Dear Senator/Representative:
As you begin deliberations about the current budget challenge facing the State, we respectfully request that you consider the following.
The Local Economic Development Act, to which you have appropriated $56 million, is doing exactly what it was intended to do: influence employers to consider and select New Mexico for job creation projects throughout the state. In FY2016 to date, of the $56 million of LEDA funds available, almost $6 million are encumbered to projects that have been already been announced and an additional $37 million in direct commitments have been delivered to a number of high impact projects. With funding in place, more employers will be added to that list.
Sweeping LEDA funds back to the General Fund would put at risk several significant job creation projects actively considering investment in communities throughout New Mexico and for which the Administration has pledged well more than half of the dedicated funds. Sweeping funds from this account would also take the state out of contention for future one-time opportunities that could dramatically improve the economy, and the state budget, in New Mexico.
The Albuquerque metro area alone is currently one of a few finalist cities for a half dozen impactful projects. A couple of those projects would give an enormous boost to the construction trades and bring national attention to New Mexico. If successful, these projects alone would create more than a thousand jobs and a billion dollars of investment. The state is a finalist for these projects for several reasons, including the strong LEDA proposals, the Job Training Incentive Program, as well as the changes approved by the Legislature and Governor with passage of the tax reform package of 2013.
Decisions are expected no later than December 15, 2016 on each of these projects.
The State is working closely with several other new and expanding employers in communities throughout New Mexico that are also in desperate need of more quality jobs being created.
As you are aware, companies often consider multiple states when looking to expand. Employers look for competitive incentive packages, and the availability of LEDA funding and other incentives can be the deciding factor. That is why we encourage the Legislature to maintain the LEDA fund at $50 million and to make the fund recurring and non-reverting. The fund needs to be maintained at this level so that LEDA proposals can be made quickly, when companies are weighing final offers from competing states. Businesses want certainty. If there is doubt about the availability of LEDA-type job creation funds and other incentives, such as the Job Training Incentive Program, the employer is more likely to remove that state from consideration. New Mexico has missed out on other job creation opportunities when it didn't have LEDA dollars to pledge. We can't afford to take that risk again.
LEDA has built-in claw backs as safeguards to ensure that those funds are getting the intended benefits of job creation and investment. An employer only receives LEDA funding as an inducement from the State to win the project, and only as a reimbursement after that firm has spent its own funds for the eligible expenses such as land, facilities, building
renovations, and infrastructure. In other words, companies only receive LEDA funds after they have invested in New Mexico. The jobs these employers create have a beneficial impact on the state's economy in the form of increased payroll, local purchases, construction and philanthropy, among other items. They also contribute to community revitalization and growth.
LEDA became a reality when New Mexicans voted in November of 1994 to approve this Constitutional Amendment. It was a powerful statement that they want more quality jobs, and that they approve of providing incentives to attract investment from new and expanding existing employers.
It's clear that New Mexico has an immediate state governmental budget challenge. But we contend that the state and its communities have other immediate and significant challenges as well: the need to get people back to work, to keep our young people in the state, and to strengthen the economy. When those things happen, the State's budget picture will also begin to brighten.
We understand that you face a difficult challenge ahead, but we respectfully request that you keep New Mexico in the running for new jobs and stronger communities by keeping funding fully intact for LEDA, JTIP, and the other incentives and tax changes that have elevated New Mexico's competitiveness in the past few years.
Sincerely,
Terri Cole, President and CEO, Greater Albuquerque Chamber of Commerce
Gary Tonjes, President, Albuquerque Economic Development, Inc.