Gov. Wants State To Use Incentives To Diversify Economy

The legislative agenda Gov. Susana Martinez outlined to business leaders in Albuquerque last week contained a laundry list of items she believes will help the economy diversify and attract new jobs.

Speaking at a luncheon Thursday organized by the Greater Albuquerque Chamber of Commerce, the Rio Rancho Regional Chamber of Commerce and other business groups, Martinez warned that New Mexico’s biggest challenge is from the stagnant national economy, which led to the loss of 1,200 federal jobs statewide in 2012.

“Until we diversify – and that’s what we have to do – until we commit to competing economically in a way we have never done before, until we focus on helping small businesses grow and attract large job creators, we will remain incredibly vulnerable to across-the-board cuts and partisan politics in Washington. We must diversify,” the governor told the audience of about 600 people.

Among the incentives she will propose to the Legislature to make New Mexico competitive in the jobs market are:

♦ Investing $10 million in an economic program that helps communities attract business by offering incentives to acquire land, construct buildings or install infrastructure.

♦ Investing $4.75 million into the Job Training Incentive Program to help companies train workers. Hewlett-Packard received JTIP funds in 2011 for training 100 employees at its customer technical support center in Rio Rancho.

♦ Lowering the corporate tax rate from 7.6 percent to 4.9 percent.

♦ Allowing companies to base their income taxes entirely on their sales within New Mexico, an approach known as the single sales factor.

Intel Corp. has pushed for this for its Rio Rancho plant for several years.

For the computer chip maker with global sales, it could mean lower corporate taxes, said Intel spokeswoman Liz Shipley, who attended the luncheon.

At present, New Mexico is not as competitive as other states in the region, which have adopted the single sales factor tax structure, Shipley said.

She said Intel’s Rio Rancho site supports an annual payroll of $350 million, and the company spends on average more than $300 million annually with New Mexico businesses, according to a 2010 economic impact study.

Some familiar with New Mexico’s economy question whether the single sales factor would bring more jobs.

“The way I see it is, we are just providing a tax break for large multistate corporations for something that’s purely speculative,” said Gerry Bradley, research director with New Mexico Voices for Children and formerly an economist with the state.

Bradley said the state Board of Finance projects corporate income tax for fiscal 2014, which begins July 1, will bring in $350 million for the state’s $6 billion budget.

He estimates a single sales factor tax structure could reduce corporate tax revenue by 50 percent.
— This article appeared on page C1 of the Albuquerque Journal