How to entice business to New Mexico

The best thing we can do for small business, said Steve Maestas, is to increase their revenue.

The best way to do that is to attract big businesses – the businesses that bring new dollars into the state’s economy, making products that are sold everywhere and generating revenue from outside the state. Speaking recently to a group of small business owners, he said big businesses generate the jobs and pay the employees who support the local service economy.

So – here comes the punch line – New Mexico needs a taxpayer-funded job creation fund with $50 million of taxpayer dollars. We already have such a fund under a law called the Local Economic Development Act (sections 5-10-1 to 5-10-13 of the New Mexico Statutes), but the law needs some amendment. And with only $15 million authorized so far, the fund doesn’t have enough money to be competitive against the incentives offered by other states.

Maestas is a partner of a major commercial real estate company and Deputy Chair of the Federal Reserve Bank of Kansas City. He’s zealous about reversing New Mexico’s dismal economic outlook and passionate about this job creation fund. The $50 million proposal comes from the Legislative Jobs Council and has bipartisan support. We’ll be seeing it in January.

Our arguments are predictable. If you are a conservative, you don’t like spending taxpayer money this way. It’s beyond what the function of government should be. And you don’t like getting the state involved in, as the saying goes, picking winners and losers. If you are a liberal, you don’t like spending our limited public funds on fat cat rich companies that ought to be able to finance their own company expansions. You are more concerned with social needs that are crying for attention.

I don’t like this any better than you do. I resent it. But New Mexico didn’t make the rules. Big business has us all over a barrel as states and localities bid against each other to attract the companies. Texas has a $250 million fund and has created 70,000 jobs. California has just authorized $200 million.

I’m not alone. One fellow in the audience commented that he doesn’t believe in the concept, but New Mexico has to compete or die. His children, with good educations and and professional skills, are moving to other states where the job opportunities are better. He’ll suck up his philosophical objections and support the legislation.

We know that New Mexico is lagging behind – the only state in the US with net job losses since the 2008 recession. It’s commonly said we relied for too long on the national labs and other federal support (in other words, on Pete Domenici). The loss of federal funding and other factors have created what one audience member called a “sink or swim moment.”

Maestas said the New Mexico law limits how the public funds can be spent. They must be spent on infrastructure, land and buildings, so that if the company doesn’t stay, the assets do. New Mexico has made money by investing in unsuccessful companies like Schott Solar and Eclipse Aviation, because the structures are still here and now being leased to other companies.

Last year the legislature passed the “single sales factor,” a tax law change that has been a major step toward making New Mexico economically competitive. Maestas believes a robust job creation fund is the next critical step.

I’d sure like a more comfortable approach – one that keeps the money in-state and also successfully expands the economy and grows jobs – but we’ve been over this ground many times and we’re not seeing results in the numbers we need.

As things stand right now, a member of the audience said, we’re all doing each other’s laundry. That’s no way to build an economy.

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