Photo courtesy wikipedia.org

By Robert Nott, Santa Fe New Mexican | August 3, 2020

A public bank could be a vitally important tool in saving New Mexico’s economy.

 

A leading state economist told lawmakers Monday that New Mexico and the nation are in “a crisis like no other experience in our lifetime.”

“It’s bleak … a debacle, if you will,” said Christopher Erickson, a professor and interim head of New Mexico State University’s College of Business.

The villain? COVID-19.

Experts from various sectors of the state’s economy painted a bleak portrait of how the viral illness has affected New Mexico during a daylong virtual hearing before the legislative Economic and Rural Development Committee.

Their testimony once again highlighted the difficulty of battling a public health enemy that is wreaking havoc in ways that go beyond how many residents have tested positive or how many have died.

Kathy Komoll, CEO of the New Mexico Hospitality Association, said it will take an estimated four to five years for those businesses to recover.

And Carri Phillis, an Albuquerque bar and restaurant owner, said the only way the state Legislature can save the dining industry is through “some sort of bailout. … If we must remain closed, it’s time for the state to step up and pay us to be closed.”

Worse yet: Both Erickson and Janie Chermak, a professor of economics at the University of New Mexico, said no economist can predict when the crisis will come to an end.

Any financial expert claiming to know what will happen next “is not telling you the truth,” Erickson said.

The numbers are becoming all too familiar to those following COVID-19’s path: Well over 97,000 New Mexico residents are receiving unemployment benefits, with a total of nearly 261,000 new claims filed since March 15; nearly 30 companies in the state have declared bankruptcy; some 40 percent of the state’s 3,500 restaurants are temporarily closed and 3 percent are permanently closed.

Consumer spending has dropped by 12 percent from this time last year, said Alicia Keyes, the state’s Cabinet secretary of economic development.

Keyes said New Mexico is nonetheless poised to draw in new businesses and economic resources because people want to relocate to a more rural setting.

“Companies want to move from Los Angeles, New York, San Francisco to get a better quality of life,” she said. With good planning and the right incentives, the state can draw them here, Keyes added.

Federal financial initiatives, like the Paycheck Protection Program, have poured billions of aid into the state to help businesses meet regular expenses, she said. But that program is slated to end this month, and a recent Goldman Sachs report said 84 percent of businesses relying on that help predicted their funds would run out by the end of July.

As the state continues to grapple with not-always-popular measures like banning mass gatherings and requiring anyone coming to New Mexico from out of state to self-quarantine, the hospitality, tourism and restaurant industries are getting hammered, experts told lawmakers on the committee.

“The nature of the crisis is such that initially the service sector will be the most impacted — retail, entertainment, hospitality, travel, tourism,” Erickson said. “Meaning relatively low-skilled workers are losing their jobs, workers who do not have widespread job opportunities. … They have skills that are not easily transferable.

“If we are not careful, these workers will end up not having jobs when the recession is over,” he said.

Lawmakers and others offered potential solutions Monday, though many were drawn along broad strokes.

They talked about finding new state revenue sources and ways to fund more small-business loans, and expanding broadband capacity in the state. Other suggestions centered on boosting the film industry when it reopens, altering liquor license laws to allow restaurants to sell alcoholic beverages to go and building up the alternative energy sector.

“We are highly dependent on the oil and gas industry, so diversification away to take us out of the highs and lows of that very cyclical industry is important,” Chermak said.

Keyes said lawmakers can help by speaking with their constituents.

“Talk to us,” she said. “Tell us what’s going on. Tell us what you need.”

Rep. Antonio “Moe” Maestas, D-Albuquerque, chairman of the committee, said it will meet again at the end of the month and in October to help lawmakers prepare for the 2021 legislative session, which begins in mid-January.

The purpose of the hearings, he said, is to have experts from different fields “give us their view on what they see so we as lawmakers can come up with public policy solutions to deal with it.”

X