A Close Look at Spaceport America’s FY 2017 Budget Request

WhiteKnightTwo visited Spaceport America for the first time in three years on Wednesday. Below, you can see a full-scale model of SpaceShipTwo on the ramp. (Credit: Virgin Galactic)
WhiteKnightTwo visited Spaceport America for the first time in three years on Wednesday. Below, you can see a full-scale model of SpaceShipTwo on the ramp. (Credit: Virgin Galactic)

Attention New Mexicans!

Have you been wondering exactly what Spaceport America costs to operate? Curious about what officials spend money on? Anxious to know what this is going to cost you in the fiscal year ahead?  Dying to learn how much anchor tenant Virgin Galactic is contributing to the budget?

Well, look no further. Parabolic Arc has the spaceport’s budget request for FY 2017, which begins on July 1. There’s a full description of spending and projected revenues right after the break.

SPACEPORT AMERICA
Proposed FY 2017 Budget

CATEGORYAMOUNT
Personnel (20)
$1,739,700
Exempt Positions (3)$267,700
Executive Director
Chief Financial Officer
General Counsel
Permanent Positions (6)$391,800
Aerospace Operations (2)
Marketing & Sales (1)
Maintenance & Ground Operations (1)
Administrative Operations (2)
Term Positions (11)$662,900
Aerospace Operations (2)
Maintenance & Ground Operations (4)
Marketing & Sales (3)
IT Operations (2)
Contractual$2,362,100
Protective Services $1,800,000
24/7 Fire Protection
24/7 Armed Security Protection
24/7 Emergency Medical
Other Contracts$562,100
Audit
Environmental (NEPA Compliance)
Legal
Other Expenses$2,297,100
Facilities Maintenance$668,000
Rent: Land/Office Space/Ranchers $375,900
Utilities — Electricity$275,000
DoIT Communications$210,300
Property Insurance$ 179,500
Supplies$94,000
Equipment$67,000
State Vehicles$60,400
Employee Travel Out of State$60,000
Employee Training$56,200
Building/Structures$50,000
Equipment Rentals $48,200
Advertising $45,500
Miscellaneous (postage, subscriptions, etc.)$39,200
Printing/Photos $25,800
IT Equipment/Maintenance$25,400
Employee travel in state $ 11,400
Board Travel $5,100
 TOTAL: $6,398,900

So, there are a few takeaways here:

  • Sixty-five percent of the $6.4 million budget — $4.16 million — is spent just staffing the spaceport. That figure includes nearly $2.4 million for 20 staff positions plus another $1.8 million for full-time fire, EMT and security serious at the remote site.
  • The full-time onsite fire and EMS services are required because the nearest services are an hour away in Truth or Consequences and are all volunteer.
  • The authority is budgeting $668,000 for facilities maintenance alone for a spaceport that is not being utilized for its primary purpose — spaceflight — by its anchor tenant. That amount is in addition to the cost of five staff positions devoted to maintenance & operations.
  • Virgin Galactic and SpaceX are tenants of the facility, with other customers using it for periodic suborbital launches, commercial and film shoots, and other purposes. The spaceport authority is making an active effort to increase the number of tenants and users.

OK, now that we have looked at expenditures, let’s examine the spaceport authority’s revenue projections for the coming fiscal year.

SPACEPORT AMERICA
Projected FY 2017 Revenues

SOURCE
AMOUNT
Virgin Galactic Facilities Lease & Ground Rent$1,030,000
Virgin Galactic User Fees$600,000
Excess Pledged Revenue $585,000
Utilities$167,000
Special Events*$750,000
Other Aerospace Customers* $680,000
Tourism / Merchandising*$150,000
Sponsorships *$174,000
Subtotal: $4,136,000
New Mexico General Fund Plus Special Appropriation $2,262,000
 Total:$6,398,000

*NOTE: NMSA revenue is based on aggressive marketing and fully functioning spaceport

The revenue estimates appear rather optimistic. How? Let us count the ways:

  • The $600,000 in Virgin Galactic user fees will only appear if the company actually uses Spaceport America for spaceflights between July 1, 2016 and June 30, 2017.  If the testing of the second SpaceShipTwo takes the entire fiscal year, and Virgin continues to conduct those tests in Mojave, Calif., the spaceport authority will have a significant hole in its budget.
  • Virgin Galactic is set to roll out SpaceShipTwo No. 2 on Feb. 19. The company is not talking about its flight test schedule, so it remains unclear when it will move operations down to New Mexico and begin revenue flights.
  • Much depends upon all those little asterisks (*) . A total of $1.75 million, to be precise. That’s 42.4 percent of the expected revenue subtotal of nearly $4.14 million. Without “aggressive marketing and a fully functioning spaceport,” that number could shrink. On the other hand, spaceport officials could always bring in more money than expected.

Revenues account for 64.4 percent of the total projected budget. Spaceport officials are seeking an additional $2.26 million from the state government to help fund operations. That figure includes $462,500 in general funds and a $1.8 million special appropriation.

The figure is higher than the $456,000 in state funding the authority has sought in previous years. Officials say the additional funds are required because tax bonds used to fund operations are expiring, the savings account has been depleted, and anchor tenant Virgin Galactic is not yet flying.

Officials are describing FY 2017 as a bridge year. They expect state funding to diminish in 2018 as Virgin Galactic begins to fly and its annual lease payment triples from $1 million to $3 million. The authority also expects that its increased marketing efforts will start paying off with more revenues from tenants and users.

If Virgin Galactic user fees and other revenues fail to meet projections for FY 2027, the spaceport authority would be required to seek additional funding from a state government whose own revenues are being hit hard by the sharp decline in oil prices. There is already a lot of frustration and impatience in Sante Fe over delays with the $225 million taxpayer-funded projects.

UPDATE: I should have mentioned that the $585,000 in excess revenues is coming from taxpayers in Dona Ana and Sierra counties. Voters agreed to increase county use taxes to support construction of the spaceport. The excess revenues are what is left over after paying off bonds that were sold to finance construction.

This amount brings total taxpayer support just for operations to just under $2.85 million for FY 2017.

State Sen. Lee Cotter (R-Las Cruces) wants to end this practice of local residents subsidizing operations. He said this was never the intent of the original tax.