LANL coalition seeks to eliminate tax-exempt status

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Legislative hearing > Regional coalition to present plan to legislative finance committee today

By Tris DeRoma

The Regional Coalition of LANL Communities asked the State Legislative Finance Committee today to consider eliminating tax-exempt status for possible, future nonprofit contractors of Sandia and Los Alamos national laboratories.
The coalition is seeking to ensure that the roughly $200 million in gross receipts tax the state annually receives from the laboratories continues, even if the laboratories acquire nonprofit management and operations contractors.
Of that $200 million, Los Alamos County receives about $30-$40 million.
Sandia and LANL are in the process of acquiring new contractors.
The coalition will appear before the committee today to hopefully provide a more complete picture of what the loss would be to the state.
“The finance committee has this on their radar. They’ve been thinking about the possibility of legislation to keep that from happening,” State Rep. Stephanie Garcia Richard (D-4) said. “The committee is looking for more expert testimony to see what the impacts would be.”
Garcia Richard, who is sponsoring the bill, is also looking for support and sponsorship from other legislators.
Coalition representatives said the coalition wants to remove the tax-exempt status of nonprofit contractors who may take over management and operations of the laboratories. It is not a new tax, they said.
“Because the function of the laboratory never changes, the tax status shouldn’t change as well,” RCLC Director Andrea Romeo said. “We’re just trying to keep the status quo with the gross receipts tax we currently receive from both Sandia and LANL.”
Romero said the arrangement would benefit both the laboratories and the surrounding communities by keeping services and infrastructure support flowing without interruption.
“This is something we need to maintain, obviously for consistency and for continuation in infrastructure and other services that supports the laboratory as well,” Romero said.
A disruption is county services could also sabotage the laboratories’ efforts to attract workers.
“Part of our job as a community is that we have to maintain a standard of living that helps in that recruitment effort, in terms of our services our amenities and our school district,” Garcia Richard said.
The coalition will include a draft bill in its presentation to the Legislative Finance Committee that goes into more detail about why nonprofit operations and management contractors shouldn’t keep their nonprofit status.
Another argument the coalition will make is that the contractor is selling research and development as a product that is used inside and outside the state. Products and services that fall into that category have always been subject to gross receipts tax, according to state law.
Sandia is currently run by Sandia Corporation and Los Alamos National Laboratory is operated by Los Alamos National Security, LLC, both for-profit entities.
LANL’s contract expires in September 2018.