NEW Mexicans are learning an expensive lesson in “Music Man”-style business development, one that is sadly familiar to Oklahomans as well.
British businessman Richard Branson urged New Mexico officials to spend more than $200 million to develop a futuristic spaceport, saying his Virgin Galactic company would then make the site a launching point for space tourism. New Mexico officials took the bait in 2005.
Today, New Mexico's Spaceport America is nearly complete — and almost completely empty. And Virgin Galactic is hinting it may go elsewhere if New Mexico lawmakers don't provide liability exemptions for the company's suppliers. Virgin Galactic is now considering a spaceport venture in the emirate of Abu Dhabi.
If this story sounds familiar, there's a reason. Oklahoma entered the same game in 1999 with creation of the Oklahoma Space Industry Development Authority. The idea was to turn an abandoned air strip near Burns Flat, which at 2.5 miles was one of the longest on the continent, into a site for future space tourism.
Rocketplane Global was awarded $18 million in state tax incentives to become the spaceport's anchor tenant. By 2010, Rocketplane was bankrupt and the Burns Flat site remained mostly shuttered.
It's worth recalling that officials with the Oklahoma authority were namedropping Virgin Galactic as a possible tenant in 2011, but worried New Mexico might lure the company there. Oklahomans can be thankful for that missed “opportunity.” It's also noteworthy that Virgin Galactic is demanding liability exemptions for suppliers, since that issue was cited by one opponent of the Oklahoma project.
Former state Rep. John Wright, R-Broken Arrow, often argued that liability issues would be a huge problem for any space tourism business launching in Oklahoma. In a 2007 debate, Wright declared, “We're not going to launch rockets from populated parts of the country.” He stressed that there's a reason NASA flights launch off the Florida coast.
“They launch those rockets out over the ocean,” Wright said, “because every once in a while, one doesn't make it. It blows up.”
Wright also noted millions in taxpayer credits had been provided to Rocketplane “and we have zero people yet that have launched into outer space. I do think they tied a bunch of balloons to something and sent it up to the stratosphere,” Wright said, “but you can do that from your back yard.”
The problem with these projects is not that they were infeasible only in hindsight, but that state officials had reason for skepticism at the time credits were provided.
When citizens have reason to think companies like Rocketplane and Virgin Galactic are gaming the system at taxpayer expense, it casts a shadow over all state and local development efforts. That's unfortunate, because not every government incentive is a boondoggle enriching only the favored few.
The New Mexico and Burns Flat spaceport programs demonstrate the continuing importance of thorough review of state business incentives. Oklahomans can be glad we didn't waste as much money as New Mexico, but that's small consolation. Tax policy should encourage broad economic growth, not capitalize politically favored companies.
As they conduct that review, lawmakers should keep in mind another of Wright's admonitions: “What we seek to do should be done in such a way that, at the end of the day, we are getting some bang for the peoples' buck.”