On Monday, March 5, 2018, the Albuquerque City Council voted to raise the city’s gross receipts tax rate by three-eighths (3/8 ths) of a percentage point to deal with a $40 million project deficit for fiscal year that commences July 1, 2018 and to fund public safety and hire more police to increase ranks.
On April 1, 2018, the Keller Administration will be submitting the city budget for fiscal year 2018-2019 to the city council for public hearings and approval.
The gross receipts tax increase of 3/8th of a cent could potentially raise an additional $30 to $40 million in revenues this year when it goes into effect July 1, 2018 and upwards of $55 million each year thereafter.
The City of Albuquerque has a total general budget of $955.3 million dollars, of which $529.6 million is the general fund which goes to providing essential services.
“Public Safety” represents 29% of a $529.6 million general fund budget appropriation and includes both the Albuquerque Fire Department and the Albuquerque Police Department.
The city’s deficits and public safety are not the only problems Albuquerque faces.
One area that is just as important as a public safety for a city for any number of reasons is its economy, yet only $3.6 million was dedicated last year to the Economic Development Department and that was a decrease of 24.1% from the fiscal year 2017.
A major challenge is to turn our economy around after eight (8) years of total stagnation and failed economic development policies by the previous administration.
A vibrant and growing city economy will go a very long ways to eliminate one of the major root causes of crime which is poverty and to provide the essential services demanded by the public.
CITY OF ALBUQUERQUE ECONOMIC DEVELOPMENT DEPARTMENT
The City had a total operating revenue and budget of approximately $955.3 million for fiscal year 2018 that ends on July 1, 2018.
Gross receipts tax makes up for 64% of the City’s general fund revenues.
29% of all city appropriations goes to public safety (police, fire, 911, emergency operations center, ect.) and 20% goes to infrastructure (street system, water and sewer system, ect.) for a combined total of 49% of all city expenditures.
The remaining 51% of city expenditures goes to providing all other essential and government services involving some 23 other city departments.
The City of Albuquerque does have an Economic Development Department and its mission is “develop a more diversified and vital economy through the expansion and retention of businesses; develop appropriate industry clusters and recruit target industries; and assist new business start-ups and promote the film and music industries.”
“The Economic Development Department supports the tourism and hospitality industries through collaboration and oversight of the City’s contractors. The department also fosters international trade efforts and increased international business opportunities for Albuquerque companies.”
The question that needs to be asked is if city hall under a new administration is serious or even committed to economic development and diversifying our economy?
For the previous administration, the answer was a loud NO based on the resources allocated by the previous administration.
The fiscal year 2018 proposed budget for the Economic Development Department was $3.6 million, a decrease of 24.1% from the fiscal year 2017 original budget and employs nine (9) full time employees which does not sound like much for an effective economic development plan for diversifying the Albuquerque economy.
During the last eight (8) years, Albuquerque’s Economic Development Department has not convinced nor attracted a single major corporation or business to relocate to Albuquerque.
With the enactment by the council of the three-eighths (3/8 ths) of a percentage point, more than enough recurring revenue should be generated to deal with the deficits, police officer shortage, the expansion of APD and fund economic development.
We will soon find out just how serious the Keller Administration is about economic development when the new 2018-2019 budget is submitted on April 1, 2018.
The funding to the Economic Development Department should be increased to $15 million a year and the staffing should also be increase significantly.
Funding for start up businesses with claw back provisions well as industrial revenue bonds and tax breaks should be explored.
THOSE WHO SHOULD TAKE CHARGE TO TURN ECONOMY AROUND
Turning our economy around is not just the Mayor’s problem, nor government’s problem, but all of our problem.
As a community, we need to decide what kind of City we want to become and identify our needs; otherwise we are destined to continue our economic death spiral.
As a community, we can do things to turn our City economy around, diversify our economy and reduce our reliance on federal government funding.
A community effort to identify our needs has been done in the past and should be undertaken again.
It is a community effort that should be led by the Mayor, the Albuquerque City Council, the Bernalillo County Commission, the Albuquerque business community, civic organizations and include charitable organizations, and the City’s and County’s Economic Development Departments.
ALBUQUERQUE’S POOR ECONOMIC RANKINGS
During the last eight years, Albuquerque has fallen to the bottom and in many cases dead last of every meaningful ranking in the country, including economy, jobs, crime, education, real estate, desirability, and traffic.
Even though Albuquerque is the largest city economy in the State, New Mexico is number one in unemployment and number one in children living in poverty.
It has been reported that Albuquerque lost 14,900 jobs during the last 10 years, which is roughly 4 jobs a day.
According to one Brookings Institution report, the Albuquerque metro area’s economy was so bad between 2009 and 2014 that it almost fell off the charts of three measures of economic health.
Of the largest 100 metro areas in the U.S., Albuquerque ranked 100th, 99th and 83rd in the three areas measured by the Brookings Institute: Growth, Prosperity and Inclusion.
According to the same Bookings Institute report, economically hobbled cities like Jackson, Miss., and Rochester, New York, fared better than Albuquerque. Albuquerque ranked 99th for economic growth, 83rd for prosperity and 100th for inclusion, which measures how an area’s poorest residents are doing in the economy.
According to US Census reports, more people are leaving the State than moving in, and our youth are leaving Albuquerque in droves to seek employment with a future elsewhere even after they get their college education at our universities.
On October 1, 2017 Wallet Hub, a personal fiancé website, published the story “Fastest Growing Cities In America”.
Albuquerque ranked 450th in economic growth among 515 cities in the United States according to the Wallet Hub report.
Wallet Hub ranked the cities using 15 metrics, including population growth, unemployment and poverty rate decrease, job growth and other measures.
Among large cities, Albuquerque ranked 60th out of 64.
Among all cities, Albuquerque fared especially poorly on unemployment rate decrease (481); job growth (446); growth in number of businesses (443); median house price growth (433), and regional gross domestic product growth (433).
According to US Census reports, more people are leaving the State than moving in, and our youth are leaving Albuquerque in droves to seek employment with a future elsewhere even after they get their college education at our universities.
ALBUQUERQUE’S ECONOMIC OUTLOOK
In 2016, the Bureau of Business and Economic Research (BBER) at the University of New Mexico (UNM) did a report on Albuquerque’s economy and outlook.
BBER used local statistics and national forecasts of our state and local economy to come up with a job history and job projections.
A portion of the University’s BBER 2016 report and forecasting model was contained in a section of the City of Albuquerque’s Proposed Budget for Fiscal Year 2017-2018.
Most of the data has remained constant with no dramatic changes over the last year, with the exception perhaps being and uptick in construction and the service industries.
(See City of Albuquerque “Proposed Budget Fiscal Year 2018, pages 46, 47, 48, 49 atwww.cabq.gov/dfa/budget/annual-budget)
Following is the section contained in last years 2017-2018 City of Albuquerque proposed budget that merits consideration:
“The Albuquerque economy declined in sync with the national economy, but has lagged in its recovery.
Total employment in the Metropolitan Statistical Area (MSA) increased in the third quarter of 2012 but this gain was due to a change in processing by the department of Workforce Solutions and not in actual employment.
The 4th quarter of 2014 and all following quarters through the 1st quarter of 2016 show increases with growth.
The UNM BBER forecast of employment in October 2016, has positive non-agricultural (non-ag) employment growth beginning in FY/13, though as mentioned above, FY/13 is due only to a technical adjustment.
The growth in total employment in FY/14 was 0.4% and FY/15 growth in total employment was 1.4% and with one estimated quarter FY/16 is expected at 1.7%.
The Albuquerque economy lost over 27,000 jobs from FY/08 to FY/12 a loss of 7% of total employment.
About 13,000 jobs were added in FY/13 to FY/16.
In FY/17 employment was expected to increase 1.5% and remain near this level for the remainder of the forecast.
The economy does not approach FY/08 employment levels until FY/19.
This puts the Albuquerque recovery over four years behind the national economy in terms of reaching post-recession employment levels.
Government employment limits growth, with private sector employment growth exceeding total employment growth from FY/12 through FY/21.
Construction has improved somewhat and is now helping the economy.
The unemployment rate continues to decline, but some of this is due to discouraged workers leaving the labor force.
In calendar year 2015 there was somewhat a reversal of this with a slight increase in the unemployment rate caused in part by people re-entering the labor force.
The [unemployment] rate is expected to slowly decline to 5.3% in FY/20 and FY/21.
This is above the unemployment rate for the U.S. for the entire forecast period.”
City hall and the Economic Development Department need to address Albuquerque’s growth industries if the city is going to have any chance of turning our economy around.
ALBUQUERQUE’S ECONOMIC GROWTH INDUSTRIES
The BBER study also discussed the following nine (9) major Albuquerque industries or economy sectors:
1. Retail and Wholesale Trade
2. Transportation, Warehousing and Utilities
4. Education and Health Services
5. Accommodation and Food Services
6. Real Estate & Financial Activities
7. Professional and Other Services
Following is information provided on each industry or sector:
1. RETAIL AND WHOLESALE TRADE
“These sectors [retail and wholesale trade] account for about 15% of employment in [Albuquerque’s Metropolitan Statistical Area]. It is a particularly important sector in terms of the Gross Receipts Tax (GRT); making up about 30% of GRT. As the recession hit, the closure of stores and reductions in purchases substantially hit employment and GRT in this sector. The sector is expected to have employment growth of just over 0.8% in FY/17 and FY/18 with a jump to over 1.5% in FY/19 and tailing off for the remainder of the forecast.”
2. TRANSPORTATION, WAREHOUSING AND UTILITIES
“This sector while important, only accounts for 2.5% of employment. Employment growth in this sector was weak before the recession hit and then declined substantially in FY/09 and FY/10. The expectations for the forecast are a robust recovery with growth over 2% in FY/17 following a decline of 0.6% in FY/16. With this growth, the sector does not reach the pre-recession high in the forecast period.”
“This sector accounts for about 4.5% of employment in the [Albuquerque’s Metropolitan Statistical Area]. It is an important sector as it creates relatively high paying jobs that bring revenue from outside the area. (Emphasis added.) It also generates purchases of materials and services in the local economy making this sector’s impact greater than its employment share. After substantial job losses including closing of Eclipse Aviation and GE, the sector posted small gains in FY11 and FY/12. In FY/13, FY/14 and FY/15 the sector declined and is expected to post a small increase in FY/16 and FY/17 before suffering losses in the remainder of the forecast. FY/21 employment is only 72% of the employment of FY/08.”
4. EDUCATION AND HEALTH SERVICES
“This sector is predominantly health services and accounts for 15.7% of employment. Albuquerque is a major regional medical center that brings people into the area for services. Presbyterian Hospital and its HMO are one of the largest employers in the area. This was the only sector that increased through the recession and continues to be a primary driver for economic growth. Growth slowed in FY/14 but increased in FY/15 and is expected to reach 4% in FY/16. Growth stays above 3% in all years but FY/21 where it slows to 2.9%. This sector is the largest contributor to employment growth in the forecast period adding about 10,000 jobs (36.6% of total job growth) from FY/16 to FY/21.” (Emphasis added.)”
5. ACCOMMODATIONS AND FOOD SERVICES
“This category includes eating and drinking establishments as well as hotels and other travel related facilities. It accounts for 10% of employment in [Albuquerque’s Metropolitan Statistical Area]. The sector is a major contributor to both [Gross Receipts Tax] and Lodgers’ Tax. FY/14 and FY/15 had growth of over 3%. This slowed in FY/16 to near 2% and after increasing to over 2.5% in FY17 remains below 2% for the remainder of the forecast. The sector reached its previous peak of FY/08 in FY/14.”
6. REAL ESTATE & FINANCIAL ACTIVITIES
“This is two sectors and includes finance, insurance and real estate including credit inter mediation. It accounts for about 4.5% of employment in the [Albuquerque’s Metropolitan Statistical Area]. The financial crisis, the consolidation of banking, and the collapse of real estate impacted this sector. FY/13 shows an increase of 1% with FY/14 increasing 1.8%. Growth tapers off through the remainder of the forecast. In FY/21 the sector remains 367 jobs below the level of FY/08.
7. PROFESSIONAL AND OTHER SERVICES
“This category is a grouping of four service sectors (Professional and Technical, Management of Companies, Administrative and Waste Services, and Other Services). The category accounts for 18% of the employment in … [Albuquerque’s Metropolitan Statistical Area]. It includes temporary employment agencies, some of Albuquerque’s back-office operations, and architect and engineering firms that are closely tied to construction. It also includes Sandia National Labs (SNL). While the national labs gained some positions in FY/11 through FY/15, the sector as a whole was weak. This began to change in FY/15 as construction services (engineering and architecture) began adding jobs, though the sector as a whole declined. The sector shows expected growth in FY/16 of less than 1%. Growth then exceeds 1% every year in the remainder of the forecast with a peak growth of 2.6% in FY/18. In FY/21 it still remains 3,300 jobs below the peak of FY/08.”
8. INFORMATION AND COMMUNICATIONS
“This sector includes businesses in telecommunications, broadcasting, publishing and internet service establishments. It also includes the film studios. It accounts for about 2% of employment in … [Albuquerque’s Metropolitan Statistical Area]. FY/13 posted solid growth, but FY/14 showed a substantial decline and FY/15 declined again. FY/16 is expected to show growth of over 3%, but slows to under 1% growth until FY/21.”
“Construction is typically cyclical, with significant swings in building and employment. Construction is an important sector and has an impact on the economy larger than its employment share of 5%. This sector lost 12 thousand jobs from FY/07 to FY/13. In FY/07 its employment share was 8%. After falling consistently from FY/07, employment in construction began increasing at the end of FY/13. FY/14 grew 2.8% and 2.4% in FY/15. Employment is expected to increase only 1.2% in FY/16, but then increases to near 3% in FY/17 and remains in the 2% to 3% range for the remainder of the forecast.It is one of the fastest growing sectors in the economy for the forecast period. Even with this growth construction employment in FY/21 is forecast to be 26% or 8,000 jobs below the FY/07 peak.”
“The government sector makes up almost 21% of the Albuquerque’s Metropolitan Statistical Area employment. The largest part of State and Local government is education. Local Government includes the public schools and State Government includes the University of New Mexico and Central New Mexico Community College. The local sector also includes Indian enterprises. The Federal Government makes up 4.4% of employment; nationally Federal government makes up 3.4% of total employment. This doesn’t include military employment which is counted separately. Active military is around 6,000 or about 1.7% of the total non-agricultural employment. Nationally military is 1% of total non-agricultural employment. Government employment slowed and decreased in FY/11 through FY/16. Local and State employment decreased due to declines in tax revenue and the inability to fund the same level of employees. State and Local are flat in FY/13. State government has been stronger with growth of 2.4% and 11.3% in FY/14 and FY/15. It is expected to grow 4.2% and then decline or remain at low levels of growth for the forecast. Local government has been flat and is expected to show little growth in the forecast. The major sources of state and local jobs are education, though the Labor department does not keep individual counts for these jobs at the local level. Federal Government after growing strongly in FY/10 showed little growth in FY/11 and declines in FY/12 through the remainder of the forecast. This occurs due to the federal government taking steps to reduce its expenditures. The forecast shows continued losses in federal jobs except in FY/19 to FY/21 largely due to hiring for the 2020 census.”
QUALITY OF LIFE LEGISLATION APPROACH
In 1987, the Albuquerque City Council engaged in a process of public hearings to determine and identify what type of facilities and projects were needed for a growing city that would enhance our quality of life and make Albuquerque an attractive City to raise a family.
In 1987, the City Council held extensive public hearings for months, throughout the City, to get public input on what should be built.
The business community, the private sector and many civic organizations got behind the effort and participated.
By a unanimous, bipartisan vote, the Albuquerque City Council enacted the “Quality of Life” legislation that resulted in the construction of the Albuquerque Aquarium, the Albuquerque Children’s Science Museum, the Botanical Gardens and the Balloon Museum.
Originally, a performing arts center was identified as a needed facility with funding included, but the funding was later struck down by a voter initiative.
Years later, the private sector, without any government funding but with reliance on private fund raising and contributions, built the Hispano Cultural Center which has a performing arts venue that fills the void for a performing arts center.
The “Quality of Life” legislation funded the acquisition of critical open space with open land acquisitions completing the final phase of what forms the backbone of our “urban parks”.
The “Quality of Life” legislation included a ten-year quarter cent sales tax with a sunset clause, and the tax has long since expired, but the facilities were designed and built.
The “Quality of Life” tax was not put on the ballot for a public vote thanks in large part to strong community support and the extensive public hearings held by the Albuquerque City Council and the forging of a public consensus of what needed to be built.
Money was also approved by the 1987 City Council to fund major improvements to our zoo, a major remodeling and expansion of our Convention Center, and the largest expansion and remodeling of the Albuquerque Sunport in Albuquerque’s history.
Looking back on it, what would Albuquerque be today without all of the “quality of life” facilities, our expanded open space and urban parks system, the expanded convention center, improvements to the zoo and the expanded airport?
Each “Quality of Life” facility contributes to our City character and helps make our City an attractive place to live, work, and raise a family.
Without the “Quality of Life” projects you cannot help but wonder if Albuquerque would be nothing more than just another dying, dusty little southwestern town.
TRY INVESTING IN OURSELVES
The same approach used in 1987 for the Quality of Life legislation can be done today to develop a successful economic development program, with or without an “economic development” tax voted upon by taxpayers.
There have been major cities where voters have agreed to tax and invest in themselves to repair or rebuild their communities and facilities.
Albuquerque and Bernalillo County voters did it to an extent in 2014 with the enactment of the Mental and Behavioral Health tax and again in 2015 with the BioPark gross receipts tax voter initiative.
In 2014, Albuquerque and Bernalillo County voters overwhelmingly voted to impose a one-eighth percent gross receipts tax to improve access to mental and behavioral health care services in the county.
The one-eighth percent gross receipts tax voted by taxpayers for mental health is to be used for the purpose of providing more mental and behavioral health services for adults and children in the Albuquerque and Bernalillo County area, and to provide a safety net system that develops mental health care not otherwise funded in New Mexico.
During the 2015 municipal election, Albuquerque voters wisely approved with an overwhelming majority the voter petition drive initiative to increase the gross receipts tax that will raise $255 million dollars over 15 years for the BioPark.
The BioPark, with its zoo, aquarium and botanical gardens, is the number one tourist attraction in the State of New Mexico.
With the enactment of both the mental and behavioral health tax and the BioPark tax, voters said they wanted to invest in their community, increase services and repair and preserve facilities that help make Albuquerque a great and unique City.
Albuquerque’s taxpayers must be convinced by its political and business leaders of the importance of investing in major public facilities, construction projects and infra structure and for economic development.
Albuquerque can turn our economy around with an aggressive and massive investment to reinvent itself like has been done by great American cities such as Denver, El Paso, Pittsburgh, Oklahoma City, Columbus, and other cities that have invested billions in their communities.
PUBLIC AND PRIVATE LEADERSHIP REQUIRED
Albuquerque must redefine its identity, take bold and aggressive, calculated risks to attract and create high-paying jobs to keep our youth and talent from leaving.
Albuquerque is one of the few major metropolitan cities its size that does not have a City operated entertainment venue or facility, as was the Civic Auditorium, but relies extensively on higher education facilities such as the UNM’s “The Pit” and Popejoy Hall.
Improving our schools and vocational systems, reducing dropout rates, are critical to diversifying Albuquerque’s economy.
Albuquerque as a community needs to voice our demands loud and clear to our New Mexico House and Senate members that they need to be far more aggressive in improving and funding our education system and fund early childhood care and intervention programs and mental health care programs and stop wasting time on “all crime, all the time” agendas increasing criminal penalties, but rather getting to and solving the root cause of crime: poverty, poor education system, high unemployment, drug addiction, to mention just a few root causes of crime.
City economic development efforts need to be better coordinated with our vocational institutions to identify new industries that can be attracted to Albuquerque and insure Albuquerque has the trained workforce to accommodate any new industry.
Albuquerque can and must expand and find better ways to use financial incentives for economic development such as tax increment districts (TIDS), industrial revenue bonds, and even fund economic development investment programs such as initial startup funding with claw back provisions.
Albuquerque needs to pursue with a vengeance real growth industry like heath care, transportation and manufacturing, and the film industry to diversify our economy.
Public-private partnerships in the growth industries where ever possible should be encouraged and developed.
Special emphasis and support should be given to Albuquerque’s film industry which is developing, expanding and proving to be very successful in providing well paying jobs.
Albuquerque’s taxpayers must be convinced by its leaders of the importance of investing in major projects and in our neighborhoods to make Albuquerque more of a “walk able” City, where people can raise their family, work and make a living and have recreational and entertainment opportunities all within a small radius thereby reducing our reliance on the automobile.
A well designed, efficient mass transportation system is a basic essential service that must be provided by any major city.
Any mass transportation system that is developed must truly serve the entire community and not just a small geographic area such as is the poorly designed ART bus project which is destroying historic Route 66.
More community centers with recreational facilities would be a good start achieving a walkable city.
The City of Albuquerque needs to partner more with the State of New Mexico wherever possible.
A good first start in partnering with the State is to find a new vision for the State Fair grounds and how that very valuable gem in the center of Albuquerque can be better utilized to serve the Albuquerque community.
A suggestion would be for the City and State to jointly fund a tear down the old Tingly Coliseum and construct a multipurpose, state of the art facility that could be used for entertainment and sports events and operated year-round with a joint powers agreement.
Other joint powers agreements can be entered into between the City, State and County for the mutual use of facilities.
On April 1, 2018 when the Keller Administration submits its very first budget, city residents will get a real look at how committed the new administration is in turning our economy around.
With the three-eighths (3/8 ths) increase in city tax revenues, the Mayor and the City Council have an opportunity to make a real commitment to economic development, if they want.
The funding to the Economic Development Department should be increased to $15 million a year and the staffing should also be increased significantly in order to promote and seek businesses to relocate to Albuquerque.
Our political, business and civic leaders need to show far more backbone and commitment to improving and diversifying Albuquerque’s economy.
Otherwise, we are destined to become a dying, dusty southwest city without any real potential for growth and better economic times.