Spaceport head says bill would shutter facility

Legislation by Sen. Lee Cotter, R-Las Cruces, to prohibit the spaceport from using excess bond revenue for operating expenses would be a death knell for the facility, Spaceport America Chief Executive Officer Christine Anderson said.

“If we lost it this year, frankly we’d probably have to close the doors. I’m not being over-dramatic when I say that,” Anderson said.

That’s not going to happen because the bill isn’t going to pass, Cotter said.

“Is the bill going to ever pass? Probably not, because the finance chairman knows if he lets this bill pass he will be obligated to come up with some money,” Cotter said. “But this comes down to just truth. Are we going to treat the taxpayers honestly?”

A similar bill was bottled up last session in the Senate Finance Committee by Chairman John Arthur Smith, D-Deming.

The legislation would prohibit the spaceport from using money collected from local taxes in Doña Ana and Sierra counties for operations.

According to a fiscal impact report on the bill, the spaceport has two outstanding bonds, both set to mature in 2029. Assuming that revenue levels remain the same, estimated excess revenue from the local taxes after paying the bond obligations is expected to be up to $600,000.

The spaceport has requested $2.8 million from the general fund this year for operations. That money was included in initial budget projections, but budget makers are paring down their original plans in response to lower revenue projections.

“Without certainty regarding the (fiscal year 2017) general fund appropriation for the agency, it is impossible to estimate what personnel, contracts, or programmatic functions would be cut, but NMSA reports it may not be able to operate in FY17 without this funding,” the report states. “The agency states it would be in default of contractual obligations to its tenants and face potential lawsuits for breach of contract.”

“They might as well say kill the spaceport; that might as well be the title of the bill,” Anderson said. “I just don’t get how we go through this every few years.

“For whatever reason, Senator Cotter, I guess, doesn’t care what the ramifications are, because they’re dire.”

Cotter said he voted for the spaceport tax in 2007 as a county resident, which he said, “worked out to be a disappointing vote.”

He and other voters were never told the tax increase would be used to pay for operations, he said.

“To me, the whole point is honesty with the taxpayers,” Cotter said. “The concept here is the state agreed to pay for operations and the counties agreed to pay the debt back. And what we’ve done for the past few years is siphoned off money from the two counties and placed it in operations; almost secretly.”

The move wasn’t illegal, Cotter said, but it also wasn’t in keeping with the spirit of was promised to voters.

Anderson noted they were required to go before three boards — the Spaceport Authority board, a county tax board and the state Board of Finance — to get approval to use the excess funds for operations. All granted approval during a public meeting, she said. And, she said it is logical to assume that voters who approved the tax would want to see the spaceport succeed.

With anchor tenant Virgin Galactic still working to come back from a fatal crash in October 2014, that excess money, which Anderson said has ranged from $200,000 to $600,000 a year, has been a savor for the spaceport.

Making matters worse this year is that the spaceport will have spent all of the proceeds from the bond in the current fiscal year, she said.

“Right now that money is critical to us. In a few years it probably won’t matter, but fiscal year 2017 is not the year to take it away,” Anderson said. “We would shut down with no companion bill to resupply that money.”

Requiring all excess money to go toward repayment of the bond could result in it being paid off one year earlier, according to the fiscal impact report. It would also provide protection against a potential future recession, Cotter argued.

And, he said spaceport officials have put themselves in this bind by not demanding from the start that the state pay full costs to cover operations.

“The original agreement at the very beginning was the state would pay for it. They haven’t asked the state to pay for anything,” Cotter said. “My worry is we’re relying on the county to do two things, pay the millions to get rid of the $78 million debt and we’re also being relied on in some years to pay more than the state of New Mexico is paying for operations.

“Should it shut down? I have no idea,” he added. “We’ve gone from the only spaceport to one of 15 or 20. Should we abandon it and try to get Fed Ex to use the runway? Maybe. I don’t know. But the purpose of my bill is to run it the way the voters said.”

Senate Bill 157 is scheduled to be heard this week in the Senate Corporations & Transportation Committee.

Walter Rubel may be reached at 575-541-5441, wrubel@lcsun-news.com or @WalterRubel on Twitter.