ARTS AND CULTURE
As defined in this report, the Arts and Culture Industry consists of Arts, Entertainment and Recreation (excluding spectator sports, amusement, gambling and recreation), publishing, libraries and archives, and arts and culture related retail trade, professional services and education. Due to the strong connection between the Arts and Culture Industry and tourism, Accommodations and Food Service is also addressed in this report, although not defined as part of the Arts and Culture Industry.
Economic Impact
Employment. As defined in this report, the Arts and Culture Industry employed over 2.7 million people in the US in 2006, representing 2.03% of all employment. In NM, the industry employed over 15,000 people, equivalent to 1.86% of total employment. In northern NM, only Santa Fe has a higher percentage of arts and culture employment than the US or NM, at nearly 6.0%. Taos County’s arts and culture employment is 2.09% of its total employment. Other studies that define Arts & Culture more broadly (for example, by including film, music and recreation) show a greater economic impact in terms of jobs and tax revenue. Such studies are summarized below:
As defined in this report, the Arts and Culture Industry has declined in employment by nearly 6% in the US between 2001 and 2006, and by 1% in NM during the same time period. While the Arts, Entertainment and Recreation sector has grown overall by 13% between 2001 and 2006 in NM, the majority of growth can be attributed to gambling activities, included in the Entertainment Report. Traditional arts and culture activities either remained flat or grew only slightly, as with museums and performing arts, at 7% and 4% growth, respectively.
The graphs below show that performing arts, fine arts, museums and historical sites (“Arts”) have grown slightly in employment between 2001 and 2006 in NM, as has arts and culture-related education. Employment in arts and culture-related retail declined in both the US and NM during this period. The notable difference between the US and NM lies in the Information sector, which includes publishing, libraries and archives. While these sectors declined in employment in the US, they grew slightly in NM.
Arts & Culture is one of NM’s primary tourist draws. Tourism is a $5.5 billion industry in NM, attracting 11.5 million domestic visitors in 2007.The NM Tourism Department reports that historical sites, Indian culture, and arts are among the top five reasons people visit NM. In terms of number of visitors per year, Santa Fe and Taos are NM’s 2nd and 3rd top destinations, with Los Alamos, Chama and Red River ranked in the top 20. Accommodations and Food Service, a NAICS code most closely associated with tourism, employed over 11 million people in the US in 2006, equivalent to 8.31% of all employment. As a percentage of total employment, Accommodations and Food Service employs more people in NM than the US as a whole, at 9.71% or nearly 78,500 people. Santa Fe County and Taos County have even greater percentages of Accommodations and Food Service employment, at 12.81% and 18.80%, respectively.
Tax Revenue. The Arts & Culture Industry generated almost $21 million in NM gross receipts tax revenue or 0.63% of all NM gross receipts revenue in 2007, and over $4 million in Santa Fe County. Accommodations and Food Services comprised nearly 7% of NM’s total gross receipts tax revenue in 2007, at nearly $223 million. Santa Fe County generated nearly $30 million, or 10.18% of its total gross receipts tax revenue from Accommodations and Food Service, with Taos County generating nearly $6 million or 13.70% of its gross receipts tax revenue from this sector.
Lodger’s tax is another measure of the tourism industry, specific to overnight accommodations. In 2007, lodger’s tax revenue ranged between $8.5 million (City of Santa Fe) and $225,000 (Taos County) for various jurisdictions in northern NM. The lodger’s tax jurisdictions in yellow represent those which collected the greatest amount of tax in 2007 over a five-year period. These jurisdictions include Rio Arriba County, the Village of Chama, Taos County, the Village of Red River, and the City of Santa Fe, which recovered from a slump between 2003 and 2005. Lodger’s tax in the Town of Taos peaked in 2006, falling only slightly in 2007. Both Los Alamos County and the City of Española fell to five-year lows in 2007, after peaking in 2006 and 2004, respectively.
Wages. Wages in the Arts and Culture Industry are generally low, averaging \$30,000 in the US and under $18,000 in NM for the entire Arts, Entertainment and Recreation sector (NAICS 71). Wages for Accommodations and Food Service are even lower, averaging under $16,000 in the US and $13,000 in NM. Average annual wages in NM for specific arts and culture occupations are listed in the table on the next page, with the number of employees for each occupation provided in parenthesis. Despite low wage averages for the Arts, Entertainment and Recreation sector, many jobs in fine arts, museum studies, publishing and arts-related professional services and education pay reasonably well.
Human Capital
Because of the long history of the Arts and Culture Industry in northern NM, the region has developed and continues to attract talented artists, designers and creative individuals. As a result, quality education and training programs in the arts are available at many institutions of higher education in the region.
The College of Santa Fe offers many high-quality educational opportunities in the arts, including Bachelor’s Degrees in Studio Arts, Art History, Graphic and Digital Design (with tracks in graphic design, motion graphics and web design, and inter-active art and technology), Creative Writing, English and Documentary Studies.
Santa Fe Community College (SFCC) offers Associate of Art degrees in Fine Arts and Media Arts, an Associate in Applied Arts degree in Gallery Management, and Associate in Applied Science degrees in Interior Design and Media Arts. Media Arts offers concentrations in animation, digital imaging, graphic design, moving image arts, video production and web design. SFCC also offers one-year certificate programs, designed to prepare students for employment, in Creative Writing, Fashion Design, Hospitality and Tourism, Interior Design and Media Arts.
Northern NM College in Española offers an Associates of Arts degree in Fine Arts, with concentrations in arts, arts entrepreneurship, flamenco dance, music, southwestern folk art, technical theatre and theatre. UNM-Taos offers an Associate of Applied Science degree in Visual Arts; Associate of Arts degrees in Liberal Arts and Southwest Studies; and certificates in Applied Arts and Crafts, Digital Graphic Design, Multimedia, Painting and Drawing, Southwest Art and Theatre. UNM-Los Alamos offers Associates of Arts degrees in Liberal Arts, Southwest Art and Studio Art; and an Associates of Applied Science degree in Digital Media Arts. Certificates are available in most of these areas, as well as Hospitality Administration and Management.
Infrastructure
Northern NM’s Arts and Culture Industry is well-established in the City of Santa Fe and the Town of Taos, two of NM’s top tourist destinations. Both locations have historic sites and vibrant art communities. Over the years, these communities have developed physical infrastructure in the form of world-class museums, visitor centers, and quality hotels and restaurants which support arts and culture related tourism. Santa Fe’s new Sweeny Convention Center and Palace of the Governors Museum are significantly improving and expanding tourism and arts and culture infrastructure in the industry’s anchor community.
The Tribal nations and Pueblos of northern NM are well-known for traditional and contemporary art forms, and are of great cultural interest to tourists. While some small tribal museums and art markets exist, Native American arts and culture are supported largely through the Museum of Indian Arts & Culture, the Institute of American Indian Arts Museum, the Palace of the Governor’s Native American artist program, and arts and crafts markets, such as Santa Fe Indian Market. In terms of cultural tourism, the Tribes and Pueblos vary in terms of infrastructure to support arts and culture related tourism. Taos Pueblo, San Ildefonso Pueblo and Picuris Pueblo have formal tourism programs and allow tourists to visit their communities. Santa Clara Pueblo plans to reestablish formal tours of Puye Cliffs, its ancestral home, in 2008. In other Pueblos, infrastructure primarily consists of the shops of native artists who sell their work to the public.
Some of northern NM’s small villages have also become recognized arts and culture destinations. Abiquiu and Dixon have developed artist studio tours; Chimayo, Los Ojos and Española have thriving fiber arts businesses; and historic churches and villages throughout the region continually draw visitors.
Outside of northern NM’s established tourist destinations, downtown retail districts are providing the necessary infrastructure to develop the Arts and Culture Industry through the NM MainStreet Program. Española’s historic downtown has been bypassed in previous decades by big box development on the major highway corridor through town. This development pattern has catered to travelers moving between Santa Fe and Taos, offering little reason for visitors to stay and visit Española. With the opening of a Fiber Arts Center, development of the San Gabriel Mision y Convento, and plans to renovate the El Rito Theatre as a performing arts space, Española is attempting to revitalize the heart of its community and to create opportunities for local artists, residents and tourists alike. Los Alamos’ MainStreet effort is focused on creating more retail opportunities to prevent leakage into surrounding communities and a sustainable tax base for the county. Diversification away from government dependence is at the heart of these efforts.
Public Policy
The State of NM provides significant support to the Arts and Culture industry through state agencies, state museums, and state grant programs. Significant state programs supporting Arts and Culture are listed below.
NM Arts and Culture Districts. Adopted by the NM Legislature in 2007, the Arts and Culture District Act gives the State of NM authority to designate arts and culture districts built around one or more art and culture resources and characterized by involvement in preservation, promotion and educational aspects of arts and culture. The first two districts—Silver City and Las Vegas—were announced in 2008. The arts and culture districts are eligible for state grants and contracts for planning, design, construction and renovation activities. Cultural properties within an arts and culture district are eligible for an additional $25,000 tax credit for rehabilitation and preservation activities. This is in addition to an existing $25,000 maximum tax credit for all cultural properties.
New Mexico MainStreet. Developed in the 1970s by the National Trust for Historic Preservation, MainStreet restores prosperity and vitality to downtowns and neighborhood business districts through a combination of historic preservation and economic development activities. The New Mexico Economic Development Department (NMEDD) certifies NM communities as MainStreet partners, making them eligible for technical assistance, project manager training, resource team visits, design assistance, board training, fund-raising, marketing, lobbying, consultation, and community development assistance. MainStreet also sponsors architecture projects through the University of New Mexico Design Planning and Assistance Center (DPAC). In 2005, New Mexico MainStreet, NMEDD, and the New Mexico Tourism created a new travel website called Off the Road which shows travelers where to shop and dine on main streets, town squares, and plazas. Funding for these activities comes from NMEDD’s general appropriation, and directly from the State Legislature.
NM Creates is a new brand developed by the Museum of New Mexico Foundation used to purchase over $1 million in works by NM artists and artisans for sale in museum shops and on the internet. NM Creates features over 1,000 works from 800 NM artists, and has increased revenue at the Museum Shops from $325,000 in 2001 to over $1 million in 2007 NMEDD and the Foundation are planning to partner in opening new NM Creates stores in MainStreet Districts throughout the state. NM Creates would operate similar to a franchise, with the stores stocked, managed and operated at the local level.
Opportunities and Challenges
Arts and Culture is a mature and thriving industry in northern NM, anchored by Santa Fe. As such, its greatest challenge is to protect its position and market share relative to other established and emerging markets, and to simultaneously grow, diversity and innovate in order to remain vibrant and relevant. This is especially important given slow growth in traditional sectors of Arts and Culture in recent years.
Economic Impact of Santa Fe’s Arts and Culture Industries, a study conducted by the UNM Bureau of Business and Economic Research in 2004, identifies the following challenges for the Arts and Culture Industry in Santa Fe County:
1. Declining affordability, resulting in out-migration of young people, loss of cultural diversity, flight of artists to more affordable locations, and shortages in low to medium wage service workers.
2. A disconnect between artist and art markets, causing only a small percentage of art sold in Santa Fe to be locally produced.
3. Lack of integration between creative and technical/applied art fields, which is limiting flexibility and growth.
BBER recommends a three-pronged strategy to revitalize the Art and Culture Industry. The strategy includes: 1) investing in local diversity and talent through the public schools, preparing students for work in the Arts and Culture Industry of the future, and addressing affordability issues; 2) regionalizing assets and strengthening connections with Albuquerque and northern NM communities; and 3) developing new marketing strategies to strengthen Santa Fe’s brand. The challenges and recommendations citied by BBER are relevant for the region as well as Santa Fe County, and additionally, reach beyond Arts and Culture into other regional industry clusters. In addition, stakeholders in this process have suggested better public policy to support cultural entrepreneurs and arts and culture businesses. These enterprises represent the core of the Arts and Culture Industry. Yet frequently they are left without support to pay the high costs of living and doing business that are, ironically, created in part by the industry’s success.
ENTERTAINMENT
As defined in this report, the Entertainment Industry consists of film and music, broadcasting, performing arts, spectator sports, gambling and other amusement activities, excluding outdoor recreation.
Economic Impact
Employment. The Entertainment Industry employed over 1.5 million people in the US in 2006, representing 1.15% of all employment. In NM, Entertainment employed over 14,000 people in 2006, equivalent to 1.74% of all employment. Of all northern NM counties, Santa Fe County has the greatest concentration of Entertainment employment, at 1.22%. The economic impact of Entertainment, particularly for film and music, is difficult to quantify, due to a significant amount of part-time employment. In addition, the film industry creates jobs and revenue by hiring local vendors in industries ranging from catering to heavy equipment and tent rental to photography. This employment and tax revenue is not included in this report, as it is impossible to separate out from other retail and service activities. The NM Film Office estimates the industry’s financial impact at nearly $480 million for 2007. Currently, three separate studies of film’s economic impact are being conducted for the State of New Mexico.
The Entertainment Industry, as defined in this report, has increased by 10% in the US between 2001 and 2006, and by nearly 34% in NM for the same time period. As shown in the graphs on the following page, most segments of the industry have remained flat, with gambling increasing in employment. Please note that Indian Gaming is not included in these figures, as it is classified under government employment due to tribal ownership of Indian casinos. While employment in film and music industries remained flat in the US between 2001 and 2006, it nearly doubled in NM between 2004 and 2006, due to NM’s film incentives which were passed into law in 2002. The NM Department of Workforce Solutions projects that film’s presence in the Information Sector will make Information the state’s fastest-growing sector, growing 25.3% between 2004 and 2014.
The Arts and Culture
Tax Revenue. In 2007, the Entertainment Industry generated over $20 million in gross receipts revenue for NM, representing 0.61% of total gross receipts tax revenue. Entertainment generated a similar percentage of gross receipts tax revenue in Santa Fe (0.53%) and Taos (0.60%) counties, but far less in Rio Arriba and Los Alamos counties.
Wages. Generally, wages in the Entertainment Industry are relatively high, as illustrated by average annual US wages for motion picture and sound recording and performing arts. Unfortunately, in NM, the average wages for these sectors are much lower, reflecting significant part-time employment in film and music, and fact that the industry is relatively new and has not yet developed capacity for higher-paying jobs. As the industry grows, however, so will employment in full-time, high-paying jobs, such as those in postproduction and digital media. The table at right provides average annual wages for occupations associated with the Entertainment Industry, with the number of employees for that occupation in parenthesis.
Human Capital
When NM’s film incentives were rolled out in 2003, nearly all of the film labor force was imported from California. In four short years, the NM Film Office has partnered with local colleges to create film technician training programs at Santa Fe Community College, Northern NM College at El Rito, Eastern NM University in Roswell, Central NM College in Albuquerque, and the Doña Ana branch of NM State University. Film training is also planned to occur at the Los Luceros property in Alcalde, which was recently purchased by the State of NM from a private landowner. Today, NM has the largest crew base outside of the west coast, with 1,800 trained technicians. However, because the number of simultaneous film projects continues to increase, there is still unmet demand for film technicians. Also, as digital media and postproduction become established in NM, new workforce needs are emerging. Some of these needs are being met by local colleges, as described below.
In addition to the film technician training programs, northern NM offers several degree and certificate programs in media arts. The College of Santa Fe offers a Bachelor’s Degree in Graphic and Digital Design, with tracks in graphic design, motion graphics and web design, and inter-active art and technology. Santa Fe Community College (SFCC) offers an Associate of Art degree or certificate in Media Arts, with concentrations in animation, digital imaging, graphic design, moving image arts, video production and web design. UNM-Taos offers certificates in Digital Graphic Design and Multimedia, while UNM-Los Alamos offers an Associates of Applied Science in Digital Media Arts. The Institute of American Indian Arts (IAIA) offers a Bachelor’s Degree and Associates of Applied Science in Media Arts.
The NM Film Office invests in and encourages mentorship opportunities to ensure sustainability of the industry. Mentorship and educational programs include the IAIA Native Showcase Teen Program, NM Filmmakers programs and conferences, and the New Visions NM filmmakers’ competition. Upcoming mentorship and educational opportunities will focus on post-production and digital efforts to support new workforce demands as these sectors expand.
In addition to education and workforce training infrastructure, NM has the rare distinction of being a state that works well with the unions. As a result, productions can travel between NM’s two overlapping work zones, centered in Albuquerque and Santa Fe, without additional costs. Unions include IATSE 480 (98 crafts), two local teamster unions (300-400 members), the Directors Guild, and IATSE 600 (camera).
Human capital resources for performing arts can be found in the Arts and Culture Industry Report.
Infrastructure
NM’s film industry was built around the state’s film incentives, rather than infrastructure. However, the success of the film industry has resulted in rapid infrastructure development over the past four years. NM has two overlapping work production zones, centered in Albuquerque and Santa Fe. The development of Albuquerque Studios in the Albuquerque zone has pulled many projects there, despite the fact that Santa Fe is a desirable film location and contains NM’s western sets. The need for a studio in Santa Fe is critical to the growth of the film industry in northern NM. Currently, Santa Fe Studios is in negotiations with Santa Fe County to build a studio on the County’s 65-acre media district on NM 14. Significant infrastructure investment, particularly in broadband, is required to support this project. Santa Fe County, the City of Santa Fe, Santa Fe Community College and NM Lambda Rail have formed a Regional Telecom Coalition to study this issue and identify solutions for providing broadband to all users in the area. In addition to the Santa Fe Studios project, NM Studios is exploring the potential for studio at Budaghers, which will create significant capacity for postproduction services.
The location of Sony Image Works at Mesa del Sol in Albuquerque is another significant piece of film infrastructure. Sony is creating 300 new jobs in digital media at this location, and is working with UNM’s IPAX program to develop curriculum that will create a workforce pipeline in this sector. Opportunities like Sony Image Works may be possible in Santa Fe, but will require a campus setting like the Santa Fe Media District.
The performing arts sector of the Entertainment Industry is well-supported by venues like the Lensic in Santa Fe, and NM’s Indian casinos.
Public Policy
In 2003, the State of New Mexico began to offer a highly-competitive suite of incentives that have made the state a premiere location for the film industry. The incentives represent model public policy for development of target industries. Film incentives include:
• 25% Film Production Tax Rebate on all production expenditures, including NM labor, that are subject to taxation by the State of New Mexico.
• Film Investment Loan Program, with participation in lieu of interest, for qualifying feature films or television projects. Terms are negotiated and the budget must be at least $2 million. Loans may total up to $15 million per project, which can represent 100% of the project budget.
• No Sales Tax, primarily for commercials and public service announcements. Type 16 Nontaxable Transaction Certificates (NTTCs) are issued and presented at the point of sale to avoid gross receipts tax (sales tax) charges. This incentive cannot be used in conjunction with the 25% tax rebate.
• Film Crew Advancement Program offers a 50% reimbursement of wages for on-the-job training of NM residents in advanced below-the-line crew positions. NM supervisors and keys have the opportunity to hire and mentor qualifying NM crew in advanced positions for this program.
In 2005, Governor Bill Richardson created the NM Music Commission to help promote local musicians. The Music Commission hosts a website featuring a directory of musicians which serves as referral network to the public and to the New Mexico Film Office for promotion purposes. The Commission is charged with growing the music scene in New Mexico by organizing and sponsoring events like State Fair Talent Showcase, the South by Southwest Music Festival in Austin, and the John Lennon Bus Tour.
Opportunities and Challenges
NM’s film industry is a model success story. In four short years, the industry has grown rapidly and sustainably, adding new jobs to the economy and providing opportunities for small businesses and vendors. Perhaps the greatest challenge for the film industry is to protect existing incentives and better document and publicize the economic benefits of this growing industry.
Opportunities for growth of the film industry include two new studios in the Santa Fe zone (Santa Fe Studios and NM Studios), as well as new emphasis on digital media and postproduction. In addition, the Town of Taos is attempting to revive Taos Talking Pictures, potentially using the Santa Fe Film Festival as a model and partner. In the past year, the City of Santa Fe has attempted to create a media and film training center at the Tino Griego Pool. Film, media and solar technology training would be provided in this location, in partnership with the unions. While this location has not been successful, the need for a media and film training center remains, and other sites should be considered within the Santa Fe work zone.
Finally, Rio Arriba County is interested in pursuing new opportunities for local musicians through the NM Music Commission, events at local casinos, and by supporting existing and new recording studios in the region. This effort would complement the Arts and Culture Industry, as well as Entertainment.
VALUE-ADDED AGRICULTURE
As defined in this report, the Value-Added Agriculture Industry consists of crop and animal production and food manufacturing.
Economic Impact
Employment. The Value-Added Agriculture Industry employed over 2.5 million people in the US in 2006, representing 1.90% of all employment. In NM, Value-Added Agriculture employed almost 17,000 people in 2006, equivalent to 2.08% of all employment. All northern NM counties have a smaller percentage of employment in this industry relative to the state as a whole. It should be noted, however, that agriculture in northern NM has historically been a subsistence activity. While many families continue to farm, and while some even engage in food production and sales, much of this activity takes place outside of the formal economy and is therefore not reflected in employment statistics. The Santa Fe Farmer’s Market reports that for 2007, 60 of its members came from Rio Arriba County, 53 from Santa Fe County, two from Los Alamos County and 11 from Taos County.
The Arts and Culture
Overall, Value-Added Agriculture remained flat in employment between 2001 and 2006 in the US, with gains in agriculture cancelling out declines in food processing. In NM, the pattern is reversed, with agriculture declining and food manufacturing growing slightly, for an overall decrease in employment of 3.5% from 2001 to 2006. It should be noted that employment in food manufacturing is greater than agricultural employment in the US, while in NM, agricultural employment occurs at more than twice the rate of food manufacturing employment.
Tax Revenue. Value-Added Agriculture has a small impact on gross receipts revenue throughout NM and in the four-county region. In 2007, the Value-Added Agriculture Industry generated just over $6 million in gross receipts revenue for NM, representing 0.19% of total gross receipts tax revenue. In the four-county region, Santa Fe County had the highest percentage of gross receipts tax generated from this industry (0.55%). However, food and beverage product wholesale and retail, which represents an opportunity for expansion of the Value-Added Agriculture Industry, generated over $168 million dollars, or 5.08%, of all gross receipts tax in NM for 2007. In the four-county region, it generated 12.6% of all gross receipts tax revenue in Rio Arriba County, 4.5% in Santa Fe County and 10.0% in Taos County. Today, local, valued-added products only make up only a small percentage of grocery sales. However, as more value-added products can be sold through major wholesale and retail outlets, the economic impact of the Value-Added Agriculture Industry will increase exponentially.
Wages. In the US, wages in Value-Added Agriculture range from $24,000 in agriculture activities to nearly $37,000 for food manufacturing. While wages in agriculture are lower in NM than in the US, they are $5,000 to $13,000 higher than the state average in Rio Arriba, Santa Fe and Taos counties. Also, wages in animal production are generally higher than crop production, in the US, NM and the four-county region. Crop production pays annual average wages of $22,796 in the US, while animal production pays $27,098. In New Mexico, the two sectors pay $21,573 and $23,817, respectively. There is little data on food manufacturing wages in northern NM; however, it appears that wages in the region fall significantly below those in NM and the US.
Human Capital
In northern NM, agriculture is a traditional activity tied to the subsistence economies of Native Americans, the original inhabitants of the area, and later, Spanish and Mexican settlers. There is a strong and proud tradition of crop and livestock production. Many northern NM residents participate in agriculture without any formal training, because it is a family tradition and is second-nature to them.
That said, the continued practice of agriculture will depend on future generations, who increasingly engage in wage labor with fewer ties to the land, and frequently leave family farms in rural areas for better economic opportunities in population centers. Programs in the school systems, colleges and youth community are vital to educating and training youth in agriculture. The Chimayo Youth Conservation Corps is a good example of a program that has local youth growing crops, and through its efforts, feeds the entire Santa Fe Public School System. The Pojoaque Valley School District has established a culinary arts career cluster, in response to the demand for chefs and food producers at the casinos, the revitalization of agriculture in the Pojoaque Valley, and the success of the Pojoaque Farmer’s Market.
At the college level, numerous agriculture-related degree and certificate programs exist. Santa Fe Community College offers an Associate in Applied Science degree in Culinary Arts, and certificates in Culinary Arts, Hospitality and Tourism and Patissier. UNM-Taos offers a certificate in Culinary Arts. Degree and certificate programs in environmental sciences are also relevant here. Santa Fe Community College offers an Associates of Applied Sciences degree in Environmental Technologies, UNM-Los Alamos offers an Associates of Science degree in Environmental Science, and Northern NM College in Española offers Associates of Applied Science degrees in Environmental Technology, Environmental Management, Natural Resource Management: Range Ecology, as well as a certificate in Environmental Monitoring. Northern NM College is working with Governor Richardson’s office on developing agricultural programs, focused on sustainability and food security, at the Los Luceros property recently purchased by the State of NM.
Infrastructure
Water availability is the most important component of infrastructure for continuation and growth of Value-Added Agriculture. Water availability can be viewed in two ways. First, it is a finite resource. Drought, changes in global climate and competition for the resource will reduce the amount of water available for irrigation over time. These facts will inevitably limit growth of the Value-Added Agriculture Industry. However, the rural counties of northern NM also see agriculture as a means of protecting their water rights from the demands of metropolitan areas, such as Albuquerque and Las Cruces, to the south. This strategy has both practical and legal dimensions. For example, if the water rights owned by Rio Arriba County are not used, the water will travel south for use by other communities. As a result, Rio Arriba County is developing small, storage areas in high elevations so that water can be stored and the growing season extended. The legal dimension of this issue is that failure to use water rights over time may result in forfeiture of rights under the laws of consumptive use. If rural communities do not use all of their water rights over time, there will be pressure to allocate more water to urban communities. Therefore, water is a reason to continue and expand Value-Added Agriculture, as well as a limiting factor to large scale production of crops.
Northern NM’s historic acequia systems are the Value-Added Agriculture Industry’s oldest piece of physical infrastructure. The acequia system was first established by Pueblo Indians, prior to Spanish contact in the late 1500s. Spanish settlers built upon and expanded the Pueblo’s systems to irrigate more land near their settlements. The system has remained in use through the present day, transporting irrigation water from the Rio Grande River to fertile plots in the river valley. The acequia system depends, however, upon continued irrigation, maintenance of the system, survival of governance organizations, and physical access, which is sometimes be blocked by new, non-irrigating landowners.
New agriculture infrastructure has been created in recent decades to support the transition of subsistence food production to value-added products. The Taos County Economic Development Corporation (TCEDC) in operates a certified commercial kitchen where food producers pay an hourly fee to process their food. TCEDC has its own food line, Oso Good Foods, in which local growers and food producers can participate. It also offers popular food production certification classes and facilitates mentorships and partnerships with established food businesses. Currently, the Pueblo of Pojoaque is planning to develop a commercial kitchen in the Pojoaque Valley.
Along with its commercial kitchen facilities, TCEDC has a “mobile matanza,” NM’s first mobile livestock slaughtering unit, which serves communities within a 100-mile radius, including Rio Arriba County and northern Taos County. TCEDC recently developed a cut and wrap facility for the processing and packaging of local meat products. This infrastructure provides a solid foundation for marketing of local meat products, including grass-fed beef, which is increasing in popularity. The high number of residents who raise livestock in northern NM, and the fact that most production occurs in sustainable environments outside of large feed lots, creates great potential for marketing organic meat products to external markets.
Some cold storage and distribution networks for value-added products exist in the region; however, a regional inventory of these resources should be done to plan for a network that moves local produce to Farmer’s Markets, wholesale and retail outlets, and increases the percentage of local produce and value-added products sold to the public.
The growing popularity of Farmer’s Markets, organic and local foods are providing significant momentum in support of the Value-Added Agriculture Industry. There are Farmer’s Markets in Santa Fe, Taos, Española and Los Alamos, most of which sell out early due to demand exceeding supply. The trend toward organic and local products, as well as rising food prices, will continue to create momentum and growth for Farmer’s Markets and other organic food outlets. “New Mexico’s Own” product line also provides opportunities for local value-added products, which are sold on-line or in retail stores.
Public Policy
State support for Value-Added Agriculture has primarily come in the form of capital outlay appropriations for farmer’s markets, acequia systems and food and meat production facilities. However, the policy issues surrounding this industry are daunting because the Value-Added Agriculture Sector is particularly dependent and vulnerable to state and federal legislation on the use of natural resources, such as water and forests. Restrictive grazing policies on the national forests and the Valles Caldera greatly limit the growth of the beef industry, which has significant potential due to the popularity of grass-fed beef and the infrastructure created by the mobile matanza at TCEDC. In order to protect current and future investments in Value-Added Agriculture, northern NM needs to build relationships with state and federal agencies and participate actively in policy development. Lt. Governor Diane Denish has expressed interest in legislation that invests in rural communities, agriculture and acequias, opening the door for dialogue on new and innovative strategies in this area.
Opportunities and Challenges
Opportunities for the Value-Added Agriculture are strong in local beef production, because wages are higher than in crop production, significant infrastructure exists with TCEDC’s mobile matanza and cut and wrap facility, and demand for grass-fed and organic products is growing. However, policy issues with national forests and the Valles Caldera require serious attention to develop a sustainable plan for grazing on forest lands.
Crop production is becoming increasingly economically viable due to the success of Farmer’s Markets, local product lines and expansion of marketing to mainstream retail outlets. Again, policy issues regarding water and the survival of acequias and agricultural communities need to be considered for this effort to be sustainable.
For value-added production in both areas, large-scale production will not be feasible given the finite nature of natural water and forest resources. However, value-added production does provide new economic opportunities in northern NM’s most traditional of economic activities, therefore building upon local traditions, culture and patterns of resource use that rural communities clearly want to continue. Value-Added Agriculture is also a viable strategy for economic development in NM’s most rural communities.
If Value-Added Agriculture is a priority for northern NM, cold storage and distribution, the use of new technology (such as cold frames, green houses and drip irrigation), and strategies such as high-elevation water storage to extend the growing season, need to be considered and planned on a regional basis.
FOREST PRODUCTS
As defined in this report, the Forest Products Industry consists of forestry and logging, manufacturing, wholesale and retail sale of wood products, paper and furniture.
Economic Impact
Employment. The Forest Products Industry employed nearly 2.5 million people in the US in 2006, representing 1.87% of all employment. In NM, Forest Products employed over 8,500 people in 2006, equivalent to 1.0% of all employment. If wholesale and retail activities related to forest products are subtracted from the equation, 2006 employment in this industry would total $1.67 million in the US and just over 3,700 in NM. Santa Fe and Taos counties have the highest concentration of jobs in Forest Industries. These counties, along with Rio Arriba, have significant timber resources, due to the Santa Fe and Carson National Forests.
Between 2001 and 2006, employment in the Forest Products Industry decreased by 6.15% in the US, but increased in NM by 8.37%. Employment in wood products, paper and furniture manufacturing has fallen significantly in the US, while in NM, wood products manufacturing has grown, with paper and furniture manufacturing falling only slightly. For both the US and NM, employment in forestry activities and forestry related wholesale and retail trade remained relatively stable over the six-year period.
Tax Revenue. Forest Products have a small impact on gross receipts revenue throughout NM and in the four-county region. In 2007, the Forest Products Industry generated over $7 million in gross receipts revenue for NM, representing 0.22% of total gross receipts tax revenue. Forestry, logging and forest product manufacturing accounts for less than half of this total ($2,695,266). Taos County receives the greatest percentage of gross receipts tax (0.59%) from Forest Products in the four-county region.
Wages. Wages in the Forest Products Industry are low, falling in the mid-$30,000 range for both forestry and logging and wood products manufacturing in the US. In NM, wages are lower, averaging nearly $21,000 for forestry and logging and $27,000 for wood products manufacturing. Foresters represent the highest-paying occupation in this industry, although furniture and cabinet makers have the potential to earn higher salaries, depending on demand and markets for their products. It should be noted that low wages, however, are low only in relation to other employment opportunities. In many cases, forests provide the only source of jobs and economic opportunity for the most remote and economically depressed communities in northern NM.
Human Capital
The rural communities most dependent on the Forest Products Industry have lived in and around the forests for decades. As a result, many residents are skilled in timber harvesting and logging, as well as wood product manufacturing. Artisans in the area continue to use wood products to make traditional furniture, retablos and bultos, which provide synergy with the Arts and Culture Industry. Today, rural communities are recognizing a “new revolution” in forest management, based in environmental science and employing tools such as geographic information systems and environmental monitoring. If targeted, this opportunity can result in higher-paying jobs and local economic opportunities for rural youth.
Local colleges offer a range of degree and certificate programs that support wood product manufacturing, traditional furniture making, and environmental technologies. Santa Fe Community College offers an Associate in Applied Science degree in Environmental Technologies, certificates in Environmental Technologies and Fine Woodworking, and a letter of qualification for Residential Construction Skills. UNM-Taos offers an Associate of Applied Science degree in Construction Technology, and certificates in Carpentry, Construction Technology and Woodworking. UNM-Los Alamos offers an Associates of Science degree in Environmental Science. Northern NM College in Española offers the most complete suite of programs for this industry, including Associates of Applied Science degrees in Environmental Technology, Environmental Management, Natural Resource Management: Range Ecology, Pre-Forestry, Construction Trades Management, Construction Trades Technology and Wildland Fire Science, as well as a certificate in Environmental Monitoring. At its El Rito Campus, Northern NM College also offers an Associates of Applied Sciences degree and certificate in Spanish Colonial Furniture Making.
Infrastructure
Many small sawmills are well established in rural communities that border national forests, providing the basic infrastructure for the Forest Products Industry. More value-added products and better marketing networks are needed to expand production and revenue for these mills.
Public Policy
The fate of the Forest Products Industry depends greatly on federal policy promulgated through the US Forest Service. Currently, the Santa Fe and Carson National Forests are in the process of developing ten-year stewardship contracts, which will provide a steady, sustainable supply of timber, as well as jobs and training to local communities. The stewardship contracts also serve to reduce fuel loads in NM’s forests, which are currently prone to high-intensity fires due to drought conditions, postponement of forest management treatments, and suppression of natural fires.
Historically, the most important policy development for the Forest Products Industry has been the Vallecitos Sustained Yield Unit. Established in 1947 by the Carson National Forest, the unit is a rural economic development strategy that aims to provide jobs and income to residents of Vallecitos and eight surrounding villages, which are located in the most remote area of Rio Arriba County. The unit was established largely to offset the impacts of grazing reductions in the 1940s on local residents. As far back as 1908, local residents have been aggrieved over the incorporation of former land grant forests into the national forest system. This action left small villages land locked and without an adequate land base to support their subsistence livelihoods, which included agriculture, livestock and timber harvesting. The grazing reductions of the 1940s added insult to injury, causing Carson National Forest to establish the unit. The Forest Service required that that a single designated operator establish a sawmill and employ residents to harvest and process timber from the unit. For a variety of reasons, the unit’s purpose has never been fully realized. Prior to 2006, the sawmill closed for nearly a decade due to a protracted NEPA process that delayed planned forest management treatments.
In 2005, Las Comunidades, a non-profit organization working to provide economic development through the Vallecitos Sustained Yield, performed two youth projects with funding from the Carson National Forest. In 2006, it had its first timber sale in a decade, as a result of receiving a $13,000, two-year Community Assistance Program Grant from the National Forest Foundation to reorganize the unit. Rio Arriba County subsequently commissioned a business plan to reopen the sawmill, and production has continued into the present day.
Las Comunidades is recommending expansion of the mill’s existing markets (poles, vigas, latillas, roughsawn lumber, beams and specialty lumber, pine bark and pine shavings) into value-added areas, including appearance grade lumber, decking, flooring and paneling. Use of Vallecitos products in local construction projects is recommended, as is exploration of biomass and other byproduct usage. Las Comunidades has identified several local markets for its products, including the Northern NM College furniture making program, Kykendahl Lumber, and Green or LEED certified regional builders. The Rio Arriba County Comprehensive Plan (2007) also recognizes the benefits of local procurement and resource utilization, particularly in regard to the Vallecitos Sustained Yield.
Opportunities and Challenges
Opportunities for the Forest Product Industry to flourish are present in the US Forest Service’s Stewardship Contracts, Collaborative Forest Restoration Program (only found in NM), and current initiatives around biomass utilization to fuel rural community facilities, such as schools.
From this foundation of supportive policies, momentum is also being created in the private sector. Proactive management of the Vallecitos sawmill, the continued success of other sawmills throughout the region, interest by the Green Building community in using local natural resources, and new initiatives at Picuris Pueblo to manufacture charcoal and lumber products from its forest resources, underscore the many opportunities for the Forest Products Industry to grow. Challenges for this industry include market expansion for value-added products and biomass, and evolution of the industry to embrace new technologies that can provide higher-paying jobs and better opportunities for rural youth. In addition, federal agencies, local residents and environmental groups need to build common ground to create a secure and long-lasting political climate for sustainable resource utilization in the forests.
HEALTH AND WELLNESS
As defined in this report, the Health and Wellness Industry consists of all Health Care and Social Assistance activities and manufacturing, wholesale and retail trade of medical and health goods.
Economic Impact
Employment. The Health and Wellness Industry employed over 18 million people in the US in 2006, equivalent to nearly 14% of all employment. In NM, Health Care and Wellness employed 15,000 people or 14% of all employment. While employment in Health and Wellness was lower than state and national averages in Los Alamos County (6.51%) and Santa Fe County (10.44%), it was significantly higher in Rio Arriba County (21.23%) and consistent with state and national averages in Taos County.
As shown on the following page, employment for all sectors of the Health and Wellness Industry except manufacturing has increased in the US and NM between 2001 and 2006. These increases result primarily from declines in health conditions associated with an aging population. Between 2001 and 2006, employment for the industry as a whole increased by 11.64% in the US and by 19.71% in NM. The most significant gains were Health Care and Social Assistance, where employment grew by 12.46% in the US and 23.46% in NM. Health-related wholesale and retail employment grew by 5.49% US and 12.45% in NM. Manufacturing decreased both in the US and NM, by 1.6% and 13.77%. All NM employment gains in this industry were roughly double the gains in the US, reflecting poorer overall health and a slightly older population in NM.
Tax Revenue. In addition to high employment, the Health and Wellness Industry generates a substantial amount of gross receipts tax revenue. In 2007, the industry generated nearly $152 million in gross receipts taxes in NM, or 4.59% of all gross receipts revenue. In Santa Fe County, it generated over $14 million or nearly 5% of gross receipts tax revenue.
Wages. Because the Health and Wellness Industry is very large, it contains a wide range of occupations which average to mid-range wages. Wages for Health Care and Social Assistance average nearly $40,000 in the US and $34,000 in NM. As shown in the extensive list of health-related occupations on the following page, many jobs in this industry are high-paying. Others, particularly those associated with home health care and technician occupations, pay average wages.
Human Capital
The US and NM are currently suffering a severe shortage of health care workers Health and Wellness is projected to grow by 4.7% between 2006 and 2008, and 17.2% between 2004 and 2014. Several of the state’s fastest growing occupations are in this category, listed with the percentage of growth projected between 2004 and 2014 in parenthesis: Licensed Practical and Vocational Nurses (40%); Home Health Aides (35%); Registered Nurses (21%); Personal and Home Care Aides (20%); and Nursing Aides, Orderlies and Attendants (18%). Given the sheer size of this sector, high growth will translate into tens of thousands of jobs by 2014.
Some of NM’s medical personnel shortages, including those of the hospitals, are addressed through recruiters, with a significant percentage of the workforce recruited internationally. In addition, New Mexico Health Resources, Inc. (NMHR) is a private, non-profit agency organized to support efforts to recruit and retain healthcare personnel in New Mexico. NMHR provides an on-line clearinghouse for healthcare practice opportunities and healthcare professionals. It also provides training assistance to agencies seeking to improve their recruitment and retention of healthcare professionals.
Within NM’s education institutions there are numerous challenges to addressing labor demands in health care. At the primary and secondary school level, NM’s low indicators for math and science achievement do not bode well for preparing students for high-paying careers in health care. At the post-secondary level, there are numerous education programs in health care professions, but not enough master’s level faculty at NM’s major universities to turn out adequate numbers of Registered Nurses. In northern NM, only Northern NM College is in the process of developing a bachelor’s level nursing program. The rest of northern NM’s post-secondary institutions are two-year colleges, offering associate level programs in the medical fields described below.
Santa Fe Community College (SFCC) is in the planning process for a Health Sciences Center, which is scheduled to open in 2010. Currently, SFCC offers an Associates of Art degree in Psychology; Associates of Applied Science degrees in Dental Health, Nursing and Respiratory Therapy; and certificates in Dental Assisting, Health Career Preparation, Medical Assistant, Nutrition, Paramedicine, Substance Abuse Specialist and Substance Abuse Treatment. In partnership with Holy Cross Hospital, UNM-Taos is planning a Health Sciences Academy and Medical Billing Center to provide medical training and new jobs in health-related fields. UNM-Taos currently offers an Associates of Art degree in Behavioral Science and a certificate in the Dental Assistance Science Program and Holistic Health and Healing Arts. Its new Nursing Program was cut recently due to higher demand in NM’s urban areas. In addition to its upcoming Bachelor’s degree in Nursing, Northern NM College offers a Bachelor of Arts degree in Integrated Health Studies; Associates of Applied Science degrees in Allied Health, Nursing, and Radiologic Technology; an Associates of Science degree in Nursing, and certificates in Nursing and Nursing Aide. Courses in massage therapy are also offered.
Infrastructure
Northern NM has significant health care infrastructure. St. Vincent’s Regional Medical Center is located in Santa Fe, and hospitals are located in Los Alamos (Los Alamos Medical Center), Española (Presbyterian Hospital) and Taos (Holy Cross Hospital). Currently, Los Alamos Medical Center is in the planning stages for a Center of Excellence, and St. Vincent’s Hospital, which is involved with a merger with Christus Heath, is planning to establish the hospital as a “health care destination” through an expanded mission dedicated to wellness. Rio Arriba County is developing a Health Commons which will co-locate primary, preventative and behavioral health services. This integrated approach will ensure warm referrals among providers. In addition, Pojoaque and Nambe Pueblos are considering development of assisted living facilities, and Picuris Pueblo is considering a residential treatment center.
In the rural areas of the region, community health clinics include Las Clinicas del Norte, Peñasco Medical Clinic, Questa Health Center and Truchas Clinic. The Pueblos of Taos and Santa Clara operate their own health clinics. Response times and EMS services are stretched thin in rural areas, due to larger service areas spread over long distances.
Perhaps the greatest infrastructure barrier to the Health and Wellness Industry are the significant gaps in broadband throughout northern NM. UNM is currently developing curriculum for community colleges and continuing education through its telemedicine initiatives. However, the ability to apply these programs in northern NM would depend entirely on access to broadband, which does not exist in many areas.
Public Policy
The most significant public policy issue facing the Health and Wellness Industry is the fate of universal health care in NM. In the 2008, the NM State Legislature considered two health care system reform options: 1) Governor Richardson’s Health Solutions Act, which provides universal care through the existing private, for-profit insurance industry, and 2) the Health Security Plan, which replaces insurance with a single-payer system. Because neither plan was adopted in the 2008 regular session, universal health care will be reconsidered in a special session scheduled for May 2008. Universal health care is especially important to NM and New Mexicans because of the state’s high rate of uninsured. Income, Poverty and Health Insurance and Health Insurance Coverage in the US, 2006, by the US Census Bureau, estimates that NM has 405,000 uninsured residents, and the second highest rate of uninsured in the nation (21%), based on a three-year average of 2004-2006. Only Texas (24.1%) and Florida (20.3%) also had rates of uninsured above 20%. In the context of northern NM, some counties, such as Rio Arriba and Taos, have even higher rates of uninsured, making it difficult for local hospitals and clinics to operate. Universal health care will address some of these inequities, making it possible for health care providers to serve rural communities on a level playing field with the rest of the state.
Opportunities and Challenges
The Health and Wellness Industry is one of NM’s largest employers. The aging population and increases in chronic health problems such as diabetes and obesity make health care one of the fastest growing industries in the NM. Health care represents a great opportunity for skilled, high-paying jobs and is a growing industry with current and projected workforce shortages. The industry also has many possibilities for growth and expansion, from the alternative medicine cluster now established in Santa Fe, to the many natural health products currently manufactured in Taos.
To capitalize on the opportunities in Health and Wellness, significant issues in human capital, public policy and telecommunications infrastructure need to be addressed. Public policy is the foundation of these efforts, as it will establish universal health care, and will potentially forward initiatives that allow NM to recruit and develop more health care professionals. Investment in broadband infrastructure is needed to allow northern NM to capitalize on telemedicine, a solution for educating more health care professionals in northern NM and its most rural communities.
RECREATION
As defined in this report, the Recreation Industry consists of fishing, hunting and trapping, spectator sports, golf, skiing, marinas, bowling, fitness and recreational sports, as well as wholesale and retail trade for sporting goods. Due to the strong connection between the Recreation Industry and tourism, Accommodations and Food Service is also addressed in this report, although not defined as part of the Recreation Industry.
Economic Impact
Employment. As defined in this report, the Recreation Industry employed over 1.65 million people in the US in 2006, representing 1.24% of all employment. In NM, the industry employed over 9,500 people, equivalent to 1.19% of total employment. In northern NM, Taos County has a significantly higher percentage of recreation employment than the US or NM, at nearly 4%.
Recreation is one of NM’s primary tourist draws. Tourism is a $5.5 billion industry in NM, attracting 11.5 million domestic visitors in 2007. The NM Tourism Department reports that scenic beauty, historical sites, and outdoor recreation are among the top four reasons people visit NM. In terms of number of visitors per year, Santa Fe and Taos are NM’s 2nd and 3rd top destinations, with Los Alamos, Chama and Red River ranked in the top 20. Accommodations and Food Service, a NAICS sector closely associated with tourism, employed over 11 million people in the US in 2006, equivalent to 8.31% of all employment. As a percentage of total employment, Accommodations and Food Service employs more people in NM than the US as a whole, at 9.71% or nearly 78,500 people. Santa Fe County and Taos County have even greater percentages of Accommodations and Food Service employment, at 12.81% and 18.80%, respectively.
The Recreation Industry, as defined in this report, has increased in employment by nearly 8% in the US between 2001 and 2006, and by 4% in NM during the same time period. Growth in the industry for in the US is due to 9.11% more employment in Other Amusement and Recreation, which includes golf, skiing, marinas, bowling, fitness and recreational sports. However, it should be noted that these recreation activities grew by only 0.70% in NM between 2001 and 2006. Growth in sporting goods wholesale and retail employment accounts for most of NM’s increased employment in recreation, even though this sector fell off in employment in the US in 2006. Spectator sports remained relatively flat in employment in both the US and NM. Please note that employment data for fishing, hunting and trapping in NM was not disclosed, due to the small number of employers in this category. Nationally, fishing, hunting and trapping employment decreased by 22% between 2001 and 2006.
Tax Revenue. The Recreation Industry is a relatively small contributor to gross receipts tax, generating over $5 million in NM in 2007, or 0.16% of total gross receipts revenue. Taos County generated a higher percentage of gross receipts tax revenue than the state as a whole, at nearly 1%. Accommodations and Food Services comprised nearly 7% of NM’s total gross receipts tax revenue in 2007, at nearly $223 million. Santa Fe County generated nearly $30 million, or 10.18% of its total gross receipts tax revenue from Accommodations and Food Service, with Taos County generating nearly $6 million or 13.70% of its gross receipts tax revenue from this sector.
Lodger’s tax is another measure of the tourism industry, specific to overnight accommodations. In 2007, lodger’s tax revenue ranged between $8.5 million (City of Santa Fe) and $225,000 (Taos County) for various jurisdictions in northern NM. The lodger’s tax jurisdictions in yellow represent those which collected the greatest amount of tax in 2007 over a five-year period. These jurisdictions include Rio Arriba County, the Village of Chama, Taos County, the Village of Red River, and the City of Santa Fe, which recovered from a slump between 2003 and 2005. Lodger’s tax in the Town of Taos peaked in 2006, falling only slightly in 2007. Both Los Alamos County and the City of Española fell to five-year lows in 2007, after peaking in 2006 and 2004, respectively.
Wages. Wages in the Recreation Industry are low, averaging under $30,000 in the US and under $18,000 in NM for the entire Arts, Entertainment and Recreation sector (NAICS 71). Wages for Accommodations and Food Service are even lower, averaging under $16,000 in the US and $13,000 in NM. Average annual wages in NM for specific recreation occupations are listed in the table at right, with the number of employees for each occupation provided in parenthesis. While traditional recreation occupations tend to be low-paying, services that support the recreation industry, such as environmental science and some medical professions, offer mid to high-paying jobs.
NM’s human capital assets for recreation have grown largely from the state’s extensive recreation infrastructure, described below. Because most jobs in the Recreation Industry do not require formal education or training, service workers have easily adapted to employment at ski valleys, golf courses, fitness centers and sporting good stores. Residents in the rural areas have learned skills in hunting and fishing through a lifetime of contact with the wilderness. Many have become outfitters who guide hunting and fishing expeditions on public and private lands. In its list of 264 active outfitters for 2008-2009, the NM Department of Game and Fish lists 34 in northern NM, most of who are based in Taos and Rio Arriba counties.
Because recreation has lower education and training requirements than other industries, few formal programs exist at local colleges. Apart from Santa Fe Community College’s Associates of Applied Science degree in Exercise Science and certificate in Fitness Instructor Training, all other programs are related to environmental science. Santa Fe Community College offers an Associate of Science degree in Biological/Physical Science, an Associate in Applied Science degree in Environmental Technologies, and a certificate in Environmental Technologies. UNM-Los Alamos offers an Associates of Science degree in Environmental Science. Northern NM College in Española offers Associates of Applied Science degrees in Environmental Technology, Environmental Management, Natural Resource Management: Range Ecology and Pre-Forestry, as well as a certificate in Environmental Monitoring.
Infrastructure
Of NM’s total land base of nearly 78 million acres, 12% or 9.4 acres is managed by the US Forest Service and 17% or 13.5 million acres is managed by the US Bureau of Land Management. In Rio Arriba and Taos counties, total public land tenure is higher, due to the many Spanish and Mexican land grants whose land was brought into the federal system in the early 1900s. This public land is the foundation of NM’s traditional recreation sector, rooted in hunting, fishing, camping, hiking and rafting. Investments by the privately-owned businesses, tribal and local governments have strengthened infrastructure in this area. For example, numerous private rafting companies in Taos have created an industry around rafting on the Taos Box, complete with guides, equipment and vacation packages. Tribal governments have contributed significantly to hunting activities through their forest lands and management programs. Jicarilla Apache Nation offers popular big game hunts and owns the Lodge at Chama, which markets hunting, fishing and outdoor recreation packages. Taos Pueblo began offering bighorn sheep hunts in the last five years.
Thorough tourism, local governments are capitalizing on existing recreation attractions. In 2008, Los Alamos County requested state funds to develop a visitor center in White Rock, to serve as the gateway to recreation activities in the Valles Caldera. The Village of Questa, which has long depended on mining as its primary employment activity, plans to revitalize buildings in its downtown area to attract local investment in cafes, shops and tourist-related amenities. Such activities are synergistic with skiing and summer tourism in nearby Red River, and recreational opportunities on adjacent US Forest Service land. The Village of Chama is using the NM MainStreet Program to improve its downtown district, which is already well-developed with shops, cafes and hotels as a result of the area’s numerous recreation activities.
In addition to community-serving recreational centers in local and tribal jurisdictions throughout the region, Rio Arriba County and the Town of Taos are planning to develop two regional recreational parks and associated facilities. The projects are not only designed to provide recreation amenities to the region, but also to draw state sports tournaments and associated conferences and visitation. In addition, citizens in the Taos area have been discussing the potential for a High-Altitude Training Cluster in Taos County, which could capitalize on the area’s natural resources, public lands, community facilities and ski areas. The effort would explore other high-altitude sports training facilities, such as those at the U.S. Olympic Training Center in Colorado Springs, and build on the assets of the Los Alamos Aquatic Center, which currently attracts national and international groups to its aquatic facilities for high-altitude training.
The private sector is responsible for most of northern NM’s skiing and golf infrastructure. Northern NM’s cold winters make it ideal for downhill and cross-country skiing, and the region has a total of six ski areas and two cross-country/Nordic areas. Taos Ski Valley and Santa Fe Ski Area are nationally and internationally known. Skiing is represented by a non-profit organization called Ski NM, which markets the industry through the NM Tourism Department and its own advertising and efforts. Golf is a more recent development in northern NM, and tribal governments have played a prominent role in its development. Two of NM’s best known courses, Black Mesa Golf Club and Towa Golf Resort, are owned and operated by the Pueblos of Santa Clara and Pojoaque. Other privately owned golf courses exist in Santa Fe and Taos, and Los Alamos has a municipal course.
An inventory of northern NM’s recreational assets is provided on the next page. While not exhaustive, it provides a snapshot of the many recreation opportunities in the region.
Public Policy
Because the majority of northern NM’s outdoor recreation activities have been established on or around public land, federal policy regarding resource use and management is central to the survival of the Recreation Industry. While some special management and wilderness areas in NM are restricted in terms of use, most public lands allow some level of public recreation. Northern NM’s Recreation Industry needs to remain actively involved in public planning processes for the US Forest Service and Bureau of Land Management, to ensure that recreation activities are allowed and managed properly in the future.
At the state level, the most recent piece of legislation affecting the Recreation Industry is the 2006 Off-Highway Vehicle (OHV) Safety Act. This Act established an Off-Highway Vehicle Safety Board to develop and enhance OHV recreation opportunities in New Mexico, consistent with the protection of natural and cultural resource values for present and future generations. The Board is charged with establishing OHV safety equipment standards, training and certifying OHV tour guides, increasing public awareness around OHV recreation, and influencing policy related to establishing, restoring, or closing OHV areas or trails and funding OHV projects throughout NM. The OHV Act also allows the NM Tourism Department to sell OHV permits and collect permit fees for out-of-state users, providing an additional revenue stream to the state. The OHV Act is significant because the US Forest Service is projecting large numbers of OHV recreationalists in the southwest. Because states such as Colorado are restricting OHV use, rather than regulating it, NM is expected to experience a significant increase in OHV recreation. The US Forest Service is currently preparing for the impacts and increased management that will be required.
Opportunities and Challenges
Recreation is one of NM’s oldest industries, anchored by the region’s public lands and private investment in skiing and golf. Today, new opportunities exist to develop regional recreation facilities in Rio Arriba County and the Town of Taos, which will have the dual benefits of serving local residents in the region, while attracting state sports tournaments, sports and wellness related conferences, and associated visitation. The opportunity to develop a northern NM as internationally known site for High-Altitude Training is promising, in that it builds upon the region’s natural resources, existing infrastructure, and the Los Alamos Aquatic Center, currently in operation. In addition to creating new jobs in the service sector, expanding recreation into High-Altitude Training will result in higher-paying jobs in the sports medicine, medical/health, technology and professional services sectors.
MANUFACTURING
As defined in this report, the Manufacturing Industry consists of the production of goods classified under NAICS Code 31-33: Manufacturing.
Economic Impact
Employment. The Manufacturing Industry employed over 14 million people in the US in 2006, equivalent to 10.54% of all employment. In NM, Manufacturing employed over 37,000 people or 4.66% of all employment. All northern NM counties have substantially less employment in Manufacturing than NM as a whole, in the range of one to two percent.
Each year between 2001 and 2006, Manufacturing has steadily declined in the US, with employment falling nearly 14% overall. NM saw a decrease of 9% in manufacturing employment for that same period; however, after hitting a low point in 2004, the industry began to rebound. Significantly, NM’s manufacturing employment increased by nearly 5% between 2004 and 2006. The Department of Workforce Solutions projects that the Manufacturing Industry will grow steadily in the short-term, 1.8% between 2006 and 2008, and substantially in the long-term, 19.9% between 2004 and 2014. In NM, growth in manufacturing is associated with higher-paying, new jobs in the automotive and aerospace sectors. Unlike NM, northern NM has not seen an increase in manufacturing jobs, and is underrepresented in this industry.
Tax Revenue. The Manufacturing Industry generated $89 million in gross receipts tax for NM in 2007. This represents 2.69% of all gross receipts revenue generated in the state. Both Santa Fe and Taos counties generated a similar percentage of revenue from manufacturing in 2006, at 2.17% and 2.13%, respectively.
Wages. The Manufacturing Industry is relatively well-paying, averaging over $50,000 per year in the US, and $44,000 in NM. Average annual wages in Rio Arriba, Santa Fe and Taos counties are significantly less, reflecting a much lower percentage of manufacturing employment in these areas.
Human Capital
As an industry unto itself, Manufacturing is not well-established in northern NM. However, because Manufacturing overlaps with many sectors, residents have transferable skills due to their work in traditional northern NM industries. The table below demonstrates how the regional workforce’s experience in Arts and Culture, Agriculture, Forest Products, Health and Wellness and Technology is applied to manufacturing sectors and occupations. Colleges throughout the region provide training and education in these areas, as described in the reports for those industries. In addition Northern NM College’s Associates in Applied Sciences degrees in Automotive Technology, Construction Technology, Electrical Technology and Pluming Technology provide technology training that is transferable to production occupations.
A Manufacturing Industry in northern NM has synergy with two ongoing workforce efforts. The WIRED Initiative, overseen by the NM Department of Workforce Solutions, focuses on seeding innovation in NM’s Green Manufacturing Cluster, which includes advanced manufacturing, green building, clean and renewable energies, aerospace, microelectronics and optics. Centered in central and southern NM, WIRED works with partners from colleges, state agencies, venture capital firms, private industry and the national laboratories to 1) foster entrepreneurship (create a sustainable incubator for technology commercialization, the development of new companies and high wage jobs and entrepreneurship), 2) generate talent (create a pipeline of entrepreneurs and technologists who have skills that are transferable across cluster industries), and 3) innovate public policy (pilot public and public-private partnerships to demonstrate the ideal public policy conditions needed to produce NM’s 21st century economy and workforce). WIRED provides a model for how to develop human capital and public policy for specific sectors of Manufacturing, which are similar to existing and emerging clusters in northern NM.
Also overseen by the NM Department of Workforce Solutions is a workforce training curriculum that will be piloted at the Española High School. The Manufacturing Standard Skills Council’s (MSSC) training, assessment and credentialing system for Certified Production Technicians is designed to meet the growing skills gap crisis in production workers. Core knowledge and skills include safety, quality practices and measurement, manufacturing processes and production, and maintenance awareness.
Infrastructure
Outside of Santa Fe, the Manufacturing Industry is limited by its distance from interstates and rail lines. This fact requires a targeted approach, in that it will always restrict Manufacturing in transportation-intensive sectors. Similarly, water availability would preclude some types of manufacturing. Another limitation is the lack of support services for Manufacturing in northern NM, including suppliers and couriers. However, the Ohkay Owingeh General Aviation Airport and other airports in the region can be useful assets in developing better shipping and receiving capabilities locally.
In the past ten years, the Española and Pojoaque valleys have developed a significant land base with which to support manufacturing and related industries. Vacant industrial land, complete with infrastructure, exists at the Ohkay Owingeh Aviation Industrial Park, Pojoaque Pueblo Industrial Park, Johnnie Roybal Industrial Park in Española and the planned Rio Arriba business park in Alcalde. In addition, both Santa Clara and San Ildefonso Pueblo have raw land that can be developed for manufacturing uses. The Tsay Corporation (Ohkay Owingeh) and Pojoaque Pueblo Enterprise Corporation are actively seeking tenants for their properties, and Rio Arriba County is proposing a “technology incubator” at Alcalde, where LANL R&D products can be manufactured.
Public Policy
NM has numerous incentives that pertain to the Manufacturing Industry, described below:
Manufacturing Investment Tax Credit. NM provides a tax credit that can be claimed against a manufacturer’s gross receipts, compensating and withholding tax, based on the value of qualifying manufacturing equipment placed in service in NM when there is an increase in employment. Qualifying operations are those that combine or process components or materials. Qualifying equipment includes essential machines, mechanisms, and tools used directly and exclusively in the manufacturing operation. The operation must add one full-time equivalent employee for every $500,000 in value of qualifying equipment up to $30,000,000 in equipment, and one additional full-time equivalent employee for every $1,000,000 in value of qualifying equipment over $30,000,000 in value. The credit is partially refundable and any unused credit carries forward. This incentive can be used in addition to Industrial Revenue Bonds.
Double-Weighted Sales Factor Option for Corporate Income Tax. This is an optional formula for calculating NM income tax liability that applies to businesses involved in manufacturing. Eligible businesses combine or process components and materials. If a company elects the double-weighted sales factor formula, it must use it for a minimum of three years. The sales factor option benefits businesses with significant investment in plant and payroll in NM and that deliver most of their product out of state.
Industrial Revenue Bonds. NM communities can issue IRBs to exempt companies from property taxes on land, buildings, and equipment. Companies creating new business facilities can receive a property tax exemption for up to 20 years. When property is purchased with proceeds of an industrial revenue bond, the government unit issuing the IRB takes title to the property, whether purchased locally or imported. Accordingly, purchases of machinery, office equipment, furniture and similar tangibles as part of an IRB project are not subject to gross receipts tax. Tangible personal property, other than building materials and related construction services, purchased with IRB proceeds is also included.
New Mexico 9000. Under NM 9000, businesses may obtain IS0 9000 certification on a sliding scale costing $1,000 to $6,000, compared with $120,000 by conventional means. Also, NM 9000 process takes only one year. Since 2000, more than 90 companies have improved their productivity through NM 9000. Trained professionals with extensive experience in ISO implementation will conduct 17 three-hour workshops including interpretation of the standard, ISO 9001:2000, procedure writing, and consulting on business-specific ISO compliance issues.
Advanced Energy Product Manufacturers Tax Credit. This incentive provides a five percent tax credit for the taxpayer’s qualified expenditures and may be modified from the taxpayer’s modified tax liability. Eligible businesses are manufacturers of advanced energy vehicles, fuel cell systems, renewable energy systems or any component of these; renewable energy systems or components for integrated gasification combined cycle coal facilities; and equipment related to the sequestration of carbon from integrated gasification combined cycle plants. The unused portion of the credit may be carried forward for five years.
Research and Development Small Business Tax Credit. This program provides a credit equal to the sum of all gross receipts taxes, compensating taxes, or withholding taxes due to the state for up to three years to qualified R&D small businesses. Eligibility requires that the business employ no more than 25 employees in any prior calendar month; have total revenues of no more than $5 million dollars in any prior fiscal year; and make qualified research expenditures of at least 20% of total expenditures for 12 calendar months ending with the month for which the credit is sought. Qualified research is defined as that undertaken for the purpose of discovering information that is technological in nature and the application of which is intended to be useful in the development of a new or improved business component, and in which substantially all activities constitute elements of a process of experimentation related to new or improved function, performance, reliability, or quality.
Research and Development Gross Receipts Tax Deduction. This program exempts any service that is exported from the state, including research and development services, from NM gross receipts tax. These services must be produced by a business with a NM office, sold to an out-of-state buyer and delivered and initially used out-of-state. This makes R&D a deductible transaction.
Job Training Incentive Program (JTIP). NM’s JTIP program funds classroom and on-the-job-training for newly created jobs in expanding or relocating businesses for up to six months. The program reimburses 50% to 70% of employee wages and required travel expenses. Custom training at a NM public educational institution may also be covered. Eligible companies must manufacture or produce a product in NM or be non-retail service companies that export a substantial percentage of services out of state. Jobs eligible for funding through JTIP must be full time, year-round and directly related to the creation of the product or service. Trainees must be guaranteed full-time employment upon successful completion of the training program. JTIP trainees must be new hires to the company and residents of NM for at least one year at any time prior to employment in an eligible position.
NM also offers the NM Aerospace Research and Development Tax Deduction, which benefits
NM businesses that sell research and development services that are ultimately sold to the U.S. Air Force; and the Aircraft Manufacturing Tax Deduction, which allows aircraft manufacturers to deduct from gross receipts income earned from selling an aircraft; aircraft services or components; aircraft flight support, pilot training or maintenance training services.
Opportunities and Challenges
The Manufacturing Industry is underrepresented in NM as compared to the US, and even more underrepresented in northern NM. Still, the industry is growing in NM, due to investments by aviation, automotive and renewable energy manufacturers in the Albuquerque area. While certain types of manufacturing will always be precluded by the lack of transportation infrastructure and water scarcity in northern NM, other manufacturing sectors have good synergy with existing industries. These include artisan manufacturing, jewelry, textiles and weaving; wood products and furniture manufacturing; natural health products and scientific research and development. The ongoing WIRED Initiative, based in central and southern NM, focuses on seeding NM’s Green Manufacturing Cluster, provides a model for development of a highly-skilled workforce in sectors similar to those identified by REDI.
The Española and Pojoaque Valleys provide opportunities for growth of this industry due to the availability of industrial parks with infrastructure, the presence of the Ohkay Owingeh General Aviation Airport and Northern NM College. Española is currently home to one high-tech manufacturing business (Sparks Industries) and to a manufacturer of flatware and trophies (Nambe Mills), and hopes to attract others to the valley.
RENEWABLE ENERGY AND GREEN INDUSTRY
Economic Impact
According to the American Solar Energy Society, the wind industry contributed $3 billion to the US economy, and added 16,000 jobs in 2006. The solar photovoltaic industry contributed $1 billion and added 6,800 jobs. Both industries are growing over 30% annually. To date, however, renewable energy and green industry are merely minor economic drivers in NM, and are only beginning to emerge in the Albuquerque and Santa Fe areas. Supporting this fact, the Corporation for Enterprise Development’s (CFED) 2007 Development Report Card for the States gave NM a “D” for resource efficiency, ranking it 48th among 50 states for use of alternative energy, 41st for use of recycled waste, and 14th in air pollution and toxic release inventory.
Wages. The Renewable Energy/Green Industry cluster provides numerous opportunities for increasing the number of high-paying, skilled jobs in northern NM. The table of the previous page provides examples of occupations in the Renewable Energy/Green Industry cluster, along with annual average wages for NM. The number of employees per occupation is listed in parenthesis.
Human Capital
New Mexico has a number of workforce initiatives to complement and support the emerging renewable energy and green industry sectors. These initiatives are primarily designed to provide a trained and skilled labor force, and most feature close links with the K-12 educational system.
Solar Energy Research Park & Academy at Northern NM College in Española. In 2008, the NM Legislature appropriated $3 million to SERPA to establish a Bachelors and Masters in Mechanical Engineering at NNMC with a focus on solar energy and storage technologies. SERPA will develop a strategic partnership with LANL to complement research and development for storage technologies, and will feature an onsite PV installation for hands-on training and energy production, possibly at the El Rito campus.
Sustainable Technologies Center at Santa Fe Community College (SFCC). SFCC is proposing to develop the state’s first Advanced Technology Center, which will focus on renewable energy technologies, sustainability technologies, and water conservation technologies. A feasibility study has been completed and a business plan is in process. The STC will focus on solar PV, thermal, and central solar (concentrated solar power), biomass, water conservation, green building, smart grid, and energy assessments. It will be an applied research/training facility with a strong industry partnership. To date, $7.5 million has been raised through bonds for capital investment, with an additional $4 million being presented to voters in November.
North American Wind Research & Training Center at Mesalands Community College in Tucumcari. NAWRTC is a wind energy technician training program that focuses on operations and maintenance, with a complementary research and development program for operations and maintenance. This is a partnership with NMSU and Sandia National Laboratory that will feature a 1.5MW GE wind turbine for energy generation and training for wind energy technicians. NAWRTC is funded through State Legislature and US Department of Labor. The first training program will be implemented in the fall of 2008, coinciding with the installation of the wind turbine.
San Juan College Renewable Energy Program in Farmington. SJCC has had a solar PV technician training program for several years, focusing on training PV installers for small residential and commercial applications.
Infrastructure and Public Policy
New Mexico has aggressively pursued and implemented policies that will enable the renewable energy and green business sectors to succeed in the state. Governor Richardson refers to NM as the “Clean Energy” state, and has pushed for legislation to support this claim.
Renewable Portfolio Standard. NM currently has one of the strongest Renewable Portfolio Standards (RPS) in the country, which requires all investor-owned utilities (IOU) to produce 20% of their electricity by 2020 from renewable sources, and rural electric coops to produce 10% of their electricity by 2020 from renewable sources. In 2008, the NM Legislature amended the Efficient Use of Energy Act to require all IOUs to achieve 10% energy efficiency savings by 2020, creating in effect an overall RPS of 30%. The NM Public Regulation Commission, in its rulemaking for the RPS, included a solar minimum of 20% of the total RPS, thereby encouraging utilities to diversify their renewable generation portfolio. NM also has one of the strongest net metering laws in the country, with a maximum project size capped at 80 MW. Net metering allows independent energy producers to connect to the grid and sell power back to the local utility.
Production Tax Credit. NM is one of only a handful of states nationwide that features a Production Tax Credit (PTC) for wind and biomass of .01/kWh, and an average of .027/kWh for solar. Coupled with the federal .02/kWh PTC for wind and the federal 30% Investment Tax Credit for solar, this amounts to a significant incentive in NM.
Renewable Energy Transmission Authority (RETA). NM has the nation’s first Renewable Energy Transmission Authority (RETA), a quasi-governmental authority mandated to develop new transmission infrastructure to enable more renewable energy development. A minimum of 30% of the energy on a RETA project must come from a renewable source, and the Authority has bonding capacity to fund transmission projects.
Residential Solar Tax Credit. NM has a residential solar tax credit of 30%, which is designed to complement the federal solar tax credit, and extends $2,000 federal cap to $9,000. This tax credit can include solar photovoltaic (PV) and solar thermal (residential hot water and space heating). There is also a sales tax exemption for solar installations, which saves consumers an additional 7%, on average.
Other Incentives. NM has a sustainable building tax credit of up to $10,000 for LEED-certified (Leadership in Energy and Environmental Design) residential homes, and up to $162,000 for LEED-certified commercial buildings; a biodiesel blending facility tax credit which requires that all diesel sold in NM contain 5% biodiesel by 2012; an energy innovation fund that directly invests grants into promising clean technologies with immediate market potential; an Angel Investment Tax Credit (up to $25,000) for High Tech/Clean Tech investment; and a clean energy grant fund for public entities interested in pursuing a renewable energy or energy efficiency project. For customers within the PNM service territory, any residence or commercial business that installs a solar PV system on their property is eligible for a .13/kWh incentive, regardless of electricity consumption. This Customer Generation Program allows PNM to essentially purchase the Renewable Energy Credit (REC) that is produced from the solar PV system and apply that REC towards its RPS compliance.
With the above suite of incentives, New Mexico has positioned itself as a national leader in renewable energy and energy efficiency. Despite this, there is still much more that can be done, and much to be learned from other states across the country. NM needs to consider System Benefit Funds that combine to make solar and wind more affordable. In some cases, these funds contribute up to half the cost of the renewable system. This fund is created through a tariff on the utility bill, and can only be used for renewable energy programs. This type of rebate program has enabled thousands of wind and solar projects to be installed in over 20 states across the country, particularly in California, where the Million Solar Roofs campaign has been implemented. Germany and Spain have similar programs, called “Feed-in Tariffs” that buy down the cost of solar installations by as much as 50%. Spain recently passed legislation mandating all new construction to include solar hot water technology. NM also needs a zero or low interest loan program for residential wind or solar installations, and is currently one of the only states in the country without one.
Additionally, NM needs to expand the current solar PTC (avg .027/kWh), which is capped at 200,000 MWH per facility, thereby limiting the size of concentrated solar power (CSP) installations that this PTC is geared toward. The cap needs to be raised to 400,000 MWH to enable CSP projects to be commercially viable. The current wind PTC (.01/kWh) is completely allocated, and the NM Legislature needs to raise the current cap of 2 million MWH to a minimum of 4 million MWH to enable more renewable production. Without this incentive, and should the federal PTC be allowed to expire on December 31, 2008, wind production will come to a complete halt in NM. Most wind projects are not economically viable without the PTC.
New Mexico should consider ramping up its efforts to build new transmission infrastructure. There are several transmission “corridors” and projects that have been presented to RETA, but no action has been taken to date. There is currently over 1000 MW of wind energy cued up for interconnection into a variety of transmission lines, but very few projects will proceed without new or upgraded transmission capacity. RETA needs to quickly determine the most feasible projects (using environmental, economical, and scientific analyses) and begin the siting, permitting, and bonding processes. Most transmission projects will take at least five years to complete, although some could take as long as 10 years.
Opportunities and Challenges
Renewable Energy and Green Industry have great potential in northern NM due to the region’s solar, wind, geothermal, and biomass resources, research and development resources at Los Alamos and Sandia National Laboratories, state and federal incentives, and current workforce initiatives at local colleges. This industry cluster is viable for all of northern NM, in that its manufacturing, retail and workforce development components will most likely develop in the region’s population centers, while energy generation can be accommodated on vacant land owned by federal agencies, tribes and land grants, providing opportunities for rural economic development.
Currently, wind and solar companies are investing in NM. Schott Solar recently announced plans for a new manufacturing facility in Albuquerque that will initially create 350 new, high-tech jobs, with potential for a total of 1,500 jobs and a proposed investment of $500 million. SkyFuel, a concentrated solar power company recently decided to permanently locate its headquarters in Albuquerque, though no manufacturing decisions have been made yet. Advent Solar, also located in Albuquerque, recently completed a new 87,000 square foot manufacturing facility that employs over 160 people. The wind industry has developed 496 MW of renewable energy to date in NM, contributing hundreds of millions of dollars to local and regional economies through temporary construction jobs and permanent jobs in operations and maintenance.
In the face of these tremendous opportunities, NM has two critical issues it must address. The state must begin developing new transmission infrastructure through RETA, or realization of the state’s incentives and workforce initiatives will not occur. In addition, PTC caps on solar and wind must be expanded for concentrated solar projects to be economically viable, and to ensure the future of wind energy in NM. The addition of System Benefit Funds and zero or low interest loan programs for residential wind and solar are also needed, to round out the state’s suite of incentives.
SECURITY
As defined in this report, the Security Industry consists of private sector employment in Investigation and Security Services, and government employment in Justice, Public Order and Safety Activities and National Security and International Affairs.
Economic Impact
Employment. In 2006, the Security Industry employed over 3 million people, representing 2.33% of all employment in the US. In NM, the industry employed over 30,000 people, or nearly 4% of total employment in NM. Based on the percentage of total employees, the industry is larger in NM than in the US due to the presence of Sandia and Los Alamos National Laboratories, as well as rapidly growing justice and corrections systems, which reflect NM’s high crime rate and related social problems.
In both the US and NM, Justice, Public Order and Safety Activities is the largest sector of this industry, comprising approximately 60% of employment. Between 2001 and 2006, Justice, Public Order and Safety Activities have grown by nearly 10% in the US, and by 16% in NM. National Security and private Investigation and Security Services employ significantly less people and had relatively flat employment between 2001 and 2006.
Wages. Wages in the Security Industry are low in the private sector, averaging $26,000 in the US and nearly $30,000 in NM. In government employment wages are much higher, averaging $52,000 for Justice and $64,000 for National Security in NM. Average annual wages for NM in National Security and International Affairs are higher than the US average, due to high-paying jobs at Sandia and Los Alamos National Laboratories. The second table at right provides average annual wages for sample occupations in the Security Industry. The number of people employed in each occupation is shown in parenthesis.
Human Capital
Northern NM is home to the NM Law Enforcement Training Academy, operated by the NM Department of Public Safety, in Santa Fe. There are no training academies for fire fighters north of Albuquerque. Educational opportunities in the Security Industry include Santa Fe Community College’s Associates of Applied Science in Criminal Justice and Certificate in Paralegal Studies. Northern NM College offers an Associates of Arts in Criminal Justice and an Associates of Applied Science in Police Science, for police officers that have completed the NM Law Enforcement Academy.
Infrastructure and Public Policy
Both infrastructure and public policy considerations for this industry are related to Los Alamos National Laboratory (LANL). LANL’s presence in the region and its oversight by the National Nuclear Security Administration in the Department of Energy provides the anchor for growing and expanding government-related security business in the region. In the private sector, Akal Security is headquartered in La Mesillla and owned and operated by the Sikh community. Akal provides a base from which to expand private-sector security services, which could interface with regional or local corrections facilities that are planned in northern NM.
Opportunities and Challenges
There are various opportunities to expand the Security Industry in Northern NM. In the private sector, the greatest opportunities build on the strength of Los Alamos National Laboratory through commercialization of national security technologies and having private defense contractors establish a local presence in the region. To date, at least two homeland security firms have located in the region: Implant Sciences Corporation (Ohkay Owingeh) and Wildflower (Taos).
Local and tribal governments have considered a regional corrections facility in northern NM, and several are in the process of expanding or upgrading their existing jails (City of Española, Taos County) and judicial complexes (Santa Fe, Rio Arriba and Taos counties). Despite likely opposition by citizens, a regional corrections facility would add new jobs and economic opportunities for the region, and create economies of scale, resulting in cost savings to local governments.
As part of their 2005 proposal to manage Los Alamos National Laboratory, Lockheed Martin and the University of Texas recommended a US Department of Energy (DOE) training facility in the Española Valley. The training facility and low-level security activities would have the dual effect of providing economic opportunities in the Valley, and creating a greater law enforcement presence to deter drug-related crimes and address associated social problems. Law enforcement related curriculum for the public school system was a component of the recommendation. The National Nuclear Security Administration has reported that DOE is still searching for a site for such a training facility. Such a training facility is an excellent opportunity for the Security Industry to establish itself outside of Los Alamos, and spread economic and social benefits throughout the region.
TECHNOLOGY
The Technology Industry creates tools, devices and services that advance the state-of-the art and improve existing methods. Technology can be applied to all industry clusters identified in REDI. In northern NM, Technology refers to tech-transfer and commercialization of Los Alamos National Laboratory science, information technology, and technologies in other industries, such as medicine, manufacturing and energy.
Economic Impact
Los Alamos National Laboratory is the recognized technology leader in northern NM. LANL is said to generate $2 billion dollars in national economic impact each year. Within NM, it employs 10,500 employees, and is projected to spend $450 million of its $750 million procurement budget for FY 08 in NM.
At LANL, and in the private sector, technology occupations are extremely high-paying. The table at right shows average annual salaries for technology jobs in NM, along with the number of employees in parenthesis.
Human Capital
CPO Education Program. To develop local capacity in technology, LANL’s Community Programs Office (CPO) coordinates education outreach efforts that leverage internal, external and corporate resources, in alignment with community needs and LANL workforce pipeline needs. Institutional agreements with Northern NM College, NM Highlands University, UNM-Los Alamos and the LANL Foundation manage LANS financial commitments in four areas: workforce development, student pipeline programs, teacher and faculty professional development, and public engagement in lifelong STEM (science, technology, engineering and math learning). The institutional agreements implement the following projects:
• LANL Foundation STEM Programs include educational outreach grants of $250,000 annually for science, technology, engineering and mathematic initiatives in northern NM. The Los Alamos Employees Scholarship Fund Program matches LANS employee contributions up to $250,000 annually for scholarships to northern NM students who are pursuing undergraduate degrees in fields serving the Laboratory. The LANL Foundation also receives $100,000 per year to operate a Math and Science Academy and $100,000 to operate the Regional Educational Quality Center in cooperation with the NM Public Education Department and the Española Public Schools.
• LANL Foundation UC Non-Resident Fee Scholarship Program provides $204,000 annually in scholarships for northern NM students who are admitted to one of the University of California campuses and would be required to pay out-of-state tuition.
• LANL Foundation Education Outreach Programs award $3 million each year to regional STEM programs.
• Northern NM College receives $100,000 annually for development of teaching and nursing programs.
• New Mexico Highlands University receives $100,000 annually toward an endowment in its computer sciences department.
• UNM-Los Alamos receives $100,000 annually for development and implementation of the Applied Technologies Degree Program in STEM-related areas. This program will implement STEM Technician Training programs in areas such as manufacturing and nanotechnology.
College Education and Training. Community and four-year colleges in the region provide a range of technology-related degrees and certificates. As described above, LANL works closely with UNM-Los Alamos in development of its Applied Technologies Degree Program. Currently, UNM-Los Alamos offers Associates of Science degrees in Environmental Science, Pre-Engineering and Science, and an Associates of Applied Science degree in Electro-Mechanical Technology. Santa Fe Community College offers Associate of Science degrees in Computer Science and Pre-Engineering and Associate of Applied Sciences degrees in Computer and Information Technology, Drafting and Engineering Technology, and Environmental Technologies, as well as certificates in Engineering Technologies and Environmental Technologies. Santa Fe Community College’s planned Advanced Technology Center will provide opportunities for students to gain hands-on experience in these technology areas, as well as for entrepreneurs to develop demonstration projects at the college. UNM-Taos offers an Associate of Science degree in Pre-Science and a certificate in Internet Technology. Northern NM College offers Associate of Applied Science degrees in Electrical Technology, Engineering Technologies, Laboratory Biotechnology, Chemical Technician and Computer Science. Northern also offers Associate of Science degrees in Materials Science Technology, Pre-Engineering, Science and Biology. A number of more focused IT degrees and programs are also offered by these institutions. At the public school level, the Pojoaque Valley Schools is considering addition of a Technology career cluster, and the Santa Fe Public Schools is currently planning for a Regional Career Technology Center.
Northern NM Connect (NNMC). Under its new management team, LANS has invested in the human capital of the region through Northern NM Connect (NNMC), an initiative that connects entrepreneurs with customized resources to accelerate the growth of northern NM companies.
NNMC is based on the highly successful San Diego Connect model that helped grow the bio-technology sector in San Diego County over the past 25 years by connecting economic development organizations, local governments, the University of California – San Diego, small businesses, and the capital/financial community, into a business ecosystem that has seen the creation of over 800 companies with thousands of high paying jobs. Through this approach, NNMC will leverage northern NM resources, knowledge, best practices and networks to accelerate entrepreneurial success.
NNMC is the brand that provides the economic development framework for growth companies. One of its key components is to develop a networking program to promote the exchange of ideas, exploration of new business avenues, and partnerships for northern NM entrepreneurial community. It is a new model for northern NM entrepreneurs and is expected to become fully operational in 2008. NNMC has numerous programs under its umbrella that are described in more detail below:
• Venture Acceleration Fund (VAF) is focused on getting innovation to market faster. VAF’s target customer base is regional entrepreneurs and businesses with a LANL technical connection needing funding to mature their technology. Each year, VAF will award investments totaling $350,000 to facilitate projects with regional entrepreneurs, companies, investors, or strategic partners. Project proposals submitted to VAF must develop and refine novel solutions that demonstrate strong market demand and have promise to achieve regional economic development. Projects must be driven by clear, distinct, and achievable commercial milestones within a specified timeframe. Evaluation criteria include regional impact, team composition, technical feasibility, market opportunity, and the availability of matching funds or in-kind contributions. Within the past twelve months, six companies have been awarded VAF contracts valued at approximately $100,000 each.
• Springboard propels companies and ideas to the next level through expert coaching and in-depth examination. It provides targeted business assistance for high tech companies in all stages of development, including concept, start-up, and growth. Entrepreneurs accepted into the program spend several weeks in coaching sessions with a NNM Connect Coach. Upon completion of this process, the entrepreneur will make a presentation regarding an important business issue to a select group of experts. The panel of experts is tailored to the individual needs of each company; however the panel will usually include a venture capitalist, a seasoned entrepreneur, corporate and patent attorneys, marketing professionals, and an executive from a successful company in the same industry. Experts will also be drawn from other areas as needed. The goals of the panel presentation are to provide the entrepreneur with candid recommendations for the refinement of their business plan and to help identify next steps to achieve the company’s goals. Following the panel presentation, the entrepreneur meets with their coach to identify next steps, incorporate the feedback from the panel, and implement a strategic plan for the next six to twelve months.
• New Mexico Small Business Assistance (NMSBA) provides NM small businesses with technical assistance to help resolve specific technical and business problems. These assistance projects impact the NM economy through workforce development and business creation, retention, and expansion. NMSBA allows up to $2.4 million worth of assistance annually, per eligible national laboratory, in exchange for a gross receipts tax credit from the State of New Mexico. Rural New Mexico small businesses (Small Business Administration definition) can access up to $20,000 of assistance and urban small businesses (Bernalillo County) up to $10,000 annually. Scientists and engineers lend their expertise to small businesses in a variety of areas, including manufacturing, agriculture, oil and gas, biotechnology, information technology, and energy and environmental resource management. Assistance is offered through technical consultation, training, testing, and access to specialized equipment and facilities. The three restrictions to the program are the following: 1) the requested assistance cannot be available in the private sector at a reasonable cost; 2) equipment or cash cannot be given to a company, 3) the requested assistance can only be provided to a for-profit business registered in NM.
Infrastructure
Infrastructure for the Technology Industry is strongest in Los Alamos, due to the Los Alamos Research Park, existing and planned LANL facilities, close proximity to other tech businesses, and the availability of broadband. Some tech-transfer businesses which have spun off from LANL are now locating in Santa Fe, expanding the reach of technology in the region. There is significant interest and available land with infrastructure in Española, Rio Arriba County and nearby Pueblos to expand tech-transfer opportunities off the hill. However, these locations have yet to attract other technology businesses that would create synergies with tech-transfer, and the general area has numerous gaps in broadband. As a result, tech-transfer has yet to take hold there. More broadband coverage, the development of campus environments and manufacturing facilities, and a skilled technology workforce are needed to attract technology companies to these areas. Below is a description of facilities and other infrastructure available to support the growth of technology businesses in the region.
Los Alamos Research Park is a forty-acre campus located just across the street from LANL's main technical area, in close proximity to researchers, laboratories and facilities at LANL that specialize in areas such as energy, biotechnology, advanced computing, computer simulation and modeling, communications and telecommunications, advanced materials and manufacturing, and microelectronics. The Research Park is designed to enhance the collaborative efforts of tenants with one another, with LANL, and with other R&D activities throughout the world. Companies and institutions such as Motorola, Silicon Graphics, General Atomics, UCSD Jacobs School of Engineering, UCSB Institute for Multiscale Materials Studies, and others that have chosen to have a presence in the park. The advantage of this location is the highly educated and trained workforce, including scientists, engineers, technicians, and professionals who come to Los Alamos from throughout the world for careers in research and development.
The LANL Science Complex is expected to provide modern facilities for a wide range of science, technology, and engineering capabilities necessary to support both National Nuclear Security Administration (NNSA) and non-NNSA missions, and to facilitate removal of aging and deteriorating facilities at the Laboratory. Facility design will be flexible and open, incorporating sustainable design principles to meet Leadership in Energy and Environmental Design (LEED) Gold certification and obtain an Energy Star label.
The Laboratory plans to house about 1,600 workers in the proposed complex’s two buildings with an adjacent parking garage at Technical Area 62 NW, located west of the Laboratory’s main technical area. The vision for the proposed Science Complex is to provide the Laboratory and NNSA a premier 21st century office and laboratory complex that provides an aesthetic and functional workspace and offers an easy to use, cost-effective and productive work environment. An RFP for the facility was issued in April of 2008.
Supercomputing is a major component of technology infrastructure. The Roadrunner Initiative will establish the world’s fastest computer at Los Alamos National Laboratory in the summer of 2008. IBM is developing the computer, nicknamed Roadrunner, which will be capable of performing more than a quadrillion operations, or a petaflop, when it's fully operational. IBM helped design and build the cell chip and has been looking for ways to expand its commercial potential.
A computer that can churn a petaflop has been a longstanding goal for many manufacturers. The top machine, the Blue Gene/L supercomputer - located at Lawrence Livermore National Laboratory - is capable of 478.2 trillion operations, or 478.2 teraflops per second. The Roadrunner will be twice as powerful. These giant leaps are becoming common in the supercomputing world thanks to clustering. This means supercomputers are now assembled through racks of smaller servers woven together through thousands of high-speed links, rather than being one indivisible whole.
Hand in hand with Roadrunner, the New Mexico Computing Applications Center will link the world’s third fastest computer (172 teraflops), located in Albuquerque, with a network of primary and secondary gateways located at every public college campus in NM. All colleges and universities in NM, including branches, will be equipped as gateways to use the supercomputer. Universities can connect not only to their own branches, but to every college and university in NM.
These gateways are potent educational and economic development engines. They offer the potential to bring small R&D businesses onto campuses as well as to attract large R&D businesses into NM. The gateways will enable a new mode for distance learning and collaboration and provide the ability to tailor courses for specific workforce development that can be taught across NM. Additionally, the Center will get kids excited about supercomputing to attract them into science and engineering careers. It will also support professional development for teachers and support college students in STEM careers.
The NM Supercomputing Center can simulate systems and issues so realistically that one can determine the best solutions to problems before we invest time, effort, and dollars. The Center will allow decision-makers to address issues of importance to NM by providing assistance to communities in solving problems such as health, water issues, environment, clean energy, and traffic congestion. The Center is expected to grow business and high-paying jobs in NM by leveraging its science and technology resources. The major draw is scientific talent at NM’s national labs and universities. One key goal is to have companies locate R&D centers and manufacturing in the state.
Public Policy
New Mexico was recently ranked first in the nation among states with the highest growth of Venture Capital (VC) funding (percentage growth between 2006 and 2007). LANL recognizes the importance of capital in the formation and growth of high technology companies and ensures that VC companies and other financial institutions are integral team players in technology transfer initiatives. Typically, VC companies will only fund start-ups where Intellectual Property (IP) rights have been determined and where barriers-to-entry are in place. LANL must continue to ensure licensing agreements and other IP rights continue to promote accelerated commercialization of federally funded research & development.
In the Corporation for Enterprise Development’s (CFED) 20th Development Report Card for the States for 2007, NM ranks first in the nation for the number of PhD’s, scientists and engineers, as well as for federal research and development. It is also in the top ten for SBIR grants and graduate students in science and engineering. On the other side of the equation, the state ranks 37th in private research and development and 43rd in royalties and licenses. Academic research and development and businesses created by it fall in between, at 19 and 38, respectively. Clearly, NM is missing a great opportunity to translate its government-funded assets into a diversified economy that provides better jobs and a more educated workforce.
LANL’s new management team, Los Alamos National Security LLC, has created new momentum around technology-transfer and commercialization, where appropriate, of Laboratory science. Most “off the hill” tech-transfer activity is currently occurring in Santa Fe, and there is future potential, in terms of available sites, for its expansion in the Española Valley. However, until substantial tech-transfer and commercialization activity occurs, the Technology Industry remains inextricably tied to LANL and policies which affect it at the federal level.
The National Nuclear Security Administration (NNSA) recently announced its complex-wide transformation plans for the next decade. This plan, called Complex Transformation, proposes changes to both work scope and infrastructure at all NNSA sites to enable long-term transformation of the nation's nuclear weapons enterprise. The intent is to be more responsive to the nation's security challenges. Overall, Complex Transformation will reportedly allow the United States to continue reducing the existing nuclear stockpile to less than 50% of its 2001 level, making it the smallest stockpile since 1950s.
In the Complex Transformation plan, LANL has been selected as NNSA's preferred alternative site for plutonium research, development and manufacturing, nuclear weapons design and engineering, and supercomputing. The preferred alternative selection confirms that Los Alamos is first and foremost a science R&D Laboratory. The Laboratory is the nation's choice for materials-centric national security science that relies on effective integration of experiments with exceptional theory, modeling, and high-performance computing. Interdisciplinary excellence in theory, modeling, and simulation with experimental science and nuclear science continue to provide the Laboratory with innovative and responsive solutions to broad national security challenges through the agile, rapid application of key science and technology strengths. According to LANL, Complex Transformation will allow it to reduce its nuclear operations footprint by nearly 50%, its building footprint by 20%, and the number of staff supporting related weapons activities by 20% by 2018.
NNSA conducted public hearings in northern NM around LANL’s role in Complex Transformation in April 2008. Public input will be used to craft NNSA’s final recommendations to Congress, with Congress making final determinations on the Complex Transformation plan. While the views on LANL’s role in Complex Transformation vary widely among citizens and local governments in the region, it is clear that NNSA’s preferred alternative strengthens LANL’s role in the nuclear complex and does not indicate any major cutbacks in LANL’s scope or infrastructure. In early 2008, 450 voluntary layoffs, most in the form of retirement, occurred at the Laboratory. While only Congress’ 2009 appropriations bill will determine if LANL budget and workforce reductions will occur next year, NNSA’s preferred alternative and the Bush Administration’s budget recommendations do not indicate that major cutbacks are planned.
At the state level, several incentives exist relative to Technology and Research and Development, as explained below:
Research and Development Small Business Tax Credit. This program provides a credit equal to the sum of all gross receipts taxes, compensating taxes, and withholding taxes due to the state for up to three years to qualified R&D small businesses. Eligibility requires that the business employ no more than 25 employees in any prior calendar month; have total revenues of no more than $5 million dollars in any prior fiscal year; and make qualified research expenditures or at least 20% of total expenditures for 12 calendar months, ending with the month for which the credit is sought. Qualified research is defined as that undertaken for the purpose of discovering information that is technological in nature and the application of which is intended to be useful in the development of a new or improved business component, and in which substantially all activities constitute elements of a process of experimentation related to new or improved function, performance, reliability, or quality.
Rural Software Gross Receipts Tax Deduction. This program exempts from gross receipts tax a taxpayer whose primary business is providing software development services and who had no business location in NM other than in a qualified area during the period for which a deduction is sought. The company must have been established after July 1, 2002. Software development services include custom software and website design and development design and development. Rural, for purposes of this tax deduction, is defined as statewide except for an incorporated municipality with a population of more than 50,000 (Albuquerque, Las Cruces, Rio Rancho, and Santa Fe).
Technology Jobs Tax Credit. This credit has two parts: a basic credit and an additional credit, each equal to four percent of the qualified expenditures on qualified research at a qualified facility. The additional credit is earned if the taxpayer increases his payroll by at least $75,000 over the base period and by at least $75,000 for each $1 million in qualified expenditures. The credit amount doubles for expenditures in facilities located in rural NM, defined as outside of Rio Rancho or more than three miles outside Bernalillo, Dona Ana, San Juan, or Santa Fe counties. Eligible expenditures include technological research; facilities; payroll, consultants and contractors performing work in NM; software, equipment, technical manuals, rent and operating expenses of facilities.
Opportunities and Challenges
The presence of Los Alamos National Laboratory in northern NM represents a tremendous, albeit sometimes unrealized, opportunity for the region. The opportunities presented by LANL R&D, tech-transfer, commercialization, workforce development and education programs have only increased under the new Los Alamos National Security LLC management team, which has demonstrated a greater commitment to regional economic development. The future of a truly regional Technology Industry, however, hinges on LANL’s tech-transfer and commercialization efforts, which will transform government assets into private sector investments. On the other hand, workforce development, educational improvements and broadband must be provided for lower-income communities in the Española Valley to truly benefit from LANL resources. Without a skilled workforce and widely-available broadband, these communities will be bypassed by technology businesses who will find it easier to locate in Los Alamos and Santa Fe, where infrastructure, workforce, and quality of life requirements are more easily met.
The most immediate opportunity for a partnership between LANL and the Española Valley is the Solar Energy Research Park and Academy, planned by Northern NM College. LANS management has already committed its support to this project, and Northern has specifically requested LANL resources to assist with research and development on energy storage. Also, upcoming development of a business park in Alacade is being positioned as a potential “technology incubator” by Rio Arriba County. The incubator would provide space for manufacturing of technologies previously in the R&D phase at LANL. In the long term, the inventory of available and infrastructure-ready sites for technology businesses in the Española and Pojoaque Valleys presents an opportunity that can be realized as workforce issues are addressed. The current inventory includes the Alcalde property, Johnnie Roybal Industrial Park in Española, the Ohkay Owingeh Aviation Industrial Park, the Pojoaque Pueblo Industrial Park, and Santa Clara and San Ildefonso Pueblo land.