Commentary: Recently I sat in the audience listening to a spoke person for Spaceport America explain the benefits of the Spaceport to the local economy. I was underwhelmed. Touted recent accomplishments was the filming of music videos and a intercollegiate science fair.
After the presentation ended, as the audience left the room, I asked the speaker for her best economic argument for Spaceport America. She said that was none. That if were to require the Spaceport to pay for itself, well it just wasn’t possible. She argued that New Mexico should support the space port because travel to space was romance.
I was shocked. The justification for the massive government support of the Spaceport, the reasons why voters have supported taxes to fund it always has been and always will be economic development. Yet here was a spokesperson saying the Spaceport was not and would not contributing to economic development.
And with that I now admit I was wrong. I have long been an advocate for the Spaceport, dating back to the election in April 2007, when Sierra and Dona Ana County voters approved a gross receipts tax increment to raise $49 million dollars to help fund the Spaceport. But Spaceport America just hasn’t panned out and it is time to end public subsidies.
In all the Spaceport cost $220 million dollars. Of that two-thirds by the state of New Mexico with the rest coming from bonds issued by Dona Ana and Sierra Counties.
The Spaceport was projected to create a thousand jobs or more. This hasn’t happened. Anchor tenant Virgin Galactic has yet to fly a single paying customer. SpaceX was briefly expected to be a tenant but now operates in Brownsville, Texas instead. In fact, the facility has been reduced to renting itself for music videos to generate revenue.
A look at Spaceport America’s 2017 financial statement tells the story. Total revenues were $11.8 million, $9.6 million or 81% came from government sources. Actual revenues generated from private sector activity was $2.2 million The government spent a little over four dollars for every dollar of revenue. Or putting it another way, the actual economic activity generated represents a 1% return on the $220 million investment.
In the early days, when Spaceport America was among the first out of the gate, there was considerable interest. But quickly other spaceports, in California and in Texas, came online. It did not help at all that the Martinez appointed New Mexico Space Authority Board cut spending by 57% in 2012, undermining the Spaceport just as the space industry was starting to take off.
Many point to the promise, always thought to be just around the corner, of Virgin Galactic, which many claim is about to bear fruit. Richard Branson says he wants to personally travel to space by July. Branson being the Elisha like figure that heads Virgin Galactic, always promising Utopia in times to come. We will see.
If Virgin Galactic does come through, it would be egg on my face. That I’ve supported Spaceport America for so long—twelve years. And just as the ship comes in, I give up on it. Now that would be ironic.
Christopher A. Erickson, Ph.D., is a professor of economics at NMSU. He teaches courses in economic development. The opinions expressed may not be shared by the regents and administration of NMSU. Chris can be reached at chrerick@nmsu.edu.