Updated on March 5 at 8:34 a.m. PST with additional information about space companies located in the Los Angeles area and the benefits of industry clusters to employers and employees.
by Douglas Messier Managing Editor
The state of New Mexico has proposed that Virgin Galactic establish a production facility at Spaceport America, which is where the company plans to begin flying tourists on suborbital space rides later this year. KRQE TV reports:
The New Mexico Economic Development Department says they have a proposal to bring Virgin Galactic’s manufacturing to the Spaceport. Right now, the manufacturing location is in the Mojave desert. Spaceport America has five permanent tenants that are conducting a variety of experiments; including one company that uses laser technology to help land on the moon.
After waiting 16 years for Virgin Galactic to begin space tourism flights from Spaceport America, New Mexico legislators have hit upon a new idea to try to get some revenues out of the place once the company begins commercial service later this year. The Las Cruces Sun-Newsreports
A bipartisan billintroduced in the state Legislature seeks to close a loophole that excluded spaceflight passenger tickets from gross receipts taxes. The move aims to harvest revenue from ticket sales as Virgin Galactic prepares to begin regular commercial service later this year.
H.B. 72 would amend a statute that excludes receipts “from launching, operating or recovering space vehicles or payloads in New Mexico” from gross receipts taxes, clarifying that sales “for transporting any person into or near space” would be taxable.
A 2019 ruling by the state Taxation and Revenue Department on the question of taxing flights to space essentially treated passengers as freight, stating: “… it seems reasonable to consider passenger revenues as receipts received for the operation of a space vehicle.”
“When those exemptions were drafted, it was not in anyone’s mind that people would be a payload,” state Rep. Jason Harper, R-Rio Rancho, told the Las Cruces Sun-News. Harper is a co-sponsor of the bill.
Virgin has sold about 700 tickets to customers at three different prices: $200,000 (until 2013); $250,000 (2013-2021); and $450,000 (2021-present). The amount of the tax would depend upon where it was leveled in Dona Ana County (where Virgin Galactic has its headquarters) or Sierra County (home of Spaceport America).
Gross Receipts Tax
Dona Ana County
The state government would receive most of the tax revenues, with the county receiving a smaller portion.
After more than a decade of delay, Virgin Galactic says it plans to complete flight test of its SpaceShipTwo VSS Unity spacecraft this summer. Commercial suborbital tourism flights are set to begin in the fourth quarter of this year.
Fourteen years ago, Virgin Galactic and New Mexico promised “tens of thousands” of tourists would fly to space from Spaceport America by 2019. Total thus far: 0.
by Douglas Messier Managing Editor
When they announced in December 2005 that Virgin Galactic would locate its space tourism business in New Mexico, Virgin Founder Richard Branson and Gov. Bill Richardson made a number of eye-popping claims about why taxpayers should back a plan to build the Southwest Regional Spaceport to serve as the space tourism company’s home base:
$331 million in total construction revenues in 2007;
2,460 construction-related jobs;
$1 billion in total spending, payroll of $300 million and 2,300 jobs by the fifth year of operation; and,
$750 million in total revenues and more than 3,500 jobs by 2020.
Virgin Galactic would sign a 20-year lease as anchor tenant and pay fees based on the number of launches it conducted. New Mexico would use the spaceport, Virgin’s presence and the funds generated to develop a large aerospace cluster.
Surprisingly, New Mexico would spend more money, $225 million, to develop a facility now known as Spaceport America than the $108 million that Branson planned to spend on developing a fleet of five SpaceShipTwos and WhiteKnightTwo carrier aircraft.
Among all the big numbers in the announcement, there was a truly astounding one that was deemed so important it was mentioned twice. (Emphasis added)
Bill Richardson, who pushed through the construction of the world’s first purpose-built commercial spaceport as governor of New Mexico, has been accused of involvement in a sex trafficking ring run by the deceased financier Jeffrey Epstein and socialite Ghislaine Maxwell.
The Daily Beastreports on court documents that were unsealed last week in a defamation suit against Maxwell by a woman who claimed she was forced to have sex with Richardson and other prominent figures:
The tax increase that Sierra County voters approved in 2008 to support the construction of Spaceport America has no expiration date and no restrictions on the use of excess revenues that might be collected each year, according to the ordinance passed by county commissioners.
This one deals with financing at Spaceport America. It requires a bit of understanding of the history of how it was funded.
So, here’s the back story: In 2007 and 2008, residents of Dona Ana and Sierra counties approved a quarter cent increase in the sales tax to help pay for the construction of Spaceport America, where billionaire Richard Branson plans to send rich people on suborbital joy rides.
New Mexico State Sen. Lee Cotter (R-Las Cruces) has renewed efforts to bring tax relief to residents of Dona Ana and Sierra counties relating to their support of Spaceport America.
In 2007, residents of the two counties agreed to increase their taxes to help fund the construction of the facility, which is located outside of Truth or Consequences. The taxes remain in place to pay off bonds sold to fund Spaceport America’s construction.
New Mexico State Senator Lee S. Cotter (R-Las Cruces) has introduced legislation to repeal the New Mexico Spaceport Authority’s (NMSA) power to issue bonds and limit its ability to used tax revenues to support Spaceport America.
Senate Bill 75 aims to remove the ability of NMSA to “issue revenue bonds and borrow money”.
New Mexico legislators spent Monday down in Las Cruces reviewing the finances of Space America. Members of the New Mexico Finance Authority Oversight Committee discovered that more had stayed the same than had changed in recent months.
Here’s a summary of the key points:
Virgin Galactic will likely not begin flying paying passengers for at least another 8 months. It’s not really clear how realistic that goal is; much depends on how upcoming test flights using a brand new motor go in Mojave.
Local taxpayers are partially on the hook for helping to keep the $218.5 million, taxpayer-funded spaceport operational until Virgin Galactic begins commercial flights. Currently, the $218.5 million taxpayer-funded spaceport is being used to launch sounding rockets and shoot commercials for Land Rover.
Operations are being partially funded from excess tax revenues levied in Dona Ana and Sierra counties that could be otherwise spent paying off spaceport bonds or making infrastructure improvements such as paving a southern road to the spaceport.
The $14.5 million that authorities have put aside to pave the road isn’t remotely enough to do the do a full paving job.
Construction on the 24-mile road – which will provide more direct access from Las Cruces – is likely to begin next summer after the Bureau of Land Management completes its review of the project.
SpaceX is about five months from being able to conduct flight tests of its reusable Falcon 9 vehicle at the spaceport.
A new, unidentified tenant is expected to begin flights of whatever it flies sometime during fiscal year 2016.
While Richard Branson’s recent appearances on U.S. TV shows have undoubtedly helped him to sell many copies of his new book, The Virgin Way, the British billionaire unintentionally stirred up a hornet’s nest in the process.
On “The Late Show With David Letterman,” Branson revealed that SpaceShipTwo’s first commercial flight — which he will take with his son, Sam — has been delayed from the end of this year until February or March 2015 at the earliest.
The Doña Ana County Board of Commissioners will be considering how it distributes tax revenues from the Spaceport America project to three school districts at its meeting on Tuesday.
The funds are derived from a 1/4 cent tax hike that county residents approved to help fund development of the $225 million spaceport project. The three school districts receive 25 percent of the tax revenue directly.
The New Mexico Spaceport Authority (NMSA) has approved borrowing $6.5 million to build a Spaceport America visitors center in Truth or Consequences. Meanwhile, Dona Ana County officials are preparing to bid out a contract to pave a southern road that leads to the remote spaceport.
However, the projects won’t measure up to the original plans for them due to funding limitations. The budget squeeze is a result of years of delay in the start of commercial operations by Spaceport America’s anchor tenant, Virgin Galactic.
The delay in the start of Virgin Galactic flights has forced the New Mexico Spaceport Authority to partially fund operations of Spaceport America from a gross receipts tax originally approved to pay for the facility’s construction. It’s a practice one state senator now wants to end but which the spaceport’s management says is essentially to keeping the lights on.
Eager to convince skeptical southern New Mexico voters to approve a tax hike to help fund the construction of Spaceport America, then-Gov. Bill Richardson promised that the revenues would bring millions of dollars in direct support to local schools.
Voters in Sierra and Dona Ana counties approved a quarter-cent increase in the local use tax, and Richardson kept his promise. The tax has raised $32 million in revenues so far, with a quarter of it — $8 million — going to local schools to fund additional teachers and new programs.
Now, with Richardson gone due to term limits, that deal is in danger of unraveling as legislators from other areas of the state are eying the revenue.