February 25, 2019

House passes Senate bill preserving gross receipts tax at national labs

Plutonium Facility-4 at Los Alamos National Laboratory houses plutonium operations vital to the lab’s national security mission, but work there has been mostly paused since June 2013.

In a defensive maneuver, New Mexico lawmakers are trying to position the state to maintain its tax revenues if nonprofit organizations become the primary contractor at Los Alamos or Sandia national laboratories.

Currently, nonprofits operating in the state are exempt from paying gross receipts taxes. But Senate Bill 11 removes this exception for nonprofits that run national labs.

The state House of Representatives on Sunday voted 64-0 in favor of the bill. This measure makes sure that “the revenue the state has consistently been receiving from the labs continues,” said Rep. Christine Chandler, D-Los Alamos.

She carried the bill in the House on behalf of Democratic senators who introduced the proposal.

At stake are some $77 million in gross receipts taxes paid annually by the contractor at Los Alamos National Laboratory and $95 million paid by the contractor at Sandia National Laboratories.

Late last year, Triad National Security LLC took over management of Los Alamos National Laboratory. Triad’s associates in the venture are the Battelle Memorial Institute, the Texas A&M University System and the University of California, all of which are nonprofits.

After the House vote, Chandler said the bill would protect the state and Los Alamos County should Triad itself ever seek nonprofit status.

“Triad hasn’t made a decision if it will apply for nonprofit, but we don’t want to be on a roller coaster every few years wondering if we are going to lose that revenue,” she said.

Sandia National Laboratories is now run by a for-profit group. But it could be operated by a nonprofit at some point, Chandler said.

The legislation guards against the loss of gross receipts tax revenue, something that would harm counties dependent on that money to pay for roads, transit systems and public schools, she said.

Though the Senate already approved the bill, it will have to consider the measure again because the House amended it.

Rep. Jason Harper, R-Rio Rancho, authored the amendment, which clarifies that the new gross receipts tax system would apply to both state and federal nonprofits that might take over as a primary contractor at a national lab.

If the Senate concurs with the amendment, the bill would go to Gov. Michelle Lujan Grisham for her consideration.

Chandler said she would be “surprised if the governor was not in favor of it because we’re all for stabilizing revenue.”