Budget plan may sink Verde Fund
$50M from water reserves not on table
Ayear ago, when the extent of the city’s Water Division surplus surfaced during the budget process, Santa Fe Forward, a nonprofit group that advocates for progressive social policies, began floating the idea of investing a portion of the $95 million in water reserves to fight poverty and climate change.
The group went door to door to rally grassroots support and, including online signatures, got more than 2,200 people to sign a petition in support of using $50 million of the water fund’s cash reserves to invest
in “the Verde Fund,” with the interest earned on the endowment used to provide “a pathway from poverty to prosperity for Santa Fe’s children and families and an environmentally sustainable future for all of us.”
That was seemingly all washed away Wednesday when Mayor Javier Gonzales announced a proposal for a new budget-fixing framework to close a $15 million budget deficit in the upcoming fiscal year. The mayor backed off his plan to take the $50 million from the water money for the Verde Fund.
But Santa Fe Forward is not deterred.
“We think that what this does is clear the path forward for the Verde Fund,” Carol Oppenheimer, co-founder and chairwoman of Santa Fe Forward, said in a phone interview Thursday morning. “We’re grateful to the mayor for working to find a viable long-term solution to solving the city’s budget issues while still being committed to finding other revenue sources. Even though there are budget concerns, it should not derail the concerns we have with the issues this community faces with poverty and climate change, and the interrelation between the two.”
Asked what the other revenue sources might be, Oppenheimer said, “That you’re going to have to discuss with the mayor. ... We just had the one proposal we made with the water surplus.”
But Oppenheimer said her group has been assured that the mayor is committed to finding financing for the Verde Fund. Santa Fe Forward released a statement Thursday morning saying it expects hearings on the Verde Fund in the next month and a vote by the end of April.
In response to a Journal inquiry, the mayor released his own statement Thursday saying he remains committed to the Verde Fund. “It’s a big idea to address our community’s biggest challenges. But I also think it’s important to be a mayor who listens to the concerns of the community and it was clear over time that, while Santa Fe overwhelmingly supports the mission of the Verde Fund, they want to see a different funding mechanism,” Gonzales said. “So we’re going to carefully examine our options, work with staff to test their viability and come back with a more formal proposal when budget hearings begin in a few weeks.”
Santa Fe Forward is closely tied to the mayor. Oppenheimer and her husband, Morty Simon, served as co-chairs of Gonzales’ successful mayoral campaign in 2014.
Under the Verde Fund plan, interest earned on investing the $50 million through the State Investment Council was expected to be between $1.5 million and $2 million annually. On Wednesday, the mayor said, “The point of the Verde Fund was not to do something with the excess cash that was available in the water fund; the point was to put money where our rhetoric has been.”
One option, Gonzales said, is to expand the Water Division’s mission to promote water security. That could include working to expand the Santa Fe watershed or creating an “urban watershed” with cisterns and rain bowls to mitigate the effects of climate change. He also said city revenue already goes to support youth and human services programs, and perhaps a greater share could be dedicated to fighting poverty.
Two other New Mexico local governments, Las Cruces and Los Alamos County, already invest through the SIC. Las Cruces reports a rate of return of between 6.5 percent and 7.5 percent, or approximately $165,000 per year, on what was a $14.4 million investment eight years ago. The city hasn’t pulled any money out as yet, instead reinvesting dividends.
Los Alamos estimates an approximately 5.2 percent annualized rate of return since its fund was established in 2000. The proceeds from the $30 million or so invested are earmarked for capital projects, a pooled investment portfolio and a cemetery.
Whether investing through the SIC remains an option for Santa Fe is unclear. “The idea to use the State Investment Council to invest came up last summer as an alternative path once we learned that the money sitting there wasn’t generating any income,” said Oppenheimer.
“The mechanism is far less important to us,” she said. “The real focus has been to invest in fighting poverty and climate change. Our point is we have to do something that is worthy of Santa Fe, which is taking the high road. We did it with the living wage. We have to give people hope that we aren’t just doing the basic work of the city, but funding something in the long term to fight poverty and climate change. We feel as a community we can do both.”