Spaceport seeks an extra $2 million

Spaceport America needs a cash infusion from the Legislature this coming fiscal year to bridge a more than $2 million gap between costs and projected revenue – but it’s not a good year to have one’s hand out.

Economists are expected to release new state revenue estimates this week. And given the relentless slide in oil prices – on which about 12.5 percent of New Mexico’s direct general fund revenue depends – legislators may have significantly less to work with in fiscal 2017 as they try to fund everything from public education to Medicaid – as well as the day-to-day operations of the $218.5 million Spaceport America.

Crude oil on the New York Mercantile Exchange dropped from more than $50 a barrel in November to about $30 a barrel Monday. Every $1 drop in the price of oil amounts to a state revenue reduction of about $10 million.

In the past few years, the spaceport has gotten about $462,000 annually from the Legislature to help fund operations. Gov. Susana Martinez’s proposed $6.5 billion budget asks for the same annual outlay for the spaceport plus an additional, non-recurring $2.35 million “for operating costs due to a shortfall in revenue from other sources.”

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New Mexico Spaceport Authority Executive Director Christine Anderson told me last month that she thinks fiscal 2017, which begins July 1, is “a pivotal year.” It’s a hump year of sorts in which construction bond money dries up, costs for maintenance and on-site emergency response rise but new business remains limited.

Anderson expects Spaceport will pull in about $4 million in revenue in fiscal 2017 through the $1 million lease of its terminal to Virgin Galactic, as well as contracts with SpaceX and a few smaller companies.

But the spaceport needs more than $6 million to break even.

“I feel pretty confident about the $4 million we can earn in 2017,” she said. “Can we earn $6 million? We’re certainly going to try.”

A test-flight accident that killed one Virgin Galactic pilot and destroyed its SpaceShipTwo in October 2014 crushed hopes that the company would send its owner, Sir Richard Branson, and other rich tourists to space last year.

The accident set back the company, as well as Spaceport America’s revenue projections.

Virgin Galactic recently said it will roll out its new SpaceShipTwo in February. Ground and flight testing will ensue as the company strives to get its spaceship safely to space and back. Once the company is flying from New Mexico, the spaceport will get per-flight fees and receive other revenue streams. Whether Virgin Galactic is flying or not, its lease agreement shoots up to $3 million annually in 2018.

In the meantime, the spaceport is working to rustle up new business in the aerospace industry and is marketing itself as an event location – part of a new business plan rolled out last May.

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Sen. John Arthur Smith, D-Deming, has introduced Senate Bill 147 at the spaceport’s behest to provide the facility with a governmental liquor license like the ones universities and some museums have, ostensibly to polish the facility’s credentials as an event location.

Anderson told me Monday that she supports the bill and notes that it won’t cost the state anything. The ability to serve mixed drinks on site is “expected” and “will help us draw more events in,” she said.

Meanwhile, as he has in past years, Sen. Lee Cotter, R-Las Cruces, has introduced a bill that would limit the spaceport’s access to bond funding. SB 157 would restrict the Spaceport Authority’s power to issue bonds, curb the use of “certain proceeds” stemming from municipal and county gross receipts taxes and require voter approval for any new bonds.

Anderson told me the consequences to the spaceport of that bill, should it pass, would be “horrendously awful,” particularly in “a really tough year for our operating budget.”

Will the spaceport be on the chopping block as the state budget shrinks?

Anderson says she has been “continuing to scrub to see how much lower I can get” on the spaceport’s budget, but says, “we have stretched as far as we can stretch and are going to need a little more help.”

UpFront is a daily front-page news and opinion column. Comment directly to Lauren Villagran in Las Cruces at lvillagran@abqjournal.com. Go to www.abqjournal.com/letters/new to submit a letter to the editor.

 

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