Truth

Truth is undeniably the first casualty of any political engagement. It’s not that objective truth doesn’t exist – it’s just that the truth becomes inconvenient for those who are promoting poor policy.

Proponents of the misleadingly named “Taxpayer Protection Act” argue that it’s “unfair” that city residents have to pay a 3% franchise fee and that somehow unincorporated county residents are “subsidized” by city residents because city residents have to pay a 3% tax to the city that county residents are not forced to pay to the county.

Of course both arguments are utter nonsense.

While it may be politically expedient or even popular for a county commissioner who represents almost exclusively city residents to impose a new tax on county residents, it doesn’t mean that the city does anything other than collect its franchise fee and spend it on city operations. There is no transfer of money or benefit to the county paid for by the city’s franchise fee, so there is no subsidy.

As for fairness… not having the burden of higher property, gross receipts, and franchise taxes in the county may be attractive but it’s no more unfair than paying lower taxes in New Mexico than they do in California or New York.

Remember, in many cases the county right-of-way isn’t owned by the county at all. The property is owned by individual property owners who already pay taxes on it. The owners must grant a utility easement which allows the use of their property for the purpose of providing needed gas, water, sewer, and electric for themselves and the community around them.

How “fair” is it to charge a property owner for use of land that they already own and pay taxes on? The Taxpayer “Protection” Act would do just that.

Wouldn’t “fairness” dictate that if individuals are forced to provide land for the public good, the county – who purchased the rights-of-way it does own with public money – should provide land without charging the public for the use of lands they paid for in the first place?

The other fallacy being floated is that the county will be charging eeevil “for profit” corporations and that county residents won’t have to pay.

The demonstrable truth is that taxes and franchise fees are ALWAYS passed on to the consumer… you. Just take a gander at any city resident’s electric, water, or gas bill where you’ll find a whole host of taxes and fees that are collected by utility providers and passed on directly to the governments that imposed them.

Words can be used to enlighten and empower or they can be used to confuse and conceal. Focus group tested phrases like “subsidy” and “fair share” may sound good and certainly evoke specific emotional responses, but more often than not they’re used to hide what’s really going on.

We’re used to this kind of misdirection and obfuscation from our political leaders in Washington D.C., where the only truth is getting re-elected and you need to pass a bill before you find out what’s in it.

Commissioner Stebbins in her January 6th letter to the Albuquerque Journal (read it here) picked up the mantle of D.C. rhetoric claiming the absence of a tax is a “subsidy” which is “unfair.” To believe her argument you have to believe that absence is subsidy, two wrongs make a right, and “if you like your health care plan, you can keep it.”

The simple undeniable truth is that if the “Taxpayer Protection Act” passes on Tuesday January 28th, the county will receive millions of dollars of new “revenue” and county residents will pay more for their basic needs utilities. Period.

We can and should have an honest argument about whether or not the county needs to impose additional taxes. But to justify a poor policy through the use of catch phrases and buzz words and more importantly, deny the truth of increased cost to county residents is a disservice to the citizens of Bernalillo County and a prime example of what’s wrong with political discourse in this country.

Mocking The “Taxpayer Protection Act”

Last week I had a little fun with my colleagues on the County Commission. You see Commissioners Stebbins, O’Malley, and De La Cruz are hell bent on raising the cost of utilities for every county resident and have decided to name their tax grab the “Taxpayer Protection Act.”

[Side Bar]
No kidding! An ordinance that would take more money out of your pockets is somehow supposed to “protect” you. At least when the mob extorts protection money from you they provide protection you from them. 

Somewhere George Orwell and Ayn Rand are laughing their posteriors off watching their predictions come true.
[End Sidebar] 

Commissioner Stebbins noted that I had named a resolution the “Ratepayer Protection Act” last year – which is true. The difference is that the “Ratepayer Protection Act” actually protected ratepayers by prohibiting the county from reaching into their pockets – something the “Taxpayer Protection Act” most certainly does not.

Having a background in journalism, I decided to come up with a name that would be more accurate. And since the “Taxpayer Protection Act” does nothing of the sort, it seemed appropriate to come up with at least ten possible names and here they are:


Top Ten More Accurate Names for the “Taxpayer ‘Protection’ Act.”
10. The… Protection Money Act
9. The… We Need More Money Act
8. The… Bernalillo County Utility Tax Collection Act
7. The…  Illegal Revenue Enhancement Act
6. The… It’s not legal but we hope the Legislature will make it legal someday so we always put it on our legislative agenda Act.
5. The… Commission Can’t Live Within Its $250 MILLION a Year Means Act
4. The… It’s Not Our Land But We’ll Tax You Again for it Anyway Act
3. The… Ratepayer Screw Job
2. The… Soak the Poor Act
1. The… We Know You Can’t Live Without Water, Power, and Electric So We Know You’ll Pay Act

You can read more about the evening’s discussion in the Albuquerque Journal (read it here – subscription).

Consequences and “Fees”

You’ve heard it before – elections have consequences and it turns out that the election of 2012 will cost unincorporated Bernalillo County taxpayers an additional 3% for utilities.

In October of 2012 the Bernalillo County Commission passed the Rate Payer Protection Act – a resolution that prohibited the county from taxing basic needs utilities for the use of county right of ways. The resolution also required the county to recover reasonable actual fees associated with accessing the publicly owned space and for those fees to be approved annually by the County Commission.

Fast forward to May of 2013 and a new Commission with an old “tax it if it moves” philosophy. The first step was to repeal the Rate Payer Protection Act and publish an ordinance that – if passed – would impose a 3% tax on all utilities that use county right of ways.

That’s 3% more on every water bill, electric bill, gas bill, waste water bill, and phone bill at a time when families are struggling just to survive.

The bill’s sponsor, Commissioner O’Malley, and County Public Works will tell you that they need the additional $6 million a year for roads. They’ll tell you that it’s a fee, not a tax, and not to worry, the utilities will pay.

While it’s true the county should be putting more money into roads, a tax is a tax even when you call it a “fee”, and utilities can, do, and will pass the proposed 3% “fee” on to you no matter what it’s called.

You see, the price charged for any good or service is equal to the cost plus a profit. Contrary to the opinions of some, a company must make a profit or it ceases to exist. Regulated utilities must justify their rates to the PRC – rates that include a profit. Costs are any kind of expenditure whether they are labor, construction, capital, regulatory, legal, taxes, and yes… “fees.”

To say that the county will be taxing “utilities” not the public is rhetorical, delusional, and false. In fact, state law requires that franchise fees “shall be stated as a separate line entry on a bill sent by a public utility.”

YOU will pay and you’ll pay on those basic services that you need most, all to use land that you already own, for a commodity that you can’t do without.

Yes roads are important, but all of the expenses associated with accessing your right of ways are already paid for by the utilities which include road cuts and repair to county standards. They even pay for “de-confliction” in those cases where other existing utilities must be moved in order to accommodate new pipes, wires, fiber, etc. And yes… you pay for all of those costs as well.

Not to mention the fact that you are already paying for road maintenance and construction through your property “fees” – more commonly known as property taxes.

There’s also the very real legal question of whether or not a county has the authority to impose a “franchise fee” that exceeds the county’s actual expenses.

NMSA 1978 § 62-1-3 states that a board of commissioners is authorized to impose charges for “reasonable actual expenses incurred in the granting of any franchise.” Unfortunately, the county is unable to provide anyone – including the county’s internal auditor – with the actual expense of granting a franchise.

So instead, they’re trying to sell you on the idea that the need for road maintenance and repair is a “reasonable actual” cost.

But it’s hard to believe that $30 million dollars over the next five years is either “reasonable” or “actual” – particularly when the county’s bond dedication for roads over the same period is less than $20 million. In reality, this is just another scheme to separate you from your money and hide the fact that the county is doing a poor job of funding one of its core functions.

If the franchise fee weren’t enough, County Public Works is doubling down on construction costs as well by tripling the design review fee and adding an “application fee.” And you guessed it… You’ll get to pay for these increased fees as well.

In short, you will be paying for roads that you already pay for, on land that you already own, for services that you can’t live without, all because the current Commission cannot or will not use the money you already provide for its intended purpose. And the whole scheme is probably illegal to begin with.

—————————————

The above column was published in the Albuquerque Journal June 21st, 2013 under the title “Call it a ‘fee,’ call it a ‘tax,’ but whatever you call it, it’s unfair.” (Subscription)

 

Minimum Wage – The Downside

The Minimum Wage… voters in the city have voted against it before voting for it. The latest version (the one that passed) not only includes an immediate pay raise but also annual raises that are tied to CPI. The Journal ran a good editorial today that you might want to take a look at (read it here).

Joy Junction Founder and Director Jeremy Reynalds has 48 employees and says that although the shelter is in the unincorporated county, as a charity his organization has followed the city’s higher minimum wage. That has resulted in “$62,000 that we have to come up with somewhere really that we don’t have. … So the income has to come up with us in order for us to continue operating at the level we’ve been operating for the last year.”

Unfortunately, reality isn’t cooperating.

The shelter’s income is down $134,000 as donations dropped in 2012 compared with 2011. Reynolds predicted such fallout when the city considered such a wage increase back in 2005, saying then “proponents of these laws don’t seem to understand that money has to come from somewhere. If this law was to become a reality, and I pray it never does, Joy Junction would have a number of options. They would include asking our donor base for additional funds to cope with the increased need, closing our doors, or laying off a number of staff and severely diminishing the services we offer to our needy guests.” 
– Albuquerque Journal 11/16/2012

Jeremy Reynalds is absolutely correct – “[the] money has to come from somewhere.”  And that doesn’t just apply to charities and non-profits. Small businesses are hit particularly hard by regressive policies like the minimum wage. Sometimes its hard just to keep the doors open and make payroll without having to chase the consumer price index every year. It simply doesn’t make sense to punish those who work so close to the margin by inflicting upon them additional costs that will eventually overtake what little profit they manage to eek out.

Minimum Wage

Like many “good deeds” that government gets involved with, the minimum wage that’s supposed to help low wage earners ends up hurting them instead. On Sunday, Celina Westervelt of News 13 (read it here) ran a pretty good story on the effects of the City of Albuquerque’s new Minimum Wage ordinance. Looks like an extra buck an hour will end up costing all of us a lot more than supporters want to tell you.

The County Commission will be taking up the issue at its January 22nd meeting. I’ve provided a draft copy of the legislation here. Like the city’s version, it includes an ill-advised provision to give every minimum wage employee a raise annually.

UNMH Accountability

$90 million – the amount Bernalillo County taxpayers send to the University of New Mexico Hospital each year. $146 million – the cash on hand UNMH plans use to build the first phase of a 5.2 million square foot mega-hospital. Zero – the amount of accountability the hospital has for the use of 6.4 mils ($90 million) of Bernalillo County taxing authority.
Last June, the University of New Mexico Hospital made public its plans to build the first phase of its master plan – a 96 bed elective care hospital. The justification for the expansion was and is to reduce emergency room wait times by moving elective or scheduled care to the new facility thereby freeing up beds in the old hospital for patients coming from the ER – which would in turn free up exam rooms currently occupied by ER patients waiting for a bed “upstairs.” 
Let’s assume for a moment that there are not questions about the hospital’s occupancy rates and that it is currently operating at 91% to 95% of capacity not the 63% to 71% provided by the Hospital Association and the Department of Health. Let’s also assume that the UNMH has done everything within its power to schedule elective care during non-peak hours and has implemented policies that use current resources in the most efficient manner. If we accept those assumptions, then UNMH may have made its case that they need to build a new 96 bed facility.
However, there would still remain serious questions about how UNMH managed to squirrel away $146 million in order to build a new 185,000 sq. ft. facility out of cash on hand. Remember, UNMH is a public hospital and receives substantial public funding particularly from Bernalillo County.  Those county tax dollars are treated as “direct revenue to offset uncompensated care.” In other words, dumped in to a single pot where they are co-mingled with the hospital’s other revenue sources without any requirement to account for the specific uses of those tax dollars.
So how did we get here? Back in 1978, Bernalillo County entered into an agreement with the University to take over operation of the Bernalillo County Medical Center – later to become UNMH. In 1992, the Commission placed on the ballot a 4.3 mill per year levy for the “continued operation and maintenance of the Hospital.” The voters approved the levy that year but the Commission retained some authority over how those dollars were used – that is until 1999.
In 1999, the County entered into an agreement with the University that transferred “exclusive responsibility” to “control and manage the Hospital” and made the UNM Regents the “ultimate governing body.” The County agreed to continue to provide “Mill Levy support,” and to “use its best efforts to obtain approval” for continued support from the voters.
At that time, the agreement provided roughly 2/3rds of the current $90 million. In 2004, UNMH needed the County to extend the lease to a 50 year term in order to secure financing for the Bill and Barbara Richardson pavilion. 
Four years later in 2008, claiming inadequate indigent care funding, UNMH asked the Commission to place on the ballot a 50% increase in Mill Levy support that was approved by the voters and added roughly $30 million to existing funding. At about the same time according to UNMH CEO, Steve McKernan, the Hospital had already begun putting away “savings” in order to fund the new $146 million facility. How can UNMH claim poverty while at the same time run a surplus sufficient to put away over $146 million?
It’s clear that the taxpayers of Bernalillo County have contributed a significant amount of their tax dollars to this project without their knowledge. It’s also clear that the hospital’s 2008 claims of poverty were somewhat exaggerated. 
As County Commissioners, we have a fiduciary responsibility to the people of Bernalillo County. But the fact is, through a series of ill-advised leases the Commission no longer has the ability to live up to that responsibility. 
In the end, UNMH may build its new facility – and it may even be justified. But that doesn’t change the fact that taxpayers are providing $90 million a year to UNMH with little oversight and no accountability. It’s a situation that needs to change in order to provide the public with the representation, stewardship and health services that they deserve.
—— Note —–
This article was published by the Albuquerque Journal under the title “Increase Oversight on UNMH Tax Money” on Monday January 14th, 2013. Read it here (subscription required).

Flying Low

Last Tuesday the Bernalillo County Commission approved $800,000 to be used to keep the Bernalillo County Sheriff’s helicopter in the air. My fellow Commissioners were then went on to approve another $500,000  that would be contingent upon a plan to “cost share” with the city and the federal government. Now while that may sound like a reasonable approach, it ignores a few very important realities not the least of which is that the county owns the most capable aircraft flying in Bernalillo County.

Right now, the Sheriff’s department will provide air support for roughly 10 hours a week. That’s all that the current budget of $1.3 million will allow. Unfortunately, there are certain basic costs associated with owning and being able to fly the two helicopters owned by the county. If you reduce the available budget by 38.5%, you’re not reducing flight time by 40%, you’re reducing it by over 50% and those 10 hours of availability per week shrink to less than 5.

“Back in 2007, then-Sheriff Darren White said the city and county were looking at combining air units because “to have two choppers up at the same time doesn’t make any sense.” Five years later, does having three?”  – ABQ Journal (Subscription)

That’s a very good question and the answer isn’t as straightforward as I would like. The City of Albuquerque can and does demonstrate a regular need for air support in the efforts to protect its citizens. The County can also demonstrate a need for air support for both law enforcement, and additionally for firefighting and search and rescue. Could the city with their equipment provide both services to residents in Albuquerque and the rest of the county? Probably not.

Both city and county officials will tell you that the APD helicopter is not designed for a mile high city such as Albuquerque which makes it difficult to operate during the day in summer, and nearly impossible to send to pluck a victim off the face of a 10,000 foot mountain. The bottom line is that the county owns and operates the two best birds for the missions required in the city and the county.

Combining the city’s capabilities with county’s is definitely a good idea and both APD and BCSO are coordinating flight hours. But the only way to save any money by combining the two air wings is to sell one of the helicopters. Which one would you sell?

“So it comes to this. If the county needs two choppers for legitimate law enforcement purposes, the Democratic majority on the commission should agree to fund them straight up and at an appropriate level. Not with questionable seizure cash. If not, they should get rid of one of them and justify the action to the public.” – ABQ Journal (Subscription)

Absolutely right. The Commission didn’t bat an eye when they were asked to provide $1.2 million for a pretrial services plan that said it would release sex offenders (read it here), why would they hesitate when asked to fully fund a program that makes the public safer?