SANTA FE – A group of Albuquerque Democrats, including 12 state legislators, is sounding a warning about granting overly generous tax subsidies in New Mexico’s bid to bring a massive electric car battery plant to the state.
In a letter sent to the Journal, the Democratic elected officials say any legislative package crafted to help lure electric car manufacturer Tesla to New Mexico – one of four states vying for the $5 billion facility – should not rely solely on tax breaks.
“We cannot afford to give up so much future tax revenue to Tesla that we continue to impoverish our schools and our infrastructure,” the letter states. “And we can’t cause everyone else’s taxes to go up.”
While the letter describes Tesla as a cutting-edge carmaker that could have a positive impact on New Mexico’s economy, it argues the state has lost money in previous “trophy” deals with out-of-state corporations.
It did not name those deals, but other legislators have raised the example of Schott Solar, which shut down its Albuquerque operations in 2012 after receiving nearly $16 million in state grants over the three previous years.
Tesla has announced it plans to build a giant battery manufacturing plant that would create an estimated 6,500 jobs. The company has said New Mexico, Arizona, Nevada and Texas are finalists for the plant.
Gov. Susana Martinez, a Republican, has said she might consider calling a special legislative session on economic incentives aimed at making New Mexico more appealing to Tesla.
Economic Development Secretary Jon Barela, a Martinez appointee, said Wednesday the administration has worked to make New Mexico a more business-friendly state while being protective of taxpayer dollars.
While he declined to give a status update on negotiations between state leaders and Tesla, he criticized some of the Democratic lawmakers that signed the letter for opposing tax legislation supported by Martinez.
“I think it is curious that many of those who signed that letter voted against the jobs package and other pro-business measures that have positioned New Mexico as more competitive,” Barela said, referring to a 2013 bill that, among other things, cut the state’s corporate income tax rate from 7.6 percent to 5.9 percent.
Sen. Cisco McSorley, D-Albuquerque, who voted in favor of the 2013 legislation, told the Journal he initiated the letter and reached out to other Bernalillo County Democratic elected officials to sign onto it. The lawmakers that signed the letter are among the progressive faction of Democrats in the Legislature.
McSorley said he did not have time to send the letter to GOP lawmakers, but said many of the ideas expressed in the letter have had bipartisan support in the Legislature.
That includes a yearly report on the effectiveness of state tax breaks. Both Martinez and her predecessor, Democratic Gov. Bill Richardson, vetoed such legislation, though Martinez has ordered a state agency to compile such a report.
Though the letter suggested several ideas, it is unclear what revisions might be included in a package aimed at luring Tesla to New Mexico. One focus could be the state law that prohibits car manufacturers from selling vehicles directly to customers, a model that Tesla uses to sell its cars in other states.
However, Martinez recently said New Mexico’s law has not been an issue in the state’s negotiations with Tesla.