New Mexico Governor signs gross receipts tax bill for national and state labs
ECA Staff | 3/5/2019
After several years of uncertainty of whether the National Nuclear Security Administration (NNSA) would force its contractor to try to circumvent paying New Mexico taxes, on February 28, Governor Michelle Lujan Grisham (D-NM) signed SB 11, a bill that will require the operators
of national and state-owned laboratories in New Mexico to pay the state’s gross receipts tax (GRT). New Mexico law exempts certain non-profits (specifically 501(c)(3) organizations) from the GRT, which became a serious concern of Los Alamos County and communities and governmental agencies in Northern New Mexico, where the Los Alamos National Laboratory (LANL) is operated.
The bill cleared both the New Mexico House of Representatives and Senate with bipartisan support. The state legislature also passed the bill in the 2018 session, but former Governor Susana Martinez vetoed it.
According to the legislative analysis of SB 11, the State of New Mexico would stand to lose $25-30 million per year in tax revenue if Triad National Security, the LANL operating contractor, were exempt from the GRT. Los Alamos County estimates that it would lose around $20 million per year in revenue, which it argues would drastically impact its
ability to provide municipal services to its community and to the laboratory.
A press release from Governor Lujan Grisham’s office noted the bill would ensure that “adjacent New Mexico communities will be able to depend on a steady stream of important revenue.”
NNSA contractors have been paying taxes in New Mexico for over a decade and Triad, as the new contractor, has been paying the GRT taxes since it began its work in November 2018. The New Mexico Taxation and Revenue Department concluded that Triad did not qualify for a GRT exemption under its current corporate structure. State legislators introduced SB 11 due to concerns that NNSA was pressuring Triad to change its corporate structure (and agreements with its owners) to become a 501(c)(3) entity
despite the fact that Triad did not have that corporate status that would permit it to be 501(c)(3) when it bid on the project.
Los Alamos County Councilmember and ECA Treasurer David Izraelevitz commented, “Los Alamos National Laboratory is a major economic engine for Northern New Mexico, and it was a major priority for us to assure that taxes from their activity supported services required of the State and local communities. We are pleased that there was universal support for this bill in the New Mexico Legislature and that the Governor signed it into law. We look forward to continuing conversations with Triad on the
ways that local governments and LANL can collaborate to the benefit of both."
Upon the signing of the bill, state Rep. Christine Chandler, whose district represents parts of Los Alamos County, commented, “Ensuring continued, stable GRT from the Los Alamos National Laboratory is critical to the long-term financial strength of the region…Los Alamos in particular would be hard hit by a multi-million dollar cut and local businesses and taxpayers would be
left unfairly covering the costs of critical infrastructure and services.”
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