Related post: Martinez looks to boost mixed economic record
Gov. Susana Martinez gave an enthusiastic speech in October to a yearly gathering of the “who’s who” in commercial spaceflight, touting the jobs Spaceport America could create and its potential to inspire young minds.
“It is with great foresight that New Mexico has chosen to invest in the commercial space business,” she told the group. “And when I say New Mexico, I mean taxpayers have chosen to invest.”
Her eagerness seemed a far cry from the skepticism she showed soon after taking office in early 2011. The change of heart illustrates an ironic reality midway into Martinez’s four-year term.
It’s not clear that Martinez would have supported the massive public investment required to build the spaceport had she been governor when the state and local communities pumped $209 million into the project. Economic Development Secretary Jon Barela wouldn’t say whether Martinez would have invested the money former Gov. Bill Richardson championed had she been in his place, saying he was “not willing to second-guess the prior administration’s decision.”
Because of the investment made while Richardson was governor, many spaceport supporters say, the project presents a real opportunity to create private-sector jobs — the kind Martinez likes best.
But the spaceport’s future, and the possibility of private-sector jobs in a region desperately in need of them, appears tenuous, its fate hanging in part on proposed legislation state lawmakers will consider in the coming weeks. The bill would protect companies supplying parts to spaceships from being sued.
The Legislature has twice failed to pass the bill even as some other states with competing spaceports have enacted similar protections. Sen. Pete Campos, D-Las Vegas, thinks compromise is possible this year.
“I would indicate today that it would be very likely, but all the stakeholders truly need to be brought to the table,” he said in late December.
While Martinez’s economic development plans are larger than Spaceport America — the spaceflight informed consent bill is one of seven measures she’ll promote in the upcoming session — the bill’s passage has the potential to boost Martinez’s economic development record, which some say is a mixed bag so far.
Martinez can count among her achievements a boom in international trade and a growing border-related industry in Santa Teresa. But the state is losing jobs, and other economic indicators show slower growth than nationally.
Spaceport supporters say the project has the potential to help grow a new aerospace economy and reduce reliance upon federal dollars. New Mexico ranked sixth in per-capita federal spending in fiscal year 2010, according to a U.S. Census Bureau report.
Though Martinez looks on the spaceport more favorably than she once did, she has been unwilling to pump more money into the project and has scaled back funding for its administering agency. Meanwhile, competing states have ramped up spending in the race to attract the commercial space industry and its jobs.
Those factors make the bill to cap legal liability for spaceflight parts manufacturers and company shareholders make-or-break for Spaceport America, supporters say. In recent weeks the CEO of the spaceport’s major tenant, Virgin Galactic, bolstered those fears, saying the company would rethink its plans if the measure fails this year.
The legislation has powerful opponents. The New Mexico Trial Lawyers Association has adamantly objected to the bill, saying it could undermine a long-held tenet protecting consumer safety.
Martinez has thrown her political weight behind the bill in the months leading up to the legislative session that begins next week. The proposal matches with her philosophy for creating a friendlier business climate in New Mexico.
It’s perhaps Martinez’s best chance of supporting potential new jobs at the spaceport without spending more money on a project she likely initially saw as excessive.
A look back
Soon after taking office in 2011, Martinez installed a new board and executive director for the New Mexico Spaceport Authority. The facility was in mid-construction, and the shake-up worried spaceport supporters.
Martinez, in a recent interview in Las Cruces, said she was concerned at the time about lax financial accounting.
The skepticism may have also been partly because the project — along with others like the Rail Runner commuter train in northern New Mexico — symbolized what some saw as Richardson largesse. Martinez took aim at other symbols of what she perceived as excess by selling a state-owned jet, shrinking her security detail and laying off chefs at the governor’s mansion.
Asked if she is a spaceport supporter now, Martinez replied: “Absolutely. And the counties that voted were also strong supporters,” she said, referring to Doña Ana and Sierra counties’ self-imposed tax increases.
But Martinez is holding to her pledge to downsize public spending on the facility.
When Virgin Galactic sought an extension of the already-built spaceport runway for landing safety reasons last summer, the spaceport re-worked its existing capital outlay budget to pay for it.
Martinez has also cut funding for the spaceport authority, which is responsible for construction and operation of the facility, from $1.2 million to $500,000 annually, said New Mexico Spaceport Authority Director Christine Anderson.
New Mexico’s project was designed and built from the ground up as a spaceport. It features a 10,000-foot concrete runway, a spacious terminal-hangar, and rocket-launching facilities.
That’s one advantage New Mexico has over other states that are using funds to expand upon or refurbish existing infrastructure, such as rocket launch pads and airport runways, Spaceport Authority Chairman Rick Holdridge said.
But the competition is steep. Florida, Virginia, Texas, Colorado and California are all vying for a piece of the action as the United States moves toward greater reliance upon commercial aerospace to transport people and payloads. Last year’s final space shuttle flight signaled that the federal government was holding to earlier plans to privatize spaceflight in low-earth orbits. In 2012, California-based SpaceX carried out the first-ever commercially contracted resupply mission to the International Space Station.
Florida received FAA approval for two spaceports in 2010 at Cecil Field Airport, a former naval air station, and Cape Canaveral. Virginia has a coastal spaceport for launching rockets. Its main client is Orbital Sciences Corp., a company with a $1.9 billion NASA contract to resupply the International Space Station.
Both states are building up spaceports, boosting dollars for the state agencies that oversee the projects and offering incentives.
In Florida, the Legislature has appropriated $4 million a year for its spaceport agency, said Tina Lange, spokeswoman for the entity. It also received another $6 million in one-time funding. Lange said about $30 million was allocated over the past two years for spaceport infrastructure projects.
Florida Gov. Rick Scott, a Republican, has supported legislation to open up more funding for Cecil Field Airport.
In 2012, Virginia’s GOP Gov. Bob McDonnell approved a budget for his state’s spaceport authority of $9.5 million annually for four years. Reaching a goal of building “the leading commercial space launch facility in the country” also includes improving facilities and exempting from income taxes companies that operate in and launch from the state, according to its strategic plan.
Texas is offering the commercial aerospace industry substantive financial incentives. It also benefits from a CNBC ranking as the most business-friendly state in the nation; New Mexico, by comparison, was tied for 36th in 2012. Texas has one privately owned, FAA-licensed spaceport. Others are in the works.
New Mexico offers some aerospace-related gross receipts tax reductions. Spaceport America offers attractive natural features – clear weather, clear airspace because of White Sands Missile Range next door, a low population density, and a high elevation that lets companies launch payloads at a lower cost, Holdridge said.
Martinez told Las Cruces symposium attendees in October that she’s committed to broader changes that would benefit the aerospace industry.
“I’m personally focused on reforming our tax and regulatory environment, as well as improving public education to equip more workforce to better serve the industry,” she said.
But New Mexico doesn’t have the population or financial resources to rival the efforts of some other leading aerospace states, Holdridge said. The state’s best hope to stay competitive is the expanded legal liability bill, supporters say.
Failing to OK the measure is “basically telling the industry the state is schizophrenic,” and will likely drive companies away, Holdridge said.
Virginia started a trend in 2007 when former Democratic Gov. Tim Kaine signed the first measure to protect manned spaceflight operators from crash-related lawsuits. New Mexico followed suit in 2010 during Richardson’s last year in office.
New Mexico spaceport supporters contend the protections must extend down the supply chain and to company directors and shareholders, which is what the proposed legislation would do. The Legislature’s failure to pass the bill has factored into at least one company’s decision to go elsewhere.
XCOR Aerospace, which plans suborbital flights, said New Mexico had several attractive sites including Spaceport America. A “surprise” failed vote on the expanded bill was partly why the company opted last year to locate a headquarters and research and development facility in Midland, Texas, said Chief Operating Officer Andrew Nelson.
In November, a group named “Save Our Spaceport Committee” announced support for the bill. Virgin Galactic CEO George Whitesides was present but is not part of the group.
In an interview, Whitesides emphasized that he’s never said the company would consider leaving if the bill fails again. He also didn’t rule it out.
“What I’ve said is we’re going to take a closer look at what the Legislature does and then evaluate our stance,” he said.
Virgin Galactic has a 20-year lease to base flight operations at Spaceport America. Breaking it would cost the company $500,000 or $2 million, depending on the circumstances of the departure, the lease states. Virgin Galactic has to guarantee itself by filing a letter of credit once lease payments begin — something that hasn’t happened yet.
Even so, Virgin Galactic would be required to pay the penalty if it pulled out before the first lease payment, Spaceport Authority Director Anderson said. She said she expects the company to move forward with its New Mexico plans.
The guarantee is a drop in the bucket compared to the more than $200 million Virgin Galactic has invested in the spacecraft it’s building to fly customers into suborbital space.
Whitesides said the proposed legislation is needed to attract other spaceport tenants. The vision has always been to create a “thriving spaceport with multiple anchor tenants and a robust ecosystem of manufacturers and suppliers,” he said.
That hasn’t happened.
“We’re faced with a situation where all the operational costs of the spaceport are going to fall on our shoulders, and that’s not what we signed up for,” Whitesides said.
Anderson said at least two other spaceflight companies are considering locating in New Mexico. She declined to name them.
Room for compromise?
Supporters and opponents of the proposed legislation point to different concerns.
Failing to enact the law could lead manufacturers to stop supplying parts to companies operating at Spaceport America, said N. Wayne Hale Jr., a former NASA official and consultant to commercial spaceflight companies, in remarks to the spaceflight symposium.
New Mexico Trial Lawyer’s Association President Ray Vargas said there’s higher risk for negligence if companies can’t be sued.
“What they’re saying is: ‘Let’s change 200 years of settled law and tell these manufacturers you can do what you want and make a faulty product and come to New Mexico and use it,’” he said.
Spaceport officials said the measure wouldn’t affect the rights of people on the ground to sue in the case of an accident.
Vargas also said the bill could set a precedent for other exemptions to tort law.
State Sen. Joseph Cervantes, D-Las Cruces, said any legal changes should apply “to the businesses that are actually going to come to New Mexico and commit to creating jobs.”
Cervantes said there’s room for compromise, perhaps drawing upon other states’ statutes. He said he’s expecting the measure to pass.
“I hope I’m going to be in a position to strike a good balance between our goals for economic development and the goal of safety,” he said. “I don’t think they have to be mutually exclusive.”
Sen. Campos, too, said policymakers can find a balance that protects consumers and advances the spaceport’s economic development potential. It will take involvement early in the legislative session from all parties in the debate, he said.
Related post: Martinez looks to boost mixed economic record