>>ANNOUNCER: REPORT FROM SANTA FE IS MADE POSSIBLE, IN PART, BY GRANTS FROM THE NATIONAL EDUCATIONAL ASSOCIATION OF NEW MEXICO, AN ORGANIZATION OF PROFESSIONALS WHO BELIEVE THAT INVESTING IN PUBLIC EDUCATION IS AN INVESTMENT IN OUR STATE'S ECONOMIC FUTURE, FROM THE NEW MEXICO MUNICIPAL LEAGUE, A BETTER NEW MEXICO THROUGH BETTER CITIES AND FROM >>LORENE: HELLO, I AM LORENE MILLS AND WELCOME TO REPORT FROM SANTA FE .

OUR GUEST TODAY IS SENATOR JOHN ARTHUR SMITH, DEMOCRAT FROM DEMING, FORMER CHAIR OF THE SENATE FINANCE COMMITTEE FOR YEARS, WELCOME BACK TO THE SHOW, JOHN, SENATOR.

>>JOHN: THANK YOU, LORENE, I CERTAINLY APPRECIATE THE OPPORTUNITY.

>>LORENE: WELL WE HAVE DONE SHOWS FOR YEARS AND YEARS AND IN MANY WAYS YOU HAVE BEEN A VERY TRUSTED "GO TO" PERSON FOR ME BECAUSE I FEEL THAT YOU KNOW SO MUCH ABOUT THE STATE'S FINANCES AND YOU ARE NOT GOING TO BE SERVING STARTING THIS UPCOMING SESSION.

AND I AM HOPING THAT YOU CAN GIVE US THE BENEFIT OF SOME ADVICE YOU HAVE BOTH FOR THE NEW SENATE AS A BODY BUT FOR THE NEW GUARD SORT OF THAT IS GOING TO BE DEALING WITH VERY COMPLICATED FINANCES FOR THE STATE.

WE HAVE RUN INTO ALL THE EXPENSES FOR UNEMPLOYMENT AND ALL OF THE EXPENSES FOR THE PANDEMIC.

WE HAVE DONE A WONDERFUL JOB BUT NOW COMES THE BIG BUDGET-BALANCING ACT AND SO I JUST WANT TO SAY YOU HAVE BEEN TRUSTED AS A STATESMAN REPRESENTING ALL NEW MEXICANS, WHEN YOU WERE CHAIR OF SENATE FINANCE, YOUR DOOR WAS OPEN TO EVERYONE, YOU PLAYED NO FAVORITES, YOU ACTED WITH SUCH INTEGRITY.

THEY DID GIVE YOU A NICKNAME OF "DR. NO" BECAUSE IF THE STATE COULDN'T AFFORD IT AND PEOPLE BROUGHT THEIR REQUESTS TO SENATE FINANCE, YOU SIMPLY SAID NO.

BUT AS YOU KNOW FOR ME, IT IS "DR. KNOW" BECAUSE YOU REALLY KNOW HOW THINGS WORK AND YOU HAVE GOTTEN THROUGH MANY A TIGHT SQUEEZE AND YOU HAVE GUIDED US THROUGH THICK AND THIN AND THROUGH SCARCITY AND SURPLUS.

SO, TELL ME, CAN YOU START BY LOOKING AT THE BODY, THE SENATE BODY, AND WHAT YOU THINK IT WILL BE LIKE AND HOW YOU FEEL ABOUT NOT BEING THERE AFTER 32 YEARS AS A STATESMAN IN THE SENATE, TAKE IT, SENATOR.

>>JOHN: NUMBER ONE, I HAVE A LOT OF FAITH IN THE SYSTEM THAT WILL RIGHT THE SHIP.

I CERTAINLY WAS LABELED AS DR. NO WHEN WE DIDN'T HAVE THE REVENUES.

I DREW THE LINE AND SAID, "NO MORE SPENDING."

SOMEBODY ELSE IS GOING TO HAVE TO STEP TO THE PLATE AND DO THAT.

NOW IT IS GOING TO BE AN ADDITIONAL CHALLENGE FOR THE NEW MEMBERS BECAUSE THE STATE IS GOING TO BE GIFTED THANKS TO OIL AND GAS, QUITE FRANKLY, TO THE STRONG RESERVES THAT HAVE BEEN BUILT.

I THINK YOU ARE GOING TO SEE THE REVENUE RESERVES IN THE RANGE OF TWO BILLION PLUS FROM THAT AND THAT IS ABOUT 30 TO 35 PERCENT AND SO THERE IS GOING TO BE AN ELEMENT OUT THERE SAYING, "WE NEED TO PUT MORE OF THAT INTO REOCCURRING," AND THAT IS A RED FLAG.

YOU BETTER BE REAL CAREFUL HOW MUCH YOU PUT INTO REOCCURRING BECAUSE YOU MAY NOT BE ABLE TO FOLLOW THROUGH WITH THAT IN THE FOLLOWING YEAR.

I CAN SEE AN ELEMENT OUT THERE THAT SAYS, WELL, WE DON'T NEED THOSE KIND OF RESERVES, WE CAN TAKE THEM DOWN TO 10 OR 15 TO WHERE WE WERE BEFORE AND THEN THE REMAINDER 20 TO 25 PERCENT WOULD BE GOING INTO HOPEFULLY ONE TIME SPENDING, BUT I AM FEARFUL THAT IT WILL BE INTO REOCCURRING SPENDING.

AND THERE IS SO MUCH UNCERTAINTY OUT THERE WITH OUR REVENUE STREAM WHETHER IT IS IN THE OIL AND GAS INDUSTRY, WHETHER IT IS IN THE RETAIL GROSS RECEIPTS, THERE IS A HUGE CHALLENGE AND IT IS CERTAINLY AN UNKNOWN COMPONENT OUT THERE WITH TODAY'S ECONOMY.

WE ARE MORE OPTIMISTIC WITH THE SUCCESS OF THE VACCINE AS THAT UNFOLDS, BUT I FOR ONE DON'T BELIEVE WE ARE GOING TO RETURN TO THE WAY IT USED TO BE AND THE RESULT WOULD BE THE LEGISLATIVE BODY IS GOING TO HAVE TO MAKE THOSE ADJUSTMENTS.

>>LORENE: WELL YOU HAVE MENTIONED JUST NOW, YOU HAVE ALWAYS BEEN CONCERNED ABOUT THE LOCAL GOVERNMENT REVENUE STREAM AND NOW BECAUSE OF THE PANDEMIC, RETAIL IS NOT WHAT IT USED TO BE, THE EROSION OF THE BASE, PEOPLE ARE NOT, SO MUCH HAS CHANGED AND RETAIL IS SORT OF ON A GREATLY DIMINISHED CAPACITY.

AND THEN PEOPLE ARE BUYING EVERYTHING ONLINE BUT THAT DOESN'T HELP OUR LOCAL ECONOMY.

SO DO YOU HAVE ANY IDEAS FOR HOW WE CAN MAKE THAT SHIFT BACK SO THE PEOPLE FEEL FREE, BESIDES GOING TO THE GROCERY STORES, TO SUPPORT OUR LOCAL SMALL BUSINESSES AND OUR RESTAURANTS.

>>JOHN: WELL NUMBER ONE, WE HAVEN'T HAD THE RESOURCES OF THE TAX DEPARTMENT TO REALLY QUANTIFY EXACTLY WHERE WE ARE AT AND IN PREPARATION OF TRYING TO REBUILD THE TAX DEPARTMENT THAT HAS BEEN ERODING FOR SEVERAL YEARS.

WE HAVE GOT STEPHANIE OVER THERE AND WE HAVE TRIED TO GET HER ADDITIONAL RESOURCES TO REBUILD THAT DEPARTMENT AND SO I HAVE GREAT FAITH IN THE DEPARTMENT OF TAX AND REVENUE.

I THINK SHE IS GOING TO BE ABLE TO THAT, SHE HAS A NEW STAFF THAT SHE IS BUILDING OR HELPING REBUILD, SHE IS EXTREMELY KNOWLEDGEABLE IN THOSE AREAS, SHE WORKS CLOSELY WITH THE FINANCE PEOPLE AT THE LEGISLATIVE FINANCE COMMITTEE AND AT THE DEPARTMENT OF FINANCE AND SO I AM OPTIMISTIC THAT WE ARE GOING TO BE ABLE TO IMPROVE THAT.

WHEN WE LOOKED AT REVENUES FOR THE STATE OF NEW MEXICO, WE FORGET THAT WE BASICALLY CONTROL AN AWFUL LOT OF THE REVENUES TO LOCAL GOVERNMENT.

YOU HAVE TOUCHED ON A FEW SUCH AS RETAIL, WELL, IN MANY CASES WE HAVE EXEMPTED A LOT OF RETAIL WHICH MEANS WE HAVE CUT OFF REVENUES TO LOCAL GOVERNMENT.

THE TAX DEPARTMENT HAS BEEN GIVEN ADDITIONAL AUTHORITY TO DISPERSE INTERNET SALES MONEY TO LOCAL GOVERNMENTS BUT THAT IS UNFOLDING QUITE FRANKLY.

SO AS A RESULT THE CHALLENGE IS GOING TO BE FOR LOCAL GOVERNMENTS WITH AN EROSION OF RETAIL THAT WILL NOT BE COMING BACK IN A LOT OF AREAS AND WE CAN JUST LOOK AT THE MALLS IN ALBUQUERQUE AND WHAT IS HAPPENING WITH THE BIG BOX STORES.

SO THE CHALLENGE IS OBVIOUSLY OUT THERE, BUT THE LEGISLATURE NEEDS TO KEEP AN EYE ON LOCAL REVENUES.

NOW WHAT WE DID ON THE FOOD TAX, WE PAID LOCAL GOVERNMENTS, WE BEING STATE, PAID LOCAL GOVERNMENTS NOT TO IMPOSE A FOOD TAX.

THE PROBLEM WITH THAT WAS THAT IT WAS UNDER PROJECTED EXACTLY WHAT THE COST WAS GOING TO BE AT THE TIME IT HAPPENED UNDER THE RICHARDSON ADMINISTRATION IT WAS ESTIMATED COST ABOUT $40 MILLION DOLLARS WE THOUGHT WAS GOING TO BE SUSTAINABLE.

THE FACT IS IT LOOKS IT WAS GOING TO GROW TO OVER A BILLION AND A HALF DOLLAR PROBLEM FOR THE STATE OF NEW MEXICO ON THE REVENUE SIDE AND SO WE HAVE HAD TO ROLL BACK ON THE WHOLE HARVEST PORTION WE WERE GIVING TO LOCAL GOVERNMENTS.

NOT BECAUSE WE WANTED TO BE CRUEL AND BRUTAL TO LOCAL GOVERNMENTS BUT THE FACT WAS IT WASN'T SUSTAINABLE.

SO THOSE CHALLENGES ARE STILL OUT THERE AND I'M HOPING THAT THE NEXT LEGISLATURE WILL LOOK AT LONG TERM RATHER THAN SHORT TERM REMEDIES.

IT REALLY BOTHERS ME, WE HAVE AN EXECUTIVE BRANCH AND WE HAVE LEGISLATIVE BRANCH THAT HAVE A TOUGH TIME SEEING BEYOND TWO AND FOUR YEARS ON THAT.

AND WE ARE TALKING LONG TERM AND IF WE DELAY IN STABILIZING OUR REVENUE STREAMS, THEN IT IS GOING TO HAVE TO BE DONE QUICKLY AND WHEN THAT HAPPENS IT THROWS THE STATE INTO CONVULSIONS.

SO I AM HOPING THAT THEY WILL GET STARTED ON THAT AND MOVE GRADUALLY WHILE THE OPPORTUNITY IS STILL THERE.

>>LORENE: SO THERE IS PART OF WHAT WE WOULD CALL THE NEW GUARD THAT SEES A SOLUTION TO THESE PROBLEMS AS A TAX INCREASE AND THAT SOME CERTAIN PEOPLE SHOULD BE PAYING MORE THAN OTHERS.

NOW I REMEMBER YOUR COMPADRE OF MANY YEARS IN THE HOUSE, LUCKY VARELA, AND HE KEPT SAYING ABOUT STATE EXPENDITURES AND TAX INCREASES, IF YOU ARE GOING TO KEEP MILKING THAT COW YOU ARE GOING TO HAVE TO FEED IT.

BUT WHAT ARE SOME OTHER OPTIONS, YOU SAY LOOK AT THE LARGE PLAN AND HOW CAN WE AVOID, THE POPULACE CAN'T TAKE A TAX INCREASE NOW, HOW CAN WE AVOID THAT?

>>JOHN: WELL FORTUNATELY WITH THE STRONG REVENUES THAT WE HAVE RIGHT NOW OR THE RESERVES THAT WE HAVE RIGHT NOW, ANY MOVEMENT IN THAT DIRECTION, NUMBER ONE HAS TO BE LAID OUT LONG TERM AND IT IS TOO LATE FOR IT TO START HAPPENING IN THIS SESSION QUITE FRANKLY.

THE WORKS AND THE GROUNDWORK NEEDED TO BE ROLLED OUT BACK IN MARCH AND APRIL FROM THAT STANDPOINT, SO WE ARE TALKING ABOUT THE SESSION AFTER THIS FROM THAT STANDPOINT.

BUT THE BOTTOM LINE IS YOU KNOW WE HAVE TO HAVE A BALANCED BUDGET UNLIKE THE FEDERAL GOVERNMENT THAT IS RUNNING MASSIVE DEFICITS RIGHT NOW, CERTAINLY AGGRAVATED BY THE VIRUS FROM THAT STANDPOINT BUT THE STATE DOESN'T HAVE THAT FLEXIBILITY.

SO WHATEVER DIRECTION THE STATE WANTS TO GO IT IS GOING TO HAVE TO BE DELIBERATE AND ROLLED OUT IN A RESPONSIBLE FASHION ON THAT AND SO THAT IS A HUGE CHALLENGE BECAUSE NORMALLY WHEN PEOPLE ARE FIRST ELECTED THEY ARE IMPATIENT AND THEY WANT INSTANT GRATIFICATION, SO THAT IS GOING TO BE A CHALLENGE FOR THIS BODY.

>>LORENE: WELL, IN JUNE YOU GAVE A FAREWELL ADDRESS TO THE SENATE AND YOU HAD SOME REALLY INTERESTING ADVICE AND ONE OF THEM WAS, IT WAS ACTUALLY QUITE LOVELY, YOU WANTED THE SENATE TO CONTINUE WORKING AS A FAMILY AND IN FRIENDSHIP.

I KNOW THAT WHEN YOU FIRST CAME TO THE SENATE 33 YEARS AGO, I THINK THERE WERE THREE OF YOU - PETE CAMPOS, SENATOR STU INGLE AND YOU.

YOU SAID IT WAS KIND OF VICIOUS, A KIND OF COMPETITIVE ENVIRONMENT, AND YOU WOULD LIKE IT TO CONTINUE WORKING AS A FAMILY AND IN FRIENDSHIP AND COOPERATION.

YOU ALSO URGED THE NEW AND OLD MEMBERS OF THE BODY TO ACTUALLY LISTEN TO THE WISDOM OF THE COMMITTEES, LIKE THE LEGISLATIVE FINANCE COMMITTEE, AND THE LEGISLATIVE EDUCATION STUDY COMMITTEE, AND FOR NEW MEMBERS TO LISTEN TO THE KNOWLEDGE OF THE NEW MEMBERS, BUT ALSO FOR THE NEW MEMBERS TO REALIZE THE VAST AMOUNT OF EXPERIENCE THAT EXISTS IN THE BODY OF THE SENATE.

>>JOHN: WELL NATURALLY I AM VERY BIASED TOWARD THE LEGISLATIVE FINANCE COMMITTEE BECAUSE THEY WERE THE FINANCIAL GURUS FOR THE STATE OF NEW MEXICO AND DAVID ABBEY OVER THERE HAS HIRED BRIGHT, BRIGHT YOUNG MINDS.

QUITE FRANKLY WHEN YOU LOOK AT THEIR CREDENTIALS IT IS SORT OF EMBARRASSING, WHEN I LOOK AT MY BACKGROUND, WITH WHAT THEY BRING TO THE TABLE AND BUDGET PEOPLE, QUITE FRANKLY, ARE NOT DEMOCRAT AND THEY ARE NOT REPUBLICANS.

BUDGET PEOPLE TELL YOU WHAT THE POLICY, WHAT IS GOOD POLICY AND WHAT IS BAD POLICY AND IT IS GOING TO BE UP TO THE LEGISLATURE TO MAKE THAT DECISION ON HOW THEY WANT TO INSTITUTE THAT.

BUT THE YOUNG PEOPLE ARE EXTREMELY, EXTREMELY COMPETANT IN THERE AND YOU HAVE THAT OVER AT THE LEGISLATIVE EDUCATION STUDY COMMITTEE AND YOU HAVE IT UP AT THE LEGISLATIVE COUNCIL SERVICE.

SO LISTEN TO THOSE YOUNG PEOPLE SUGGESTING TO YOU POSSIBLE ROUTES THAT MIGHT BE VERY PRUDENT AND RESPONSIBLE ON THAT.

AND DON'T GO UP THERE THINKING THAT YOU KNOW IT ALL AND YOU ARE GOING TO BE ABLE TO ACCOMPLISH MOST OF THAT.

NOW THAT IS A DIFFICULT CHALLENGE WHEN MOST PEOPLE COME FROM A COFFEE CLUB IF THEY ARE MALES AND PROBABLY FEMALES, BECAUSE YOU ARE NORMALLY SITTING WITH PEOPLE THAT HAVE ALL THE ANSWERS.

AND SO AS A RESULT I AM SAYING SHIFT GEARS, LISTEN TO THE EXTREMELY TRAINED COMPETENT PEOPLE THAT ARE OUT THERE IN STATE GOVERNMENT.

>>LORENE: I KNOW THAT YOU CHAIRED THE LEGISLATIVE FINANCE COMMITTEE FOR MANY YEARS SOMETIMES ALTERNATING WITH OTHERS, BUT YOU WERE ALWAYS IN A POSITION TO LISTEN TO PEOPLE AND ALSO IN YOUR OFFICE AS A SENATOR, ANY ONE COULD GET TIME WITH YOU AND YOU DIDN'T PLAY FAVORITES.

I JUST WANT TO TAKE A MOMENT FOR OUR RADIO AUDIENCE AND REINTRODUCE WE ARE SPEAKING TODAY WITH SENATOR JOHN ARTHUR SMITH.

HE WAS A DEMOCRAT FROM DEMING, HE IS RETIRED NOW BUT I HAVE ASKED HIM TO COME AND SHARE HIS WISDOM WITH US BECAUSE HE HAS BEEN MY STATE FINANCES GURU FOR MANY, MANY YEARS AND I KNOW HE HAS GOT A LOT TO TELL US.

SENATOR, THERE WERE A WHOLE LOT OF PROJECTS THAT YOU WORKED FOR YEARS AND YEARS ON AND I WOULD LOVE A LITTLE UPDATE AND PREDICTION.

YOU WORKED SO HARD FOR THE RETIREMENT FUND FIXES, WILL WE EVER REFORM OUR TAX STRUCTURE AND MAYBE GET AWAY FROM THE GROSS RECEIPTS TAX AND IS THERE IS A POSSIBILITY THAT WE WILL FINALLY JOIN MOST OF THE OTHER STATES AND NOT TAX SOCIAL SECURITY BENEFITS, ANY OF YOUR LONG TERM PROJECTS THAT YOU WOULD LIKE TO TALK TO US ABOUT.

>>JOHN: WELL, QUITE FRANKLY, THE TAX REFORM HAS ALWAYS BEEN AT THE TOP OF MY LIST.

AND I WAS READING THE OTHER DAY THAT WE NEED TO GET RID OF THE PYRAMIDING PROBLEM THAT WE HAVE AND TO SEND A MESSAGE I CARRIED A BILL THAT WILL ELIMINATE A PYRAMID.

THE PROBLEM WAS THAT IT ELIMINATED ALL THE REVENUES TO LOCAL GOVERNMENT AND I KNEW THAT WHEN I WAS INTRODUCING IT, IT WAS A MESSAGE BILL FROM THAT STANDPOINT, BUT AT LEAST TO GET THAT DISCUSSION TAKING PLACE ON GROSS RECEIPTS AND THAT IS A HUGE CHALLENGE.

I HAVE BEEN READING LATELY WHERE THESE NEW IDEAS ABOUT TAX REFORM AND TAX RELIABILITY, WE HAVE LITERALLY BEEN TALKING ABOUT THAT FOR YEARS, BUT TRYING TO GET THAT INITIATIVE THROUGH IS A HUGE CHALLENGE.

I GO BACK AND TALK ABOUT EXPERIENCE BEING VERY VALUABLE, I HAVE SERVED UNDER SIX GOVERNORS AND THE ONE THAT I DIDN'T WANT TO LISTEN TO THAT I APPRECIATE MORE NOW THAT HE IS NO LONGER THERE, THAT KNEW MORE ABOUT TAXES AND TAX POLICY, WAS PROBABLY GOVERNOR JOHNSON.

GOVERNOR JOHNSON BASICALLY SAID, "HEY, IF YOU ARE GOING TO HAVE TO HAVE A TAX, MAKE CERTAIN IT IS BROAD BASED, AND A VERY, VERY LOW RATE ON THAT."

WELL WHAT HAS THE LEGISLATURE AND OTHER GOVERNORS DONE, THEY HAVEN'T MADE A BROAD BASE, THEY HAVE NARROWED THE BASE AND INCREASED THE RATES.

AND QUITE FRANKLY THAT HAPPENED WHEN WE REPEALED THE FOOD TAX.

NOW WE CAN SET THERE WITH THE HUMAN ASPECT OF IT ON FOOD TAX AND WE CAN ARGUE THAT ALL DAY LONG, I AM TALKING ABOUT A RELIABLE REVENUE STREAM FROM THAT STANDPOINT AND THE VALUE OF WHAT THAT CONTRIBUTES TO LOCAL GOVERNMENT REVENUES.

SO THAT HAS BEEN CERTAINLY NEAR AND DEAR TO ME.

THE OTHER ISSUE THAT HAS BEEN NEAR AND DEAR TO ME WE FORGET THAT WE WERE A CITIZEN LEGISLATURE AND WHAT DOES THAT MEAN, WELL, WE ARE NOT THERE FULL TIME.

AND THANK GOD WE ARE NOT THERE FULL TIME AT THIS STAGE, BUT THAT OBVIOUSLY IS CHANGING.

AND IT IS IMPERATIVE THAT YOU WORK TOGETHER.

YOU KNOW IF I AM GOING TO BRING MY BACKGROUND, MY DEGREE WAS IN BIOLOGY BUT I TOOK A LITTLE PHYSICS OR A LITTLE PHYSICS TOOK A LOT OUT OF ME WHEN I WAS IN COLLEGE, BUT FOR EVERY ACTION THERE IS AN EQUAL AND OPPOSITE REACTION.

AND WHEN THE FAR RIGHT TAKES CONTROL OF THINGS, THEN THE REACTION IS GOING TO BE THE FAR LEFT.

BUT YOU ACCOMPLISH VERY LITTLE UNDER THAT SCENARIO IN A CITIZEN LEGISLATIVE BODY.

IT IS IMPERATIVE THAT YOU WORK TOGETHER AND THIS IS AN AREA WHERE I CERTAINLY APPRECIATE THE STU INGLES OF THE WORLD ALLOWING THAT TO HAPPEN, THE STEVEN NEVILLES THAT WERE ON SENATE FINANCE ALLOWING THAT TO HAPPEN AND THE GAY KERNANS FROM SOUTHEAST NEW MEXICO.

I MADE IT A PERSONAL INITIATIVE OF MINE NOT TO TURN TO THE MINORITY PARTY AND SAY, "HEY, THIS IS WHAT WE ARE GOING TO DO, YOU ARE GOING TO HAVE TO SWALLOW IT."

I ALWAYS BROUGHT THEM IN AND THEIR STAFF IN WHEN IT DEALT WITH BUDGET ISSUES ON HOW ARE WE GOING TO MAKE THIS WORK, BEFORE WE EVER TOOK ANY ACTION.

AND THANKS TO THE SENATOR INGLES OF THE WORLD AND THAT GROUP, THAT THEY WANTED THE SYSTEM TO WORK AND MOST PEOPLE WANTED THE SYSTEM TO WORK OUT THERE, SO HOPEFULLY IF THERE IS ONE THING THAT JOHN ARTHUR MIGHT BE REMEMBERED FOR WAS WORKING COLLECTIVELY TOGETHER AND NOT TRYING TO GET THAT EXTREME REACTION FROM FAR RIGHT OR FAR LEFT.

SO THAT IS GOING TO BE A CHALLENGE IN THE FUTURE AND IF WE GO TOO FAR TO THE LEFT THEN IT IS GOING TO GO TOO FAR TO THE RIGHT AND WE ARE BRINGING IN THE LAW OF PHYSICS AGAIN.

>>LORENE: WELL WE DID, FOR 10 YEARS WE ALWAYS DID TOWARD THE END OF THE SESSION I WOULD HAVE YOU AND SENATOR INGLE ON TOGETHER TO TALK ABOUT THE SOLUTION AND THEN THAT'S USUALLY HOW IT TURNED OUT SO I FEEL I MISS SENATOR INGLE IN OUR CONVERSATION TODAY.

BUT HE IS JUST SUCH A SOLID DEEP THINKER AND I REALLY APPRECIATE ALL OF HIS YEARS OF PUBLIC SERVICE.

I THINK TOGETHER YOU GUYS WERE IN THE SENATE FOR WHAT 66 OR 68 YEARS, YOU HAD YOUR 32 AND HE HAD SO MANY BUT HE IS A DEDICATED PUBLIC SERVANT AND VERY WISE MAN AND GOOD SENATOR.

NOW AS YOU LOOK AT THE BODY, THERE IS GOING TO BE A LOT OF CHANGES, THERE IS A LOT OF TURNOVER AND YOUR ADVICE TO WORK AS A FAMILY AND COOPERATIVELY.

WHAT ARE YOU GOING TO MISS ABOUT BEING IN THE SENATE THIS YEAR AND WHAT WOULD YOUR ADVICE TO THE BODY BE?

>>JOHN: WELL I HAD THE OPPORTUNITY TO SERVE WITH A LOT OF LEGENDS IN THE LEGISLATURE.

SENATOR JOE FIDEL AND AT THE TIME HE SAID IT I THOUGHT IT WAS A NICE REMARK BUT HE SAID, "YOU KNOW, I AM NOT GOING TO MISS THIS SYSTEM."

HE SAID, "I AM GOING TO MISS THE PEOPLE."

AND THE LONGER THAT I AM THERE THE MORE I RESPECT THE WISDOM OF THE JOE FIDELS OF THE WORLD.

AND SO I THINK IT IS IMPERATIVE THAT WE CONTINUE TO KNOW ABOUT EACH OTHER'S FAMILIES.

I THINK IT IS IMPERATIVE THAT WE CONTINUE DIALOGUE AND DEBATE AND DISCUSSION BEHIND THE SCENES.

I DO BELIEVE THAT IT IS IMPORTANT THAT WE WORK COLLECTIVELY TOGETHER, I GO BACK, YOU KNOW, I CAME IN UNDER SENATOR ARAGON AND SENATOR LES HOUSTON AND IF YOU WANT TO TALK ABOUT PEOPLE THAT CAN PLAY HARDBALL, THEY CERTAINLY WERE THERE TO PLAY HARDBALL.

AND I WATCHED THE LEGISLATURE EVOLVE OVER THE YEARS ON THE SENATE SIDE IN PARTICULAR WHERE WE BECAME CLOSER LET'S SAY TRYING TO WORK TOGETHER TO MAKE THE SYSTEM WORK AND I HOPE THAT HAPPENS.

THE GROUNDWORK IS OBVIOUSLY BEEN THERE BUT THE CHALLENGE IS GOING TO BE FOR THE NEW LEADERSHIP ON HOW THEY ARE GOING TO ROLL THAT OUT AND SUSTAIN THAT.

>>LORENE: AND YOU DID COME FROM A POWERHOUSE CORNER OF THE STATE.

YOU HAD SENATOR ALTAMIRANO, YOU HAD IKE SMALLEY, YOU HAD TOMMY FOY FROM OVER IN THE HOUSE.

YOU HAD G. X. MCSHERRY, I CAN'T NAME THEM ALL.

BUT YOU DID COME IN REALLY ON THE SHOULDERS OF GIANTS AND YOU HAVE ALWAYS SERVED YOUR PART OF THE STATE SO WELL.

WE DON'T HAVE MUCH TIME LEFT BUT IF YOU CAN TELL US THE SHORTEST VERSION OF THE STORY ABOUT HOW YOU FIRST RAN, HOW YOU CHOSE TO RUN FOR THE SENAT AND WHAT YOU ACCOMPLISHED BEFORE YOU WERE EVEN SEATED, THE SHORT VERSION.

>>JOHN: THE SHORT VERSION, I AM AN APPRAISER BY TRADE AND IT MEANS THAT I HAVE WORKED FOR A LOT OF DIFFERENT BANKS, I HAVE BEEN AN INDEPENDENT APPRAISER AND HAVE BEEN ALL THOSE YEARS.

BUT WHEN I FIRST RETURNED TO MY HOMETOWN, I NOTICED THAT THE THREE MAJOR LENDING INSTITUTIONS ALL SHARED A BOARD OF DIRECTORS.

WHAT I DIDN'T KNOW IT IS PROHIBITED BY FEDERAL LAW UNLESS YOU WERE GRANDFATHERED IN AND IN THIS CASE AND IN A LOT OF COMMUNITIES THEY WERE GRANDFATHERED IN.

IF YOU ARE REJECTED AT ONE OF THE LENDING INSTITUTIONS, THERE IS A GOOD CHANCE YOU ARE GOING TO BE REJECTED AT THE OTHER LENDING INSTITUTIONS.

AND SO I RAN ON THAT BASIS AND IT IS A TOUGH STORY TO TELL AND MY MOTHER WAS ALWAYS CONCERNED, SHE SAID, "WHAT HAPPENS IF YOU LOSE?"

AND I SAID, "ABSOLUTELY NO PROBLEM, MOM."

I SAID, "I WILL JUST MOVE."

I WOULDN'T HAVE A CHOICE FROM THAT STANDPOINT.

BUT AS IT TURNED OUT IN MY HOMETOWN AND MANY HOMETOWNS, QUITE FRANKLY, THEY MOVED THOSE BOARD OF DIRECTORS TO RETIREMENT STATUS WHERE THEY WEREN'T DRAWING THEIR STIPEND FROM THAT STANDPOINT.

BUT THAT HAPPENED BEFORE I WAS EVER SWORN IN, I HAD BEEN ELECTED.

BUT THEY STARTED MOVING THE BOARD OF DIRECTORS AROUND FROM THAT STANDPOINT AND THE LATE CONGRESSMAN, TOM MORRIS, KNEW EXACTLY WHAT I WAS UP TO FROM THAT STANDPOINT.

HE CAME TO ME, HE WAS LIVING IN TUCUMCARI, AND HE CAME TO ME, WORKING FOR ONE OF THE MAJOR BANKS IN THE STATE, AND HE THANKED ME FOR WHAT I HAD DONE FROM THAT STANDPOINT.

BUT THAT IS A STORY THAT IS UNBEKNOWNST TO MOST PEOPLE AND WHAT IT IN FACT DID, IT LEVELED THE TABLE, THE PLAYING FIELD AND OPPORTUNITY IN THE FINANCIAL INSTITUTIONAL WORLD.

>>LORENE: SO IN OUR FEW MINUTES LEFT AND I WANT TO THANK YOU FOR 32 YEARS OF PUBLIC SERVICE IN THE SENATE AND I KNOW YOU ARE WORKING AS AN APPRAISER AND YOU ARE STILL VERY BUSY, THANK YOU FOR TAKING THE TIME.

WHAT WOULD YOU TELL NEW MEXICANS ABOUT THE FINANCIAL STATE OF OUR STATE OF NEW MEXICO, WHAT DO THEY NEED TO KNOW, YOU ARE LEAVING US IN VERY GOOD SHAPE.

>>JOHN: WE ARE IN GREAT SHAPE AS FAR AS HAVING A STRONG RESERVE, BUT WE STILL HAVE THE PROBLEM THAT WE HAVE ONE INDUSTRY CONTRIBUTES PROBABLY CLOSE EITHER DIRECTLY OR INDIRECTLY 40 PERCENT, 40 CENTS OUT OF EVERY DOLLAR.

YOU GO TO THE STATE OF UTAH, THERE IS NO ONE CONTRIBUTOR THAT EXCEEDS SEVEN PERCENT AND SO THEY ARE VERY VULNERABLE IN THE STATE OF NEW MEXICO TO THE HILLS AND VALLEYS OF THE SUCCESS OF THAT ONE INDUSTRY.

SO YES, FORTUNATELY, WE HAVE STRONG RESERVES, WE HAVE STRONG RESERVES BECAUSE WE COUNTED ON THE VOLATILITY HAPPENING BUT WE NEED TO BE MOVING AWAY FROM THAT SINGLE SOURCE SO TO SPEAK.

SO OBVIOUSLY THE CHALLENGE IS THERE.

THE OTHER THING THAT WE NEED TO LEAD AND I THINK IT IS APPROPRIATE THIS TIME AND SENATOR TIM JENNINGS AND SENATOR MARY KAY PAPAN WERE EXTREMELY STRONG IN THAT POINT, THAT YOU HAD A SEPARATION OF POWERS AND YOU HAD TO RESPECT THE SYSTEM.

I MEAN BOTH WERE SCHOOLED IN THE THOUGHT, BOTH WERE NON-ATTORNEYS FROM A CONSTITUTIONAL STANDPOINT BUT YOU HAD TO PROTECT THE INSTITUTION OF THE LEGISLATURE.

AND SO IN PARTING, I THINK IT IS CRITICAL THAT WE STABILIZE OUR REVENUES BUT ALWAYS RESPECT THE LEGISLATURE AND MAKE CERTAIN THAT YOU DO NO HARM TO THAT BODY.

WE HAVE THE JUDICIARY, WE HAVE THE EXECUTIVE BRANCH AND THE LEGISLATIVE BRANCH.

NOT TRYING TO GARNISH ANY ADDITIONAL SUPPORT FOR THE LEGISLATURE BY ANY MEANS BUT RECOGNIZE THERE HAS TO BE A BALANCE FOR THE SYSTEM TO WORK.

>>LORENE: WELL SAID.

I HEAR YOUR VOICE RINGING IN MY EARS FOR YEARS OF OUR INTERVIEWS ABOUT DIVERSIFYING THE STATE'S INCOME SOURCES, SO WHEN YOU MENTION THAT FOUR CENTS OUT OF EVERY DOLLAR COMES FROM OIL AND GAS, WE DO NEED TO DIVERSIFY AND I AM SURE A LOT OF PEOPLE ARE WORKING ON IT.

I KNOW YOU WON'T MISS DRIVING UP TO SANTA FE FROM DEMING BUT WHAT WILL YOU MISS, THE PEOPLE I AM SURE.

>>JOHN: OH YES.

THE YOUNG STAFF THAT WE HAD AT LEGISLATIVE FINANCE COMMITTEE, THEY CERTAINLY INSPIRED WHAT I BELIEVE WAS BETTER FOR THE STATE OF NEW MEXICO AND I AM NOT TRYING TO DISCOUNT THE LEGISLATIVE EDUCATION STUDY COMMITTEE OR COUNCIL SERVICE BY ANY MEANS.

BUT I JUST NETWORKED WITH THE LEGISLATIVE FINANCE COMMITTEE MORE FREQUENTLY.

BUT THAT IS OBVIOUSLY SOMETHING THAT I WILL MISS BUT I CAN SAY WITH 32 YEARS, I PROBABLY HAD THE SELF-DRIVING CAR ALL THE WAY FROM DEMING TO SANTA FE, NEW MEXICO, LONG BEFORE THEY STARTED ADVERTISING WHAT IT COULD DO AND WHAT IT COULDN'T DO.

I DON'T EVEN WANT TO TRANSLATE HOW MANY MILES THAT I PUT ON GOING TO SANTA FE AND BACK, I WILL NOT MISS THAT TRIP AT ALL, WE ARE LOOKING RIGHT AT 300 MILES ONE DIRECTION.

>>LORENE: RIGHT, RIGHT.

WELL I HOPE YOU COME UP AND VISIT US AND I JUST WANT TO THANK YOU.

OUR GUEST TODAY HAS BEEN SENATOR JOHN ARTHUR SMITH, THE FORMER HEAD OF THE SENATE FINANCE COMMITTEE AND ONE OF MY FINANCIAL "EMINENCE GRISE" SOMEBODY WHO IS A STATESMAN AND WHO I HAVE TRUSTED TO GUIDE THE STATE FINANCES THROUGH THICK AND THIN SO, SENATOR SMITH, THANK YOU FOR TAKING THE TIME TO BE WITH US TODAY.

>>JOHN: THANK YOU FOR THE OPPORTUNITY, LORENE.

>>LORENE: IT'S A PLEASURE.

AND I AM LORENE MILLS AND I WOULD LIKE TO THANK YOU OUR AUDIENCE BEING WITH US TODAY ON THIS VERY SPECIAL EDITION OF REPORT FROM SANTA FE .

>>ANNOUNCER: REPORT FROM SANTA FE IS MADE POSSIBLE, IN PART, BY GRANTS FROM THE NATIONAL EDUCATIONAL ASSOCIATION OF NEW MEXICO, AN ORGANIZATION OF PROFESSIONALS WHO BELIEVE THAT INVESTING IN PUBLIC EDUCATION IS AN INVESTMENT IN OUR STATE'S ECONOMIC FUTURE, FROM THE NEW MEXICO MUNICIPAL LEAGUE, A BETTER NEW MEXICO THROUGH BETTER CITIES AND FROM