To: Senator Pete Dominici and (former) Governor Garrey Carruthers

Gentlemen:
Recently I read in the newspaper that you two decided to join Governor Bill Richardson's group attempting to pass Constitutional Amendment 2 in the September 23rd Special Election.

I have also read how Governor Bill Richardson is planning to raise one or two million dollars to do this. Any governor willing to spend so much money and effort to pass a constitutional amendment raises a few questions: 1) Who would give him this much money? 2) What would be expected in return? 3) Why would he spend so much time working to see that it passed?

Constitutional Amendment 2 says, "A joint resolution proposing to amend the Constitution of New Mexico to provide for a limited additional distribution from the Permanent Fund to provide more money for public schools to implement and maintain educational reforms and for other permanent fund recipients."

The Permanent School Fund is derived from lands granted or confirmed to the state by an Act of Congress, June 20, 1910. Our constitution was adopted on January 21, 1911. These monies are the proceeds of sales or leases of land or mineral rights in sections 2, 16, 32 and 36 in each township of state land. All earnings including interest, dividends and capital gains from investments make up the Permanent School Fund which now totals $6.9 billion. Four point seven percent (4.7%) of the 5-year average of these funds go into the state budget for the schools.

Constitutional Amendment 2, passed with little opposition in the legislature with very strong support from the public employees unions and Governor Bill, has many strange twists and turns but with disturbing results:

Constitutional Amendment 2 says that we will increase the hit on the Permanent School Fund from 4.7% to 5.8% beginning (no date is set) for only the first eight years then drops to 5.5% for four years, then down to 5%. This means Bill's scheme gives the school administrators, the maintenance staff and possibly teachers the biggest raises for the 8 years that Bill has announced he will serve as New Mexico's Governor. Then the next hit on the Permanent School Fund is only 5.5% for four years, then dropping to 5% after that so all the governors who follow won't look as good as Bill.

If the hit on the fund makes the fund drop below $5.8 billion, then any payments cease. This allows a $1.1 billion hit or 16% of the fund. We should not be willing to risk 16% of the Permanent School Fund just for Bill's political future (aspirations) in Washington. Gentlemen, I have decided to oppose the amendment because I believe it will be a disaster for our state.

This letter is not to ask each of you to change your mind about helping Governor Richardson (that would be nice if you did) but I am asking if the two of you will make sure that Bill and his high-dollar Political Action Committee tell the truth to New Mexico citizens. I'm also asking you two to encourage the media and the do-gooder groups to tell both sides of the issue.

Senator and Governor, I think if you demanded the truth from everyone it would be a real service to our state and help our citizens make good decisions by having all the facts. Listed below are some ideas that should be brought out:

1) Bill and his million-dollar PAC should stop calling the Permanent School Fund a "Rainy Day Fund." In the New Mexico Constitution and in their own amendment that they are trying to pass, it is called a "Permanent School Fund."

2) Remind the media that when Governor Johnson left office, we were one of only four states considered solvent. (Governor Johnson gets blamed for too many things now that were not his fault). If we are in a financial mess (rainy day) it is Governor Bill's doing. He demanded and received everything he wanted from the last legislature including: $800,000 per year for raises and additions to his personal staff (including $64,000 for a personal chef) and $200,000 per year so New Mexico could lobby Congress for more federal funds for the state. This is a total of one million dollars per year over the previous administration in just his department alone. Keep in mind that all of the additional positions and salary increases will in themselves increase annually due to inflation and salary raises.

3) The public and the media should be reminded that big trust funds set-up by the richest people in our country (Ford Foundation, Carnegie Foundation, Rockefeller Foundation, etc.) were at first required by federal law to payout 6% of the net worth per year. But after a few years, they found that 6% was depleting the funds too fast so Congress changed the percentage to 5% which is still in effect today. Remember these funds have some of the best financial minds in the country running them -- not some New Mexico political appointee who gave money to the Governor's political campaign. And remember that appointees can be changed at the whim of the governor, or when the governor's term ends.

4) The public should be reminded that the New Mexico Permanent School Fund was meant to grow. Then if there is a drop in the extractive industries production (oil, gas, copper, etc.) for our state to tax, we will continue to receive income from the Permanent School Fund to help our schools and other needs. Right now the Permanent School Fund pays out 4.7% to the General Fund and accounts for 20% to 25% of our state General Fund budget.

5) Remind the public that most colleges have endowment funds to help their schools grow, pay faculty and award scholarships. According to the National Association of College and University Business Offices their payout is kept at 4.5 to 5% so these funds will grow and will cover inflation.

6) This amendment's so-called small increase of 4.7 to 5.8% is almost a 25% increase and will be a disaster to our Permanent School Fund. California is also a public domain state and once had a system like ours but made a huge mistake. Their fund was not protected by their constitution. California state politicians kept finding emergencies so their fund could be raided. California's Permanent Fund is now gone. The free-spending politicians raided all of it and California, unlike New Mexico, is a very rich state.

7) The Permanent School Fund has had money deposited in it for over 90 years. The first deposit into the Fund by the Territorial Government was $150,202.91 in 1910. Even during the Great Depression no money was spent, but income still went into the Fund. With the large amount of money Governor Bill is raising, I think he will have TV ads running about how wonderful it will be to spend the Permanent School Fund (that will be referred to as the "Rainy Day Fund"). Remember some of this money was paid in by people who had no TVs, maybe no indoor plumbing, lights or even a VCR so that we, and our grandchildren could pay less taxes today. I do not think it is time for us to "steal from the past" and to "steal from our future" by doing what Governor Bill wants to do with the Permanent School Fund.

8) Question: Why are we having an expensive statewide special election on only two constitutional amendments on September 23rd? From my experience, I'll sum it up in 3 words TIMING, TIMING, TIMING.

A. Governor Bill and the unions are hoping for a small turnout in September so that they will win because all of the union members turn out to vote.

B. Remember we are also having a special session of the legislature in October or November to work on taxes and other items specified by Governor Bill. I think that Governor Bill is scheming to spend an extra $75 million dollars out of the Permanent School Fund right then. The special session will be a feeding frenzy for the porkers. Nothing will stop them! Money that came out of the General Fund last year that was designated for the schools will go somewhere else and then that money will be replaced by taking funds from the Permanent School Fund. Not everyone will understand, but the groups who get the extra money will all love Governor Bill. The Permanent School Fund that is for future children will have $75 million dollars taken from it every year for the next 8 years. There will be no way to prevent this because the amendment says it can only be stopped with a 60% vote of each house of the legislature. The way the present Democrats and some Republicans voted in the last session, I cannot see them ever voting against Boss Bill. So on Boss Bill's journey to Washington his road will be a four-lane freeway paved with money from New Mexico's Permanent School Fund.

Using the fund by the politicians is a classic example of a "slippery slope" that everyone talks about. The legislature and Governor Bill in the future will find emergencies to spend using the Permanent School Fund. (Santa Fe politicians have always found "emergencies" to spend money on so that they can be important and this will never change).

You should remind the citizens of New Mexico that the Permanent School Fund now pays around 25% of our state budget and if it was gone, our taxes would be 25% higher to pay for the same government services we now receive.

All property owners, including owners of apartments, business people, ranchers, farmers, miners, oil and gas producers that cannot move their income property will get higher taxes if the Permanent Fund is hurt or destroyed. Some businesses that can move out of the state could leave. In addition, all people using state land will probably see their lease payments increased.

Two business groups, the Albuquerque Chamber of Commerce and the Association of Commerce and Industry have already endorsed Bill's Raid on the Permanent School Fund. I hope that they will go back and poll their members about this endorsement after all of the facts get talked about in the media. It would only be ethical to listen to their members. The National Federation of Independent Business People (NFIB) always polls their members when they take a stand like this. These other two business groups should follow their lead.

Sixty-four years ago, my old Swedish grandfather would always say, "Don't eat your seed corn." It was good advice then, it's great advice today.

Sincerely,

George D. Buffett

P.S. People have asked me what can be done to stop Bill Richardson? I say to them, if enough voters understand what Bill's raid on the Permanent School Fund means and then go out to vote on September 23rd, Boss Bill and his public employee unions could be stopped. Have this open letter copied. Give copies to as many people as you can, who care for our state, and encourage them to do the same. We might not have the millions of dollars that Bill and his unions have, but our citizens should not be conned into "stealing from the past" as well as "stealing from the future.