You are currently viewing No more tax incentives without ironclad clawback agreements

No more tax incentives without ironclad clawback agreements

New Mexico Business Coalition has for many years now, trumpeted the clear need for New Mexican government officials to include rock solid “clawback” agreements when using tax payer funds as incentives for luring companies to the state. Volaris Airlines is the most recent industry example of overlooking important details like clawbacks when attempting to entice businesses to operate in New Mexico. 

New Mexico has continued to try and diversify it’s economy, but the disappointment surrounding Google’s removal of Titan Aerospace from Moriarty is an excellent example of the necessity for rock solid clawback provisions. The state spent $995,000 of Local Economic Development Act (LEDA) funds on upgrading the sewer and water systems at the Moriarty Municipal Airport to accommodate the needs of Titan Aerospace. Nearly three years later Google decided to relocate Titan Aerospace and all of it’s operations back to the Bay area, taking tax revenue and jobs for New Mexicans along with it. However, Thanks to contractual agreements before hand the state was able to recoup the nearly $1 million investment back from Google.

New Mexican officials will, without a doubt, continue to use taxpayer incentives as a way to lure companies into moving to New Mexico. For example, the state of New Mexico Economic Development Department is providing $7.7 million through the Local Economic Development Act (LEDA) for the new NBC Universal production studio that is set to be built in Albuquerque. But that LEDA assistance is tied to specific economic development measures and subject to strict clawback provisions if NBC Universal does not meet its benchmarks. 

When companies like Volaris Airlines get millions of tax dollars in fee payment abatements or other state bonuses and decide to leave the state before they fulfill their obligation in return for those dollars, they need to be held accountable to the taxpayers. Read more HERE.