ALBUQUERQUE, N.M. (AP) – Republican Gov. Susana Martinez and the Legislature decided this year to pour tens of millions of dollars more into wooing businesses and spurring job creation, an infusion that New Mexico's top economic development official said Friday will help make the state even more competitive.
"It's an arms race in economic development. Everybody is chasing that bright shiny ball out there," Economic Development Secretary Jon Barela told lawmakers during a Legislative Finance Committee meeting in Albuquerque.
The key, he said, is balancing the incentives offered to private companies with the revenues and jobs those businesses promise to create.
New Mexico already spends close to $470 million annually on tax incentives and other programs aimed at boosting economic development. While the economy is growing faster than in recent years, legislative analysts say the state has seen little growth in jobs despite the "full toolbox" of incentives provided by lawmakers.
New Mexico has had 33 straight months of job growth, but the rate of that growth continues to lag behind neighboring states and the nation as a whole, according to labor statistics.
Rep. Luciano "Lucky" Varela, D-Santa Fe, said he's disappointed in the numbers, particular for rural areas in northern New Mexico.
The fight over incentives, taxes and job creation will only become more politicized in the coming election year, Varela said.
"I don't have high expectations that we'll do better in New Mexico," he said.
Barela dismissed Varela's pessimism, saying New Mexico is now in the top half of the nation when it comes to wage growth and is ranked No. 1 in the country when it comes to the growth of trade-related jobs.
State economic officials also pointed to recent business rankings by CNBC that put New Mexico in the top half of the nation. The state jumped 13 places this year, marking one of the biggest gains.
Barela also said New Mexico is seeing revenue increases across the board, from corporate and personal income taxes to gross receipts taxes, and that has helped to offset declines in the oil and gas industry.
"These numbers belie any kind of negativity," Barela said.
Martinez and the Legislature this year approved $50 million for projects under the Local Economic Development Act, or LEDA. That's more than three times what was set aside for the program last year and it puts New Mexico ahead of Texas, Arizona and California in such spending per capita.
The money, which flows through local governments, is generally used to help with land purchases, building improvements and other infrastructure needs sought by private companies.
Following town halls around New Mexico and discussions with lawmakers, Barela said his office is crafting policies to ensure that the money is spent wisely and that the program is transparent.
The Legislative Finance Committee, which is instrumental in crafting the budget each year, will also be reviewing expenditures and job creation data given the significant increase in LEDA funding.
The Economic Development Department aims to create at least 1,500 jobs with LEDA money in the next fiscal year.
A previous review by the committee found that many of the jobs funded through incentive programs such as LEDA and job training disappear within a few years after the incentives expire.
Going forward, Barela told lawmakers his department wants to avoid this by establishing guidelines and metrics for awarding the funding.
"This is very, very important and we want to make sure we do it right," he said.