August 6, 2015

A year later, Google leaves and NM wants its money back

Alexander Kim

In the wake of a surprise announcement that Google is moving a Moriarty drone manufacturer to Silicon Valley, the state is apparently scrambling to get back some of money it gave to aid a promise of 200-300 new jobs.

Alexander Kim

Alexander Kim

Yesterday the Albuquerque Journal quoted Secretary Jon Barela assuring that the state would seek to enforce clawback provisions on Google and reap back “a very sizable portion” of taxpayer dollars from the tech giant. A spokeswoman with the department has not responded to repeated attempts by New Mexico Political Report seeking comment.

What’s still unclear is exactly what type of clawbacks New Mexico is entitled to get back from Google, which purchased Titan Aerospace in 2014 amid much fanfare.

On top of the crickets we’re hearing from the Economic Development Department, the governor’s office and Estancia Valley Economic Development Association also aren’t returning our calls on this specific question. A receptionist with the city of Moriarty said Mayor Ted Hart is out of the office for the rest of the week.

Google sent a broad statement about how they’re “optimistic about the potential of solar-powered planes to help deliver Internet connectivity.”

The company is also “exploring alternative ways that we may use the facility at the Moriarty Municipal Airport, as well as working with local leaders to explore uses by other organizations,” according to Angie Welling, a Google government affairs manager.

Just last fall, Gov. Susana Martinez touted the benefits of spending $1 million in taxpayer money to help Google bring between new jobs to New Mexico. Optimistic news headlines like “Gov. to announce 200 aviation related jobs” all but assured this was a great deal.

“With important infrastructure investments like these, we will continue to grow this important industry in our state, creating jobs and diversifying our economy while decreasing our reliance on a dysfunctional federal government,” she said in a Sept. 22, 2014 press release.

That $1 million, however, didn’t go directly to Google. It went to the Moriarty for water and sewer infrastructure in the municipal airport, where Google was in turn going to spend $15 million to on a facility for Titan Aerospace.

Lee Reynis, a research professor at the University of New Mexico’s Bureau of Business and Economic Research, said she can’t see how Moriarty would be on the hook to pay that $1 million back to the state in a clawback provision.

“It seems unlikely,” she said.

Before Google purchased Titan Aerospace, the company did receive smaller incentives from the state. In March 2013, the Economic Development Department’s Job Training Incentive Program gave the company $141,390 to pay for seven jobs.

Titan Aerospace ended up employing around 40 people.

It raises the question of how to best make clawback provisions effective in situations when employers skip town after reaping the benefits of corporate welfare.

“Everyone wants the clawbacks now,” said George Luján, a communications organizer with the Southwest Organizing Project, which previously advocated for clawbacks in contracts with Intel. “When you try to institute them on the frontend you get a lot of resistance.”

Fred Nathan, executive director of Think New Mexico, said he would like to see all government business incentives happen after the job promises become reality.

“Trying to pick winners and losers has a real spotty record,” Nathan said.

He points to Utah’s success in using post-performance incentives, which according to the Pew Charitable Trusts is second only to North Dakota in leading the nation in job growth since the Recession.

“Don’t tell us from the front end how many jobs you’re going to create,” Nathan said. “Just do it.”

A bill to establish post-performance incentives in New Mexico carried by Senate President Pro Tem Mary Kay Papen, D-Las Cruces, and state Rep. Nate Gentry, R-Albuquerque, cleared two Senate committees but was never called for a Senate floor vote in 2014.

Although a similar bill wasn’t introduced during this year’s session, Nathan said one is planned for in the 2016.