NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB458 and SB479

SOURCES OF INFORMATION

LFC Files

Economic Development Department (EDD)

SUMMARY

Synopsis of HAFC Amendment

The amendment makes the appropriation from the general fund operating reserve. It also requires that the state receive a written commitment that New Mexico is one of three finalists for the spaceport site in order to spend these funds.

Synopsis of Bill

The bill appropriates $1,810.0 general fund in FY99, FY200 and FY2001 to develop the southwest regional spaceport to conduct environmental impact studies, obtain water resources, and develop a proposal in response to Lockheed Martin's site selection process. Expenditure of the funds is contingent on an indication from Lockheed Martin that New Mexico is a finalist in the competition for site selection [for a spaceport]. Unexpended balances at the end of FY2001 would revert to the general fund. The bill contains an emergency clause.

Significant Issues

In January 1998, Lockheed Martin initiated a process to choose one or more spaceport sites for launching and landing the VentureStar reuseable launch vehicle (RLV), the next generation of space vehicles after the space shuttle. As many as 14 states, including New Mexico, are in competition to become the spaceport site.

In preparing New Mexico's response to the request for proposals (RFP) from Lockheed Martin, the Office of Space Commercialization (OSC) in the Economic Development Department has identified two alternative New Mexico sites-Upham (about 35 miles north of Las Cruces) and Orogrande (at the southeast corner of White Sands Missile Range)-which could be submitted to Lockheed Martin. Depending on which site Lockheed Martin prefers, the OSC would require as much as $1.81 million to purchase water rights and to prepare an environmental impact statement. If the Orogrande site were selected as a finalist, the OSC would need to complete a new environmental impact statement at a cost of about $1,015.0. If the Upham site were selected as a finalist, the OSC would need about $500.0 to update an existing environmental impact statement. For either site, the OSC would need about $400.0 to purchase water rights. Additionally, the OSC has requested $260.0 in contractual services for project management and technical support in preparation of New Mexico's response to the Lockheed Martin RFP.

This bill provides full funding for the EDD request under the worst case scenario.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

This bill relates to SB479 which would provide all of the funds ($1.81 million) requested by the OSC. However, SB479 contains a technical error in placing the spaceport sites in Dona Ana county. The bill also relates to SB458 which provides $1.6 million for this purpose. SB458 does not include the faulty language with regard to Dona Ana county, but it does not fully fund the EDD request.

TECHNICAL ISSUES

This bill could be modified to make the appropriations contingent upon the specific site selected by Lockheed Martin.

OTHER SUBSTANTIVE ISSUES

During the 1998 special session, the New Mexico legislature appropriated $350.0 general fund to the economic development department (EDD) in House Bill 2 for the southwest regional spaceport. These funds were targeted for the state's RFQ reply. Additionally, the legislature passed Senate Bill 1 and House Bill 16, which appropriate $8.6 million from the general fund operating reserve for construction of roads, runways and other infrastructure for a spaceport site, which was contingent upon a nine to one match from federal or private sector sources and upon selection of New Mexico for development of a spaceport site for reusable aerospace launch vehicles. Since 1994, New Mexico has spent over $2.5 million on the spaceport effort.

Estimates of potential economic impact of the spaceport, prepared by the Physical Science Laboratory at New Mexico State University, indicate that about 2,500 direct jobs would be created and over 3,000 indirect jobs through multiplier effects. These positions would be responsible for assembling the RLVs as well as for operating the spaceport facilities and would result in total direct personal income from the spaceport exceeding $120 million.

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