SANTA FE (KRQE) – A bipartisan proposal aimed at attracting high-paying jobs to New Mexico is starting to get some traction at the Roundhouse.
Senate Bill 10, sponsored by Sen. Mary Kay Papen, D-Las Cruces, and Rep. Nate Gentry, R-Albuquerque, gives companies a discount on their corporate taxes if they can show they made a major investment or added to their payroll. It’s called the New Revenue Income Tax Credit.
Companies in or around the state’s four biggest cities would have to prove they made a $5 million capital investment in New Mexico or created at least 10 new jobs. Businesses in more rural communities would have a minimum requirement of half that to get the credit.
Qualifying jobs would have to pay an average or above-average wage. Based on the latest federal data, an Albuquerque company applying for the credit would have to show the jobs they added paid close to $54,000 a year or more.
Companies getting the credit would receive a 30 percent discount off of any increase in corporate taxes they paid that year, or the “new” revenue they’re providing to the state.
If the company folded up shop or laid off workers within two years of getting the credit, they’d have to pay the tax credit back.
The bill is part of a jobs package that Think New Mexico, a non-partisan think tank, is pushing this session.
Think New Mexico executive director Fred Nathan says the benefit of the idea is that it rewards companies only after they’ve proven performance, not beforehand. Incentives paid up front have had a rocky history at times.
In 2009, Schott Solar received state, county and city incentives to open up a solar plant in Mesa del Sol with the promise that hundreds of jobs would follow. Three years later, Schott Solar announced it was pulling the plug on the Albuquerque plant, leaving the state out $16 million.
Nathan points to the Spaceport as an example of a major up front investment that still needs to pay off.
“Now we have to cross our fingers and hope it creates jobs,” Nathan said. “What’s different about SB 10 is it creates incentives after the jobs are created.”
A fiscal study of the bill estimates the state would pay out around $3 million for the credit this coming fiscal year. Analysis of the bill worries that companies looking to hire 20 workers might be inclined to spread those jobs out to qualify for the credit in multiple years, as opposed to hiring all at once.
SB 10 unanimously cleared its first committee Monday night and is waiting for a hearing in Senate Finance.
Utah has a similar incentive on the books.