KRWG

New Mexicans Push For Infrastructure Spending To Boost Economy

Jan 8, 2018

Rebecca Dow is a on a mission.  She says it’s long past time for New Mexico to move forward.  “Right now, I think we need hope.  I think we need hope for a better future,” she said.  Dow was elected to the New Mexico State Legislature in 2016.  The Republican represents District 38 in the state House, which includes parts of Grant, Hidalgo, and Sierra counties. 

Dow was part of a group of citizens who participated in a recent Solutions Journalism Network focus group in Truth or Consequences, the Sierra County town of about six thousand people known in these parts as T or C.  Like some of her fellow focus group members, Dow is a business owner.  She is the founder and director of AppleTree Educational Center, which provides Pre-K and K-12 private schooling and other services. 

State Representative Rebecca Dow speaking with Fred Martino

Dow contends to help build successful businesses and communities, New Mexico state and local government must focus on the basics.  “I think the role of the government, from my perspective as a Republican, is to provide basic needs, such as law enforcement, public safety, roads, infrastructure, those sorts of capital capacities and basic things,” she said.

The push for infrastructure spending isn’t a partisan issue.  Many Democrats and Republicans have supported infrastructure investments.  But some economists say the state is not doing enough.

New Mexico State University economist Dr. Chris Erickson

Dr. Chris Erickson, a New Mexico State University economics professor, has been at the Las Cruces campus of NMSU for some three decades.  Erickson has been critical of New Mexico’s economic development approach.  Republican Governor Susana Martinez has been a major proponent of business funding through the Local Economic Development Act (LEDA).  The legislature has provided tens of millions of dollars in LEDA funding to attract new businesses and help in-state firms expand. 

“The LEDA funds could be used to develop infrastructure that could be used by existing businesses, could be used by consumers, and could also be used to attract businesses into the community. Fixing the potholes is as important for economic development when you figure the importance of transportation as anything else.  And we're not fixing the potholes; instead, we're giving handouts to private companies, picking winners and losers...it makes my blood boil,” Erickson said.

The approach has been criticized for decades.  In 1986, a report by the Committee for Economic Development said, “Financial subsidies ... are rarely a significant concern in wise business-location decisions and usually amount to little more than a government giveaway and burden on taxpayers, including corporate taxpayers forced to subsidize their competitors.”

Dow completed her first legislative session earlier this year, and agrees that special interests have a major voice in New Mexico politics.  “I think there's a lot of special interests and a lot of the people who have the largest voice or the deepest pocket or the longest relationships in our state do get heard more.  I think that's what I learned as a freshman legislator is that to be able to get to Santa Fe and advocate for your cause definitely makes a difference,” she said.

Home of Spaceport America

Spaceport America in Sierra County, New Mexico

Suspicion about special treatment runs high in T or C.  Sierra County is home to one of New Mexico’s biggest economic development projects.  Spaceport America was launched with a public vote to approve local spaceport taxes about a decade ago.  Local taxpayers have paid a portion of the quarter-billion dollar cost of the facility through gross receipts taxes that were approved by voters in Sierra and Doña Ana counties.  The state general fund also provides money for its operation.

The promise was Richard Branson’s Virgin Galactic would put T or C on the map and launch wealthy tourists into space.  But delay after delay has raised serious questions.  And now, space industry leaders like Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have spaceports of their own in the works in major metropolitan areas near the ocean, locations required for many rockets that cannot be launched at inland spaceports.  Even at launch sites near the ocean, experts say great caution is needed in the event of a problem.

Jessica Murphy of Truth or Consequences, New Mexico, was part of our State of Change focus group

Jessica Murphy has lived in T or C for eight years.  Another member of our focus group, she reflects the view of many here, who are wary of Spaceport America. “I'm really skeptical about the spaceport and I'm also not in favor of some of the issues that come up with the public-private partnership in this way.  It feels like New Mexico, because we've invested...so much...that we should be having a lot more transparency than there is,” she said.

Questions about transparency have only grown in the last year.  When voters approved the spaceport gross receipts tax, it was sold as a way to pay for the construction of the facility.  But the spaceport GRT has provided more money than what was needed to pay off the construction bonds.  Earlier this year, the New Mexico Finance Authority voted to allow the spaceport to continue to use those “excess funds” to operate the facility, at least for one more year. 

Downtown Truth or Consequences, New Mexico

Another member of our focus group says there’s still hope. “We're fortunate that it is in our backyard.  I think just like any new venture, it takes time to develop and build.  But not all states have a spaceport.  And we know that's a new industry that's up and coming, there's more activity going on, especially more private investment,” said Juan Fuentes, T or C city manager.

Fuentes has been city manager in T or C for about seven years.  He says he is hopeful due to recent announcements by spaceport tenant Virgin Galactic that it is making progress in testing a vehicle that will be able to safely transport space tourists.  “We'll be patient.  I mean, that's just part of being resilient, is you want to wait for that opportunity to flourish.  And I think we're seeing that starting to happen going into next year with Virgin Galactic announcing they're bringing in families into the region and we'll see some of them move into town, which is great,” Fuentes said.

It is not easy to find others who are as optimistic as Fuentes.  “I've heard mostly that people feel like it's a boondoggle.  It does seem like a boondoggle to T or C.  But, I mean, we've been here for a long time and heard about the Spaceport for a long time and it's still kind of a nebulous idea, even though there's a building,” Murphy said.

Basic Needs Neglected

In recent years, New Mexico has faced one budget crisis after another.  This has led to program cuts and a failure to provide regular cost of living adjustments for state employees, as well as local government and university employees in departments that depend on state funding.

In this environment of budget austerity, some find continued spending on what are described as economic development projects particularly disturbing.  Critics note these projects displace money that could be used for increases in employee compensation and infrastructure, which provide both immediate and long-term benefits for the state and local economies. 

Spaceport America is just one example of “big ticket” spending in the name of economic development.  New Mexico is also one of the nation’s biggest spenders on the film and television production.  The state provides up to $50 million a year in subsidies to the industry.  The incentive is extraordinary compared to most programs:  in general, if a producer spends one dollar in New Mexico, the state will provide a 25-cent reimbursement in the form of a tax credit.

Dr. Erickson says the state should instead be focused on long-term investments.  “These films are very footloose...meaning that they can come and they can go.  They can set up in Georgia.  They can set up in New Mexico.  They don't really care.  And they come in and they represent a business project that lasts a few months,” said Erickson.

Education Is Economic Development

Erickson says the state urgently needs to invest in education.  “K-12 education is critical for economic development.  We have a number of problems in the state with K-12 education.  One of them is we are one of the few states in the country where the local school board has almost no taxing authority,” said Erickson.

The state’s continued failure to increase education spending in line with inflation has resulted in a widening gulf between New Mexico teacher pay compared with other districts.  For example, a starting teacher in Las Cruces Public Schools makes $34,000 a year.  Just down Interstate 10 in El Paso, Texas, starting teachers make $48,300 in the El Paso Independent School District

“When you pay people well, you're able to attract high quality people to the profession and you're able to retain high quality people in the profession.  And we are not paying our teachers well enough to be able to do that,” said Erickson.

Erickson says the inability to attract more high quality educators makes it difficult for the state to improve K-12 and higher education.  That, in turn, affects the state’s workforce.  “So why is our productivity dropping in the state?  And I think it's because...I'm pretty sure it's because...we're not able to attract high-end employers who have high-productivity jobs, because we don't have the workforce for it,” said Erickson.

Jared Bartoo of Bartoo Sand and Gravel in Truth or Consequences, New Mexico, was part of our State of Change focus group

Some employers say attracting good employees is difficult in blue collar as well as white collar industries.  Jared Bartoo of Bartoo Sand and Gravel in Truth or Consequences also participated in our focus group.  “It's tough.  That's the hardest thing we face is finding good people.  And when we find 'em, we try to keep 'em.  A lot of 'em leave and go out of town, make more money, you know,” said Bartoo.

U.S. Census Bureau figures for 2016 show New Mexico’s median household income at $48,451, far below the national median of $59,039.

Bartoo agrees education is an important priority for improving the state’s economy.  But he says K-12 education does not provide enough support for vocational instruction.  “I learned how to weld in high school.  I think they're not pushing the trades thing as much.  And they're not encouraging it.  You know, everyone wants to make a hundred thousand dollars a year doing nothing.  And that's not reality,” said Bartoo.

Bartoo says he works to treat his employees well to encourage them to stay.  But it’s often difficult.  He grew up in the area and has seen most of his high school classmates leave.  “There's no real employment opportunities, so people really don't have reason to stay.  We're hoping for growth, and so that can change.  I don't want my children to grow up and have to leave, or be forced to leave to find some kind of well-paying job, because it's just not here,” said Bartoo.

Infrastructure Needed For Growth

Along with investment in education, those who work in economic development say New Mexico must learn from other states that place a high priority on helping communities rather than spending on individual companies or industries.  Leaders in Truth or Consequences also say additional funding is needed from the federal government.  “I think a major piece of that is actually helping the smaller communities to improve their infrastructure...because those are high-ticket items and obviously, to recruit businesses, in order to recruit people to come into town to promote some of our economic activities, we need to make sure we have the adequate infrastructure in place,” said Truth or Consequences city manager Juan Fuentes.

There’s hope for change in T or C.  Fuentes points to an investment by the U.S. Department of Agriculture in the city’s wastewater treatment plant.  He cites the effort as an example of federal money that helped the community build the infrastructure it needs for growth.

KRWG Public Media and nmpolitics.net met for several hours with a diverse group in Truth or Consequences, New Mexico

While everyone in our focus group agreed growth and new opportunities are needed in T or C and all of New Mexico, there’s also a yearning to hold on to the state’s culture and way of life.  Jessica Murphy has lived in Sierra County for eight years, but she’s a lifelong New Mexican, having grown up in Hagerman, a Chaves County town with a population of 1,251 in the 2010 census.  She contends, “New Mexicans don't exactly always want things to change.  We like things to be laid back.  We value our clean environment.  We value open spaces.  And we value a quiet life.  And so, there's something to be said for that.  Now, of course, when you compare that with demographics that show poverty is kicking our butts or our kids don't have a good quality of life, there has to be some sort of balance there.  But, for certain, we do need to value what we have, because it's really important to a lot of people.”