A Close Look at Spaceport America’s FY 2017 Budget Request

WhiteKnightTwo visited Spaceport America for the first time in three years on Wednesday. Below, you can see a full-scale model of SpaceShipTwo on the ramp. (Credit: Virgin Galactic)
WhiteKnightTwo visited Spaceport America for the first time in three years on Wednesday. Below, you can see a full-scale model of SpaceShipTwo on the ramp. (Credit: Virgin Galactic)

Attention New Mexicans!

Have you been wondering exactly what Spaceport America costs to operate? Curious about what officials spend money on? Anxious to know what this is going to cost you in the fiscal year ahead?  Dying to learn how much anchor tenant Virgin Galactic is contributing to the budget?

Well, look no further. Parabolic Arc has the spaceport’s budget request for FY 2017, which begins on July 1. There’s a full description of spending and projected revenues right after the break.

SPACEPORT AMERICA
Proposed FY 2017 Budget

CATEGORYAMOUNT
Personnel (20)
$1,739,700
Exempt Positions (3)$267,700
Executive Director
Chief Financial Officer
General Counsel
Permanent Positions (6)$391,800
Aerospace Operations (2)
Marketing & Sales (1)
Maintenance & Ground Operations (1)
Administrative Operations (2)
Term Positions (11)$662,900
Aerospace Operations (2)
Maintenance & Ground Operations (4)
Marketing & Sales (3)
IT Operations (2)
Contractual$2,362,100
Protective Services $1,800,000
24/7 Fire Protection
24/7 Armed Security Protection
24/7 Emergency Medical
Other Contracts$562,100
Audit
Environmental (NEPA Compliance)
Legal
Other Expenses$2,297,100
Facilities Maintenance$668,000
Rent: Land/Office Space/Ranchers $375,900
Utilities — Electricity$275,000
DoIT Communications$210,300
Property Insurance$ 179,500
Supplies$94,000
Equipment$67,000
State Vehicles$60,400
Employee Travel Out of State$60,000
Employee Training$56,200
Building/Structures$50,000
Equipment Rentals $48,200
Advertising $45,500
Miscellaneous (postage, subscriptions, etc.)$39,200
Printing/Photos $25,800
IT Equipment/Maintenance$25,400
Employee travel in state $ 11,400
Board Travel $5,100
 TOTAL: $6,398,900

So, there are a few takeaways here:

  • Sixty-five percent of the $6.4 million budget — $4.16 million — is spent just staffing the spaceport. That figure includes nearly $2.4 million for 20 staff positions plus another $1.8 million for full-time fire, EMT and security serious at the remote site.
  • The full-time onsite fire and EMS services are required because the nearest services are an hour away in Truth or Consequences and are all volunteer.
  • The authority is budgeting $668,000 for facilities maintenance alone for a spaceport that is not being utilized for its primary purpose — spaceflight — by its anchor tenant. That amount is in addition to the cost of five staff positions devoted to maintenance & operations.
  • Virgin Galactic and SpaceX are tenants of the facility, with other customers using it for periodic suborbital launches, commercial and film shoots, and other purposes. The spaceport authority is making an active effort to increase the number of tenants and users.

OK, now that we have looked at expenditures, let’s examine the spaceport authority’s revenue projections for the coming fiscal year.

SPACEPORT AMERICA
Projected FY 2017 Revenues

SOURCE
AMOUNT
Virgin Galactic Facilities Lease & Ground Rent$1,030,000
Virgin Galactic User Fees$600,000
Excess Pledged Revenue $585,000
Utilities$167,000
Special Events*$750,000
Other Aerospace Customers* $680,000
Tourism / Merchandising*$150,000
Sponsorships *$174,000
Subtotal: $4,136,000
New Mexico General Fund Plus Special Appropriation $2,262,000
 Total:$6,398,000

*NOTE: NMSA revenue is based on aggressive marketing and fully functioning spaceport

The revenue estimates appear rather optimistic. How? Let us count the ways:

  • The $600,000 in Virgin Galactic user fees will only appear if the company actually uses Spaceport America for spaceflights between July 1, 2016 and June 30, 2017.  If the testing of the second SpaceShipTwo takes the entire fiscal year, and Virgin continues to conduct those tests in Mojave, Calif., the spaceport authority will have a significant hole in its budget.
  • Virgin Galactic is set to roll out SpaceShipTwo No. 2 on Feb. 19. The company is not talking about its flight test schedule, so it remains unclear when it will move operations down to New Mexico and begin revenue flights.
  • Much depends upon all those little asterisks (*) . A total of $1.75 million, to be precise. That’s 42.4 percent of the expected revenue subtotal of nearly $4.14 million. Without “aggressive marketing and a fully functioning spaceport,” that number could shrink. On the other hand, spaceport officials could always bring in more money than expected.

Revenues account for 64.4 percent of the total projected budget. Spaceport officials are seeking an additional $2.26 million from the state government to help fund operations. That figure includes $462,500 in general funds and a $1.8 million special appropriation.

The figure is higher than the $456,000 in state funding the authority has sought in previous years. Officials say the additional funds are required because tax bonds used to fund operations are expiring, the savings account has been depleted, and anchor tenant Virgin Galactic is not yet flying.

Officials are describing FY 2017 as a bridge year. They expect state funding to diminish in 2018 as Virgin Galactic begins to fly and its annual lease payment triples from $1 million to $3 million. The authority also expects that its increased marketing efforts will start paying off with more revenues from tenants and users.

If Virgin Galactic user fees and other revenues fail to meet projections for FY 2027, the spaceport authority would be required to seek additional funding from a state government whose own revenues are being hit hard by the sharp decline in oil prices. There is already a lot of frustration and impatience in Sante Fe over delays with the $225 million taxpayer-funded projects.

UPDATE: I should have mentioned that the $585,000 in excess revenues is coming from taxpayers in Dona Ana and Sierra counties. Voters agreed to increase county use taxes to support construction of the spaceport. The excess revenues are what is left over after paying off bonds that were sold to finance construction.

This amount brings total taxpayer support just for operations to just under $2.85 million for FY 2017.

State Sen. Lee Cotter (R-Las Cruces) wants to end this practice of local residents subsidizing operations. He said this was never the intent of the original tax.

  • Hemingway

    It is time for Sir Richard Branson to invest some of his money for
    Spaceport America. New Mexico should form a partnership with Virgin
    Galactic to get additional funds. Taxpayers in Southern New Mexico are
    tired of shouldering the burden of this non-productive facility – a
    real money pit. Enough is enough!

  • Hemingway

    State Senator John Arthur Smith has proposed a bill in 2016 that would allow liquor to be sold at all
    spaceport authority facilities by authorizing a governmental liquor
    license. I assume Spaceport America can’t operate without booze for its
    visitors. This is irresponsible legislation.

    http://www.nmlegis.gov/Sessions/16%20Regular/bills/senate/SB0147.pdf

    “Another Round at Spaceport Bar”

    http://ecx.images-amazon.com/images/I/A1lg1NebYsL.jpg

  • Hemingway

    The New Mexico Space Authority has hired a new CFO for Spaceport America
    this month. Mr. De Gregorio just graduated from the University of New
    Mexico. His previous work experience is inflated. He was an Executive
    Assistant to the Area General Manager of the Kor Group, a privately held real estate development and management
    firm with investments primarily in hotels and multi-family real estate.It does not seem to be a management
    position. He was only a “Business Management Professional” at the
    Renewable Energy Division of Sandia National Laboratory.

    Why would the Authority hire this seemingly inexperienced person as a CFO -strange. However he has a lot of degrees.

    Here are some details on his job experience.

    http://www.zoominfo.com/p/Zach-De%20Gregorio/-2043159615Here is Linkedin data

    https://www.linkedin.com/in/zach-de-gregorio-b3b9b716

    http://spaceportamerica.com/about-us/our-team/

  • Hemingway

    Instead of having a hiring freeze, Spaceport America just hired Rosa Bañuelos for Business Development as Brand Communicator.

    https://www.linkedin.com/in/rosa-banuelos-bbb51283

  • Hemingway

    Instead of investing in cash strapped Spaceport America Sir Richard Branson has bought a new Swiss Chalet in Verbier, perched high in the Swiss Alps. Here is a video.

    https://www.youtube.com/watch?v=KxvMgTemt7g

  • ThomasLMatula

    The marketing seems to be consumer orientated when what they need is someone with good network contacts in the aerospace industry. This should be positioned more as a high tech industrial park than someplace for tourists. I could understand folks coming to gawk at the rich and famous when/if they start flying but until then they could be better focusing their efforts on industrial startups or firms looking for an isolated place to test systems.

    Also, based on the experience of those it has hired, it looks like it is on its way to becoming an expensive movie set.

  • ThomasLMatula

    It would be a good place to have intergalactic keggers 🙂

  • Douglas Messier

    It makes sense in expanding the sorts of events you could book for the spaceport. As long as people are drinking responsibly, it’s probably OK. But, it’s a long drive at night on an unlit two-lane road with any number of desert creatures that could jump out in front of you.

  • Douglas Messier

    They have a contract, and as long as Virgin is paying its lease and rent fees, there’s really nothing else they are obligated to do. I’m sure New Mexico would like them to start flying as soon as possible, but such pressure could end up backfiring. A rushed flight test program would likely raise the prospects of a fatal accident in New Mexico with passengers. And that would bad in the long run.

  • Kam Chuanhui

    Can or will Blue ever fly from Spaceport America? It’s sounds like building an airport when you have only one carrier and no planes yet.

  • Hemingway

    New Mexico taxpayers have spent $218.5 million to build
    Spaceport America in
    southern New Mexico. If Sir Richard Branson wants to pull up stakes to
    move to Dubai or Mojave, Virgin Galactic’s would only have to pay a
    motley $1.5-$2 million in claw backs. No more money should be expended
    until the claw back is increased substantially.

  • Hemingway

    Doug – By the way did Virgin Galactic WhiteKnightTwo fix the defects in the wings, variously described as cracks or
    imperfections? I assume they fixed them.

  • Douglas Messier

    Yes. They addressed them.

  • Douglas Messier

    I don’t know. I suppose it’s possible. On the other hand, Blue would want to give their passengers a different experience than Virgin Galactic. They’d be wanting to be looking out the window at something different.

  • ThomasLMatula

    Their current location in west Texas is far more remote than Spaceport America. Plus it would require Jeff Bezos to allow a fair number of outsiders on his ranch where he is also doing R&D. I see him looking for another location when he starts offering passenger service.

  • mostly big brown cows . . .

  • Kim Audette

    The government invested nothing and the Solar Buzz (Facebook/SolarBuzz1) is operational and taking passengers every day. It uses only the sun for fuel. http://krqe.com/2016/01/28/new-mexico-woman-invents-states-first-solar-powered-bus/

    Laughing Gas as a fuel is a hoax. So is welfare for the rich. Sierra County did that and just got poorer.

    ALL Economic Development funds have been misappropriated from the impoverished towns in Sierra County to pay off cronies of the governor. If you’re not a crony of the governor, there will be no benefit from the $pacePork.

    Why spend $50 to see empty buildings and listen to empty promises for 4 hours?

    Celebrate the sun in T or C with a fun ride on the world’s only Solar Buzz!

  • JamesG

    Seems like a good idea. I wouldn’t get on that thing without a few drinks myself…

  • JamesG

    BO has committed to infrastructure at KSC/CCAFS. While most of that is linked to their efforts to “mee too” SpaceX with an orbital booster, I haven’t seen anything where they wouldn’t do sub-orbital shots with New Shepard from there. Its hard to tell with Bezos.

    Right now SA is not set up for big VTVL vehicles. The pads would need major build out and WSMR is still a PITA to work with. Probably nothing Bezos’ people can’t smooth out if they came to “town”…

  • Doug Weathers

    The joke’s on you! Laughing gas isn’t fuel – it’s oxidizer. Ha ha!

  • Kenneth_Brown

    $275K for electricity? That seems a bit on the high side for a facility just sitting there not doing much. A solar farm on-site might be a better option for the short term. Over $2k/month in printing costs? Wow! Why do staff need to be traveling so much? What does “DoIT” communications cover? for $210K it better be gold plated.

    The P&L looks like what an MBA would come up with, very top heavy. The NM taxpayers should be madder than hell.

  • a quarter of a billion dollars paid by some of the poorest people in America – for a whole lot of nothing