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F I S C A L I M P A C T R E P O R T
SPONSOR Leavell
ORIGINAL DATE
LAST UPDATED
01/24/07 HB
SHORT TITLE
Certified Business Incubators
SB 67
ANALYST Hanika Ortiz
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
$750.0
Recurring
General Fund
Duplicates House Bill 175
SOURCES OF INFORMATION
LFC Files
Responses Received From
Economic Development Department (EDD)
SUMMARY
Senate Bill 67 appropriates $750 thousand to EDD for expenditure in FY08 and FY09 for
operating funds for certified business incubators in New Mexico. No single recipient will receive
more than $150 thousand per year, and any single recipient receiving funding must provide a
fifty (50) percent cash match.
FISCAL IMPLICATIONS
The appropriation of $750 thousand contained in Senate Bill 67 is a recurring expense to the
general fund for expenditure in fiscal years 2008 and 2009. Any unexpended or unencumbered
balance remaining at the end of fiscal year 2009 shall revert to the general fund.
U.S. Department of Commerce reports that every $1 in public investment in incubators returns
more than $4.50 in taxes and economic growth. Nationwide, 87% of firms that graduate from
business incubators remain in business after five years.
pg_0002
Senate Bill 67 – Page
2
SIGNIFICANT ISSUES
EDD reports that state requirements for certification of business incubators provide a structure
for success for developing incubators and evaluating the effectiveness of existing business
incubators.
EDD further reports that the average cost of starting an incubator is $2.3 million; and business
incubators are rarely self-sustainable. Often the host community must provide the funding and
resources to sustain the incubator in addition to the development costs. State and federal sources
of funding for “soft costs" associated with providing staff and business services for incubators
are nearly non-existent. The challenges of developing and sustaining incubators in communities
that cannot provide this funding are substantial without these outside sources.
ADMINISTRATIVE IMPLICATIONS
EDD has been administering the business incubator certification program since its creation in
2005, and can continue to do so with existing staff and resources.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicates House Bill 175 “Certified Business Incubators"
OTHER SUBSTANTIVE ISSUES
EDD notes that cultivating local entrepreneurs can be an important source of jobs for small, rural
communities that lack the resources and population base to recruit industry.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
EDD further notes since the beginning of the New Mexico Incubator Certification Program in
2005, four business incubators have been certified statewide: two in Albuquerque, one in Santa
Fe and one in Farmington. Other communities statewide, including Hobbs, Clovis, Cuba, Silver
City, Tucumcari and Las Vegas, are in various stages of trying to develop business incubators
and attain certification. A funding source such as this legislation is essential if these and other
communities are to be successful in starting and maintaining effective business incubators. EDD
believes without this appropriation opportunity for job creation and economic growth will be lost
to the communities that cannot identify these resources on their own.
POSSIBLE QUESTIONS
EDD reports that nationwide, 87% of companies that graduate from business incubators remain
in business after five years. How do participating New Mexico companies compare.
AHO/csd