New Mexico State of the State Address 2002

Following is the full test of Gov. Gary Johnson's annual State of the State address, delivered in Santa Fe on January 15, 2002. Mr. Speaker, Mr. President, Honorable Justices of the Supreme Court, members of the forty-fifth legislature, distinguished guests, my fellow New Mexicans. This will be a year like no other in recent history. On September 11th of last year everything changed for all of us. As a result, one cannot really speak of the state of our state without taking into consideration the state of our nation. We have lost loved ones, but we are coping. We have been injured, but we are healing. We have seen destruction, but we are rebuilding. We have been challenged, but we are meeting that challenge. We have suffered economic loss, but we are recovering.

So, as we enter this year of 2002, we must be mindful of our new world. Near the head of the list is the increased need for maintaining our national and statewide security. This need will remain at a heightened level for years to come and it may take money that was not needed in the past. Also, because of lower energy prices, gas and oil revenue is down so the state will receive fewer dollars from one of its most important industries. In addition, tourism, another important industry, is down as a direct result of the "9/11" tragedy. Businesses are not expanding as they were a year ago. Caution has become the watchword and lay-offs have become commonplace. Consumers are thinking more carefully before spending money on big-ticket items. As always, we in government need to be responsive to the changing needs of our citizens.

Fortunately, we have gotten a lot of important things done over the last seven years. We in government the Legislature, the courts, and the executive have worked hard and worked together to improve the quality of life here in New Mexico. I'd like to take a quick look back down the road we've just traveled and highlight the progress we have made.

We are finishing up the construction of 500 miles of four-lane highways, as well as moving toward the completion of the "Big I." These have been huge and important projects because of our ever-increasing need for economic growth. They have opened up many New Mexico communities to new business development that would not come their way without an improved infrastructure. The financing for the billion dollars we borrowed was at a rate of 4.69%. Inflation costs for highways is running at a rate of 4.5%. Arguably, these improvements are made without finance costs. This means that we don't have to wait twenty years; we can use these roads today. Economic development can start now instead of twenty years from now.

We have also built new prisons and, in doing so, reduced the cost of housing a prisoner. In addition, the Duran Consent Decree was brought to an end and the juvenile justice system has been greatly improved. Our private and public prisons, according to a report by the Independent Board of Inquiry, are operating well. They are a success and should be viewed as such. It is also a fact that our prisons are full.

I can also report to you that your state government is smaller and better. We have reduced the number of state employees by 1.25% since I took office while at the same time putting in systems that better serve our citizens. Prior to my administration, the state employee head count grew at an annual rate of 2.8%. If that trend had continued, the employee count would now be approximately 25,000 instead of the current 20,000. Let's credit state employees for a great job. It is obvious they are doing more work with fewer people. In addition to being smaller, the Government Accountability Act I signed is making your government better.

Significant progress has been made in the area of educational reform. Testing and accountability measures are in place at every school all across New Mexico. Schools are being ranked annually. Every child in every grade at every school are tested every year. Incentives now reward schools for success. Sanctions and corrective action plans help failing schools. There are more choices in education today than there were seven years ago. Today there are 20 charter schools on-line with the availability for 80 more. In addition, we have "put our money where our mouth is" in terms of education spending. Classrooms and school facilities are being built, renovated and repaired. $608 million statewide has been spent on brick and mortar for schools during my term in office. Since 1995, annual operational spending has increased by $598 million and teacher pay has increased by 28%, an average of $8,000. This school year we are spending $1,806,177,700. I repeat, $1,806,177,700.

Our state has remained focused on providing services to those in need. And we're doing it in a more efficient, effective and compassionate manner. Welfare reform is working in New Mexico. One third fewer New Mexicans are on welfare since I took office. Medicaid spending to provide healthcare to the poor has increased by 100% over the past seven years and we have added approximately 127,000 citizens onto Medicaid since 1995. Under my administration we are spending a total of $1.75 billion to provide health care to 343,000 needy New Mexicans.

Public safety has remained a priority of my administration. Today, there are 569 New Mexico State Police men and women, an increase of 170 officers since 1995. That's a 40% increase with more to be added this year.

We have dealt with economic development issues from an innovative standpoint. With respect to an industry with limitless potential in New Mexico, film, we have passed valuable legislation to allow permanent fund money to be invested in New Mexico companies and films made in New Mexico. Long term, this legislation will have a positive impact on our state, but this legislation needs amending and will be before the legislature this session.

We have taken huge strides in our government-to-government relationships with the state's Native American governments. A notable result of those efforts is the resolution of the Indian gaming dispute through recently signed and approved compacts. These compacts lay to rest the significant contention between the State of New Mexico and its various Tribes and Pueblos since the passage of the Indian Gaming Regulatory Act in 1988. All of the time, effort and attention that went into this issue by the Legislature, the courts and the Governor's office over the past 13 years can now be redirected toward other areas that can improve our state. For example, we have recently signed a memorandum of understanding to try and resolve our water issues with the Navajo Nation. One hundred years of dispute could potentially come to resolution.

We have taken New Mexico's water issues seriously. Funding for the State Engineer's Office has increased by 43% since 1995. Tom Turney now has a budget of almost $15 million and a staff of over 180. In addition, during the last seven years, the State has greatly increased the adjudication of water rights achieving levels far in excess of those adjudicated since statehood. We are resolving federal water issues, developing water resources and streamlining the water permit process. A water trust board is now in place, and I hope Eagle Nest Lake will be purchased this year. We have taken the right steps with regard to water quality and quantity, providing increased certainty for future economic development where uncertainty existed before.

Fiscally, your government is on sound, secure footing. Reserves and bond ratings are at all-time highs. Government accounting and accountability practices have been greatly improved. And while annual budget growth has been limited, new spending priorities have been established. Here's a seven-year "state-of-the-state budget" summary of those new priorities:
  • Medicaid has had a 100% increase in funding;
  • Public Safety, a 65% increase in funding;
  • Corrections, a 78% increase in funding;
  • Judiciary, a 68% increase in funding;
  • Our public schools, a 49% increase in funding; and,
  • Higher Education has had a 37% increase in funding.
    With respect to higher education, I want to note the budgets of our colleges and universities have also benefited from the enormous success of the lottery scholarship and from significant increases in student tuitions. Finally, having made all of this progress and more, my administration has also held the line on taxes. In the last seven years there has been no increase in taxes. I repeat, no new taxes. I will always remember when I signed the repeal of the six-cent gas tax in 1995 and I thank the Legislature for that.

    Now, let's take a look at the year ahead. Clearly, we need an income tax cut to stimulate the economy in New Mexico. Clearly, we have needed an income tax cut in New Mexico. An income tax cut will help New Mexico families and businesses. Is this an easy sell and will it happen this session? Probably not. Should it happen? Absolutely. We have had seven years of surplus and no meaningful income tax reduction. We are faced with a flat revenue year and an income tax reduction is more important than ever. I can't count how many business leaders I have met from other parts of the country who have asked me why New Mexico hasn't boomed like our neighboring states. When I respond by telling them our top income tax rate is 8.2%, they immediately understand why New Mexico will never experience the comparable economic growth of the region. I will support a modest $30 million dollar income tax reduction. While it is not currently in my budget, I am asking the Legislature to make an income tax reduction the most important element of an economic stimulus package. I will work closely with the legislative leadership to see if this can happen.

    We also need to reduce the rate of increase in Medicaid spending and we need to do that now - this session. My budget includes a $10 million increase in Medicaid. Our plan is to provide more New Mexico citizens with the health care they need by lowering the benefits to a few. Cover more by lowering a few. Throughout my term as governor, I have always heard that, "we can afford to expand Medicaid. If in the future we can't afford it, we will cut back!" We can't afford the increased costs and therefore we must reduce them now. Don't forget that the future will compound this problem because Medicaid is an entitlement and the services will cost 10% more next year than this year.

    We need to hold the budgetary line. We are looking at an $8 million increase in revenue. This is not a time to expand government programs. Last legislative session, I vetoed $147 million in general fund capital outlay and $110 million in recurring spending. In retrospect that was the right thing to do because it allowed us to increase our reserve fund to $450 million. As you know, some people are suggesting we dip into those reserve funds. They argue that our reserve funds are for just such a year as this when revenue is down. I am going to make the following promise to every citizen in New Mexico: I am not going to walk out this office in December 2002 and leave the state the way that I inherited it in January 1995. Today reserves are at $450 million. In 1995, because of under-funding by the Legislature and the Governor prior to my taking office, reserves went down to $22 million. It won't be an issue that makes headlines, but I won't do that to the next governor, the next legislature or the citizens of New Mexico. An adequate reserve today is the key to fiscal stability tomorrow.

    Another area I believe to be most important is that of public education. We must continue with education reform in New Mexico. Just because government revenues are down does not mean education reform should stop. It can be accomplished without any new cost to taxpayers because the investment has already been made. We have made a tremendous investment in our schools over the past seven years. Nearly 600 million new dollars have been added to our public schools, Kindergarten through 12th grade, since I have been in office. The grand total going to education from general funding is $1.8 billion. I believe now is the time to require the educational system in New Mexico to perform and demonstrate that it is giving taxpayers a good return on their investment and demonstrate that our children are learning. The $1.8 billion already in the system can be reallocated and dedicated to the reform package I am proposing during this upcoming legislative session.

    My education reform package focuses on student achievement, parental involvement and system accountability. I am proposing common sense ideas that are both practical and affordable. First, I would like to discuss some of the initiatives that pertain to student achievement. I believe we need to allow public school students who have completed the 10th grade the option of testing out of high school and moving on to college, with parental consent. We need to have the ability to track student progress from year to year. The tracking process would not only monitor student progress, it would also identify the misapplication of educational program money. We also need to provide all students identified below grade level competency with tutoring before and after school.

    In the area of parental involvement, we need to give parents a choice in finding the best education possible to meet the needs of their children. The voucher plan I am proposing this session begins as a pilot program and expands to include all students over time. It includes a five-year phase-in, at which time all New Mexico students, K-12, would receive a voucher to attend the school of their choice. The first-year pilot program would include students whose families are at 100% of poverty and who apply to participate in a lottery for one of the 2,900 vouchers that will be available. The value of the voucher in this plan is approximately $3,000. The total cost of the pilot would be $8.7 million and it is included in my Executive Budget recommendation. This pilot is targeted in Albuquerque. After the pilot program is successfully tested in Albuquerque over a four-year period, all students statewide would be eligible to attend the school of their choice.

    We have provided alternatives to the current system in the form of charter schools. However, I believe we need to amend the Charter School Act to encourage more charter schools by shortening the time required to apply for and receive a charter. I believe we will see more charter schools.

    In the category of system accountability, I am proposing the consolidation of smaller school districts in New Mexico and the separation of larger districts. The State Board of Education would be responsible for facilitating this process. In addition, I am proposing legislation that would require the use of annual criterion-reference testing in the areas of math and reading for all students, grades three through eight. If adopted, these initiatives would result in significant improvements in the areas of student achievement, parental involvement and system accountability.

    Another legislative initiative creates a Secretary of Education through a Constitutional amendment. The secretary would have a direct line to the governor's office and the current state Board of Education would serve as an advisory council to the Secretary of Education.

    The final legislative initiative is the repeal of the Little Davis Bacon Act. This legislation would allow for more schools to be built by providing the school district with the option of hiring non-union construction workers rather than being required to hire union workers, as is now the case.

    If we can get these things done for the children of New Mexico, we will have gone a long way to improving everything about our state. Better schools mean our young people will be equipped to take their place in our rapidly changing world. Better schools mean more businesses will locate here. Better schools mean juvenile crime will go down because young people with better options make better choices. We are investing in our schools. Our schools are improving. Let's not waste this opportunity. Let's seize it and improve education in New Mexico now.

    And there's one other area in which I believe we can both improve public health and public safety while saving money. There are five bills pertaining to drug policy reform that will be before this Legislature. They are as follows:
    • Medical Cannabis;
    • Civil Asset Forfeiture;
    • Treatment Instead of Incarceration (remember, our prisons are already full);
    • Habitual Offender Sentencing Reform (this would give judges discretion for non-violent drug offenders; again, our prisons are already full); and
    • Assessment of Civil Penalties for less than one ounce of marijuana.

      If we will pass these five bills, focus on treatment for those who need it and provide better, honest education regarding drugs, I guarantee that in a very small but very real way, we will decrease the death, disease, and crime associated with drug abuse. We will also save money.

      Now, before closing, there's something I'd like to pass on to the next administration the one voters will elect next November. What I'm going to tell you now is not a secret. All of my cabinet secretaries, all of my staff, and thousands of people around New Mexico know that there has been an underlying philosophy behind this administration. I put it in place in the first months of my administration, I live by it everyday and I have stressed it repeatedly though the years. I call this philosophy: "The Seven Principles of Good Government." And when I leave office in December, I am going to leave a copy on top of my desk for the next administration. Because this is probably the last time I will get to speak in this way to all New Mexicans I want to challenge the next governor to keep these principles of good government in place. They are:
      • Become reality-driven. Don't kid yourself or others. Find out what's what and base your decisions and actions on that.
      • Always be honest and tell the truth. It is extremely difficult to do any real damage to people who are willing to tell the truth regardless of the consequences.
      • Always do what's right and fair. Remember, the more you actually accomplish, the louder the critics become. Learn to ignore them. Maintain your integrity and continue to do what's right.
      • Determine your goal and develop a plan to reach that goal. Then act don't procrastinate.
      • Make sure every one who ought to know what you're doing does know what you're doing-communicate.
      • Don't hesitate to deliver bad news. Acknowledge mistakes immediately. There may still be time to salvage things or to make corrections. Take Henry Kissinger's advice: "Anything that will be revealed eventually should be revealed immediately."
      • Be willing to do whatever it takes to get the job done. If your job doesn't excite you enough to follow this principle, resign and get a job you love enough to do what it takes.

        That's what we've tried to be all about. Sometimes we've failed, but most of the time we've done pretty well trying to live by these principles. In my heart I believe they have the power to change government, business, or your own personal life for the better. As governors finish up their last year there's always talk about what their legacy is going to be. For me, more than anything, the legacy I'd like to leave to New Mexico is that I took on the issues that needed attention regardless of the political consequences.

        Finally, a few important thank-yous. To my staff and to my cabinet, thank you. To my wife Dee, to my parents and family, thank you. And to my fellow New Mexicans, thank you for your attention today. To all legislators, thank you. Thank all of you for your efforts to forever make New Mexico a better place to live. May God bless you personally and may he bless all of New Mexico and the entire nation as we work together to keep America free.
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