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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC Files

Economic Development Department (EDD)

SUMMARY

Synopsis of Bill

The bill would make the following FY2000 general fund appropriations to the Economic Development Department (EDD):

• $300.0 for state and local advertising,



• $160.0 to assist companies in rural areas in applying for and using in-plant training and other state development training resources,



• $150.0 to assist local communities to improve their capacity to attract new employers,



• $70.0 to pay for travel expenses for familiarization tours for representatives of national site location consulting firms, and



• $70.0 to develop and implement a plan to attract maquiladora suppliers to New Mexico.

Unexpended balances would revert to the general fund at the end of FY2000.

Significant Issues

This bill represents an effort to address many of the major funding concerns of economic development professionals in New Mexico. The purpose of the bill is to assist EDD in its efforts to attract business and employment to New Mexico and to provide assistance to rural programs qualifying for participation in the in-plant training program.

EDD provided the following analysis of the individual items in the bill:

State and local advertising. This appropriation will be used to assist EDD in its efforts to market New Mexico to potential businesses seeking to expand or relocate. Marketing is typically focused toward advertising in national site selection publications, on the world wide web sites and direct mail brochures.

Assisting firms in rural areas of New Mexico with applying for and using the industrial development training program: The industrial development training program is one of New Mexico's most popular financial incentives for expanding businesses. Since its inception in 1972, the program has traditionally funded employee training for businesses located in urban area in New Mexico. EDD staff, being aware of this urban emphasis, recently responded by initiating a rural outreach effort to visit existing rural businesses in New Mexico and assist them with the application and other procedural processes to qualify for this program. These "hands-on" visits are making a major impact as more applications to use funds from rural businesses are being processed. The appropriation will expand the department's ability to continue rural outreach efforts and shift the trend of the program toward rural business.

Improving community capacity. Often, communities in New Mexico are very limited in their ability to attract business as marketing, infrastructure and other resources are limited. The result of these limitations is a lack of exposure and offerings to potential businesses seeking to expand or relocate. Effectively, this places these communities at a tremendous disadvantage when potential businesses are looking in their geographic region for a business location site. With the appropriation, EDD can better assist communities to become competitive in the site selection process.

Familiarization tours. The number of businesses using a site selection consultant for an expansion or relocation decision has increased dramatically in the past five years. Usually, officials from a company hire the consultant to perform the preliminary site search and screening. The consultant then, after an extensive review of several sites in numerous states, presents a list of the top locations for the project to the company. On his list of top candidates, the consultant has weighed all available factors including site costs, taxation, incentives, quality of life, availability of suppliers, market opportunity, etc. Having these consultants intimately familiar with the positive and negative aspects of a state or region of a state is invaluable, because of their role in screening potential locations for companies. There is no better way to educate consultants than to actually show them first hand what New Mexico has to offer a potential business. This bill would provide funds for familiarization tours to showcase New Mexico's business climate to these consultants. The more site selection consultants are familiar with New Mexico and the business climate and opportunities here, the better our chances of being considered for business expansions and relocations.

Develop and implement a plan to attract maquiladora suppliers to New Mexico. Perhaps the most promising business opportunities in New Mexico exist in the maquiladora supplier arena. Because of this, the border area (El Paso, Ciudad Juarez, Santa Teresa, Anthony, Las Cruces, Deming) has seen a tremendous increase in business expansion inquiries and locations. In addition, with the advent of NAFTA 2000, a company that is not located in the United States, Canada or Mexico which is supplying product to a maquiladora industry will have to pay a 16 percent tariff to import their product into the area. This fact will force many maquiladora suppliers to relocate to this region from around the world. EDD hopes New Mexico's border area will be home to many of these companies. This appropriation will help EDD achieve this goal.

ADMINISTRATIVE IMPLICATIONS

EDD anticipates no administrative impact from passage of this bill other than provision of additional financial resources to allow department staff to implement and expand these programs. In the long-term, one additional FTE would be required for the industrial development training program's rural outreach.

TECHNICAL ISSUES

EDD recommended the following amendments to the bill:

Page one, line 22: Delete the words "in-plant training" and substitute in lieu thereof the words "the Industrial Development Training Program." The latter is the formal title of the program commonly referred to as the in-plant training program.

Page one, line 25: After the word "communities," insert "and municipalities other than those municipalities located in a class A county with a population over 15,000 as determined by the last official United States census." This language would help EDD prioritize its efforts to assist communities in the least populated regions of New Mexico-about 13 counties.

Page two, line 6: Delete the word "to" and, on line 7, delete "develop and implement a plan." EDD is already pursuing this goal and the funds are not needed to develop and implement a plan but to continue and expand existing efforts.

DH/gm