Planes, Trains and....What's Next? Automobiles?

Bill Richardson

Before a train (Rail Runner) was losing millions of New Mexico taxpayer's dollars, millions were being lost on planes. A walk down memory lane reminds us that thanks to investments by the State of New Mexico under the urging of Governor Bill Richardson (and incentives/concessions from the City of Albuquerque, encouraged by former Mayor Martin Chavez) Eclipse Aviation decided to move its production facilities to Albuquerque in 2000. In 2006 Eclipse and its CEO Vern Raburn both made substantial campaign contributions to Bill Richardson. By October of 2007 the writing was on the wall. Both Governor Richardson and Mayor Chavez had miscalculated badly.....with taxpayer dollars. Eclispse laid-off between 100-150 contract workers and employees. Then a month later a subcontractor, Hampson Aerospace, which built the tail assembly for the Eclipse 500, filed a suit against Eclipse alleging that Eclipse had not paid them for work completed.

In August 2008, Eclipse announced the laying off of 650 of its workforce of 1800 people and a week later Pratt and Whitney - Canada repossessed 24 engines sold to Eclipse. Within a year many Eclipse customers filed law suits against the company for failure to return deposits for cancelled and delayed orders. The company indicated that due to lack of funding it was not in a position to return deposits.

Marty Chavez

In November 2008, Eclipse filed for Chapter 11 bankruptcy protection. Bankruptcy documents indicated that a total of $702.6 million was owed and the court documents filed indicated that the bankruptcy occurred because the company "continued to lose larger than expected sums of money on each aircraft manufactured and has not reached cash flow positive in its operations." Total company liabilities were estimated at over USD 1 billion.
How quick did the legislature move in the good old days when Richardson spotted a can't miss deal for the state? The House and Senate joined hands to repeal the gross receipts taxes on aircraft sales within six days and New Mexico eventually invested $20 million of taxpayer dollars in Eclipse. The state also "gave" the company 150 acres of free land for an assembly plant as well as an abatement of sales and property taxes for 20 years. Eventually the state's investment got wiped out. However, by then Governor Richardson had already moved on to a much bigger loser taxpayer's loser, the Rail Runner. In 2011 not only are taxpayers seeing their investments stranded in a train operation. Millions in productive assets have been taken of the tax rolls. Taxpayers are also swallowing huge operating losses by the Rail Runner on an ongoing basis. When will New Mexican citizens demand the state's elected officials cut ongoing taxpayer losses by the Rail Runner and move on? Some are already doing so.

Planes, Trains and....What's Next? Automobiles?