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A Project of The Annenberg Public Policy Center

A ‘Scandal’ in New Mexico?

In New Mexico’s governor’s race, Republican Susana Martinez accuses Democratic Lt. Gov. Diane Denish of giving a $500 million "special tax deal" to a developer who contributed to her campaign and hired her husband as a lobbyist. But Martinez, a district attorney, uses circumstantial evidence to make her case in an ad that falsely accuses Denish of "hiding a scandal."

The evidence cited by the Martinez campaign fails to prove that Denish misused her office to help the developer get a tax break or that the tax break was connected to her husband’s lobbying job or her campaign contributions.

The ad, which began airing Sept. 10, centers on tax-increment financing legislation to help Forest City Covington finance a sprawling 13,000-acre mixed-use development project known as Mesa Del Sol in Albuquerque. According to an informational memo available on the city’s website, the Tax Increment Development Act signed by Gov. Bill Richardson allowed "future gross receipts tax and property tax revenues" within the development district to finance the sale of public bonds that "are then allocated to the project developer to pay the infrastructure costs of the new development." The tax diversion for Mesa Del Sol was estimated at about $500 million, the memo says. Denish’s husband Herb Denish worked for Forest City as a paid lobbyist, and the developer made campaign contributions to Denish and Richardson, both of whom publicly supported the project.

The ad accuses Denish of "hiding a scandal." It says the developer gave $320,000 in campaign contributions to "Richardson and Denish" and that "Mrs. Denish’s administration gave developer special tax deal worth $500 million."

Let’s first look at the campaign contributions. The Martinez campaign’s own accounting of the contributions shows that the overwhelming majority — $290,000 —  went to Richardson’s gubernatorial reelection committee in 2006, his presidential campaign in 2008 and his two political action committees. According to the Martinez campaign, Mesa del Sol gave $30,500 to Denish’s campaign between 2008 and 2010. (Although Richardson and Denish ran on a joint ticket, the two candidates kept separate campaign accounts as evidenced by their campaign disclosures.)

And while it is true that the administration supported the tax-increment financing legislation that provided "tax breaks" for Forest City Covington, the ad suggests without evidence that Denish misused her office to get the tax deal done. The Martinez campaign says the Richardson-Denish administration supported the project and cites a New York Times article as proof that the administration pushed to get it done. But the story — which centered on a federal investigation of Richardson’s campaign contributions — says Richardson pushed for the legislation. It doesn’t mention Denish, and at no point does it connect her with getting the tax breaks for Forest City Covington:

New York Times, Jan 10, 2009: The Legislature, with strong urging from the governor, also changed state law to let the developer divert tax receipts to underwrite bonds that would be used to pay for infrastructure on the site. In April 2007, Mr. Richardson signed off on legislation authorizing the developer to issue up to $500 million in bonds.

As lieutenant governor, Denish sits on the New Mexico Board of Finance, which approves such projects before they move to the legislature. She has said that she did not participate in any discussions or cast any votes where the Forest City Covington project was concerned. But Denish did attend at least one board meeting, on Oct. 17, 2006, when developers presented an informational demonstration on the project. The Martinez campaign cites Denish’s attendance at the meeting as evidence that she did not in fact recuse herself from discussion, but minutes of the meeting provided to FactCheck.org by the Martinez campaign don’t show Denish making any comments. She did, however, make public comments in support of the project, including calling Mesa del Sol "a model for the country."

The ad continues: "But it gets worse. Turns out, developer had Denish’s husband on the payroll. Mr. Denish was developer’s paid lobbyist." That’s true. But the Martinez campaign provides no evidence that Denish was hiding that fact, or that her husband’s job had anything to do with the administration’s support of the tax legislation. Denish reported on her annual financial disclosure forms in 2004, 2005, 2006 and 2007, that her husband was a lobbyist for Forest City Covington and various other clients in Albuquerque. According to the forms, he lobbied the state Department of Transportation, not the governor’s office.

The Martinez campaign is jumping to conclusions when it implies that Denish supported the project because of her husband’s work. It’s true that she supported the project, and it’s true that her husband openly worked as a lobbyist, but the campaign has not provided enough evidence to link the two. Regardless, the Martinez campaign is continuing its assault, releasing a new ad Sept. 21 called "Caught" that claims Denish has been "caught in a scandal." For now, it is a scandal of the Martinez campaign’s making. 

— by Joshua Goldman and Melissa Siegel