HOLDING THE LINE
We need a plan — not a deal, insists Legislature’s longtime fiscal guru
Originally published July 1, 2018.
You don’t win popularity contests by being the proverbial adult in the room who says we can’t afford the new pony because we need to pay our bills and put a little money in the bank.
But that’s the reputation, along with being the Legislature’s leading expert on finance, that Sen. John Arthur Smith of Deming has earned in nearly 30 years in the New Mexico Senate.
His fans praise Smith, a Democrat, real estate appraiser and chairman of the powerful Senate Finance Committee, as a fiscal realist who correctly predicted and tried to plan for the economic crash when oil and gas prices plummeted running up to the crushing recession that started in December 2007.
To others — then-Gov. Bill Richardson dubbed him “Dr. No” — Smith has been a thorn in their spending plans over the years, including recent high-profile efforts to tap the state’s permanent funds to pay for a bevy of early childhood programs.
Smith takes exception to the notion that he’s not a supporter of early childhood efforts.
“My wife taught grades 1 to 3, and I was a sponsor of full-day kindergarten. We’ve increased spending on early childhood from $165 million to $305 million in the last five years despite those being tough times, and we were pouring extra money in.”
But he’s firm in his position that the permanent fund should be protected from additional diversions.
“In discussions with people who are not advocates, you can have a civil conversation about that endowment fund, and that’s what it is — not a rainy day fund — and how it’s delivering money to us right now, and, quite frankly, two years ago was delivering more money directly than oil and gas. They don’t realize it’s working for us right now.”
And as for conversations with the advocates?
“They want the money.”
Family politics
Unassuming, friendly and soft-spoken, Smith says he always had the political bug.
“My folks would talk politics around the dinner table. My aunt listened to Walter Winchell, a Republican, and my grandfather was a strong Democrat who took me to the train station when Harry Truman was on a whistle stop in Albuquerque.”
Smith was elected to the state Senate in 1989 and has been there since. He lost a bid against Steve Pearce for Congress in 2001.
Why did he run for the state Senate?
“I came back to my hometown with a degree and some experience and started looking at the banking community in Deming, where I was an appraiser. All three major lending institutions had a common board of directors, and I said, ‘You know, that’s not fair. If you’re going to get rejected for a loan, you shouldn’t be rejected at the country club.’ So I was determined to break that up.”
He won after incumbent Sen. Ike Smalley decided not to seek re-election and supported Smith.
“As soon as I was elected, the bank board members took emeritus status, so I accomplished what I wanted to do before I was ever sworn in. My mother never lived to see me serve, but she had asked what would happen if I got beat.
“I said, ‘No problem, Mom, I’ll just move.’”
New Mexico roots
Smith grew up in Deming. “My grandparents went there in 1916 with the railroad. When I was running for election, people asked how I ended up in Deming, and I used to say that’s where the car broke down.
“My kinfolks had a dairy, and my dad was superintendent for a road contractor, so we traveled the state. In fact, my first memories as a kid are from Los Alamos, where I got upset at the security guards
because they wouldn’t check my credentials. I couldn’t have been more than 3.
“But Deming was always home.”
Smith says he “wasn’t a bad basketball player” and recalls playing against a kid from Silver City who went on to his own political career: Jeff Bingaman.
After graduating from Deming High School in 1960, Smith wound up at the University of New Mexico majoring in biology.
Looking back, he says he would have switched to something else, “but I was married and had a kid and was afraid to change my major because it would take longer to get out. I was going to school and working full time for the old Southern Union Gas out on Atrisco Road — two swing shifts, two night shifts and one day shift a week.”
After graduating from UNM in 1966, he went to work for H.J. Heinz, calling on retail stores before moving into management in Dallas.
“My family was happy there and remind me to this day that I gave up a good job to move back to Deming. But I wanted to have control of where I lived.”
Smith opened an auto parts store with a partner: “I had never put a set of points in a car in my life, but I was anxious to get back, and my wife was a teacher. But it’s tough to support two families with those smalltown businesses,” he said. He had an uncle in the appraisal business, and he had taken some courses at UNM, so he switched careers.
Smith has worked as an appraiser since, doing residential and commercial in southwestern New Mexico.
Institutional racism?
Smith was stung by the public charge earlier this year from the lobbyist for the state’s Catholic bishops, who said “institutional racism” was a factor for opponents of dipping into the permanent fund.
“I really didn’t respond to that at the time,” he said. “But I take real exception. I grew up on the border, and both my daughters-in-law are Hispanic. I can’t correct any injustice that’s happened in the past, but I want to move forward with a plan to make things better.
“I was just taken aback by that attitude and reinforcement by the bishop.”
He added that his wife is a devout Catholic.
“I’m not Catholic, but I’ve always gone to Catholic Church since we’ve been married — going on 57 years — because I thought it was important that my kids had a father who would attend church with them.”
Smith says Bishop Ricardo Ramirez from Las Cruces called him one day on the Senate floor and “gave me a list of people who supported hitting the permanent fund.”
“He asked what I thought of the list, and I said they are an impressive group, but they aren’t responsible financially.”
“My wife went through the roof and said, ‘You didn’t tell the bishop that.’ I said, ‘I sure did.’”
Smith said one of the people on the bishop’s list was Gary King, a fellow Democrat who served as attorney general and campaigned unsuccessfully for governor.
“His dad — the late former Gov. Bruce King — would have been appalled,” Smith said. “Because my last conversation with Bruce was him saying to protect that permanent fund.”
Smith said that on another occasion the bishops came to see him in Santa Fe.
“I was happy to speak to them, but I will challenge them as well. They don’t have their diocese finances in order, either. I explained to them that I see the permanent fund as a reliable revenue stream.”
Senate DNA
The New Mexico Senate is relatively collegial at a time when much of the country is mired in partisan warfare.
“I think the Senate has been a very pleasant place to be for the last 15 years. We know each other, and we know when family members are sick. I get ridiculed sometimes by the extreme end of my caucus, but I make a conscientious effort on Senate Finance to end up with a bipartisan product we can all live with,” he said.
“You just have to appreciate the different viewpoints and the districts they come from, but quite frankly, I’ve got as many ‘R’ friends as I have ‘D’ friends.”
Although Smith says a citizen Legislature doesn’t have time to be hyperpartisan, he thinks it’s time for New Mexico to move to a professional, paid Legislature. The conflicts of interest are just too much, in his view.
“If you don’t get good people, you’re going to have bad government, whether it’s paid or citizen. But we have attorneys, people who have contracts with the state, day care providers getting work from CYFD. I get upset with educators and say, ‘Why do you hire a lobbyist when both the chairs in House and Senate Education are school administrators who were getting paid?’
“I go back to my little coffee shop in Deming, and somebody will say, ‘I love that citizen Legislature’ and I say, ‘Well, how much conflict of interest do you want to pay for?’”
Credibility builder
Smith often answers a question by telling a story, which is how he responded when asked how he came to be viewed as the Senate’s budget guru.
The setting was Santa Fe in 2006.
“I was sitting in my office, and a guy walked in here with Levi’s and a T-shirt. I’m leaving his name out, but he said, ‘You don’t know me, and I don’t know you. But I was born in this state, and I’m going to die in this state — and I can live anywhere in this world I want to. But I want to tell you what I see about oil and gas.’”
And what Smith’s visitor saw was that oil and natural gas prices would crater, throwing the state into a fiscal crisis.
“I called (Democratic Rep.) Jerry Sandel up in Farmington and told him this is what so-andso just told me. Jerry said, ‘If he told you that, you’d better take it to the bank.’
“So I went upstairs to Gov. Richardson and told him what I had, and Richardson implied he had better connections with oil and gas and didn’t see this happening.”
Meanwhile, Smith had also seen some projections on a drop in housing starts.
“I went back to Richardson and said, ‘We’ve got a tsunami coming.’”
Richardson didn’t buy it, “But it all turned out pretty much that way. It’s not that I know that much, but I’ve had pretty darned good luck listening to people.”
Smith was right; Richardson and most everyone else was wrong. New Mexico was hit hard.
Renewed debate
The early childhood/ permanent fund debate will be front and center again when the Legislature meets next year.
In addition to other arguments, Smith says the state should seriously consider whether it can effectively spend more than it is spending now.
“We need capacity,” he said, regarding institutions of higher education turning out more teachers for the early childhood years.
He knows he will again have a political target on his back.
“I get battered and bruised, but I’m willing to do that. I’m concerned about the kids now — and about the kids in the future. If we throw money at it and it fails, we have not been fair to our young people and their parents.”
At the end of the day, Smith says, “We don’t need a deal. We need a sustainable plan that produces results.
“I worry about how we pay our bills in the future. God knows, I have a lot of human flaws, and one of them is I look too far down the road.
“But there are some who don’t even see the intersection they just drove through.”