Before he came to Santa Fe, City of Santa Fe Finance Director David Millican spent 18 years as the finance director for the city of Fremont, Calif. Here are his thoughts on Santa Fe, the economy and related topics.
In Santa Fe, because it is a world-class tourism attraction, you end up with what's called an hourglass-shaped economy. You have a number of relatively wealthy people who are drawn here because of the sense of place and the amenities, and you have a lot of people working in the service industries who don't have high-paying jobs, and you don't have much of a middle. When your housing prices get high, that is made worse.
Whether this economy will let the mayor be successful with the 4,000-job objective is not clear to me, but it's an objective that has to be pursued.
The long-range strategies for really sustainable economic development are just to build good infrastructure—you know, transportation, water and sewer systems, parks—and then to concentrate on creating a really great place to live, work and invest. Those things will do as much for you as a lot of interesting economic development projects.
Santa Fe has a big head start on a lot of other places because of the nature of the people who are already here, the reputation of the city and its ability to endure over 400 years.
Seventy-five percent of the general fund is gross receipts tax. Things many people think of as traditional city services—police, fire, libraries and parks—that's GRT. We got our gross receipts numbers yesterday. For the first time in 40 years, my estimate of how much the gross receipts tax [revenue] would be for this month was exactly 0.0 percent different from the actual. I guess that means you get at least one hole-in-one in your life.
Santa Fe has always had real sensitivity to the fact that the families who have been here for a long time may have land but not much cash.
It's hard to get people to pay more taxes for the same old stuff. So to get more taxes, the city has to have a compelling story about what will be used with those taxes that will be really important to the people who vote. And it's the people who vote that it has to be important to, not the people who thought up the idea of raising the tax.
People want their big institutions to help them, but they don't trust their big institutions.
Poorer people are more likely to spend their income because they have more needs that can be satisfied through consumption, but wealthy people—if you give them more money, they may invest, they may buy stuff, they may travel overseas. They have many choices; they're much less linked directly to your local consumer economy.
I'm really not an economic development specialist.
I think we're going to see a recovery. I think it's going to be a slow recovery, but if it acts the way I've always seen it act, 10 years from now we'll see people creating other bubbles, and the boom we'll see starting out five years from now will surprise everybody and will create some great sense of euphoria—and then it'll collapse again.
From a pure Keynesian economics perspective, give money to people who need it most and are most likely to spend it. From a supply-side economic view, you make sure that there's plenty of money available and that it's cheap so that people will use it to invest. But that's not working.
