Oct. 4--A report prepared by the state's Legislative Finance Committee and presented to the Revenue Stabilization and Tax Policy Committee on June 2, 2005, should put to rest any arguments suggesting that state officials couldn't have possibly predicted the financial mess they now find themselves in.

"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.

The report predicted that the "Structural imbalance could reach $419 million by FY09." That proved to be Kreskin-like in its accuracy. The deficit plugged by lawmakers at the start of this past legislative session was some $450 million.

"If we keep on spending on the path we're on, and if oil and gas prices come down, something has got to change," David Abbey, director of the Legislative Finance Committee, told lawmakers in 2005.

Every 10-cent change in gas prices is worth $13 million to the state, Abbey explained at the time. That was great for New Mexico when oil was steadily climbing to its peak of more than $140 a barrel in July, 2008. But prices for both oil and natural gas have fallen steadily since then, taking state revenues down with them.

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.

"There are group of

pessimists in New Mexico who are pessimistic about New Mexico's economy," Richardson said in June 2005. "Well, I have some good news about New Mexico's economy that's going to contradict many of those doomsayers."

That good news was that, with natural gas and oil money rolling in, state revenues for that year were $200 million more than had been earlier projected.

"They're wrong," Richardson said of the LFC economists. "They've been wrong every year. Look at this growth. Look at the success of our economy. Their underlying numbers have been proven wrong."

Flash forward to today. The state is facing another budget deficit. Senate Finance Committee Chairman John Arthur Smith, who is one of 12 legislators negotiating with Richardson's staff ahead of an expected special session (others are Lucky Varella, Steve Neville, Kiki Saavedra, Rick Miera, Donald Bratton, Sheryl Williams Stapleton, Jimmie Hall, Carlos Cisneros, John Sapien, Stuart Ingle and Sue Wilson Beffort) said they now believe the deficit will grow to somewhere in the $650 million to $700 million range in the FY 2010 budget.

School funding has been reported as the main sticking point holding up an agreement, with Richardson wanting no cuts to education, and Senate President pro tem Tim Jennings warning districts that cuts could be as much as 10 percent. While education is certainly an important issue, the differences run deeper that that.

Richardson, who by state law will not be eligible to run for re-election in 2010, has proposed a number of temporary fixes -- diverting short-term bond proceeds, canceling capital outlay projects, tapping into federal stimulus money and dipping into reserves. That would minimize the short-term pain but leave the structural problems for his successor to deal with.

Legislators, many of whom plan to be around long after Richardson is gone, are looking for a more permanent solution.

Something to consider when arguing about the wisdom of term limits.

Walter Rubel has been a newsman for more than 25 years and is managing editor of the Sun-News. He can be reached at wrubel@lcsun-news.com.

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