February 14, 2018

Legislature sends governor bill imposing tax on nonprofit lab contractor

Los Alamos National Labs, Wikicommons

Gov. Susana Martinez will have to decide whether to sign a bill designed to prevent the state government, as well as local governments in Northern New Mexico, from losing tax revenue if a nonprofit university takes over management of Los Alamos National Laboratory later this year.

That possibility is real, as two Texas universities have submitted bids for the contract.

“We stand to lose about $30 million in gross receipts revenue to the state should a nonprofit contractor receive the [operations contract] at the national laboratory in Los Alamos,” Rep. Stephanie Garcia Richard, D-Los Alamos, told the House of Representatives late Tuesday night before it voted 48-19 in favor of the measure, Senate Bill 17.

Garcia Richard’s number is consistent with a fiscal impact report by the Legislative Finance Committee, which estimates the state’s gross receipts tax losses at $25 million to $30 million if a nonprofit is chosen to run the lab.

Both the University of Texas System Board of Regents and Texas A&M submitted formal bids on the lab management contract in December. Texas A&M’s proposal was in partnership with the University of California, which currently operates the lab with the industrial giant Bechtel and other partners. The consortium’s contract ends Sept. 30, 2018, with the new operator assuming control Oct. 1.

SB 17, sponsored by Sens. Carlos Cisneros, D-Taos, and Richard Martinez, D-Española, as well as Garcia Richard, passed the Senate earlier in the session on a vote of 31-4.

Spokesmen for the governor did not respond Wednesday to a question about whether Martinez would sign the measure.

Rep. Jason Harper, R-Rio Rancho, who has pushed for a comprehensive overhaul of the state’s tax structure, argued against the bill saying, “Tax policy should be uniform, broad and neutral. … It shouldn’t pick winners and losers.”

Harper said he recently received a call from a member of the U.S. House Armed Services Committee who was concerned about the bill. The congressman told him, “It looks like the state is telling the labs how to run the labs,” Harper said, adding, “I’m worried this sends a message to some folks that we’re ungrateful.”

In November, the Legislature’s Revenue Stabilization and Tax Policy Committee discussed data that shows the lab management consortium, Los Alamos National Security LLC, paid between $48 million and $100 million a year in gross receipts taxes. Some of that money went to the state to pay for day-to-day government services, including public education. Another portion was distributed to local governments in and around the lab.

In 2015, the most recent year for data, $76 million was collected and $22 million of that stayed with the state government. The rest was distributed to local governments, including the city and county of Santa Fe, Rio Arriba County and tribal governments.

Los Alamos County got the largest share, some $20 million a year.

Contact Steve Terrell at 505-986-3037 or sterrell@sfnewmexica­n.com. Read his blog at www.santafenewmexican.com/roundhouse_roundup.