Your Legislators; 102; Sen. John Arthur Smith (D)

I mean, if you work hard for four years, you can re-election, assuming you want to run for re-election, you can say, you know, here's what I've done, here's what I've been able to do. So, you know, we've got one individual on the floor that's been there forever that doesn't command respect from their one, you know, and it's because of actions from campaigns, this work really started. And so... Well, and I'm sure he had the ability to say, hey, stop it, but how much of that was coming from the party, how much of that was coming from national? I mean, I was astounded, dealing with the both TG and, you know, quickly, we forget their

names. Are we ready? Yeah, we're ready. We're ready. We're ready. We're ready. We're ready. Yeah, hear it. Well, TG and who was the runner against? Bill McKenzie. No, well, that one too. But for the... Yeah. Jeez, my memory's not this bad. Anyway, the amount of national dollars going into that... Well, you know I ran for Congress? No. Against Steve Pierce, the first time. Okay, so I've only been here, this is my third year, so... And short on money, and in our district, President Bush had a 75% approval rating. And he made two... Ten times. He made two trips out, and it was an open seat, made two trips out, the vice president made two trips, and the Speaker of the House at that time made two trips, and then they brought JC, what's his name, Watts, from Oklahoma? From Oklahoma into Southeast New Mexico on that. And we were still pulling very, very well up until just the shift at the last few days

on that. But they were... Richardson was campaigning, and Richardson is a very astute politician. And not my wife now, because we drove that campaign. It was a delicious district. Oh, on that, and I get this phone call, and Bill Richardson told me, he said, John, he said, you're going to win this thing, but you have to go negative. And I said, well, Governor, I said, I appreciate that. But I said, you know, I've got grandkids. And I said, we're not going that direction on that. And so as a result, you know, the rest is history, may never have been able to win it. I was outspin, almost three to one, and that's a percentage that is a, once you're outspin to that level, virtually, can't ever overcome it. But the, and then that was the year that the Democrats lost the United States Senate, and I was with Jeff Bingham in increases.

When I got this phone call, that all financial resources were going to be diverted to the Senate because polling had picked up that the dees were going to lose it. And Jeff said, what was that? Not all of that, I told him. He says, wow, that's wrong. He said, I sort of like my chairmanship. And so immediately called his office, and this, you know, Senator, we're trying to get through to you. That's what the polling is showing, and well, it, it happened. But in the, in the same breath, driving across Joe Lieberman called me. And he had been out to New Mexico, and he said, I can't believe what they're throwing at you. And Governor Johnson, we're different parties in that disagreements. He let his own party know that he wasn't happy with it. Would you say that he's what Tim did? That's right. The bottom line was, what, what that on this outside money, the soft money, so to speak, when you're not supposed to have any contact, and you leave well enough alone, I told him

I said, if there's anything out of line, I'm going to come out and condemn ads that were meant to, to help me publicly. And so we really never had that type of thing. But we were driving down the road from dimming to cruises, and are from cruises to dimming. My granddaughter was six years old, and we had the radio on, and she started crying. And I said, what's wrong? She said, why are they seeing bad things about you on the radio, Grandpa? And these are, this is terrible. The worst side of politics, when you paint that, and you know, it's not that important for me to run for Congress again, even if I was younger. But it's just, like I said, every time I got one of those damn flyers, it's like, stop. We don't need that. Need that. And this whole thing about having the road, what businessmen wouldn't push to have the road.

And the road was a lousy in front of this place. It was, oh, I know. And we had a new campus going up right next to him, and we needed it, well, and we will tell you right now, there's several of us would have put the, on that appropriation, our name on it, just tell us right there, and, and with the commitment behind the scenes, with the city, with what they're doing on that, and well, I didn't think about it, you know, right there. God, it's a nice thing to say, but while he's very wily, and while he's very seasoned, there was also a tinge of being naive about what was going on, and I say that in a non-erable way, not in a negative way. You ready to go? Yes, I'm ready. Do you want me to be ready and thank you, huh? I mean, look at me. I mean, look at me. It's just a conversation. We welcome you to another edition of your legislators on KRWG, I'm Glenn Sonny, and for the first time during this legislative session, we're coming to you from

the roundhouse in Santa Fe, and I can't think of a person that would probably be more appropriate to have here after just about three days of the session having worked here in Santa Fe, to speak with us about what's going on in New Mexico, and specifically from Santa Fe, then Senator John Arthur Smith from Deming, the 35th district, first of all, welcome to your legislators. Well, thank you very much, Glenn. And I have to tell you, I do appreciate the fact that, as I was walking through here before we started this interview, you, myself and Christian, may be about the only people in the roundhouse this morning. Well, it's a pretty thin crowd right now, which gives you time to think. Well, hopefully. Hopefully. Can I mess with that? Yes, you can. We should mention, Chair of the Legislative Finance Committee, at a point where we are over $400 million projected to be in debt with the budget. I can't think of being Chair in a committee that would be worse than the Legislative Finance Committee.

Can you start out, and first of all, explain what is the Legislative Finance Committee and what are its responsibilities? Well, actually, the Legislative Finance Committee is an interim committee that works year round with economists staffing the committee, experts in different agencies staffing the committee, and we alternate that chairmanship with the House every two years. So I've chaired Legislative Finance for two years, and next year I will not be chairing it. Then timing. Bad timing. But we go into, break into the session, and I also chair Senate Finance Committee, and Representative Savada chairs the House Appropriation Committee. So now we're faced with trying to shape the Legislative Finance Committee's recommendations back into our respective chambers, and hopefully we'll have unanimous support with the 42 senators in the state Senate. Can I say that perhaps a little optimistic to say unanimous, but you and I were talking

before we started the interview, and almost a half billion dollars in debt and you really don't know where the bottom is. That could be conservative, hopefully it's overestimating. But at the moment, there isn't a whole lot of time to be bickering and arguing and spending time for petty arguments, is there? That's right. And when you use that number of 500 million, may even go 600 million, we're talking about the 09 budget, the one we're trying to fix that we thought we had resolved back in February and March of this year. So on a $6 billion budget for the state of New Mexico, 500, 600 million is a significant number. Can you kind of give us an idea, and I know the governor has declared this the year of fiscal responsibility, and that wasn't a real difficult one to figure out. I don't think when you look at the numbers.

But the governor has some proposals. I know you have some proposals. Can you kind of give us an overview of where the Legislative Finance Committee is and where the governor's proposals are at this time? In actuality, they are very, very similar when you look at the very bottom line, where the governor's recommendations differ from the Legislative Finance Committee's recommendations is on the capital side, recalling capital that has been distributed to cities and counties and other municipal entities, universities, monies that have not been split. Public broadcasters. You're probably going first right now, but the bottom line is we're trying to recall those dollars, Governor, I think our figure is in the 160 million range. His figure is in the 260 million range, and it's not that the Legislative members hold those projects near and dear, necessarily.

There is a communication breakdown where you have municipalities that are telling the DFA, the governor's financial arm, that we really didn't want this money. Those same entities are telling their legislative members, of course, we want that money. So trying to find out exactly the status of the projects, whether it's contracts out already, whether in fact they wanted it, whether there's enough money to complete the project, takes a little bit more time on what people realize, especially when some of the appropriations are relatively small as far as government spending goes. I read yesterday that there's a relatively new situation developing in Washington that in the new bailout package that President Obama is presenting, there may be as close as a billion dollars coming to New Mexico, possibly. How do you start weighing this?

Well, you better worry it carefully because some of the legislative members will say, well, we can go ahead and fund a little heavier in this category because we're going to get federal help. Federal help is not reoccurring. I mean, we're looking over maybe a two-year cycle to draw this money down, and after that we're on our own. So we better be very, very careful on how we expend that. Now, I have a lot of support, you know, I'm very supportive of infrastructure as far as highways and roads, new schools, but when it comes to operational dollars that are there to act as a band-aid, you better be very, very careful with that. You've also got a delicate balancing act here. I mean, you mentioned roads, education obviously needs attention. All of these priorities are very valid, all of them are requiring funding. How do you as a senator begin to discern of, okay, how do we deal with this? How do we start to make these decisions which truly do impact the state of New Mexico?

Well, Glenn, you really go right to the heart of a balanced budget requirement. When the money runs out, you don't run to the press and print more money. As a result, you stay within guidelines, historical guidelines. Our education expenditures in this state as a percentage of our general fund budget is right at 60 percent, 58 to be exact, that includes public ed and higher ed. And then healthcare and social services take 25 percent, so you've spent 85 percent of your general fund revenues in those two areas. So as a result, we try and stick closely to that. And what we're challenged with right now is to make certain that when we're reducing budgets, that we try and mitigate the agony that's going to be created in the education community and also on the health and social service site.

But we have to live within a budget. Few people recognize the fact that the state of New Mexico has to have a balanced budget. We reconcile what that dollar amount is with the executive branch. We have agreement going in. And if it's $6 billion and people come in with a school funding formula of additional $350 million, a healthcare proposal of an additional $150 million, you better have some new revenues to fund that because that takes 500 million up and above what your revenues are. So Senate Finance Committee will be the burial ground for lots of bills because we flat run out of money. Can you look into your crystal ball and please feel free to be optimistic. Please feel free to be optimistic. Where do you see this going in the next couple of weeks? And you really need to get this one resolved so you can get on to the other things that should be being discussed during this long session.

We believe that the state is very, very near if not there already to writing checks that are not legally binding. We're flat out of general fund appropriated money on that or very near it. So what we're hoping to do is fix this expeditiously, not have to resort to a furlowing. That's the last thing we want. But we have to make certain that what is done as far as writing the checks is legal. We should probably also mention that part of the dilemma is exasperated a little bit. You are in a situation now where for all practical purposes the fiscal year is seven months over now. So you're left to make up seven months with just the five months remaining. Yeah, absolutely right. You know, when I look back at it, I'd like to defend the New Mexico State Senate, the state Senate started notifying the executive branch back in July when our fiscal year was just

starting that we were going to have a shortfall in October when we went into special session or and that was actually August when we went into special session members of the state Senate told the executive branch we have no business being in session. We didn't have the votes to walk out as we should have done looking back on that would have been the responsible thing to do. In October, the executive branch was notified by leadership in the state Senate that you better start notifying your agencies to trim back because the quicker the notice, the better chance of a soft landing. So when you notify them, let's say January, you've got another five months, six months to try and adjust your budget. It would have been much better if the breaks would have been put on in September and October. And I know you're not gloating or gleeful about this, but there also has to be some sense

of satisfaction that you earned the nickname, I believe it is Dr. Nell, for having tried to stem this months and months ago and honestly took some shots of being too negative for what was probably coming down the pike and as it turns out, you were more accurate than I think any of us hoped is that the way to phrase that? Well, we hoped you were wrong. Well, I'm hoping that that will translate to credit for the Legislative Finance Committee to rather than Dr. Nell, Dr. K N O W. It doesn't please me to think I'm right because there's going to be some hurt out there. There's going to be some suffering out there where we do need additional revenues and it's just not available. But it was a challenge and a very, very lonesome club that I belong to at that time. So how quickly do you think we can get the plan passed through the Governor's signature, everything taken care of so we can start to look at some of the other problems that are

facing New Mexico? I'm hoping that we can have it completed by the end of this next week. Is that extremely optimistic? Is that, if you were to give me a percentage of... I believe that's realistic. It's realistic. Can we start to then look at the other issues that you have confronted with you because there is still the daily business and there are some issues that are on the table. A lot of them still unresolved from last year and we can start to kind of tick them off. Healthcare being one of them. And my first question has to be, how do you make plans not knowing where you're really going to be financially next year? Well, I believe that goes precisely to the Governor's state of the state message. He did not emphasize healthcare. I think he's a fiscal realist and I think he recognizes the fact that we've got some problems there. He recommended in his budget that we recall some of the Medicaid dollars that we have that

we appropriated in August and there was about 32 million dollars and he's asked for a recall of that. I think the Senate Finance Committees and Legislative Finance Committees have recommended of trying to maintain five to seven million and replace the difference with tobacco settlement money. First of all, I want to make sure that we thank everyone for being a part of our audience here of your legislators. We're coming to you from Santa Fe on this week's program and very pleased to have Senator John Arthur Smith from Deming joining us from the area just west of Las Cruces and Senator as we start to go through this session. A lot to do, a lot of work to be taken into and a lot of things that we need to be worried about. Do you have any priorities that you would like to see done as we get through the part of this session?

Well, I oversee the financial side on the Senate side. So you're kind of preoccupied with that and trying to anticipate what our revenues are going to be next year for the 2010 budget starting in July and forecasting what those revenues are going to be given the national economy, trying to anticipate where we may have additional downturn. And right now we did not know exactly where the bottom is economically in the state of New Mexico. The Senate has gained a reputation, I think to some degree, to their credit. Certainly it is realistic of being a little bit on the cantaker aside at times, especially with the governor. Can you give us an idea? And I know you've only had really three working days. I mean, the first day was the speech, the swearing in, the ceremonies, and then when we got here at 2 o'clock on Friday, the place was pretty empty already. What's the tenor of this session starting to look like? Has there been kind of a pace set? Well, the first thing we have to do is convince our own members that don't serve on the finance

committee, that in fact we do have some major financial problems. Most of them will give you a wing and say, we're all right. But I don't think anybody realizes the depth of our problem financially. We thought we're going to have about a $6 billion budget for 2010. And it could be in the $5.5 billion range, a significant drop. And some forecasters are saying the downside risk is even greater than $500 million. It could approach $8 billion. So rather than a $6 billion budget, we could be looking at a $5 billion in revenues in the state of New Mexico. Is it denial on the group you're referring to or are they waiting for your cue from your finance committee to say, here's what we've hammered out with the governor, here's where we are. What I've found, I think the governor's realistic and he understands the nature of the problem met with them a couple of days ago and then we're out at his home here night

before last. And I think he has his feet well grounded and exactly what's happening. But one of the difficulties with denial that we have with some of our own members are that, well, we've always under forecast the revenues we had. And so let's not worry about it. But unfortunately, the source of those additional dollars came from oil and gas. And in many cases, the natural gas price was approaching seven or eight times greater than what it was is right now. And oil was four or five times higher and anticipated to go to 200 and I think oil the day is in the $45 range. New Mexico oil is probably in about $39 to $40 range on the spot market today. And natural gas was anticipated to be in the $960 to $10 range. And as we talk, it's probably at about $3.20 range.

And they deliver literally millions of dollars to the state of New Mexico. But those of us that have a real difficult time getting our arms around this, since it is so dependent on gas and oil, is there a magic price that we should be looking at where we say? And obviously, if it goes lower, we know we're in trouble, we know if it comes higher, it's going to be better. But is there that level? Is there a point where a casual observers could go, okay, we're at the point where we may be able to do things with a little less pain? You know, if oil and natural gas go too high, it creates pain. If it goes too low, it creates pain. And so as a result, I sort of like to have a range of stability in there. And on oil, I plug it in somewhere close to $80 a barrel. And on natural gas, we'd like to have it in there around $7.50. And if you exceed those numbers, they pay at the gas pumps or they pay at for home heating.

So as a result, we're looking for stability in that range and the pendulum hasn't come back yet. And that's not real good news considering you just gave sort of a ballpark of $80 and we're at $45 and that would be a pretty quick increase. That's right. To reach that. Well, it's an annualized number when we look at that. So when I'm quoting spot market, I mean, that's the extreme. But every day that it lingers at a very low level, we move forward in our fiscal year and we're running out of time for it to rebound. We could have a quarter that's strong and three quarters that are very, very weak and we got major problems. And that appears to be the course we're on right now. Last week, we had Senator Mary Jane Garcia on and we referred to the first week of the session of being somewhat described as organized chaos. Committee appointments were made, is the Senate organized?

Did you accomplish what you needed to do in those first three, four days of the session? We accomplished actually probably a day quicker than what's happened in the past, the forming of the committees and identifying the membership on those committees. So I believe we're moving well in the correct direction. The word from Washington is that we need to work together. The word from Washington is we need to help each other, that we need to reach across the aisle. And as a casual observer who has an opportunity to speak with people like you once a week, I'm getting the feeling that there is a little different attitude in this session from last session. Is that a fair observation? I have been so focused on the financial issue that I really haven't gotten into the personalities. But even your comments of being in concert with the governor are a positive departure if I can use that term from what we've seen in the last two or three years.

That's correct. That's correct. And because times of the essence right now, I know the public wants politicians to get along, the legislature to get along, whether it's at the federal level or whether it's at the state level. But the bottom line is, when time is paramount, we have to work together. And you and I were talking before on one of the favorite comments I heard from Senator Dodd during the Domenici Institute presentations in September on the campus of New Mexico State University. He said for some reason in our history when those times come, congressmen, senators, representatives, the legislative and the executive branch seem to come together. They seem to recognize that this isn't the time to be playing games. Is that what we're seeing a little bit of maybe? Well, I'm hoping that's the case. Now what we're seeing, I'm hoping that that is the case where we can work collectively together for the good of the state. Let me rattle off a couple of the standard questions that we have every session, ethics. Ethics is obviously going to be a large issue.

One of the biggest disappointments as an elected official in the state of New Mexico is the daily press that comes out with potential indictments that's sort of circling over this capital. We've had the state treasure problem, incidentally the legislative finance committee had notified officials five years before they were ever prosecuted that turning was taking place in the state treasures portfolio. We believe lots of commissions were generated that way, but it took five years after the Attorney General's office was notified after the federal prosecutor was notified and after the executive branch was notified. We are not a police arm. The legislature is not. But it's very frustrating. But still, you have that situation. Three years ago, I guess it's three or maybe two years ago, I personally asked the Attorney General to look into the housing authority issue and that is starting to surface again.

So hopefully the railrunners getting down the track quicker than some of these cases. Well, and Representative Servantes of Las Cruces has been pushing for this for some time. Is it a fertile or more fertile basis now to do something? That's exactly right. I think there's a good chance that that will get through on that and I really don't object to that. I think we need more disclosure of what is disheartening. When you look at the media that's laying off people, they've placed a lot of sunshine on legislative issues historically and given the economy they're withdrawing and we're going to have to offset some of that and I think we need to open up the process more. We've got just a couple minutes left. The other one education continues to be a concern in New Mexico although there were some positive signs we should add as well. But again, I think all of us recognize the importance of education in the future of New Mexico.

How is that going to fare during this difficult economic climate? Well, once again, I stated that education takes 58 to 60 percent of the entire state budget. We're determined to try and stay the course with that. There's a cry out there that we need more dollars that we haven't stepped to the plate but there was a report that came out that maybe the salaries aren't high enough for the professional educators. But we're number three for the progress we've made in the entire nation over the last seven or eight years. So I think the legislature has made that effort and I think the executive has made that effort and now we're going to have to step back and what are we going to do about the cuts that have to take place and there's proponents out there that, well, let's raise taxes. Well, it's very, very difficult for me in my district. I share a lot of mining activity with Grant County. I don't represent that county but we have employees going back and forth and I have a difficult time asking them to pay more in taxes when they've lost their jobs and we're in a difficult situation as a nation and we're going to have to work through this and hopefully the

education community will exhibit some patience. Again, I really appreciate you're taking the time. It's a Saturday here in the roundhouse and like I said, we're about the only ones there and I also really want to thank all of you for being a part of our audience. Our guest today has been Senator John Arthur Smith from Deming. We'll be back next week with Jeff Steinborn scheduled to appear. I'm Glenn Cerney and again. Thank you for being a part of your legislators. How close was I? I don't know, you're about 15 seconds. God, I'm disappointed. My perfect record right there. Thank you, sir. Thank you very much. Wasn't too painful, was it? I didn't grill yet. No, no, no, no. The... That's what I... Wait, you've been out of reports. You know what the purpose of the program is, but...