February 22, 2017

Industry comes out in force, committee kills energy surtax for early childhood ed funding

Laura Paskus

Sen. Michael Padilla in his office, standing with memorabilia of Sister Bladina Segale, who founded schools and hospitals in New Mexico in the 19th century.

On Tuesday a bill to fund early childhood education programs with two new taxes on energy and electricity producers failed to make it out of committee.

During the Senate Conservation Committee meeting, Sen. Michael Padilla, D-Albuquerque, sought support for a bill that would create an early childhood education fund paid for by a one-hundredth percent oil and gas energy surtax and a one cent per kilowatt hour tax on electricity produced in New Mexico.

The two revenue sources would generate more than $320 million annually, according to the fiscal impact report for Senate Bill 288.

Once the meeting was opened for public comments, not one audience member spoke in support of the bill. But more than a dozen lobbyists and representatives of the oil and gas industry and utilities like PNM, El Paso Electric, Xcel Energy and Tri-State Generation and Transmission opposed it.

Some, like Bernard Treat with Xcel Energy said the one cent per kilowatt hour tax would curtail energy production in New Mexico and even hurt renewable energy plans. A representative from PNM, who pointed out the utility donates $3.5 million to causes each year through its foundation, said that such a tax would likely have to be passed on to its customers. The New Mexico Rural Electric Cooperative opposed the bill as well. Its representative said the bill would make electricity generators in New Mexico less competitive. He pointed out that the co-ops serve the “most rural and poor parts of the state” and said that customers “can’t afford any more.”

Michael Miller of the Permian Basin Petroleum Association said while the group supports education, “industry is trying to recover and this would be an obstacle to this recovery.”

He added that there are 331 wells in the Permian basin, but only 47 of those are in New Mexico, saying it was indicative of the restrictions companies already face doing business in the state.

Even the New Mexico Children, Youth and Families Department opposed the bill.

“Funding for early childhood education is far from stagnant,” said CYFD’s Steve Hendrix. He added that putting more money into the system would “lead to waste and abuse of public dollars” in the state. The increased money, Hendrix said, would also detract from the agency’s ongoing work.

He said the department supports incremental, responsible work.

If the proposed fund were created, he said, the state could be pressured to “just get money out the door” and that some communities might not be “ready to receive services as fast as the money comes.”

Following public comment, committee member Sen. Peter Wirth, D-Santa Fe, suggested that the tax be cut to a half-cent, in the spirit of compromise. Padilla agreed to what’s called a “friendly amendment” to the bill.

But Cisco McSorley, D-Albuquerque, fired back. “What’s the point of compromise?” he asked, looking to the audience. “Is there even one person willing to support it? We’re here negotiating against ourselves.”

McSorley doubled down on the state employee in the audience.

“We couldn’t even get CYFD to stand up,” he said. “This is no way to run a railroad, never mind the state of New Mexico.”

Republican Sens. William Payne, of Albuquerque, and Pat Woods, of Broadview, spoke against the bill.

Woods wondered what costs would be paid onto consumers and said the bill seemed like it would be “killing renewables.” He also cast doubt on Padilla’s assertion that the first 36 months of a child’s life are a crucial time for ensuring later student success.

He said that he had heard that “most kids catch up in seventh grade,” but added, “I’m not an education expert. I’m just throwing that into the mix.”

Payne said that when it came to funding early childhood education, “I don’t think we know what the heck we’re doing on any of this,” and said he didn’t support creating a fund without knowing how the money would be spent.

Sen. Bill Soules, D-Las Cruces, responded toward the end of the discussion on the bill.

“Everybody talks about how they support education, but when it comes time to a real proposal, [they say], ‘don’t make us pay for it,’ ” the educator said, alluding to the bill’s opponents who prefaced their statements by saying they support early childhood education. “We have a roomful of people who say education is great, don’t make us do it.”

Sen. Ron Griggs, R-Alamogordo, didn’t support the bill, but he commended Padilla.

“There’s a movie, from 1969, called ‘Butch Cassidy and the Sundance Kid,’ and there’s a line in that movie, ‘You just keep thinking, Butch. That’s what you’re good at,’” Griggs said. “Senator Padilla, you’re good at thinking. And I applaud you for continuing to search for things.”

In the committee, a vote to pass the bill with no recommendation failed on a 5-3 vote, with all Republicans voting against the motion and Sens. Richard Martinez, D-Española, and Joseph Cervantes, D-Las Cruces, voting against passing the bill.

Turning around NM

Roughly 27,000 four-year-old children live in New Mexico, according to analysis from the Legislative Education Study Committee. Of those, 73 percent are considered “low-income.”

That committee report notes that in Fiscal Year 2017, early childhood services across the state received $259.9 million. The Legislative Finance Committee, according to the report, estimates the state needs another $14.2 million to fully serve all low-income four year olds in half-day prekindergarten programs or $20.6 million to fund full-day pre-K programs. The analysis also says that early childhood education funding has grown by more than 80 percent in New Mexico since 2012.

The report points to a Pew Charitable Trusts study that says high-quality pre-K increases a child’s later success in school and life. Children who attend high-quality early learning programs are less likely to be held back a grade or to require special education services and are more likely to graduate from high school and achieve higher-earning jobs, according to the Pew study. They’re also less likely to rely on welfare or be incarcerated later in life.

As Griggs alluded to, this wasn’t Padilla’s first attempt to boost education funding. He’s also worked on legislation to ask voters to approve using a small percentage of the state’s land grant permanent fund for early childhood. Analysis, Padilla said, puts the annual need at an additional $277 million each year.

Padilla is also currently authoring a bill to create an early childhood education department.

“I go to my colleagues quite frequently and say, ‘We have to do this and here are the reasons why,” he told NM Political Report. “And the responses are, ‘I love early childhood education, I hear you, but you need to find another way to fund it.”

That’s why this year, he said that he proposed the two taxes on energy.

“Whenever other states, cities, even countries, like Italy, have done this, they have seen tremendous returns on their investments,” he said. He cited a study from a Nobel-winning economist at the University of Chicago showing that high-quality early childhood programs deliver an annual return of 13 percent per child on upfront costs.

In other words, the study showed spending money on early childhood programs yields better outcomes later in life, including better physical and behavioral health and higher income.

“We have to do whatever we can do to fully turn around the ship of New Mexico, to turn around the economy,” Padilla said. “Because we’re a smaller state, we should focus on creating a world-class workforce, and the way we do that is by fully funding early childhood education.”

Soules said during an interview with NM Political Report that for years, legislators have been trying to find different funding solutions.

“I appreciate the other week, [Sen.] Mary Kay Papen, talking about using the state trust lands. It had some flaws, but I applaud her for trying to find another mechanism,” he said. “Here’s another mechanism, that would essentially spread out the funding to every consumer in the state.”

All New Mexicans consume energy, he said, and more affluent people tend to consume the most. “It’s a very progressive way of funding it, and yet, as soon as we propose another funding mechanism all of the high-paid lobbyists for the energy industry come out of the woodwork and start opposing it—and never put out a plan for how they would go about doing it,” Soules said.

A former high school teacher, Soules said it reminds him of asking a question in class, and watching all the students turn away, not wanting to answer.

“It can be very frustrating. Everybody talks about how important education is, how important early childhood education is, but when it comes down to actually finding a mechanism to fund it, for improving it, for getting more access to children, the support starts dropping off quickly as personal interests, corporate interests, and greed start taking over,” he said. “We’ve had national-level economists talk about how the investments pay off immediately, yet when it comes down to actually putting down votes, everybody looks the other way.”