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Denish stimulus spending: What’s the big deal?
Heath Haussamen
Scarantino’s report has spread like a virus, but I can’t figure out what all the fuss is about
There’s been much ado this week following a report from a new Web site about the way Lt. Gov. Diane Denish spent federal stimulus funds she was given in 2003 by Gov. Bill Richardson.
I’ve been investigating the situation for two days and, frankly, I can’t figure out what all the fuss is about.
First the context: Jim Scarantino, on the site New Mexico Watchdog (which is a project of the libertarian Rio Grande Foundation), published an article on Wednesday about Denish’s spending of money appropriated to New Mexico under the Jobs and Growth Tax Relief Reconciliation Act of 2003.
From the article:
“Lt. Governor Diane Denish used $225,000 in federal funds to pay for a driver to shuttle her to meetings and press events, a contractor to take Christmas pictures and write Christmas cards, a lawyer to make hotel reservations, opinion polling and public relations services.”
The article made no allegations of wrongdoing, but it did raise a lot of questions. There was no indication that Scarantino made attempts to answer those questions – which would have been required before such an article would have been published by many journalistic organizations, including my own site.
For example, what did the poll say? Was it related to legitimate government services, or did it have to do with political topics that might have made it an inappropriate way to spend taxpayer money?
The GOP pounces
Unfortunately, there was no way to tell from the report what the poll was about. Republicans seized on the less-than-complete article about the spending by the Democrats’ likely 2010 gubernatorial nominee, and the story grew into a scandal and spread like a virus.
“Today’s news concerning Diane Denish is deeply disturbing and raises serious questions that must be answered,” GOP gubernatorial candidate Susana Martinez said in a news release.
“A full federal audit needs to be done to find out whether Lt. Governor Denish has misused federal tax dollars for personal and campaign purposes,” former U.S. Rep. Heather Wilson wrote in an e-mail to reporters.
“The questionable manner in which Ms. Denish has spent federal taxpayer dollars is not surprising given the spending habits of the Richardson-Denish administration,” state GOP Chairman Harvey Yates Jr. said in a release.
The worst came from Republican Gubernatorial candidate Allen Weh, who put out a news release and held a news conference to announce that he’d asked the U.S. and state attorneys general and the state auditor to look into the situation.
“On the surface, it looks like tax dollars were spent to help her in her campaigning, and that’s why today’s report is so serious,” Weh said in the release. “When I entered this race for governor, I pledged that the first thing I’d do when elected is root out corruption in Santa Fe, but it looks like I’m going to start early.”
Asked at the news conference if he’d read the 2003 act, Weh said he had not. Asked by me what specific questions needed to be looked into, Weh spokesman Christopher Sanchez said, “Clearly, Scarantino’s report raises many questions that need to be looked into.”
I asked Sanchez again what questions needed to be looked into, since he didn’t answer the first time. He had no response. I also asked the state GOP and Martinez what questions needed to be answered and got no response.
Here’s what I know
Disappointingly, in spite of the fact that Weh and others had provided no substance to back up their allegations, many in the media were happy to oblige attempts to turn Scarantino’s report into a scandal.
Two Albuquerque TV stations ran with reports. So did the Albuquerque Journal and Santa Fe New Mexican. As far as I can tell, none did the digging to find out whether there is actually a story to report here in the first place. I guess they judged that Weh holding a news conference was cause in and of itself to cover the situation.
Well, I’ve spent a couple of days digging into this situation. I’ve obtained the documents in question (so did the Journal and New Mexican), along with a bunch of other related documents Scarantino apparently never looked at. I’ve conversed with Wilson about the situation. I’ve obtained a number of statements. Here’s what I know:
The 2003 act appropriated funds to states to be used for two purposes: “essential government services” and to comply with federal mandates. The U.S. Government Accountability Office states on its Web site that the funds were “generally… unrestricted in nature.”
Wilson suggested otherwise. She wrote in an e-mail that federal funds generally have to be used for “a bona fide public purpose.” Pointing to the above-referenced provisions in the act, she said regulations were “probably” promulgated that were more specific about how the money must be spent.
I could find no such regulations. But I did learn that the GAO looked into — for Congress — how the funds were spent in a number of states, including New Mexico. That office wasn’t looking for wrongdoing, but was simply surveying how the cash was spent.
The GAO’s report indicates a lack of restrictions placed on how the money was to be spent.
“Some officials indicated that they dedicated funds for a specific purpose, while others told us that they have used the funds as general revenue,” the report states.
There was even a dispute in New Mexico about whether the governor had to gain legislative approval before spending the money. The GAO report made Congress aware of that.
Basically, a report written by two Legislative Council Service staffers stated that the governor had to gain legislative approval before he could spend at least some of the money. The situation was discussed at a July 2003 meeting of the Legislative Finance Committee. Ultimately, lawmakers, as they’ve done so often in the last few years, decided against challenging the governor’s insistence on spending the money how he pleased.
This statement is included in that LCS report:
“In the instance of the temporary fiscal relief funds, Congress has not made the policy choice of how these temporary funds are to be allocated. It has only required that such funds be utilized for ‘essential government services’, or to cover co-called unfunded federal mandates, so long as the expenditure of these temporary funds are limited to the ‘types of expenditures permitted under the most recently approved budget for the state.’”
So what are “essential government services?” Well, in the minds of the LCS staffers, there are “a host” of them, and the feds placed “no specific requirements” on what they were.
The governor certified in a letter to the feds in 2003 that the money would be spent according to the two requirements from the act. And, with that, he gave some of the money to Denish, who spent much of it on a poll related to children’s issues in New Mexico – one of the primary focuses of Denish’s work as lieutenant governor – and hiring contractors to do public relations and media work and shuttle her around.
Scarantino: ‘I hope my work serves as a resource’
So the bottom line is this: I’ve spent the better part of the last two days digging into this and doing work I personally think Scarantino should have done before publishing his story. And I’ve found that only Wilson, among the Republicans who were quick to complain about Denish’s spending, had any wise words to back up her complaint.
Even then, none of the reporting I’ve done has turned up anything to back up Wilson’s claim – and some of it suggests she’s wrong.
Scarantino, for his part, sounds pleased with how this has turned out.
“Please understand my role as New Mexico Watchdog,” he wrote in an e-mail. “Most of what I will do is dig through voluminous records and report on what’s there, something that too few people have the time or wherewithal to do. I then report on what is in the records.”
“I hope my work serves as a resource to enable professional and citizen journalists to dig deeper, which seems to be the case in this matter,” he wrote.
One final point
There’s one point that still raises my eyebrows: An invoice Scarantino reviewed has one contractor billing Denish’s office for “work on Christmas card.” What that work was isn’t clear, and I couldn’t get an answer out of Denish Chief of Staff Joshua Rosen that satisfied me.
“The invoice (the contractor) submitted made reference to work on a Christmas card. Based on staff recollection, that work had to do with the Holiday Open House,” he wrote in an e-mail. “… This was quite a few years back. Based on staff recollection, that staffer was primarily focused at the time on a 2004 Holiday Open House that the Office of the Lt. Governor held for members of the public, including homeless children from La Comunidad De Los Ninos in Santa Fe, not a personal or political event for the Lt. Governor, herself. The 2004 holiday card was primarily handled and paid for by the Denish campaign, not the state office.”
Rosen also provided an invoice that shows most expenses related to the 2004 Christmas card were paid for by the campaign.
Though I’m not certain at all, I think it’s still possible there was a little mixing here, with a very small amount of public money. But my question, then, is this: If Republicans want to complain about the possibility that a Denish staffer might have been paid with public money for a few hours of work related to a Christmas card, do they also have a problem with the calendar hanging above my desk and paid for by taxpayers that former U.S. Sen. Pete Domenici, R-N.M., mailed me (also with taxpayer money) last year just before he retired?
I’m not saying it’s OK to abuse taxpayer money, even in very small amounts. I’m saying that, if the possibility that Denish spent a small amount of the stimulus money on a Christmas card is the worst we’re looking at here, it’s not even clear that such an expense would be inappropriate.
An investigation by the U.S. attorney general? Come on. There are much more important issues to be discussing.
A prior version of this posting incorrectly attributed the Legislative Council Service report to Legislative Finance Committee staffers.
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From everything I’ve read and seen about Scarantino, he isn’t a partisan punk, as much as one side or the other would relish that. There is WAY to much focus on the Xmas Cards – the driver, the PR person … gimme a break. HAW ilson hit it on the spot. While the scandal is five or six years old … how is it that the legislative leadership let the Governor get away with squirreling the $62 million away without its being appropriated (a constitutional duty of the legislature), and how is it that the Governor certified the expenditure of federal funds was appropriate? Where IS the audit on these unappropriated funds … or at the very least – where is the accounting? File a IPRA request for public records … or is that Scarantino’s next step? Thanks for being there Jim.
Well we got used to an idea that public servant blows $225,000 on limos and photos, in the state where 8% of children grow up in the family with a yearly income of less then $5000.00 a year. After all if it’s less then a million , it’s not even worth talking about. We can always blow a billion or so on some unnecesairy train or a space ship landing zone so the foodstamps can be delivered faster. More then half a kids can’t graduate from High School becouse of illiteracy, but state Hot Shoots blow millions on entertainment. Animal Farm.
Let’s say TnT is correct; Jim Scarantino is nothing but a “mudslinger”.
So what?
Is mudslinging not part and parcel to New Mexico politics?
Further, I am curious if there is even one person who has called Scarantino a mudslinger in a post or a comment, who can also point to a post or a comment they made condemning Marty Chavez for the mud he slung at Richard Berry.
The motivation of the slinger does not play. If they is a glob of mud in your punchbowl you deal with it. It makes no difference who flung it there or why.
Look at each individual glop. It is either true or false on its own merits; completely independent of who threw it or why.
If it is false, point to the falsity and attaching it to the slinger as careless, or deliberately dishonest; a lie.
If is it true, explain, defend, deny, or at the very least, acknowledge it.
For the most part, on Scarantino’s report, I’m thinking so what?
As for the public opinion poll glob, I say money well spent.
As for the Christmas card creation, I’m less certain that that was the very best things our tax dollars might have bought.
After examining all the globs, come to a conclusion based on the facts.
If after examining all of the globs, find another name for Jim Scarantino.
Rather than a “mudslinger” he is right or wrong, honest or dishonest, accurate or inaccurate, whatever or whatever else.
Let’s all work real hard to make sure that our next governor is a woman of character, competence and courage.
Scarantino, for his part, sounds pleased with how this has turned out.
“Please understand my role as New Mexico Watchdog,”
—————
Seems that “New Mexico Mudslinger” would be more appropriate.
Heath, there is a big deal here and the fact that you either don’t see it or it doesn’t bother you concerns me and probably other readers who respect your work.
The 2003 Stimulus bill was principally a tax relief bill for small businesses and families. There was one section that provided funds directly to states for temporary fiscal relief, including $62 million for New Mexico. These funds were to help states facing budget crunches because of the recession and could be used only to provide “essential government services” or “to cover the costs to the State of complying with any Federal intergovernmental mandate”.
The use of the funds was further limited by the requirement that they could only be used for “expenditures permitted under the most recently approved budget for the State.”
As Mr. Scarantino pointed out and the GAO report confirms, unlike other states, New Mexico’s legislature didn’t allocate the funds. They were put in a special account and spent solely at the discretion of the Governor. He gave some of them to the Lt Governor to spend. Under the federal law, the Governor had to certify in writing that the funds were spent for essential government services or to cover the costs of unfunded mandates.
There are a lot of things that would qualify as essential government services — school teachers, road repairs, state police overtime, head start or child protective services. The idea that paying for contract employees to do public relations work for the Lieutenant Governor is an essential government service that must be maintained during a recession is laughable.
Even more troubling is the response of the Lieutenant Governor when confronted by the facts Mr. Scarantino uncovered. She didn’t accept responsibility for the misuse of federal funds, ask for an audit and correct the problem. Quite the reverse. She defends spending money on PR and media work and paying someone to drive her to events as “essential” during a recession.
You are quite right, Heath, that the amount of taxpayer’s money Mrs. Denish used to have someone prepare her campaign Christmas Cards was small. Her defensive response — lashing out at the sunshine rather than fixing what the sunshine revealed — says something important about her leadership. We won’t be able to count on her to clean up the self-dealing and fiscal mismanagement that plagues Santa Fe because she is part of the problem. That is a very big deal.
The response by the Lieutenant Governor reinforces my initial reaction to Mr. Scarantino’s story: we need an audit to find out how these federal economic stimulus funds were used.
Unlike most other states which added funds to general revenues, New Mexico created a $62 million account that can be audited. It was entirely under the control of the Governor and the Lt. Governor. If the Lieutenant Governor thinks her $225,000 for PR, media and polling were “essential” and that using taxpayer funded help to send out her campaign Christmas cards was okay, what else did she and the Governor think was perfectly acceptable?
An audit will find out and the people who earned those tax dollars and turned them over to the government deserve to know.
Heather Wilson
Oh, and Ched – I agree that Jim did not lie in his article on New Mexico Watchdog. There was certainly counter-spin coming from the Denish campaign and the state Democratic Party in response to the GOP spin…
Jim -
It’s late, but I have one thought for now, and I may add more later. I did not, as you claimed, ignore the fact that “most of the $225,000 in federal stimulus money was spent on PR for the Lt. Governor.” Here’s what this article states:
“The governor certified in a letter to the feds in 2003 that the money would be spent according to the two requirements from the act. And, with that, he gave some of the money to Denish, who spent much of it on a poll related to children’s issues in New Mexico – one of the primary focuses of Denish’s work as lieutenant governor – and hiring contractors to do public relations and media work and shuttle her around.”
That clearly says Denish spent much of the money on the poll — about 10 percent, as you pointed out — and hiring contractors to do public relations and media work and shuttle her around.
Here’s my reply to Heath: The time sheets are self-explanatory and indisputable. They are much more valuable than any spin from hired spokespeople, who, as Heath has learned, have shed no additional light. As we reported, stimulus funds, which were to be spent only on essential state services, were spent to drive the Lt. Governor around, pick her up at the airport, pick things up at her house, write speeches for her, write letters to the editor, to take pictures for Christmas cards and to work on Christmas cards. Heath disputes none of that. In all his questioning of Denish’s staff he gained no more insights that what was explicitly written on the invoices approved by the Lt. Governor’s office.
The Journal’s reporters, though, did uncover that the Christmas cards were for the Lt. Governor’s campaign committee, meaning that federal stimulus dollars paid for labor in preparing those cards. Heath got a different story later from Denish’s chief of staff, but didn’t catch the contradiction. I am quite surprised to see you let the chief of staff off with a “it was a long time ago” excuse.
Heath has been quite selective in his review of how the Lt. Governor spent the stimulus money given to her, focusing on a poll on which he says “much” of the money given Denish was spent. If fact, that poll represented less than a tenth of the money given her. He simply ignored the majority of other expenditures. Heath says I didn’t look into what the poll was about, political polling or something else. But in my report I did in fact state the poll was related to the Children’s Cabinet. [In a paragraph close to the end, Heath]. So I would say that, even after looking into published reports for two days, Heath’s critique is far more incomplete than my report, which covered the full range of the expenditures of the $225,000.
Heath’s revelations about the Governor spending the stimulus funds without legislative approval were covered in a report I did more than a month ago. He could have at least acknowledged that. It was linked in the Denish story.
Heath has also ignored the fact that, as the Albuquerque Journal confirmed, most of the $225,000 in federal stimulus money was spent on PR for the Lt. Governor, a fact which in itself is worthy of being known by taxpayers. Is PR an essential government service, something for which stimulus funds should be used? At least the taxpayers have the right to know that’s how their money was spent.
My first report [more to follow] opened the investigation on this. The Journal has discovered, as Heath now admits, that the Lt. Governor used federal stimulus funds on Christmas cards for her campaign committee. [There are two invoices showing this, Heath, not just the one you mentioned]. Is that not also something the public should know? Of course it is.
It’s not my job to make allegations. I seek to report facts, facts which have not been disputed by Heath or Lt. Governor Denish. He may put a different spin on them, but he does not dispute the facts in the report. I think that is what matters most.
Maybe Heath and the Lt. Governor aren’t impressed by how $225,000 of public money gets spent. No big deal, maybe. The Lt. Governor’s chief of staff has attempted to marginalize the value of $225,000. We think the details on how every penny of the taxpayers’ money is spent still matters. And it doesn’t have to illegal to be newsworthy. There is still a need to report on how taxpayer money gets wasted.
We will keep digging into public records, plowing through stacks of paper, and bringing facts to light about how taxpayers’ money is being spent and misspent. And if other journalists take the investigation further from our start, we are pleased. The more the public knows about how their money gets spent, the better.
Heath, my friend, we should hold the Lt. Governor to the same high standards against which you have measured the conduct of lower level public officials in your past reporting. And, as for your closing comment about why anyone would want to involve an Attorney General, please remember, that’s who enforces the law, for everyone, be they a big or little public official.
Thank you for the work you put into this report Heath, it’s top notch. In order to pick our next Governor we need some facts, not a bunch of innuendo and name calling, and you have set a standard for others to follow.
While principles are important, and some have even argued that there is no such thing as an unimportant principle, none of this is a hill worth dying on.
One thing disturbs me; it has to do with Diane Denish calling Jim Scarantino “a liar”.
He wrote that people had “worked” on the Christmas cards, a fact she didn’t deny.
She then furnished proof that she had paid for the “printing and mailing”, and that
that proof proves Scarantino a liar. It did not. It was a red herring at best, and seems
deliberately deceitful.
Or did I miss something?