Mayor Berry Suggests Changes to Spur Economic Growth
Mayor Richard J. Berry provided an update on his economic initiatives to the NAIOP Commercial Real Estate Development Association at a luncheon meeting at the Marriott Pyramid on March 28, 2011. Mayor Berry addressed the group a year ago when he rolled out his thrive!ABQ plan. The plan included various action items that the Berry Administration set out to accomplish during the first year in office to create a better business climate in Albuquerque. He provided updates on the major points that are part of his plan:
- Albuquerque First seeks to attract more local vendors for City purchases as well as encourage the community to buy locally. Since its inception, the City of Albuquerque has made more purchases through local vendors.
- The Mayor committed to helping businesses of all sizes to work with the City and delivered on the promise. The city installed new software that allows businesses to submit all bids online.
- Under legislation carried by Councilor O’Malley, the City will raise the threshold for small purchase RFQs from $10,000 to $25,000, which will lead to even more purchases locally.
- FasTrax – Within the city planning department, the Mayor proposed a streamlined permitting process in which a customer pays a premium for expedited plan reviews. FasTrax was implemented in July of 2010 and since that time 17 customers have used the service, with an average review time of 10 days compared to the 4 to 8 weeks it took previously.
- The Planning Department also has begun to phase in a system to submit plans electronically. Phase 1 was implemented in December of 2010, which allows multiple divisions to review plans simultaneously, also expediting the overall process.
- The City Council passed legislation last week which Mayor Berry had requested to allow for third party plan review in Albuquerque. This allows outside plan checkers to review plans, thus expediting the process and reducing the burden to taxpayers.
- Albuquerque Business Resource Center – One of the key components of the mayor’s economic development initiative was to create a business center which provides resources to prospective local entrepreneurs for those interested in doing business in the city of Albuquerque. The center which opened in city hall in July of 2010 has assisted in over 300 cases involving everything from business start up to navigating various aspects of city government.
- Small Business Regulatory Relief Act– City Council recently passed legislation that will form a new panel to review all new city ordinances and report how they impact business.
- Capital Fund for Economic Development – last year the mayor committed to creating a $2 million fund for economic development and business recruitment. He sought the legislation and the council passed it unanimously. It will be put to a public vote along with other Capital Improvement Projects in October.
Also under the area of buying local, the Mayor announced a website, thriveABQ.com. The site takes the city’s existing database of registered businesses in Albuquerque and makes it user friendly and searchable. It is a resource to help institutional buyers purchase locally and connect residents to local businesses. ThriveABQ.com will facilitate business to business transactions.
Mayor Berry also spoke about the current business climate in New Mexico and some of the challenges that we face in competing against other regional states in attracting new businesses and corporations. For 2010, The Tax Foundation ranked New Mexico 33rd on its business climate index. Chief Executive Magazine ranked New Mexico 29th in the category of “Best States for Business” and Forbes ranked New Mexico 35th on its “Best States for Business” list. Mayor Berry described these rankings as opportunities for improvement.
Thanks to better corporate income tax rates, tax credits and other economic incentives, several regional states ranked higher for their business climate including Utah, Arizona, Texas and Oklahoma. “It’s obvious other states are willing to step up to the plate to attract and retain business. We shouldn’t shy away from incentives if the company has the track record and proven performance to justify the investment,” Mayor Berry said.
The Mayor indicated that the City has received feedback from companies who have decided not to locate in Albuquerque. Some of the reasons included the corporate income tax structure, gross receipts taxes on electricity and other inputs and gross receipts taxes on construction.
Nonetheless, the Mayor highlighted that Albuquerque still has some things that work in our favor when it comes to recruiting businesses including the Job Training Incentive Program (JTIP), the Manufacturers Investment Tax Credit and Industrial Revenue Bonds (IRB).
Mayor Berry went on to stress that he will reach out in an effort to work collaboratively with the City Council, State Legislature and private industry to seek certain changes. Some of the ideas he put forward as worthy of consideration included:
Special incentives for Mega Job Creation Projects
- New Initiatives for high tech start-ups
- Incentives to attract Headquarter projects
- A corporate income tax single sales factor option
- Cap on gross receipts tax for consumable inputs such as gas and electricity for select projects
- Special incentives for targeted industries
- Post-performance, refundable tax credits for a percentage of new state revenues
- Reduction or elimination of gross receipts tax for Research and Development performed by New Mexico companies for our national labs
Mayor Berry also stressed the importance of regulatory reform as a key component to attracting new business. He lauded the efforts of Governor Susana Martinez to review existing regulations and their impact on business, as Albuquerque has done at the local level since he took office.
- The Mayor made the case that it is time to review our tax structure through a comprehensive competitive analysis. The analysis would review our structure compared to that of various other states in order to take a clear, unbiased look at the relative impact of certain state taxes on specific types of business expansion. He is advocating for a study by the New Mexico Tax Research Institute and committed funds from next year’s budget to help support the study. Secretary Jon Barela of the New Mexico Economic Development Department and the leadership at PNM are teaming with the Mayor and have also agreed to devote funds to the study. Mayor Berry said he will seek out more businesses to pitch in and invest in the study.
Mayor Berry acknowledged that all of these proposals will cost money and that we must identify resources to cover the costs. He indicated that a continued commitment to fiscal responsibility in both lean and more prosperous years will go a long way toward covering the cost. “We have fought hard and made tough decisions in the past several years to reduce the size and cost of government, both at the state and local levels. We must continue to do so in order to use the revenues as they increase to fund improvements in the tax code,” Mayor Berry said. “This is truly a once in a generation opportunity.”
The Mayor ended the speech by recognizing the importance of making improvements in order to keep and attract jobs in Albuquerque and throughout New Mexico.
“It’s about jobs – it’s about our future – and it’s about time!” Mayor Berry said.