New Mexico’s Republican governor, Susana Martinez, who was born and raised in El Paso, makes frequent trips to Southern New Mexico, usually to announce a new business or expansion at Santa Teresa.
And most of the time, the state’s economic development secretary, Las Crucen Jon Barela, comes with her. They’ve been working together since soon after she took office in 2010.
For a New Mexico governor like Martinez and a cabinet member like Barela to have such close ties to Southern New Mexico, Las Cruces and El Paso is probably unique in the state’s history.
Before Martinez, Las Cruces’ relationship with Santa Fe was much like that between El Paso and Austin – distant in both miles and politics.
“El Paso’s like my second home,” Barela said. “I spent a lot of time there – a lot of time, as people from Cruces do – or did.”
The lure was not really El Paso, but Juárez.
“It was a different time,” he said. “You went over there and had a good time. We never found ourselves in any trouble. It was very welcoming.”
Martinez, who went to law school at the University of Oklahoma, settled in Las Cruces in the 1980s and became Doña Ana County’s district attorney in 1996.
Barela, the son of working-class parents, took off for Georgetown University in Washington, D.C. after graduating from Las Cruces High.
“I thought it was important to understand the global picture, different cultures, international economics and was very interested in interacting with folks from different parts of the world,” he said. “That was why I chose Georgetown’s School of Foreign Service.”
Barela, 53, recalls spending a summer studying in Chihuahua and writing a report on a proposal for a free trade zone that would extend 200 miles into the United States and Mexico along the length of the border.
Put forth by a Texan, Abelardo Valdez, who served as President Jimmy Carter’s chief of protocol, it would have allowed the free flow of goods and labor within the 400-mile-wide zone.
“It would have been very been very beneficial to both countries,” Barela said. “I guess the closest thing to that idea today is the European Union.”
After graduating, Barela went to work for New Mexico’s newly elected Republican representative, Joe Skeen, and attended Georgetown Law at night. In 1987, he came home.
“My plans and my heart had always been to return to New Mexico and be part of our state,” he said.
After four years in private practice, Barela went to work for New Mexico Attorney General Hal Stratton as an assistant attorney general and director of the civil division.
In 1993, Barela jumped to the computer software giant Intel, New Mexico’s leading private employer, and spent 12 years as its manager of community and government relations.
Since he became New Mexico’s secretary of economic development, the state has jumped from 38th to first in the country in the growth of exports, and has nearly doubled exports to Mexico, according to his office.
Barela came by El Paso Inc. last week and talked about efforts to woo Tesla’s $5-billion battery factory, what the new Union Pacific rail yard means for Santa Teresa, and a sometimes bumpy relationship with El Paso’s Borderplex Alliance.
Q: What kind of incentive package do you think Tesla Automotive is seeking for the $5-billion battery plant it plans to build? Albuquerque has been named a possible location. Texas is in the running. What can New Mexico offer?
We believe the Tesla project fits New Mexico’s business climate and culture very well. We are a hub of R&D activity. We are a state that welcomes renewable energy projects and we believe we’re blessed by geography in New Mexico.
Q: How hard is New Mexico going after it?
We are aggressively pursuing the Tesla project. New Mexico has become a much more competitive state when it comes to job creation and an inviting business climate. We have been working methodically over the last three years to reduce the tax on job creators and to create a more friendly regulatory environment for businesses to either expand or relocate in New Mexico. Recently, we were ranked the most business friendly state in taxation policy when it comes to manufacturing in the West.
Q: What are the elements of that competitiveness, because economically, isn’t the state still having difficulties?
Well, first, we have to be competitive when it comes to taxation. Secondly, our financial house is in order. The governor inherited the largest structural deficit in the state’s history – almost half a billion dollars. Without raising taxes on job creators or individuals, we’ve had three straight years of $250 million-plus surpluses.
Third, we have a regulatory environment that has seen reformation and results. Anecdotally, I used to work for Intel, and it took three years and two administrations to get a minor source air permit complete in New Mexico. Under Gov. Martinez’s leadership, we got essentially the same permit done in less than three months. That’s an example of the type of regulatory climate we have.
Fourth, infrastructure and infrastructure improvements. That’s especially apparent here along the border. We’ve invested heavily in water and road projects and will continue to do so. Most recently, the governor was able to call in a bipartisan manner for an $89 million set-aside for critical water projects around the state. Finally, our workforce development initiatives are starting to take hold, especially when it comes to post-secondary education workforce development initiatives.
Q: How do you view the role of the Borderplex Alliance in economic development for the Southern New Mexico-El Paso-Juárez region? Relations between Borderplex and Santa Teresa business officials have been a little rocky where industry recruitment is concerned.
I look forward to working with the Borderplex Alliance, as is the governor, on broader policy issues, which help brand this region as a place of choice for employers and employees. We believe there is a lot of room and great common interest in working on issues of our mutual benefit in the three-state region.
In my view, when it comes to taking a lead on job creation efforts and recruitment, however, they are best left to the local economic development organizations, like the BIA (Border Industrial Association), MVIDA (Mesilla Valley Economic Development Association), and the Otero County Economic Development Council.
Q: The Strauss Rail Yard has opened – eight months early. What development do you see there and what will it mean to Southern New Mexico and the region?
Our long-term vision, Gov. Martinez and I foresee Santa Teresa being the inland port of choice for the Americas. New Mexico is blessed by geography, and that’s what we see in the long term.
In the short term, I see the creation of literally thousands of jobs in Santa Teresa. We have seen that occur over the last three years. If you add up all of the jobs that we have announced, we’re well over 1,500. The lion’s share, of course, is Union Pacific. They’ve announced 600 permanent, full-time jobs and of course thousands of construction jobs have been created and they will be ongoing because the construction continues out there.
Q: What exactly do you mean when you say your state is blessed by geography?
Clearly, being in the middle of the NAFTA countries – north and south, east and west – is an advantage. But, we are also the easternmost land bridge on the border. That’s why New Mexico should be the place of choice for these expansions. It is much, much less expensive to build infrastructure over land than over a river. You also have the regulatory advantages that you can press. For example, the whole idea of the overweight zone is that it allows heavier trucks to come over from Mexico into New Mexico.
You have federal restrictions on loads over a bridge. Plus, it’s much more expensive to put rail on a bridge over a river than over land.
And, we have a clean slate from which to master plan a community now.
As we move forward, we can scale ports of entry less expensively along with roads, rail and utilities. It’s much more efficient.
Q: There’s also the Santa Teresa-San Jeronimo binational community initiative. What is that?
This will be the first of its kind as far as we know – a master-planned, binational community along two borders. It will entail over 75,000 acres of land where we will work in conjunction with our Mexican counterparts to master plan surface transportation, rail ports of entry, and utility easements, commercial and residential districts. We will be working on sustainable energy initiatives.
It will be designed to accommodate growth. Along the 2,000-mile border, there are choke points because there was no master planning done – whether you look at El Paso-Juárez or San Diego-Tijuana. We will design this community to be scalable and expandable to accommodate growth and to have a quality of life that will be unparalleled along the border.
Q: Is planning underway?
Yes. We have started the process of committee appointments.
Q: What’s the role of the Border Industrial Association in this area’s development?
The BIA has been a tremendous ally in our efforts to develop this region and create new opportunities for New Mexicans. The work that’s done by Jerry Pacheco and his staff is in many ways an extension of what we do at the state level in our economic development department.
Q: Jerry Pacheco told El Paso Inc. that 500 to 800 trucks coming to the rail yard will take a toll on local roads and may create major congestion at the Santa Teresa Port of Entry and the intersection of the Pete Domenici Highway at I-10. That line gets long on regular days as it is. Is he right and what help will the state provide?
Let me step back a bit. The first element of this infrastructure plan was to provide water. Three years ago, we didn’t have enough pressure to fire hydrants in the industrial park. That’s how bad our water infrastructure was out there. So, we worked with county and other officials to make sure there is a sustainable supply of water for growth in the area.
At the same time, we put money into Strauss Road and other arterials in the area. Our next phase will be to identify surface infrastructure and look at the air service operations. So, we’ve got water in place now. We’re looking at road improvements to be sure we can accommodate the growth – Airport Road probably being at the top of the list for help.
Q What are the plans for the Santa Teresa Airport?
What I foresee is to work on having a complementary air cargo cluster of businesses at Santa Teresa. I also foresee a time when we might provide some passenger service out there. These are the things I’m thinking of in the long term – to position Santa Teresa to have an incomparable rail hub, surface transportation and finally, air service, starting with air cargo service.
Q: What incentives can the state offer to industries looking to locate or expand in Southern New Mexico to help the area stay competitive with, say, Texas or Arizona?
As I mentioned, our tax structure, at least for manufacturing, makes us more competitive than Texas or Arizona. New Mexico has enacted an elective single sales formula option for manufacturers, which means if you export your goods outside of New Mexico, you’re only taxed on sales within New Mexico. That essentially means most companies have a zero corporate income tax that will be phased in over four years.
We already have among the lowest property taxes in the country. We do not have an inventory tax like Texas has. We also are offering an array of tax incentives, including a high-wage tax credit that offsets some of the income tax liabilities that a company might have. There’s a credit given for paying people well. We have an R&D tax credit and a manufacturing investment tax credit for investments in equipment.
We also understand that we have to train the employees. We have one of the finest on-the-job training programs, the Job Training Incentive Program, which offsets up to 60 percent of the first six months’ salaries for qualified employees and for qualified businesses. That defrays a lot of the upfront costs for a company that expands or relocates. Since it began, we’ve been able to allocate about $3.5 million to that program a year.
The other thing we offer in New Mexico is the Local Economic Development Act, known as LEDA. Those are closing funds. We have $15 million that helps us provide infrastructure or building improvements to businesses that expand or relocate into New Mexico.
Q: Notwithstanding all the activity and good news, New Mexico’s economy is still struggling. In January, NMSU economist Jim Peach said the state hasn’t bounced back from the recession in terms of unemployment and per capita income. What’s holding New Mexico back and what is the state doing to get things going?
New Mexico is the most reliant state on federal spending by any measure, whether it’s direct discretionary dollars coming into the state, according to a Washington Post report last year. Another report ranked New Mexico’s private sector as the most reliant in the country on federal spending – small businesses that partner with Kirtland Air Force Base or the labs or White Sands.
The $17.6-trillion federal debt and the ever-shrinking discretionary portion of federal spending is having a dramatic impact in New Mexico, as federal defense and energy department programs are being cut. All the monthly jobs reports graphically illustrate that our private sector is growing, but our federal government employment is dropping like a rock. If you were to segregate the federal job losses and forget they existed, New Mexico would easily rank in the top third of states in job creation. So that is the unfortunate fact. It’s imperative that we diversify our economy and make our economy more competitive.
Q: Peach also said the number of jobs in Las Cruces was only 200 more than in 2007 and that a quarter of its population is “simply excluded from a modern economy” because of poverty. What’s being done turn the city around?
Stay tuned. Las Cruces is a microcosm of what’s happening in the state because of federal spending. We have some great news coming for Doña Ana County in terms of job announcements, and we hope that within the next several weeks, we will be able to announce those jobs.
They are private-sector jobs and excellent job opportunities, so we’re starting to see some of the benefit spill-over effect from this border region.
Email El Paso Inc. reporter David Crowder at firstname.lastname@example.org or call (915) 534-4422, ext. 122 and (915) 630-6622.