Economic Benefits

University of New Mexico Study

A study completed and released in February 2009 by the University of New Mexico Bureau of Business and Economic Research (BBER) estimated construction of the BDD Project will inject $287.2 million in net economic benefits to the regional economy through the completion of construction in 2011. It also will generate and sustain more than 500 jobs per year during the same period.

The study defined net economic benefits as the total benefits of the project minus the negative impacts on the economy of taxes and water rate increases that are providing funding to build the BDD Project.

The study estimated the BDD Project will “create or sustain over 500 jobs in the local economic region.” Based on commuter patterns and spending, BBER defines the local economic region to include Santa Fe, Bernalillo, Rio Arriba and Sandoval counties, which are a “functional economic area,” or a semi-self sufficient economic unit.

The study estimated construction spending will support an additional $286.6 million in economic activity (including the contractor’s receipts from the project, spending on goods and services for construction of the project and spending by contractor employees or those indirectly supported by the project) for the four-county region while the project is being built. The total labor income will be $93 million during BDD construction. BDD Project construction is expected to generate nearly $3 million in gross receipts tax revenues for Santa Fe County and $9 million for the State of New Mexico, not including revenues on a PNM construction project to support the BDD.

Spending by employees supported directly and indirectly by the BDD Project is estimated to generate an additional $1 million in gross receipts taxes for local governments in the economic region.

In terms of professional services contracts, the study estimated $25.8 million will be spent during BDD Project construction, with most of the money going to pay for architectural and engineering services provided by local firms. The economic impact to the region is predicted to be $34.8 million, with the BDD Project generating an average of 83 professional services jobs and $14.2 million in labor earnings. Professional services contracts will generate more than $250,000 in gross receipts tax revenue for communities and counties and another $320,000 for the state during construction.

The economic impact of the BDD Project is particularly important, according to the study, because the Santa Fe Metropolitan Statistical Area (MSA), which consists of Santa Fe County, has been one of two areas in the state “hit very hard” by the national recession.

According to the New Mexico Department of Workforce Solutions, the seasonally adjusted unemployment rate in the Santa Fe MSA was 3.6 percent in November 2008, one percent higher than the 2.6 percent rate in November 2007. Also, year-over-year job growth was a -0.9 percent, representing a total loss of 600 jobs out of 65,700 jobs as of November 2007. The report noted that Santa Fe has experienced year-over-year job losses since June 2008 – the first instance of negative growth since April 2001.

BBER Report on Economic Impact of Buckman Direct Diversion (BDD) Construction