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NM should create intelligent Tesla incentives

As New Mexico competes with three other states for a Tesla auto battery factory, we welcome the possible jobs. Tesla is a leader in innovative new transportation technology and we are proud that we made the short list.

We are hopeful about a possible deal with Tesla, but we also want the governor and other state and local officials to be mindful of our state’s mixed history with big “trophy” deals. Let’s be fair to our state’s existing employers and to working families by not overpromising and overspending if this Tesla deal falters. Indeed, the very conservative Rio Grande Foundation has already warned against a state taxpayer giveaway before benefits have flowed to the state.

We’ve been down this road before. In too many cases, New Mexico taxpayers gave large tax breaks and other subsidies to corporations relocating to New Mexico. In some cases many of the best jobs went to people moving in from out of state. Sometimes we even agreed companies wouldn’t pay a dime in state taxes. When these agreements didn’t pan out, existing businesses and taxpayers subsidized the new companies with no positive business growth in return. In fact we have large corporations that are headed toward paying nothing in New Mexico income taxes and are still reducing their investment in our state.

We’ve already granted these powerful subsidy packages at the same time our long-term investments in education and infrastructure have suffered. We remain near the bottom among the 50 states on critical measures of educational attainment, child poverty and child wellbeing. We have already granted one billion in tax reductions for various special interests, in effect raising taxes 20 percent higher on our existing businesses and individuals. Therefore our agreements with Tesla have to create a balance, of reduced long-term revenues for increases in economic activity and living wages for our citizens.

We cannot afford to give up so much future tax revenue to Tesla that we continue to impoverish our schools and our infrastructure. And we can’t cause everyone else’s taxes to go up. But the hard truth is: if Tesla comes and induces growth, that growth will require more water projects, more teachers and classrooms, more roads and police, and more sanitation and sewerage. So this is what we must balance – increased business activity and a healthy return on our investment. If Tesla’s footprint in New Mexico doesn’t expand our economy to help cover those costs, we will all have to either pay higher taxes, suffer poorer public services, or some of both. Our hope is that Tesla’s impact can be part of the solution to these challenges.

Every other state has faced this same dilemma between reduced taxes and outright subsidies for future economic growth. Unfortunately the other three states have done a better job in creating a healthier balance. Here is a positive agenda, some of which is borrowed from our competing states, for welcoming Tesla in a way that will reduce taxpayer risk and benefit the greatest number of New Mexicans. In exchange for economic development, tax breaks and other subsidies, let’s negotiate a smart deal.

• Partner with our university and research laboratories: Tesla and Panasonic are pushing the envelope on automotive battery technology. Let’s make part of the deal support for technology transfer with the University of New Mexico and our national laboratories, through incentives for these companies to invest in a research partnership. Together we can build a long-term talent pool for alternative transportation technology. That’s critical for growing new companies and leveraging a possible large taxpayer investment in Tesla. UNM has already secured funds that will avail Tesla and others, student interns from the UNM Engineering Department at little or no cost to the company. Let’s use these assets – they are unique to New Mexico and a powerful driver for a win-win proposition.

• Better disclosure of costs and benefits: In a recent 50-state report card New Mexico ranked No. 45 on how well we disclose the costs and benefits of our economic development deals. And Gov. Susana Martinez, like Gov. Bill Richardson before her, has vetoed legislation to create a tax expenditure budget that would provide a full inventory of all the state’s tax breaks. If we are going to put a lot of eggs in one basket, we need to be able to see all of our investments to determine if they are paying off.

• Money-back guarantees: Any deal with Tesla must provide for a mandatory clawback, or money-back guarantee, if the deal falls short on job-creation goals or other promises, while the subsidies are still in effect. Most states use this safeguard, especially for big-ticket deals.

• Job quality standards: We know the engineering and management jobs at Tesla will pay well, but the total 6,500 projected jobs may include many production jobs that won’t require advanced degrees. Any Tesla deal should ensure a local hiring preference and wage and benefit packages that are high enough so that taxpayers do not incur hidden costs such as Medicaid, food stamps or the Earned Income Tax Credit. If we are going to give Tesla tax breaks and incentives we need good jobs that will generate a strong consumer ripple effect throughout the state’s economy. This ripple effect is the balance that will protect and enhance our existing businesses and taxpayers.

We are all excited about the possibility of a large cutting-edge company like Tesla locating in Albuquerque. Let’s welcome Tesla with our eyes wide open and make this deal work for all New Mexicans. This is the kind of opportunity, which if done correctly, can create a foundation for an increase in our standard of living for generations to come.

Also signed by these Democrats: Sens. Michael Padilla, Jerry Ortiz y Pino, Bill O’Neill and Tim Keller; Reps. Rick Miera, Miguel Garcia, Emily Kane, Gail Chasey, Christine Trujillo, Mimi Stewart and Liz Thomson; and Albuquerque City Councilors Rey Garduno, Ike Benton and Debbie O’Malley.