Senators float idea NM should take financial control of Spaceport
Agency still has $29 million in unspent capital outlay, continues to seek capital outlay project manager and says it will ask for more state funding
The VSS Eve space plane enters the hanger in the Gateway to Space building at Spaceport America on June 12, 2023.
SANTA TERESA — The future of funding Spaceport drove the conversation at the Sept. 7 presentation before the interim New Mexico Finance Authority Oversight Committee meeting.
Republican and Democratic senators said that the state of New Mexico should fully claim responsibility for funding the New Mexico Spaceport Authority and its Truth or Consequences-adjacent spaceport.
Spaceport America was built with more than $220 million in taxpayer money, using a combination of bonds funded in part by a 0.25% tax from Sierra County and Doña Ana County enacted in 2007. Otero County rejected enacting a spaceport tax the same year.
Taking over Spaceport
Tensions sparked over a recent study released by the New Mexico State Arrowhead Center on projections about the Spaceport’s economic impact on the state.
The New Mexico Spaceport Authority sponsored the study. According to the analysis, between tourism and job spending, Spaceport generated $58 million to Doña Ana County and another $62 million in Sierra County.
Sen. Joe Cervantes (D-Las Cruces), a longtime critic of the Spaceport, said the facility burdened taxpayers in Doña Ana County, for little long-term benefit.
“Looking at the economic analysis, you’ll see that the lion’s share of the economic benefits are going to Sierra County, by this analysis,” Cervantes said. “But the vast majority of the funding is from Doña Ana County.”
Cervantes said he was skeptical that the self-reported job numbers from Spaceport tenants were accurate.
“I would expect, not to be overly critical, but I would expect them to put a rosy picture on what they’re doing,” he said.
Scott McLaughlin, the director of the New Mexico Spaceport Authority, pushed back in an exchange with Cervantes.
“The reason we hired the Center for Border Economic Development is because they are independent,” McLaughlin said. “And when they surveyed our tenants and our customers, we weren’t involved in that, they did that on their own.”
While the spaceport was a risky venture, and may continue to be one, McLaughlin said it offers New Mexico economic development.
“I can’t guarantee the success of the spaceport, we can’t guarantee the success of our customers,” McLaughlin said. “But if we, as a local region, as a state, want to do something to get us off the oil and gas, to really change the tide – I think aerospace is actually a very good bet.”
Senators evoke Richardson
Former Gov. Bill Richardson, who died Sept. 1, loomed large in the conversation. Richardson struck the controversial deal with billionaire Richard Branson to build the Spaceport and develop New Mexico as a spaceflight tourism hotspot.
Sen. Ron Griggs (R-Alamogordo) credited the former governor’s enthusiasm for the project, noting it also received support from Republicans.
“You have to believe, regardless of anything else, you have to believe the guy was not afraid to dream and to push things people were unwilling or unable to push,” Griggs said.
Griggs said the legislature’s “remarkable revenues” from oil and gas money offer the opportunity to take over the agency, and “make it the best it can be.”
“Let’s let the legislature take over the spaceport, and keep the local communities from having to do that,” Griggs said.
Sen. Nancy Rodriguez (D-Santa Fe) said she’d support that effort.
“This discussion will never end until the state finally steps up to the plate, takes responsibility, bites the bullet and says this is a state project, a state building, a state economic development venture that the state has to fund,” Rodriguez said.
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Cutting tax question continues
The county tax paying for the spaceport has no scheduled end or “sunset.” A resolution the Doña Ana County Commission brought forward would cut the tax and end the program in 2029, when the bonds are projected to be paid off.
However, that measure was postponed, said county commissioner Shannon Reynolds, at the request of the New Mexico Finance Authority, until the Spaceport Authority, and both of its governing boards were included in additional meetings.
“We have to get more people involved in the process,” Reynolds said in a phone interview with Source NM.
Currently, 75% of the tax revenue received from the counties goes towards bond repayment. The remaining 25% of the tax goes to science and math programs at Las Cruces Public Schools and Gadsden Independent School District.
In an interview, McLaughlin said a discussion about removing the tax now is premature, while the bonds are outstanding.
“Once we pay them off, then the discussion of what to do with that tax, I think that’s a good discussion,” he said. “But maybe not right now, not why we’re still paying the bonds.”
Capital outlay and more
The New Mexico Spaceport authority is about 60% funded by revenues it collects from rent and user fees, the rest paid by state appropriations, McLaughlin said.
Revenue in 2022 included $6.1 million in rent and interest, and another $1.4 million in tours and launch event revenue. The authority has a budget of about $11 million. The largest expense is $4.2 million for around the clock security and fire personnel on staff, he said.
“”But if we didn’t have 24-hour firefighters, security, a lot of customers couldn’t operate and we also put the assets at risk,” he said. “So it’s a burden we have to carry.”
However, that self-funded percentage excludes capital outlay. The agency expects to request tens of millions in coming years to fund new construction and repairs.
This includes at least $18 million for a new reception center project, which is currently in the design phase, another $25 million for a taxiway addition to the spaceport’s runway and another hanger for general use, budgeted between $7 to $10 million.
The agency will also have to spend to fix the undulating roof on the Gateway to Space – the building built for Virgin Galactic. The roof has cracking and water damage, with an estimated cost of $3 million dollars to replace.
While the agency spent $5.1million on road improvements, paving and foundation improvements, it has a remaining $29 million unspent in capital outlay. The authority also has not yet posted a job for a capital outlay projects manager, saying they were delayed by a lag of emails with the State Personnel Office.
Sen. Crystal Diamond (R-Elephant Butte), who is on the Senate Finance Committee said she was uneasy appropriating more money, if the agency can’t spend what it has.
“Continue to spread it out as much as you can, between now and January, we will talk about your ask during this next legislative session,” Diamond said.
Diamond pushed the agency to focus on other tenants beyond it’s anchor Virgin Galactic, saying their success should not define New Mexico Spaceport Authority’s success.
“In fact, many New Mexicans can’t differentiate between the two – what Spaceport is and what Virgin is,” she said. “That’s still something, that messaging, that we’re still trying to overcome.”
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