Secretary of State Mary Herrera

Five influential New Mexico newspapers have all endorsed Democratic State Auditor Hector Balderas, Treasurer James B. Lewis, and land commissioner candidate Ray Powell in next Tuesday’s elections.

The Albuquerque Journal, Santa Fe New Mexican, Taos News, Las Cruces Sun-News and Espanola-based Rio Grande SUN all agreed the three Democrats were the better candidates in their respective races.

But in a sharp rebuke of Democratic Secretary of State Mary Herrera (whose office will announce next Tuesday’s election results) four of the five papers also backed former Otero County clerk and state Sen. Diana Duran, Herrera’s Republican challenger.

Herrera’s office has been beset by allegations of mismanagement and controversial firings in recent months.

The Rio Grande SUN’s endorsements for governor and secretary of state will appear in Thursday’s paper, editor Lou Mattei said Wednesday morning. The Sun, which recently broke several stories about allegations of mismanagement and corruption in Herrera’s office, will likely endorse Duran as well.

Endorsements for governor were evenly split between the four other papers, with the Taos News and New Mexican backing Democrat Diane Denish and the Albuquerque Journal and Las Cruces Sun-News endorsing Republican Susana Martinez.

Only the Santa Fe New Mexican and Taos News endorsed Gary King‘s reelection as N.M.’s attorney general.

“(King) isn’t willing to say a culture of corruption has developed here even as he investigates millions in missing voter education funds,” the Journal endorsement states. “Let’s face it: Pay-to-play has become a way of doing business, and New Mexico simply can not move forward with those blinders.”

Overall, the Albuquerque Journal — the state’s largest newspaper — appears out of step with the state’s other newspapers, with only 36 percent of its endorsements going to Democratic candidates, compared to an average 75 percent for the other four papers reviewed.

The Santa Fe New Mexican generally favored Democrats and the Albuquerque Journal favored Republicans — but the two papers reversed roles when it came to endorsements for Public Regulation Commission (PRC) District 4. The Journal endorsed Democrat and Gov. Bill Richardson-appointed Commissioner Theresa Becenti-Aguilar, while the New Mexican backed Gary Montoya, her Tea Party-affiliated Republican challenger.

The New Mexican dismissed Becenti-Aguilar as a “political appointee” and noted Montoya’s recent endorsement by the Northern Navajo Agency Council.

“Montoya brings a vast blue-collar experience in the very industries regulated by the PRC,” the New Mexican’s endorsement states.

The Journal, in contrast, urged voters to “keep (Becenti-Aguilar’s) commitment to honest, integrity and ethics” on the Commission.

Becenti-Aguilar has emphasized a commitment to consumer protection, even at a recent PNM-sponsored shareholders’ meeting. At the same meeting, Montoya questioned PRC regulation of the state’s energy monopolies and insurance companies as “micromanaging.”

PRC district 5 Democratic candidate Bill McCamley was endorsed by the Journal and Las Cruces Sun-News. Republican Patrick Lyons won the Journal’s endorsement for his PRC district 2 race against Stephanie DuBois.

The Las Cruces Sun-News inadvertently left DuBois’s name out of its voter guide, Editor Jim Lawitz confirmed Tuesday.

Balderas received one of the year’s most enthusiastic endorsements from the Rio Grande SUN.

“We have an almost $3.4 million theft in the Jemez Mountains School District,” editor R. Braiden Trapp’s endorsement of Balderas notes. “The city of Española has such poor or nonexistent financial record-keeping, auditors can’t form an official opinion and the city is behind in audits. Had Balderas not stepped in a year ago, we wouldn’t have an inkling of the financial condition of the city. Balderas has made huge strides in clamping down on schools, cities and counties performing their audits on time. It’s a gargantuan task.”

Opposition to proposed constitutional amendments

All five newspapers opposed proposed constitutional amendment 2, which would relax term limits on elected county officials, extending the current two four-year term limit to three terms, and proposed constitutional amendment 5, which would allow state lawmakers to be appointed to civil office.

Currently, legislators may not resign to seek appointment to civil office to prevent undue influence over the legislator by the appointing official, according to a Legislative Council Service’s analysis.

“That prohibition was put in place to prevent public corruption,” notes the Sun-News editorial urging voters to reject the amendment. “We are simply amazed that lawmakers would suggest voters should no longer have concerns in that regard.”

All five papers supported proposed constitutional amendment 1, which would establish college scholarships for N.M. veterans of the Iraq and Afghanistan conflicts.

The Rio Rancho Observer, Socorro-based El Defensor-Chiefton and several other newspapers across the state do not endorse candidates.

The difference of opinion emerged during a hearing Tuesday and included a reference to a letter submitted by one staff attorney reiterating staff’s desire to see the utility face stiff punishment.

“If penalties are not warranted here, where will they be,” reads a letter penned by PRC attorney Ashley Schannauer.

The company “violated almost every procedural order in this case, illustrating disregard and defiance of Commission authority,” Schannauer wrote.

The alleged violations by Picacho Hills Utility Company — the company at the center of Tuesday’s hearing — include failing to comply with a PRC order to extend a sewer discharge line to the Rio Grande in order to avoid sewer contamination of ground and surface water at the Picacho Hills Country Club, southwest of Las Cruces, according to a PRC staff report.

The report is separate from Schannauer’s letter.

“There are turds floating on the golf course pond,” Commissioner Jason Marks said. “There’s no polite way to put that.”

The commission will vote by Aug. 12 to refer the case to state district court so the company can be placed into receivership, commissioners said Tuesday. Such an action would remove owner Stephen Blanco from the helm, replacing him with a court-ordered trustee.

Blanco, who did not attend Tuesday’s meeting in person, was placed on speaker phone. At times Blanco sounded combative and ready to resist any move by the commission to put his for-profit company into court receivership or depose him as its chief executive.

“It’s clear we’ll probably end up in the Supreme Court,” Blanco said to commissioners, suggesting he would fight the effort to place his company in the hands of a court-appointed trustee.

After a heated exchange over construction of a sewer line to the Rio Grande, in which Blanco and commissioners repeatedly interrupted one another, Blanco hung up.

Blanco could not be reached for comment after Tuesday’s meeting.

Sewer line is most important

A staff examination of Blanco’s utility found that he had secured at least $775,345 in bank loans for the company without receiving PRC authorization first, and that he inappropriately transferred company money to other accounts, including his personal bank account. It is unclear how that money was spent, according to PRC records. It was not used to construct the sewer discharge line extension. PRC investigators found unexplained bank transfers from the company’s bank account to other accounts.

The company already has had run-ins with the New Mexico Environment Department over the sewer-line issue, which fined the company $85,850 May 24 for waste water discharge permit violations. The company is required to treat waste water before spraying it on the golf course, but residents have complained about repeated failures to treat sewer water, according to a letter submitted to the PRC by the owner of the Pichaco Hills Country Club.

Determining exactly where the loan money went would require an audit, according to a PRC staff report.

But commissioners seemed to sidestep the issue of an audit Tuesday.

“Starting another docket with an audit wouldn’t be the greatest use of our resources,” Marks said. “Some entity’s going to have to operate the business and do the books. They’ll have to figure out what the finances are. The most pressing need is to stop the bleeding. …We need to get this utility under the control of somebody who can go to a bank, get the money and build the (sewer) discharge line.”

The commission’s first goal should be to ensure that the sewer discharge line is built, Commissioner Sandy Jones and PRC chairman David King said.

“I don’t know how we accomplish that,” Jones said. “It doesn’t matter to me if we put (the company) in receivership or not. The question is, how do we get that line built?”

Some commissioners seemed persuaded by another PRC attorney, Margaret C. Moquin, who argued that an $850,000 fine could leave the utility insolvent and unable to pay for the sewer line — a scenario that wouldn’t help the utility’s 800 customers.

The recommended $850,000 fine is “probably excessive, given the concern here is to maintain some degree of solvency in the utility,” Moquin told commissioners at the hearing Tuesday.

Instead, she recommended reinstituting a $35,000 imposed in September 2009 for earlier violations “send the proper signal regarding (the company’s) lack of compliance.”

But Schannauer disagreed.

“Staff submits that an already (ordered) $35,000 penalty for four prior violations is not a sufficient penalty for the 43 additional violations at issue here,” Schannauer wrote in a letter to the Commission. “(The company) and Mr. Blanco committed substantive violations such as engaging in unauthorized borrowings and failing to construct the sewage discharge line.”

It’s not unusual for staff to file an exception letter when a hearing examiner doesn’t agree with their recommendations, Marks said.

“A fine wouldn’t serve any real purpose,” Marks said. “The message we’re sending is he’s losing his utility.”

But commissioners were anxious to focus on getting the company into receivership so that the discharge line could be built, saying it was clear that Blanco would not build it.

“This case needs to move,” Marks said. “This guy’s capable of running a water company but he’s not capable of running a regulated water company. …Time after time, he doesn’t follow the specific procedures that are required of a regulated company. What’s his motive? It could be a number of things, but time after time after time he doesn’t follow orders or submit things in the right form or on time.”

Moving quickly to get the company placed in receivership, which Marks described as “essentially, a forced sale,” appeared foremost in his mind.

The Picacho Hills Utility Company was registered as a for-profit corporation by developer Blanco in 1979, according to PRC corporation records. The system, which serves approximately 800 water customers and 750 waste water customers, has been bedeviled over recent years by billing problems and repeated service disruptions affecting residents and fire hydrants — there were four outages in 2009 alone, according to media reports.

Even when there is water, water pressure is frequently a problem, customers complained at a PRC public hearing held Aug. 26, 2009 in Las Cruces, according to the Las Cruces Sun-News.

The company claims that the move will allow it to eliminate a great deal of debt without affecting operations at its newspapers, The Associated Press is reporting.

The news about one of the nation’s largest newspaper companies – MediaNews’ papers include the Denver Post and San Jose Mercury News – is the latest blow to an industry that has been crippled by readers’ moves to the Internet and the economic downturn. And it follows a series of changes at the company’s New Mexico newspapers.

In recent weeks, the company has brought on a new publisher at the Daily Times, and hired a new vice president for its New Mexico operations so the Sun-News publisher – who previously oversaw all New Mexico operations – can focus on being more active in the Las Cruces community.

Last year, the company eliminated a number of jobs at its Las Cruces newspaper, moved the Sun-News copy desk to El Paso – the company also owns the nearby El Paso Times – and furloughed all employees company-wide for a week without pay.

The bankruptcy filing by MediaNews’ holding company, Affiliated Media Inc., is a “prepackaged” plan that’s already been approved by lenders, the AP reported. Affiliated Media says that will allow the company to more quickly come out of bankruptcy.

From the AP:

“MediaNews’ management and newspaper operations, employees and vendors won’t be affected by the holding company’s restructuring, MediaNews Group Chairman and CEO William Dean Singleton said. He is the chairman of The Associated Press board of directors.

“A date for the filing hasn’t been announced, but the company said it would be in the near future. The reorganization plan was expected to be filed in federal bankruptcy court in Delaware.

“Under the plan, the company’s debt would fall from about $930 million to $165 million. Senior lenders would swap debt for stock, the company said. The group of 116 lenders, led by Bank of America, would hold a majority of stock but not voting control.”

And the context, also from the AP:

“Affiliated Media’s bankruptcy filing illustrates the uncertainty facing major newspapers publishers as their main source of income – print advertising – has plunged during the past four years. Since 2005, the industry’s annual ad sales have dropped by more than $20 billion, a decline of about 40 percent, based on figures from the Newspaper Association of America.

“Publishers are hoping the slump will ease this year as the economy recovers from the worst recession in 70 years. But newspapers still must figure out how to support their operations as more readers and advertisers migrate to the Internet, where ads sell for dramatically less, many news articles are free, and the competition is much greater.”

In a letter to MediaNews employees, Singleton called the news of the bankruptcy filing “important and positive.”

“We expect all of our daily operations to continue without disruption, with employees receiving normal salary and benefits, suppliers being paid, advertising being placed and newspapers being printed and delivered as usual,” he wrote. “No layoffs, sale of newspapers, facility closings or consolidations are anticipated as a result of the financial reorganization announced today.”

In New Mexico, MediaNews owns the Ruidoso News and White Sands Missile Ranger. In addition to the Daily Times and Las Cruces Sun-News, it is the majority stakeholder in the Alamogordo Daily News, Carlsbad Current-Argus, Deming Headlight, the Four Corners Business Journal in Farmington and the Silver City Sun-News.

Richardson's budget secretary, Katherine Miller, answers questions in the Senate.

SANTA FE — Three days into the special legislative session, a nearly $900 million structural deficit continues to confound Gov. Bill Richardson and the New Mexico Legislature.

Richardson and lawmakers face a challenge unseen in decades: a $200 million deficit for the budget that ended June 30 and another $650 million shortfall this budget year.

And the stress is showing.

“For each day we’re here, that’s one teacher and one teaching assistant,” state Sen. Howie Morales, D-Silver City, said, referring to the nearly $50,000 a day it costs to fund the special session. “What does that mean for a small school district? We’ve been here three days. It’s time we moved on to solutions.”

As of Monday afternoon, hopes for an imminent deal appeared dim. Richardson and top lawmakers seemed no closer to a agreeing how to close this year’s shortfall than when the session began Saturday.

House and Senate leaders plan to meet this morning to see how if their plans are close.

Meanwhile, Richardson, the state’s bigger-than-life chief executive and former presidential candidate, finds himself in a position unusual during his six-year tenure, attacked from both the political right and left.

Republicans and conservative Democrats blame him for not putting the brakes on spending leading up to the special legislative session, a charge his staff says misstates the facts. Progressive Democrats, meanwhile, are crying foul that he is opposing tax increases, and is only open to spending cuts.

“I think this is very irresponsible behavior,” Sen. Gerald Ortiz y Pino, an Albuquerque Democrat running for lieutenant governor, said Sunday. “He doesn’t want to be the bad buy. He wants us to be the bad guys.”

Added House Minority Whip Keith Gardner, R-Roswell: “The truth is, a real executive would have already fixed this by saying I’m cutting across the board my own budget to reduce my expenditures in order to accommodate the income coming in. The reason that we are here in special session is because the executive refuses to do what his job is, which is to cut expenditures.”

A column by Las Cruces Sun-News managing editor Walter Rubel, a former state Capitol reporter, best exemplifies the mood. Copies of the column have made the rounds with state lawmakers at the Capitol.

Rubel’s column profiles a 2005 report by the states Legislative Finance Committee that he says predicted the financial mess the state now finds itself in.

Rubel wrote:

“Projected recurring revenue growth may be too low to support the estimated recurring expenditure level in [fiscal year] 09 to [fiscal year] 10,” the report said.

Days after that 2005 report, Gov. Bill Richardson dismissed any suggestion that the state should consider reigning in spending. He had big plans and an ambitious agenda, and he wasn’t going to let any Chicken Little bean counters get in the way.”

State lawmakers and staff, especially those on the Legislature’s finance committees, view the column as a bit of vindication. Certain lawmakers for years have warned that New Mexico’s revenues weren’t stable after the 2003 state income tax cuts at the same time that state spending increased. If the price of gas and oil dropped, or the national and state economy stumbled into a serious recession, they said, New Mexico would face serious problems.

As it happened, both the drop in oil and gas tax revenue as well as a deep recession occurred.

The anger at Richardson is almost palpable in the Capitol, although most state lawmakers still decline to share their feelings publicly.

But that anger was on public display in the state Senate Monday.

State senators dragged in Richardson’s budget staff for a marathon grilling, during which budget secretary Katherine Miller deflected criticisms for nearly three-and-a-half hours.

“Since November, we’ve reduced the number of state workers by 760 employees and reduced payroll by $1.3 million on a bi-weekly basis,” Miller said in response to charges that the administration had not cut expenses.

Later in the day, the governor’s office issued a statement in response to the state lawmakers’ criticisms.

“I am disturbed that some lawmakers have seriously mischaracterized the results of these important cost cutting measures,” Richardson said in the release. “The truth is, there have been real results and savings to the State of New Mexico. In just the past eleven months, we’ve cut payroll by millions while making sure services to New Mexicans are not affected.”

The release had a different number than Miller gave to state lawmakers. The governor’s statement said “the state has nearly 1,300 fewer employees than when the hiring freeze took effect on November 15, 2008.”

State lawmakers also quizzed Miller why the state had a $200 million shortfall for the budget year that ended June 30. The state hasn’t closed the books on last year because the Legislature needs to appropriate $200 million to pay all that year’s bills.

Miller told state lawmakers that it was a revenue problem. The Legislature had allotted so much in expenses for last year, but revenue didn’t keep pace with expenses. In fact, revenues dropped precipitously in the last months of the year, in April, May and June.

Miller said the administration “does not have the authority to not allot the money the Legislature has allotted.”

That answer didn’t go over well with Sen. William Payne, R-Albuquerque.

“I don’t read the statute that the governor can spend until he says I will call the Legislature in to fix this thing,” Payne said. “It’s not the Legislature‘s job to come in and clean up” after the governor.

Also catching the lawmakers’ ire was the issue of Richardson’s political hires.

Sen. John Ryan, R-Albuquerque, questioned Miller on how many individuals Richardson had appointed to political jobs at state agencies.

Ryan and Miller sparred over the number: Ryan placed the number somewhere in the mid 500s; Miller said it was around 450.

The breadth of legislative anger over the issue manifested itself when a majority of state senators signed onto legislation Ryan plans to introduce limiting the number of so-called exempt employees to 200.

“Don’t buy it,” the Las Cruces Sun-News’ Walt Rubel writes in a recent commentary.

ACI is one of a number of groups that put out such rankings following legislative sessions. Rubel writes that, while the scorecards “may have some value to the members of those organizations in letting them know who is supportive of their pet projects, they are of little value to voters.”

Why? Such scorecards “invariably favor one party over the other based on the special interest they are representing,” Rubel writes. In the ACI report, for example, the top rankings all went to Republicans, while the bottom spots were all held by Democrats.

But that isn’t the biggest problem, Rubel writes:

The greatest failing of all these scorecards is that they are incredibly shallow. They provide a snapshot of the legislative session, and not the panoramic view needed to truly and fairly evaluate your senator or representative.

There were 896 bills introduced in the House and 693 in the Senate this past session. That doesn’t count memorials and resolutions. The ACI rankings are based entirely on 23 House bills and 17 Senate bills.

I’ve highlighted some aspects of this before in writing about Conservation Voters New Mexico’s 2007 legislative scorecard. The bottom line: Such scorecards are designed to help push an organization’s agenda, not give voters unbiased information to help them make decisions.

The move, announced to Sun-News employees on Tuesday, is the latest sign of the struggles the newspaper industry faces in New Mexico and across the country. The first Sun-News layoffs came earlier this month, and the companywide furloughs were designed to make ends meet in the first quarter for the Denver-based MediaNews Group, which is the owner or majority stakeholder in nine New Mexico papers, including the Sun-News. It’s also the majority stakeholder in the El Paso paper.

The Sun-News copy desk — responsible for copy editing of articles, page layout and design — currently has six staffers. Four will be offered jobs at the El Paso newspaper, while two positions will be eliminated, sources confirmed. There are a couple of openings at other MediaNews papers in New Mexico, so it’s possible that every affected employee will still have a job at the end of the transition, which is expected to be finalized in early May.

The Deming Headlight and Silver City Sun-News were already being produced by the copy desk in Las Cruces, so both of those papers will join the Las Cruces Sun-News in being produced in El Paso.

The move is a major shift as the newspaper industry struggles to adapt to the Internet and the sinking economy. Earlier this month, three east-side New Mexico papers owned by Freedom Communications Inc. also announced weeklong, unpaid furloughs for all employees. And the Las Vegas Optic went from a daily newspaper to one that publishes three days a week.

New Mexico has been no stranger to newspaper cuts in recent years. It has lost the Albuquerque Tribune and the Lordsburg Liberal, and several other papers, including the Albuquerque Journal and Santa Fe New Mexican, have cut positions. MediaNews also eliminated its capitol bureau a few years ago.

Around the nation, several major newspaper companies have declared bankruptcy in recent months, and some newspapers, including the Rocky Mountain News and Seattle Post-Intelligencer, have shut down or are in the process of becoming online-only publications.

The editor of Pulse, the newspaper’s weekly entertainment insert, in addition to the typist who transcribes calls to Sound Off! and the paper’s only advertising writer, were all laid off in the last several days, sources confirmed.

The layoffs come as all employees of the paper’s parent company, Denver-based MediaNews Group, are taking weeklong, unpaid furloughs before the end of this month to help the company make ends meet for the quarter.

When the furloughs were announced last month, MediaNews said they were an attempt to avoid layoffs.

The Sun-News is Las Cruces’ only daily newspaper.

In New Mexico, MediaNews owns the Ruidoso News and White Sands Missile Ranger. In addition to the Sun-News, it is the majority stakeholder in the Alamogordo Daily News, Carlsbad Current-Argus, Deming Headlight, Farmington Daily Times, the Four Corners Business Journal in Farmington and the Silver City Sun-News. Most of those newspapers are part of a partnership that also includes the El Paso Times in Texas.

The sources said there have been at least a couple of other positions eliminated at other MediaNews papers in New Mexico in recent weeks. The most recent layoffs come after a MediaNews executive traveled to El Paso to help the partnership cut costs.

New Mexico has been no stranger to newspaper cuts in recent years. It has lost the Albuquerque Tribune entirely, while several other papers, including the Albuquerque Journal and Santa Fe New Mexican, have cut positions. MediaNews also eliminated its capitol bureau a few years ago.

Around the nation, several major newspaper companies have declared bankruptcy in recent months. The Rocky Mountain News has shut down. The San Francisco Chronicle is in danger of closing, and the Seattle Post-Intelligencer announced on Monday that it would become an online-only publication.

By way of disclosure, I used to write for the Las Cruces Sun-News, the Albuquerque Tribune and the Santa Fe New Mexican.