“Blending these three bill together we finally have true reform,” said Sen. Cisco McSorley, D-Albuquerque.

The new bill would change the State Investment Council (SIC) in several ways:

• The Governor would be removed from the SIC.
• The SIC would select the State Investment Officer, not the Governor.
• The SIC would gain the authority to hire and fire management services. That is now the purview of the State Investment Officer.
• The Governor would appoint only three members of the SIC (and only 2 from the same political party).
• If a member of the SIC misses three meetings in a row, they would lose their seat.
• Seven appointed public members of the SIC must have 10 years experience in investment or finance.

“This appears to be a pretty good shot, pretty good stab at it,” said Sen. Tim Jennings, D-Roswell, talking about the bill, “As long as we don’t add too much to this to give someone a reason to veto the thing.”

The committee however, did change a few things. Originally the Governor had four selections to the SIC, and the number of meetings members could miss was also at four.

The bill will now head to the Senate Finance Committee.

The bill is one of three in the Senate aimed at reforming at a state agency at the center of an ever-widening investment scandal with ties to New York state and California. All three bills are scheduled to come up for a hearing Friday before the Senate Rules Committee.

The removal of the governor from the State Investment Council would represent a major change. The governor now sits on the council and wields great authority over the agency.

In fact, a recently completed review of the State Investment Council recommended significantly reducing the governor’s power over it.

That report found that Richardson’s influence over the State Investment Council “is more far-reaching than it is for governors in most of the 14 other states with similar funds,” according to Chicago-based consulting firm EnnisKnupp.

In addition, decisions on how to invest New Mexico’s $13 billion worth of endowment funds were made internally and largely without scrutiny from the board appointed to oversee the state’s portfolio, the report said.

The removal of the governor from the SIC is one of the major provisions in McSorley’s legislation.

A separate proposal sponsored by Sen. Tim Keller, D-Albuquerque, would lessen the governor’s authority over the State Investment Council and reduce the portfolio of the agency’s top staff member — the State Investment Officer.

Currently, Gov. Bill Richardson appoints the State Investment Officer who, in turn, can hire and fire advisers and outside managers helping the agency.

Under Keller’s legislation the State Investment Council, and not the governor, would hire the state investment officer. The council also would gain hiring and firing power over advisors and outside managers.

Other changes contemplated in Keller’s bill would require more investment expertise among SIC members, so that they possess greater know-how to assess investment decisions. Also the Legislature would gain more say in who sits on the SIC board.

It appears that McSorley’s bill doesn’t give the SIC board the same authority as proposed under Keller’s bill. But McSorley’s measure would invest SIC members with a fiduciary duty. That would codify the trust the public already puts in SIC members to provide oversight in how taxpayers’ money is invested.

A third SIC reform bill proposed by Sen. Steven Neville, R-Aztec, would change the membership of the SIC and require several members to have at least 10 years of investment or finance experience.

It also would prohibit SIC members from having contracted in the two years previous with that agency, State Treasurer, the Educational Retirement Board, the Public Employees Retirement Association, the New Mexico Finance Authority or State Board of Finance.

Richardson has said he is in favor of reforming the SIC, but it’s unclear what he would support from the three bills.

Questions have swirled around the SIC, including related to former State Investment Officer Gary Bland and how much information and decision-making he kept from the State Investment Council. Bland resigned in October prior to a scheduled no-confidence vote by council members.

New Mexico in recent months has emerged as a hot spot in an ever-widening investment scandal with ties to New York state and California.

As a result, the federal Securities and Exchange Commission is conducting an inquiry into the agency.

The SEC inquiry, meanwhile, coincides with an ongoing criminal investigation that began earlier this year in New York. New Mexico’s former investment adviser, Saul Meyer of Aldus Equity, pleaded guilty there to securities violations. Meyer admitted to pushing certain deals to New Mexico’s two investment agencies — the SIC and Educational Retirement Board —because politically connected individuals here recommended them.

Meyer didn’t name names.

The bill is expected to go before a joint House and Sentate committee on Tuesday. (We will be live-blogging the hearing, so be sure to join us.)

In the following video, Sen. McSorley spents a few light moments with Rep. Brian Egolf before telling supporters how he expects  the Domestic Partnership bill to move through the Roundhouse.

The Judiciary Committee decided Thursday to send a letter asking the State Investment Council (SIC) and Educational Retirement Board (ERB) to explain “why did you refuse to produce those documents,” the committee chairman, Sen. Cisco McSorley, D-Albuquerque, said.

The correspondence was proposed by GOP Sen. John Ryan, but was supported by many of the committee’s members.

Ryan’s proposal followed appearances by ERB former investment officer Frank Foy and his attorney, Victor Marshall. Foy hopes to recover hundreds of millions of dollars in taxpayer money. It was lost because of bad investments. Foy has sued several dozen defendants, including the SIC and ERB, members of each agency’s board and financial institutions that participated in the deals that went sour.

“They have stonewalled us, they have stalled, they have prevaricated. One has to ask why?” Foy said of the Richardson administration at Thursday’s hearing. “This administration is using taxpayer money to cover up the bribery and kickbacks as long as they can. The days of this administration are numbered.”

A spokesman for the State Investment Council said Thursday his agency isn’t stonewalling Foy. It is prioritizing responsibilities and right now the priority is responding to federal investigators, said Charles Wollman of the State Investment Council.

“We are honoring their requests,” Wollman said of Foy and Marshall. “Two weeks ago we gave him 75,000 documents. We are sympathetic to his frustration.”

The U.S. Department of Justice is investigating whether criminal wrongdoing occurred at the SIC. Meanwhile, the federal Securities and Exchange Commission is conducting its own probe.

“Some of the documents that we provide to federal authorities are not public,” Wollman said. “So we can’t turn over every document we give to the federal authorities.”

Wollman said his agency “would look forward to going before them (state lawmakers) to help them understand the complexities involved. What lawmakers hears is one side of the story and there is more to it.”

The SIC and ERB find themselves at the center of an investment scandal that has included pay-to-play allegations in the Richardson administration.

And more and more state lawmakers are sounding restive enough to make one wonder if they’re up to challenging the Richardson administration. On Thursday, some state lawmakers asked if the Legislature had subpoena power and suggested adding the authority if it doesn’t.

The Legislative Finance Committee, effectively the Legislature’s budget arm, has subpoena power, but no other legislative bodies do, McSorley said.

Rep. Joseph Cervantes, D-Las Cruces, a former House Judiciary Committee Chairman, said that should change.

“As legislative bodies we should be bringing in witnesses, we should be putting them under oath, we should swearing and taking testimony,” Cervantes said. “I think that would make us a much more effective Legislature.”

He said the investment scandal was one such situation where a more vigorous Legislature was called for.

Foy and his attorney, Victor Marshall, told lawmakers repeatedly Thursday that the Richardson administration had stonewalled them because some of the documents demanded, including e-mails, were a “smoking gun.”

The e-mails show the state’s former state investment officer, Gary Bland, putting “the arm on investment firms to hire Marc Correra,” Marshall said. “We don’t know that for sure.”

Bland is a former state investment officer who resigned in October to avoid a no-confidence vote by the State Investment Council.

Marc Correra, meanwhile, shared in $22 million in third-party marketing fees on dozens of investment deals by the SIC and ERB. Correra is the son of Anthony Correra, a friend and fundraiser for Richardson.

The no-confidence vote on Bland followed a guilty plea in New York by the state’s former investment adviser.

Saul Meyer of Aldus Equity pleaded guilty to securities fraud in an ongoing investment investigation. Meyer admitted recommending “proposed investments pushed on him by politically-connected individuals in New Mexico, knowing that these politically-connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico.”

State Land Commissioner Pat Lyons, a member of the State Investment Council, has said publicly that a law firm working for the State Investment Council discovered that Bland was soliciting third-party marketers.

No one has named those politically connected individuals, but the names of the two Correras has kept surfacing.

“We think Gary Bland would have gone back in February” had those e-mails been made public, Marshall said.

Several times state lawmakers evinced anger during Thursday’s hearing at the situation New Mexico finds itself in, especially as it relates to losses in taxpayer money.

The SIC and Educational Retirement Board have lost nearly $290 million from eight investment deals that were arranged in party by Marc Correra and involved a Chicago firm, Foy and Marshall told lawmakers Thursday.

The $290 million figure is a result of Marshall’s own accounting, the attorney said. It dwarfs the $90 million in taxpayer money originally disclosed as lost last year because of a deal involving Chicago-based Vanderbilt Financial Trust and Correra.

All eight deals had Marc Correra as a third-party marketer, the equivalent of a matchmaker who brings together an institutional investor like a state with a fund manager, Marshall said.

Richardson told state lawmakers that he is now open to education cuts during a meeting this morning, state Rep. Mimi Stewart, D-Albuquerque, told a crowd of teachers and school board members at the Capitol around 1:30 p.m. today.

Richardson spent most of the morning meeting with several groups of state lawmakers in anticipation of today’s special legislative session, which is now scheduled to start around 3 p.m. or so.

A call to the governor’s office about what public education cuts the governor is considering was not immediately returned Saturday.

A statewide poll released today and commissioned by an public education advocacy organization showed that most New Mexicans oppose cutting public schools to solve the state’s budgetary problems.

Several representatives of organizations representing teachers, school administrators and parent teacher organizations whipped up the crowd by saying that the Legislature should raise taxes, not make cuts, to address the shortfall.

Stewart said there were numerous bills ready to be introduced that would raise various taxes to generate revenue and close this year’s shortfall.

“I still believe we need revenue now,” Stewart said, to cheers.

Sen. Cisco McSorley, D-Albuquerque, meanwhile, told the same crowd of teachers and school board members said that the state Senate had close to enough votes to support a tax increase.

There is an ongoing battle behind the scenes over what the the budget fix will look like — mainly spending cuts and the use of federal stimulus dollars or whether tax increases will play a role in the mix.

“That’s to understand we are being ruled by a conservative coalition [that says] we can just take care of taxes in the (January regular session),” McSorley said. “For people to say we can just put this off to a tax year, is nuts, just nuts.”

“I don’t trust the people that say let’s just put it off until the regular session,” McSorley added.

The Senate debates the domestic partnership legislation Thursday.

SANTA FE — The two crowds couldn’t have been more different. One was joyous, the other tearful.

Moments before, the New Mexico Senate voted 25-17 to oppose conferring many of the same rights enjoyed by married couples to same-sex couples and opposite-sex couples in a committed relationship.

Gathered in a lobby on the west side of the Capitol, victorious opponents stood in a circle. Hands clasped with smiles plastered on their faces and their eyes closed, they listened as someone led a prayer in thanks for the bill’s defeat.

“Remember God loves them as much as He loves us,” Daniel Ruiz, an opponent, shouted to others as the impromptu prayer broke up. Ruiz explained later that he was referring to gays and lesbians.

On the other side of the Roundhouse a larger crowd, with many of those gays and lesbians Ruiz had referred to, clustered around a tearful Marybeth Lennox. Some individuals wiped away tears. Others wore the hangdog look of the defeated. Still others looked shell-shocked.

“Where were our supporters?” Lennox, a field organizer with the Human Rights Campaign, a national gay rights organization, shouted. “You’ve got to push, make phone calls.”

Lennox sounded frustrated, perhaps at the legislation’s defeat or possibly at the thumping supporters had just taken.

For a vote that had been touted as being so close no one knew how the Senate was going to go — in support of domestic partnerships, or against — the eight-vote margin on the Senate floor against domestic partnerships had turned out to be the biggest surprise Thursday.

Two years ago, the legislation had failed by one vote in committee. Last year, it was a two-vote margin in a committee.

With the House and Senate adding several progressive lawmakers to their ranks this year, supporters had viewed this year as the best shot yet for New Mexico to pass domestic partnership legislation, and to make a signal statement in the national debate over gay rights.

With the exception of Hawaii, all the states that recognize same sex marriage, civil unions or domestic partnerships are on the East Coast or West Coast (pdf).

But advocates had learned not to fall to the temptation of overconfidence. No one expected passage of the legislation to be easy.

What supporters ran into this year was a buzzsaw of opposition, and a confluence of factors that worked against the bill’s passage.

Several lawmakers interviewed Thursday spoke of a push by both sides that was unrivaled by campaigns in previous years.

“I received 2,500 e-mails in two days,” said Sen. Pete Campos, D-Las Vegas, who was one of 10 Democrats to side with 15 Republicans to kill the bill Thursday. Last year, Campos publicly announced that he supported domestic partnerships.

Roughly, 90 percent of the e-mails were from people opposed, he said. At the same time, his office got 750 calls over the same period. There, the split was closer, with opponents composing about 60 percent of the calls.

Meanwhile, New Mexico’s Catholic Church jumped into the debate over domestic partnerships this year after two years of staying largely out of the issue.

“There’s no question that they had a big influence,” said former Lt. Gov. Walter Bradley, an opponent who lobbied lawmakers on the issue for the Christian Life Committee of the state’s Southern Baptist Convention.

A spokesman for the Catholic Church, as well as Campos, explained their change in position by pointing to what had happened in other states over the past year.

The top courts in Connecticut and California during 2008 ruled that domestic partnerships – or civil unions in the case of Connecticut – were inherently legally unfair and were not the same as marriage. Citing equal protection under the law, each state’s Supreme Court struck down the laws creating domestic partnerships. The courts also found a “fundamental right to marry” and ruled that marriage was available to gay and lesbian couples.

“I’ve been watching this issue over the past year,” Campos said of the court rulings.

The experiences of California and Connecticut figured prominently in opponents’ arguments throughout this year’s debate, including Thursday’s discussion on the Senate floor.

“It makes New Mexico ripe for a court challenge,” Sen. William Payne, R-Albuquerque, said of the legislation. “This is a very cleverly crafted bill. It is designed to set up a court challenge.”

But the bill’s sponsor, state Sen. Cisco McSorley, D-Albuquerque, disputed that contention, saying the bill not only included language saying that it wasn’t marriage, but to not pass it could result in New Mexico getting same-sex marriage.

“If we pass this, the Supreme Court must consider what we have done,” he said. “The Supreme Court will have to look at everything we have done in this bill. They must conclude that we spoke and that we spoke loudly and clearly.”

Still, to allay opponents’ fears, McSorley ran a substitute bill Thursday that removed all language referring to domestic partnerships granting the same protections to its recipients as state law does to spouses. Replacing it was a phrase that said domestic partnerships were granted rights “as contemplated by Section 40-1-1 NMSA 1978″ — the provision in state law that establishes marriage as a civil contract.

The substitute was offered as a possible peace offering to opponents meant to garner a few more votes. Ultimately the strategy didn’t work.

Linda Siegle, a key lobbyist for the domestic partnerships legislation, said what killed the legislation was not what happened in other states or the lack of the substitute’s efficacy, but how opponents framed the issue.

“I think religious organizations convinced people that this was marriage, when it was not even close to marriage,” Siegle said.

It is unclear whether the legislation will be brought up again this year.

“The margin makes it a little unlikely,” said Senate Minority Whip Stuart Ingle, R-Portales, who voted against the legislation.

As of last week, the bill’s failure or passage in the Senate Judiciary Committee had come down to one vote — that of Sen. Bernadette Sanchez, D-Albuquerque. Sanchez said last week she hadn’t decided how to vote.

Support and opposition appear evenly matched on the committee. Five Democrats support the bill while Sen. Richard Martinez, D-Española, is siding with what likely will be four GOP senators voting no.There is furious last-minute lobbying going on as I write this, including from the governor’s office, say people involved in the issue. Gov. Bill Richardson has said he supports domestic partnerships.

New Mexico Sen. Bernadette Sanchez

SANTA FE — Are we about to witness a repeat performance?

A bill that would give same-sex couples many of the same rights as married, opposite-sex couples appears to be in trouble as it heads to the Senate Judiciary Committee, where it died last year.

Sen. Cisco McSorley, D-Albuquerque and the sponsor of the Domestic Partner Rights and Responsibilities Act, said Wednesday that he had the votes to push the domestic partners legislation through the Judiciary Committee this time.

But McSorley’s vice chairman, Sen. Richard Martinez, D-Española, said Thursday he opposes the bill. And another Democrat, Sen. Bernadette Sanchez, D-Albuquerque, said she was undecided.

“I don’t know yet,” Sanchez said Thursday outside the Senate chamber.

With seven Democrats and four Republicans on the Senate Judiciary Committee, Martinez’s opposition gives opponents five votes assuming every GOP senator opposes the controversial bill. Five of the six Democrats appear to be in support. Sanchez, meanwhile, stands in the middle, undecided, and the likely swing vote.

Both Martinez and Sanchez, like other state lawmakers, are being lobbied hard on domestic partnerships, which would extend rights enjoyed by married couples to both same-sex and opposite-sex couples in a committed relationship.

Both state lawmakers said they were receiving numerous e-mails and calls.

“I can’t even get into my office,” Martinez said of the people waiting at his office in the Capitol to tell him how they feel.

Martinez, who voted with Republicans last year to oppose the legislation in the Judiciary Committee, said he had been besieged by opponents.

“The bottom line is I am not here to vote how I feel,” he said. “My constituents have sent me a very, very strong message telling me that they do not want me to support the bill,” Martinez said. “I represent 45,000 people, and I would say about 90 percent of them are opposed to it.”

Sanchez likewise said her in-box has been filled with hundreds of e-mails.

Sen. Sander Rue, a freshman Republican from Albuquerque, said he also was being lobbied hard by both sides. On Thursday he said he opposed the bill.

McSorley said Thursday a vote on domestic partnerships likely won’t happen in the Senate Judiciary Committee until next week. He had said Wednesday night a vote could have taken place as early as Thursday.

Supporters of domestic partnerships stress that they are not the same as marriage, or even a step in that direction. But opponents don’t find that argument persuasive.

Even if domestic partnerships are recognized as legal, they would unlock rights only under state law, supporters say. Gay couples as well as unmarried straight couples in a committed relationship who enter into domestic partnerships would not see hundreds of federal rights unlocked to them, as they are for married couples.

Under the domestic partnerships legislation, individuals would be able to enjoy medical coverage through their partner’s health insurance plan and would have the right to visit a partner in a hospital. They could also take family medical leave to care for a partner who is ill and earn property rights in a partner’s pension and inheritance rights.