Management failure led to budget crisis

Administration has shown poor leadership as problem built up and in reacting to it

To win the job of governor of New Mexico it takes getting the most votes.

To be an effective governor of New Mexico it takes a good deal more than votes: It takes a compelling vision for the state’s future shared by the people, a strategy to realize that vision, a set of programs to activate the strategy and a strong and capable managerial focus to deliver real results from the programs.

Of all of these, by far the least appreciated — and the most critically important — is the last one. Ideology may win votes; only managerial skill can create the results that make people’s lives better.

You can see the evidence for the vital importance of sound management in the current budget crisis. Estimates say the budget deficit for last year could be $150 million; the hole in the budget for this year could be as much as $500 million.

Without good management those numbers will cut the legs out from our future.

It’s easy and convenient to blame plummeting oil and gas prices for the state’s budget disaster. The truth is, this budget mess is a direct result of terrible management and willful blindness. It is a self-inflicted wound that does damage to us all.

Here’s how bad management brought us to this crisis.

First, the state’s economic development strategy has been a dismal failure. Relying on the outmoded notion of using tax breaks to bribe large out-of-state corporations to come to New Mexico has been an expensive mistake. But that’s a failure of vision, strategy and program. The managerial sin is not looking the facts in the eye and changing course. Good managers don’t cling to their failures. They see them for what they are and adapt with speed and agility.

The second big managerial failure came last year at the legislative session, where the administration adopted a budget based on phony forecasts — and did it knowingly. Some of New Mexico’s most knowledgeable fiscal advisors spoke out loud and clear, sounding the alarm that the assumptions underlying the budget were flat wrong. But the administration, using “Titanic management techniques,” put on rose-colored glasses and sailed straight ahead, hoping things would somehow work out. “Hoping for better numbers” isn’t good management — especially not where the state budget is concerned.

The third managerial failure is the painfully slow response of the administration to the deepening budget crisis. It’s a fundamental principle of crisis management: The longer you wait to intervene, the worse the crisis will get. If you don’t know a crisis is brewing, you’re guilty of ignorance; if you fail to see it once it arrives, you’re guilty of negligence; and if you fail to act once you see it, you’re guilty of incompetence.

The fourth managerial sin of the administration is to announce that, in solving the budget crisis, any tax increase is off the table. Imagine your house is on fire. The fire chief gets there — late — and tells you, “Sorry, using water is off the table.” New Mexico’s house is on fire. Anything that can help put out this fiscal fire should be on the table.

The fifth classic managerial blunder was the administration’s announcement last week of a 5 percent acrossthe-board budget cut. This is the kind of mistake only rookie managers make. Experienced leaders know that acrossthe-board cuts are an admission of managerial failure. Real leaders know that not all departments are equal. They know what their priorities are and they protect those priorities, even in the toughest times. By treating them all the same, across-the-board cuts punish the best performers and reward the worst. What looks and sounds fair to the weak manager is a managerial mistake that experienced leaders never commit.

Good managers know there will be events beyond their control. They also know the job of a leader is to prepare for the unexpected, to adapt quickly to changing conditions, to look the facts in the eye, to face reality, and to bring people together when times are tough to build a united effort in a common cause.

We can tell ourselves we’re in trouble because of what oil and gas prices did to our state budget.

The truth is we’re in trouble because of consistently bad management from the top of the state.

That’s actually good news — because we can fix it with sound management practices. Without good management we’ll have more crises like this one. With good management we can set the stage for a better future for all New Mexicans.