b'2021 State ReportNM ofJanuary 2020, before the pandemic began, estimated road fund New Mexico Notes In the NM SPOTLIGHT . revenue of $511 million for FY21 and currently anticipates the Oil and Natural Gas Prices Trending Aheadfinal total for the year will be between $508 million and $513 Forecast Oil prices are on track to average $6 more per barrelmillion. Revenue was partly boosted by a 2019 change to state in FY21 than the $43.50/bbl for FY21 in the February fore- law that increased the motor vehicle excise tax from 3 percent cast, while natural gas prices are expected to average $3.05to 4 percent and earmarked the additional $50 million to $60 per thousand cubic feet, slightly above the forecast of $2.45/ million in revenue for the road fund. mcf, economists report. A $1 change in the annual averageHowever, stagnant fuel tax revenueNew Mexicos 17 cents New Mexico price of oil has about a $23 million impact on theper gallon has not changed since 1995 and is among the lowest general fund, and a 10-cent change in the annual average Newin the nationand a one-third drop in road fund purchasing Mexico price of natural gas has about a $14 million impact onpower since the year 2000 means the fund cannot keep up with the general fund. The price of oil is on track to average $57/bblneed. The departments latest pavement condition rating data in FY22, compared with $47/bbl in the forecast, the economistsshows 21 percent of the states roads are in poor or very poor report. In addition, New Mexico is the only top oil-producingcondition. The department estimates the gap between mainte-state to have recovered to pre-pandemic production levels,nance needs and available revenue is $281 million. Construc-despite fewer active drilling rigs. Production is being boostedtion costs increased by 23 percent between FY15 and FY20, by output from the completion of wells that were previouslyalthough increases in materials, which affect construction costs, drilled-but-uncompleted. New Mexico is currently on trackhave not been uniform, with base course costs increasing by 53 to produce about 390 million barrels in FY21, 20 million bar- percent, structural concrete by 50 percent, and hot mix asphalt rels above the February 2021 projection. by 3 percent. The Legislature approved special general fund In the last five years, the tax gap between what taxpayersappropriations totaling $819 million between 2018 and 2021 owe but fail to pay has grown by more than $100 million,and authorized $300 million in bonds to help close the gap and partly because agency efforts have resulted in greater identifi- for new road construction statewide. As a result of the extra cation of owed taxes but not an increase in collections, a reportfunds and a mild winter, the department is on track to exceed finds. In a follow-up to an evaluation of the tax gap in 2016,its targets for roadway preservation in FY21, LFC staff reports. the Program Evaluation Unit reports the tax gap has grownThe official and literal launch of space tourism earlier this from $635 million to $743 million since its original report. Atmonth, with the first commercial passenger spaceflight from the same time, spending on tax administration programs in- Spaceport America, was a single momentan inspiring and creased by 11 percent, and the department invested in technol- monumental momentrepresenting years of work and invest-ogy that has improved its auditing. A progress report scheduledment by Virgin Galactic. Similarly, it was also a single step, to be presented to the Taxation and Revenue Department hasbut a significant step, on New Mexicos path to becoming a improved its ability to assess taxes, but not its ability to collecthub for the space industry. New Mexicos leap of faith into an them. Taxpayers who dodge their responsibilities force the stateuntested economic sector has not come cheap. The state has to raise taxes to support government services, placing a greaterinvested nearly two decades and hundreds of millions of dol-burden on law-abiding taxpayers, the report notes.lars into Spaceport America. But it has the potential to pay the Road Fund Steady but Maintenance Lags; Tax Collectionsstate back multifold. Virgin Galactic pays the state $3 million a Fall Short of Amounts Owed. LFC evaluators point out almostyear for its spaceport lease and employs 180 people who have $593 million in assessed taxes are being challenged by taxpay- spent $9 million on New Mexico real estate. In addition to an ers in formal protests, a 360 percent increase over the $161estimated 400 commercial flights per month, Virgin Galactic million under protest in FY17. Noting the potential impact of awill be training NASA astronauts headed to the International halfbillion dollars in protested taxes on revenue forecasts andSpace Station. SpinLaunch, which has built the worlds largest budgeting, the evaluators report five of the 25 positions in theevacuated centrifuge at the spaceport to fling satellites into departments protest unit are currently vacant and almost $50space, has 59 New Mexico employees earning an average of thousand of a $500 thousand special appropriation for protest$174 thousand a year. The 10-year economic impact of the litigation was never spent. Many of the weaknesses identifiedcompany is estimated at $527 million. Up Aerospace has built in a 2016 report and a 2017 update remain, the Progress Reporta Space Propulsion Center at Spaceport America and Haps says, including a finding that the audit program suffers fromMobile Aerovironment is working on a solar powered strato-high vacancies and turnover among staff. However, the reportspheric telecommunications platform at its spaceport facilities. notes, the Audit and Compliance Division increased productiv- Those are just the tenants. The spaceport also provides services ity in identifying taxes owed until FY21, when assessmentsto Exos Aerospace, Boeing, Swift Engineering, C6 Launch, per FTE fell by 26 percent. In FY20, division staff assessedStratodynamics, and White Sands Research and Developers, an average of $671 thousand per FTE, a 12-to-1 return on theLLC. It also hosts the Spaceport America Cup, a rocket engi-states investment in the division. The state road fund, highlyneering competition for student teams, and promotes science dependent on fuel sales, survived the travel restrictions of theand engineering education through its STEM with Spaceport pandemic mostly intact, but road maintenance needs continueAmerica program. Yes, weve invested heavily in the space-to outstrip revenue. The Department of Transportation inport but it is proving to be a sound investment. The activity at Spaceport America should allow the facility to soon start 44 www.wpma.com / Autumn 2021'