Public officials from Northern New Mexico communities are renewing a push to try to ensure that Los Alamos National Laboratory and its contractors continue to pay gross receipts taxes on their purchases.
Under state law, the communities and the state would lose tens of millions of dollars a year in gross receipts taxes if a nonprofit group takes over management of the lab next year when the Department of Energy puts a new contractor in place. The lab is now managed by a for-profit consortium, which is required to pay gross receipts taxes.
A bill that would have required a nonprofit lab management organization to pay gross receipts taxes died in the Legislature’s session that ended in March.
Now the effort to tax billion-dollar nonprofit organizations is included in a larger omnibus tax-reform bill that Gov. Susana Martinez has added to the agenda of a special session of the Legislature that is scheduled to begin May 24.
The campaign by community officials to get the tax provision approved is preventive, as the Trump administration is likely to favor a private-sector operator for Los Alamos. The provision also would cover Sandia National Laboratories, even though a new $2.6 billion management contract for the Albuquerque weapons and research facility was recently awarded to a division of Honeywell, a defense company that is subject to taxation. The Sandia agreement could be in place for 10 years.
The prime contractor now for Los Alamos National Laboratory is Los Alamos National Security LLC, a consortium led by Bechtel National. It paid $77 million in gross receipts taxes to state and local governments in 2015, down from $101 million in 2011, according to an analysis of the bill that stalled in the House Taxation Committee during the legislative session.
A request for proposals for a new Los Alamos contract will be released in the next few weeks by the National Nuclear Security Administration. A final decision could be made in early 2018, and a management firm could be in place by mid- to late 2018.
Once the contract is bid, it becomes harder to change, said Andrea Romero, director of the Regional Coalition of LANL Communities.
“Any retroactive [gross receipts tax] payments would be hard to define legally,” she said. “Right now, we’re looking at maintaining the status quo.”
The bill is being backed by the coalition because a portion of gross receipt taxes stays with local governments. That helps pay for the day-to-day operations in Los Alamos County, such as fire and police protection. It also covers cost sharing for regional transportation services, as well as health programs and The University of New Mexico-Los Alamos campus.
An analysis from 2009, when the lab was spending more on construction, showed that building and other operations generated $128 million in total gross receipts taxes. About $46 million was retained by Los Alamos County. But as those dollars got circulated through the economy, another $7 million went to Santa Fe County and $2.5 million to Rio Arriba County.
With the state facing a budget crunch, the bill in the last legislative session to ensure the tax dollars keep rolling in was a priority for lawmakers.
But, Romero said, some lawmakers wanted to see if a not-for-profit lab manager could spend additional money on research or economic development, if it was not required to pay taxes.
The community coalition has learned that would not be the case, and a tax-exempt provider would mean less money overall coming into New Mexico.
The effort to move the issue in a special session is a steep climb. Democrats have raised concerns about trying to do major tax reform in such a compressed time, and dozens of smaller nonprofits are standing in line to lobby against extending gross receipts taxes to their purchases.
Contact Bruce Krasnow at firstname.lastname@example.org.