekend. Speaking of snow, that’s exactly what forecasters are predicting today for parts of the state.

With little explanation, Richardson replaced Steve Anaya, Bob Gallagher and Student Regent Ed Kellum with Thomas “Dick” Salopek of Las Cruces, Javier Gonzales of Santa Fe and Student Regent Christopher Anaya. The new regents’ terms will begin on Jan. 1, a news release from Richardson’s office stated, but the appointees must be confirmed by the Senate before they can begin their work, and the Legislature doesn’t convene until Jan. 20.

In the meantime, the terms of Steve Anaya, Gallagher and Kellum end on Dec. 31.

In an e-mail, Gallagher claimed that he was told he was going to be reappointed, “so I expected to be able to continue some very important work we are in the middle of, and I would like to complete these projects.”

“I think some experience and continuity would make sense here. The timing of the announcement is curious in that the Senate must hold hearings and confirm regents, and the Legislature does not even convene for two months,” Gallagher said. “I am honored to serve NMSU, and my record shows I always put the university first. I would be honored to serve again, should I be asked.”

Asked why he believed the governor didn’t reappoint him, Gallagher said: “Private conversations between the governor and I should stay that way. I do not think I am in the position to answer that.”

Richardson spokesman Gilbert Gallegos said in this in response to Gallagher’s comments:

“When a regent comes up for reappointment, the governor typically takes the opportunity to appoint someone new,” he said. “The governor likes Bob Gallagher personally, but he wants news blood on the Board of Regents. The governor also believes the addition of these three outstanding new regents could help the board with its presidential selection process.”

Salopek is a pecan farmer who has a bachelor’s in agronomy and soil science from the university. Gonzales, a former Santa Fe County commissioner, is a well-connected politico who has spent the past four years as chairman of the New Mexico Highlands University Board of Regents and has a bachelor’s in accounting from NMSU. Christopher Anaya is a sophomore majoring in government.

Richardson’s appointments come less than a week after the regents, led by Gallagher, suspended their search for a new president to replace Michael Martin, who left earlier this year to be chancellor at Louisiana State University’s main campus in Baton Rouge. In scrapping their search process after spending some $90,000, Gallagher and others complained that a state law requiring the regents to publicly name five finalists was unfair and hampered the process.

The regents decided to restart the search next year. Waded Cruzado will remain interim president, and she may be allowed to apply for the permanent position the second time around, though she was not during the search that ended last week.

The Las Cruces Sun-News and Albuquerque Journal have been highly critical of Gallagher’s complaining about the state law he said doomed the presidential search.

The go-go years of high oil and gas prices that flooded the state coffers have ended, leaving a budget gap that some predict could eclipse $500 million in the place of what was supposed to be a decent-sized surplus.

The money shortage is the equivalent of a forced diet for lawmakers who have gotten used to divvying up huge surpluses with Gov. Bill Richardson. Now the fights will be over where to cut, how deep to cut, whether to raise taxes — in effect, how to make do with less.

And the battles won’t be pretty.

To get a sense of some of the battle lines already being drawn, you had only to be a wall-leaner at the state Capitol in Santa Fe on Wednesday, where two competing legislative hearings exposed some of the rifts likely to surface when the 60-day session convenes in January.

One hearing was held by the Legislative Finance Committee (LFC), the other by the Legislative Education Study Committee (LESC).

At the LFC hearing, state lawmakers focused on dollars and cents, quizzing state budget officials about a recently instituted hiring freeze, about spending, about ways to jump-start lagging revenue.

They also sparred with the governor’s budget officials over which brick-and-mortar projects — better known as pork projects — to stop funding: the governor’s projects or lawmakers’?

“Everything is on the table,” Richardson’s budget chief, Katherine Miller, told lawmakers.

At one point, Rep. Kiki Saavedra, D-Albuquerque, chairman of the House Finance and Administrations Committee, got off a wisecrack dripping in the gallows humor that is quickly becoming more common with all the bad financial news.

The public address system in the room kept malfunctioning. Finally, after the seventh or so eardrum-bursting squeal, Saavedra quipped, “That means that there is no money.”

The room burst into laughter in a rare moment of levity.

A few doors away, smiles were easier to spot at the LESC hearing. State lawmakers were discussing a proposal to raise the state’s gross-receipts tax by 1 percent to beef up public school funding. Advocates say it would generate $500 million for the state’s 89 public school districts, many of which are struggling. More importantly, supporters say, the cash infusion would move New Mexico toward a more equitable way of divvying up state education money to districts.

The proposal would tack on $1 to every $100 for most goods and services that are purchased. But supporters said the bad economic times shouldn’t scare away support. The money could keep school districts from taking draconian measures, like layoffs, they said.

“It’s a perfect time” for the tax increase, said Sen. Cynthia Nava, D-Las Cruces, who also is superintendent of the Gadsden School District, which is staring at a $3.9 million deficit this year.

But there are indications the tax increase might be in for a chilly reception if the LFC chairman’s response is any barometer.

“Do you make the people who are losing their jobs pay more?” Sen. John Arthur Smith, D-Deming, said of the tax proposal.

Responding to the caution from the finance committee, Rep. Mimi Stewart, D-Albuquerque, an LESC member, appeared to sum up the differences between the two committees — and a fault line that lawmakers must navigate once they convene early next year.

“They’re gloom and doom,” she said of the finance committee. “We’re hopeful, optimistic.”

The remark goes to show that the battle lines won’t be only Democrats vs. Republicans. It’ll be lawmakers who watch the bottom line vs. lawmakers who advocate for causes. Or, as one capitol wit put it, the gloom-and-doom types vs. glass-half-full types.

Add to those tensions a testy relationship between Richardson and the state Senate. Mix in a purported leadership battle in the Senate.

Then throw in for good measure the uncertainty about who the governor will be when the session starts Jan. 20. Gov. Bill Richardson is rumored to be packing his bags for Washington as part of President-elect Barack Obama’s administration.

A new state chief executive would change all the dynamics and some of the rules as state lawmakers and lobbyists scramble to get close to Lt. Gov. Diane Denish, Richardson’s replacement should he depart for Washington.

“It’s going to be very interesting,” said Sen. Dianna Duran, R-Tularosa.

Scrambling to deal with looming money crunch

It is difficult to say how bad the state’s financial situation is, staff say.

An updated revenue forecast is due out next month and that will give lawmakers and Richardson new estimates of how much money the state should expect in the current fiscal year and in the 2010 budget year, which starts in July.

Meanwhile, oil and natural gas prices — a major barometer for state revenues — remain volatile after falling in recent months, leading some to predict much lower revenues from broad-based taxes — gross receipts and income taxes.

Last month, Richardson ordered executive branch agencies to trim spending and impose a freeze on hiring. The governor also said he would ask the Legislature to eliminate some previously approved capital improvement projects to save money.

Universities and other institutions of higher learning have already frozen wages and cut back on travel and other expenses. Senate President Pro Tem Tim Jennings, D-Roswell, meanwhile, has told school districts in a letter to prepare for spending cuts and possible layoffs to cope with the state budget gap — a move Richardson criticized as “irresponsible and premature.”

It was in that context that Wednesday’s LFC meeting took place.

The finance committee is effectively the Legislature’s Mr. Moneybags. And it has managed to serve as a persistent thorn in Richardson’s side during his six years as governor.

Wednesday was no exception.

Testimony from the governor’s budget director, Katherine Miller, was marked by occasional testy exchanges with lawmakers.

The source of the tension was a memo Richardson sent out Nov. 17 to all state agencies asking them to list brick-and-mortar projects — alternately called capital outlay or pork — as candidates for having their funding canceled. Each year the state Legislature and the governor agree to spend hundreds of millions of dollars to build or renovate senior centers, gyms, community centers and university labs.

Richardson has publicly announced that he wants to de-authorize $200 million to $300 million from more than a $1 billion in backlogged projects statewide that have stalled for whatever reason — lack of full funding, lack of interest, etc.

But was the governor overstepping his authority with the memo by trying to unilaterally cancel funding? wondered Rep. Donald Bratton, R-Hobbs.

“The governor is not trying to de-authorize projects unilaterally,” said Miller, the budget director.

Bratton responded, “We got a lot of projects that have languished for years because we have tried to piecemeal [them]. Because of the inability to fully fund, we have created a situation where agencies have to come back year after year to [secure enough funding].”

Saavedra, the chairman of the powerful House Administrative and Finance Committee, then articulated the question on many lawmakers’ minds.

“You are telling me that the governor is cutting his own projects?” Saavedra asked Miller. “Most of the legislators are concerned … they are concerned that the focus is on legislators’ capital outlay. Most of the big money is in the governor’s capital outlay, right? Those are the rumors. I’m just being honest now.”

Miller responded, “We will look at every available project.”

That didn’t satisfy the lawmakers on the committee.

The conversation veered to reports that the governor is favoring putting a multimillion-dollar equestrian facility at the Expo New Mexico state fairgrounds in Albuquerque, which has lost its main source of revenue and attendees: a racetrack.

The governor put $25 million of his capital outlay money in a bill a couple of years back to pay for the facility.

Legislative staff quoted from an e-mail saying that the state was thinking of signing a Memorandum of Understanding with Expo New Mexico to put the facility at the fairgrounds.

“It makes a lot of sense to bring that [equestrian facility] project back to [the state fairgrounds],” Miller told lawmakers.

Rep. Edward Sandoval, D-Albuquerque, wanted to know if the facility was even viable at the fairgrounds.

Then Sandoval asked Miller point-blank if the governor were reviewing his projects like the equestrian facility to find monetary savings.

“All capital outlay projects are being looked at,” Miller said.

‘Schools statewide are going broke’

A few doors down at the LESC, lawmakers were hearing from school superintendents, most of whom were enthusiastic about a statewide tax to help fund the state’s 89 school districts.

New Mexico public schools are facing hard economic times. Spending on public schools makes up roughly 43 percent of New Mexico’s $6 billion annual budget. But that hasn’t eased the pain that schools are feeling.

Albuquerque Public Schools announced a $10 million savings plan earlier this month to make up for a budget shortfall.

Albuquerque’s neighbor to the west and north, Rio Rancho, has slashed supply budgets for most of the district’s departments and schools, reduced utility costs, trimmed travel budgets and stipends and seriously curtailed the use of substitute teachers.

The Gadsden public schools district in the Las Cruces area, meanwhile, is asking central office employees to cover for teachers in situations involving long-term absences, such as maternity leave or surgery, Nava said.

Gadsden is looking at a $3.9 million shortfall and will attempt to cover it by using money the state is reimbursing the district for money spent on a high school, Nava said.

“Of course, we’ll still have a $3.9 million shortfall next year,” Nava said.

The shortfall is due to what Nava calls a “perfect storm:” several years of no auditing of the Gadsden school budget, diminished tax revenues and the construction of five new elementary schools and one high school in a four-year period.

Despite her particular district’s challenges, Nava thinks Gadsden is on the front edge of a financial trend that will spread to other districts eventually.

“Schools statewide are going broke — that’s my opinion,” Nava said.

Nava and other supporters of the 1 percent increase to the state gross-receipts tax see it as a way to raise money to divvy up the state’s funding more equitably among the state’s districts. But they also see it as a lifeline to public schools.

“Now is the time for every New Mexican to come to the aid of their schools,” Nava said.

Stewart, the Albuquerque Democrat, predicted there would be layoffs and programmatic cuts across the state if more money weren’t injected into public schools.

But Stewart admitted that the bad economic times would make a state tax increase difficult to stomach for her fellow state lawmakers. “It’s going to be extremely difficult,” she said. “What we are going to propose is a phase-in, over two to three years.”

Not longer?

No, just two to three years, she said.

Sitting in his office after a long day, Smith, the LFC chairman, said the tax increase was a case of bad timing. There are some who wonder if the state’s shortfall might grow in coming months because they are unsure we have reached the bottom of oil and gas prices.

“I don’t enjoy saying ‘no’ to things I’d like to advocate,” he said. “We’re dealing with reality here.”