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F I S C A L I M P A C T R E P O R T

SPONSOR Smith

DATE TYPED 2/10/05

HB

SHORT TITLE Spaceport Development Act

SB 165/aSFC

ANALYST Ford

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Indeterminate

Recurring Spaceport Authority

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Indeterminate

Indeterminate Recurring Spaceport Authority

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates

HB 419

SOURCES OF INFORMATION

LFC Files

Responses Received From

Economic Development Department (EDD)

New Mexico Finance Authority (NMFA)

SUMMARY

Synopsis of SFC Amendment

The Senate Finance Committee amendment provides that one of the 6 appointment members of

the Spaceport Authority shall be a resident of Sierra county.

Synopsis of Original Bill

Senate Bill 165 enacts the Spaceport Development Act, which creates the Spaceport Authority to

Senate Bill 165/aSFC -- Page 2

encourage and foster the development of spaceport facilities that support public and private sec-

tor space activities within the state of New Mexico. Senate Bill 165 creates a special fund, the

Spaceport Development Fund, and allows the spaceport authority to issue revenue bonds. Fi-

nally, Senate Bill 165 creates the statutory framework for the development and operation of the

spaceport authority and associated spaceport facilities.

Significant Issues

Senate Bill 165 enacts the Spaceport Authority Act, creating the authority and providing for its

purpose, membership, powers and duties, and financing.

Purpose: The purpose of the spaceport authority is to foster development of spaceport facilities

in New Mexico, actively promote public and private sector infrastructure development to attract

new industries and businesses, create the statutory framework that will enable the state to design,

finance, construct, equip and operate spaceport facilities necessary to ensure the timely, planned

and efficient development of a southwest regional spaceport; and promote educational involve-

ment in spaceport education and training of the workforce.

Membership: The authority is administratively attached to the EDD and shall consist of seven

voting and two nonvoting members. Six members are appointed by the Governor with the con-

sent of the Senate. The secretary of economic development (or the secretary’s designee) shall be

the seventh voting member and shall serve as the chair of the authority. The Lieutenant Gover-

nor and the executive director of the authority shall be non-voting members. Senate Bill 165

further provides procedures related to the members’ terms, reimbursements, meetings, and va-

cancies.

Powers and Duties: The authority is charged with a variety of duties to develop space related

projects, expand high technology economic opportunities, provide advice and information re-

garding the southwest regional spaceport and other scientific and technological trends, and gen-

erally support efforts to develop space related technologies and industries in New Mexico. The

authority shall hire an executive director and staff to fulfill its duties.

In addition, the bill authorizes the authority to operate spaceport facilities, solicit outside funds,

issue revenue bonds, refinance projects and collect tolls (see “Financing” below).

Finally, the authority is prohibited from operating a project as a business or in any manner except

as a lessor, incurring general obligation debt, pledging the full faith and credit of the state, and

expending funds or incurring debt for the improvement, maintenance, repair or addition to prop-

erty not owned by the authority.

Financing: Senate Bill 165 provides for the financing of the authority. It establishes the Space-

port Authority Fund, a non-reverting special fund within the state treasury. Money shall be ap-

propriated from the fund to the authority for the purposes of carrying out the Spaceport Devel-

opment Act.

Money deposited in the fund will include:

•

Proceeds of the issuance of revenue bonds;

•

Proceeds from loans;

Senate Bill 165/aSFC -- Page 3

•

Tolls, fees, rentals and charges for the use of or services rendered by any authority facil-

ity, program or service;

•

Interest earned upon any money in the fund;

•

Earnings of properties and securities acquired through the use of the fund;

•

Money received from public or private sources.

Senate Bill 165 prohibits the authority to issue general obligation bonds or pledge the faith and

credit of the state to repay debt. The bill lays out the procedures and requirements for the issu-

ance of bonds and specifies that the bonds are exempt from taxation by the state or its subdivi-

sions.

PERFORMANCE IMPLICATIONS

EDD operates the Office Space Commercialization as part of the Technology and Space Com-

mercialization program for the purpose of increasing the start-up, relocation and growth of tech-

nology-based businesses in New Mexico. The LFC is recommending $713.8 thousand in funding

for FY 06. The program has several performance measures related to the creation of jobs. This

bill could help improve on those performance measures by developing new spaceport facilities

and attracting new businesses to the state.

However, EDD notes that the relationship between the Spaceport Authority and Office for Space

Commercialization is not defined by the bill (see “Technical Issues” below).

FISCAL IMPLICATIONS

Senate Bill 165 creates a Spaceport Authority Fund and appropriates money from the fund for

the purpose of carrying out the Spaceport Development Act.

The bill authorizes the Spaceport Authority to issue revenue bonds. The bill presents no direct

impact to the state’s general fund.

Continuing Appropriations

This bill creates a new fund and provides for continuing appropriations. The LFC objects to in-

cluding continuing appropriation language in the statutory provisions for newly created funds.

Earmarking reduces the ability of the legislature to establish spending priorities.

ADMINISTRATIVE IMPLICATIONS

Although the spaceport authority is administratively attached to the EDD, the bill provides for

the authority to hire its own staff and provide its own administrative support.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 165 duplicates House Bill 419.

TECHNICAL ISSUES

EDD notes that the relationship between the current Office of Space Commercialization and the

Senate Bill 165/aSFC -- Page 4

Spaceport Authority is not defined in the bill. This could cause overlap and duplication of ef-

forts.

NMFA recommends that the authority partner with NMFA to issue bonds in order to take advan-

tage of its financial expertise.

OTHER SUBSTANTIVE ISSUES

New Mexico is in the process of establishing the southwest regional spaceport at Upham, located

approximately 45 miles north of Las Cruces and 30 miles east of Truth or Consequences. The

EDD will request $10 million for the spaceport, which is scheduled to be licensed in early 2006.

The Legislature has already appropriated $9 million for infrastructure at White Sands Missile

Range and other expenses related to the X-Prize Competition (an annual competition for reusable

space vehicles to promote space tourism and related industrial development). The X Prize Cup

has the potential to generate significant economic impact. However, as the LFC notes in its rec-

ommendations for FY 06, this impact will depend on recurring funding yet to be secured, contin-

ued competition with six other spaceports, and the X-Prize Foundation plans for expansion at

other spaceports.

Both the EDD and the NMFA believe that this bill is an economic development initiative that

will create new job opportunities, attract new industries, and improve New Mexico’s reputation

as a leader in high-technology.

EF/yr