New Mexico governor Susana Martinez is making legislative changes that are turning around her state’s economy, and she is doing so with bipartisan support – something rare in the US today. Ms Martinez, a Republican, has been working with two legislative branches that are Democratic.
When she took office in 2011, the state was facing its largest budget deficit ever. Since then, Ms Martinez has reduced taxes 24 times, lowering them on manufacturing in 2011 and 2013 by 60%, and eliminating corporate income taxes on manufacturing goods sold in the state. The vote to lower corporate income taxes by 22%, however, was a very close call and happened in the last 10 seconds of a legislative session.
All of these moves have been achieved without having to cut the state’s health or education budgets. Indeed, Ms Martinez's efforts have been praised by consultancy EY for improving New Mexico’s business climate more than any other state in western US.
Part of the impetus was to wean New Mexico from its reliance on federal funds that support Sandia National Laboratories and four military bases in the state. Ms Martinez was concerned about budget uncertainties in Washington, DC, and sceptical of federal government.
Her approach is hands-off and pro-business. “Businesses can see that we are serious and a business-friendly state,” says Ms Martinez.
In one particular move, she eliminated state taxes on locomotive fuel. This helped secure railroad operator Union Pacific’s $400m intermodal facility in Santa Teresa on the Mexican border. The fact that Mexico is attracting a lot of industrial investment due to reshoring efforts by companies to circumvent higher production costs in China had not gone unnoticed.
Ms Martinez, the first woman to be elected governor of New Mexico and the first Hispanic female governor in the US, wants a piece of this pie, and Union Pacific’s New Mexico facility has replaced an old intermodal yard in neighbouring Texas.
Ms Martinez, who maintains close relations with the Mexican governor of the border state of Chihuahua for a number of reasons – including tackling smuggling and drug cartel problems – comments on how trade between New Mexico and Mexico has gone up almost 400% in four years. “Last year it was off the charts. It went up 93%,” she says. Exports worldwide from New Mexico increased 250% in 2014 year on year, putting the state among the leaders in the US for export growth.
Coinciding with the Union Pacific deal, New Mexico invested tens of millions of dollars in infrastructure to accommodate some 20 companies that located in more than 93,000 square metres of space near the intermodal facility.
Indeed, companies from around the world are investing in New Mexico: CN Wire (Turkey) is investing $42m in Santa Teresa; Certoplast (Germany) is opening its first US plastics operation in Las Cruces; and Southwest Cheese (Ireland) is investing $100m in the food and tobacco sector in Clovis.
There are other projects. ARCA Space (Romania) is building rockets, and manned and unmanned aircraft, in Las Cruces, while Unirac of Liechtenstein is extending its North American presence in Albuquerque in the solar market.
Helping to strengthen her hand is Ms Martinez’s ability to secure legislative approval for $37.5m in closing funds to help investors in land and expansion costs – all while other states are cutting back. So, how long does she intend to keep sharpening New Mexico’s competitive edge? “As long as I am governor,” she vows.