New Mexico Improves Its Tax Climate

03 Aug, 2014

By Rachel Hamilton

New Mexico has made some big changes to its business climate, in particular making large improvements to the tax structure.

“Through the bipartisan leadership of Governor [Suzanna] Martinez, New Mexico has reduced its business tax rate by 24 percent,” says Jon Barela, cabinet secretary of the New Mexico Department of Economic Development. He also gives credit to Martinez’s administration for having eliminated the state’s previous structural deficit and having led the state to “four fiscal years of $250 million plus surpluses.”

As of January 2014, New Mexico has begun a four-year process to improve their tax climate for manufacturers.

“Our manufacturers can elect to have their corporate income tax according to in-state sales,” explains Steve Vierck, president and CEO of the New Mexico Partnership, the nonprofit marketing and business development arm of the state.

“New Mexico essentially has no corporate income tax for those who manufacture a product,” Barela explains.

He also adds that New Mexico “has the nation’s lowest property tax rates across the board.” This is per capita, and contributes greatly to the friendly business environment cultivated throughout the state.

Carlsbad has “no municipal impact fees,” says Jeff Campbell, director of marketing and business development, Carlsbad Department of Development. “We save them hundreds of thousands of dollars just by coming here.”

Possibly the biggest news in the southern portion of the state, say both Barela and Vierck, is that Union Pacific has completed an 11-mile long intermodal terminal in Santa Teresa, just outside of El Paso, Texas.

“In addition to Union Pacific, dozens of new companies have located along New Mexico’s border, creating thousands of jobs in industries like manufacturing, warehousing, logistics, and transportation,” Barela says. “In short, we envisioned Santa Teresa and southern New Mexico to be the inland port of choice for the Americas. That vision is rapidly becoming a reality.”
Industries and Innovations

New Mexico’s economic development targets eight industry sectors, and value-added agriculture is one of them. “Every corner of New Mexico contributes to that industry,” Barela says.

“The big news at the moment is that the former Sunland peanut butter plant has been purchased by Golden Boy Foods out of Canada,” says Stan Livengood, executive business director with the Roosevelt County Community Development Corp. in Portales. When the plant reopens, it will provide an estimated 100 jobs, be a base for possible Asian trade for Golden Boy, as well as being part of the revitalization of the area.

Roosevelt County has a lot of value-added specialty food production, a Dairy Farmers of America powdered milk plant, a Hampton Farms’ peanut shelling plant, and a Coca-Cola Refreshments plant, Livengood says.

The other seven targeted industries include advanced manufacturing; aerospace and defense; back office and tech support; digital media; emerging tech; energy and natural resources; and logistics, distribution and transportation.

“Those are the industries in which we see particular growth,” Barela says.

Northern Mexico has increased automobile manufacturing. As a result,“We have an increased number of auto parts suppliers choosing to park on the U.S. side of the border,” Vierck says.

CertoPlast, a German company that manufactures specialized tape for wire harnesses in automobiles, is part of that supply chain. “This is their first U.S. manufacturing facility,” Vierck says. It is expected to employ 300 people over three years.

Intel, Barela says, has been “an anchor in our advanced manufacturing sector for many years.” He also notes companies like Ethicon (a division of Johnson & Johnson), Bendix/King (an avionics manufacturer), and Hewlett-Packard.

“New Mexico is a large energy producing state — traditional and clean energy,” Vierck says, adding that they typically rank in the top five to seven in the country for energy production, and that they are second in solar production, all of which means that energy supply chain companies are investing in New Mexico.

A lot of the state’s oil comes from the Permian Basin in the southeast corner around Carlsbad. “Eddy County has led the state of New Mexico for oil production and was eighth in the nation as well last year,” Campbell says. He adds that the indicators predict “good oil production for the next 15 to 20 years.” The area is also known for potash production and the fertilizer supply chain.

“We also do a lot of aircraft modification,” Vierck says. Much of that is located at the Roswell International Air Center, formerly Walker Air Force Base.

Stewart Industries International LLC, Dean Baldwin Painting, AerSale Inc., Honeywell International Inc., and Lockheed Martin Corp. all contribute to the state’s aerospace industry.

“Like most parts of the country, we’re seeing a lot of customer service and back-office facilities,” Vierck says. Notably, Volts Management Services, Lowes’s customer service facility, and Fidelity all call New Mexico home. Fidelity announced it would add 200 jobs “for highly trained individuals in insurance and financial services,” according to Barela.

“It’s a pretty diverse state,” Vierck says.

Talent and Education

“New Mexico has one of the best on-the-job training and support programs,” Barela says. It is called the Job Training Incentive Program, or JTIP.

Businesses participating in JTIP can receive “checks for 50 to 70 percent of the employees’ wages while they’re being trained,” Vierck says.

New Mexico’s universities are particularly strong on engineering, Vierck says, and “Our community colleges can quickly construct and deliver specialized training for employers.”

Livengood says that almost 23 percent of Portales’s workforce has a bachelor’s degree or higher, and he hopes that will help the community attract more technology and biotechnology firms going forward.

“We have an emerging biosciences industry cluster,” Barela says of the whole state. He also sees New Mexico as a leader in nuclear medicine and other types of research, particularly at the University of New Mexico’s Health Sciences Center.

New Mexico is also home to Los Alamos National Laboratory, a name nearly synonymous with nuclear research and to Sandia National Laboratories. Campbell explains that the labs often work in tandem or in support of projects for local businesses as needed.

Carlsbad has “the only permitted nuclear underground repository in the U.S.,” Campbell says. They also have a satellite branch of New Mexico State University that has developed a nuclear training program for the repository.
Assets

Besides the rich deposits of potash and oil, New Mexico has another natural advantage. “The risk of doing business due to natural disasters is very low in most parts of our state,” Barela says.

New Mexico experiences few or no earthquakes, hurricanes, or blizzards; this is particularly advantageous for data centers and other industries that rely on consistent conditions.

New Mexico has several air ports, including the Albuquerque International Sunport, the Four Corners Regional Airport, and Carlsbad’s Cavern City Air Terminal.

The Carlsbad Airport Industrial Park, Campbell says, has been filling up for the last six years but still has about 60 acres left; the city offers reimbursements to companies that construct infrastructure for their own facilities.

Portales has an industrial park as well, and offers local economic development funds, mostly in the form of grants, to companies locating within it, Livengood says.

The large intermodal built by Union Pacific in Santa Teresa is not the only active hub in New Mexico. In the northwestern part of the state, U.S. 491 is being widened to strengthen the infrastructure for the already thriving Gallup Rail and Industrial Park and its connection to the BNSF rail lines.
Lifestyle

“There is no more beautiful place to live, work, and play than New Mexico,” Barela says.

“We average about half a million tourists per year,” Campbell says of Carlsbad.

Carlsbad’s tourism industry is growing, too. They are in the initial phases of building the Cascades at Carlsbad, which will take at least two years to see its first stages of completion. The Cascades will be an outdoor market with an eight-screen theater, a “significant water feature,” and a projected 650,000 square feet of retail shopping, Campbell says. He also says that a few waterparks and major hotels have already shown interest in the project.

College football is also expanding in the state. In Portales, Eastern New Mexico University and the city of Portales have announced they will build a projected $12 million stadium inside the city and on campus, Livengood says.

“You certainly have innumerable options in terms of recreation,” Vierck says, citing the mountains with streams full of trout, the White Sands National Monument, Santa Fe’s arts scene, and the history of human settlements. “In many respects, New Mexico is the oldest state in the Union,” Vierck says. The Juan de Oñate party of Spaniards claimed territory in the state in 1598, nine years before the English settled at Jamestown in 1607.

Thanks to the archaeological sites at Blackwater Draw near Clovis, the history and pre-history of the Native Americans in the area are also widely studied.

More Info

New Mexico Department of Economic Development