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Regional coalition presses GRT tax issue with state

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By Tris DeRoma

The state legislature’s Revenue Stabilization and Tax Policy Committee agreed Tuesday something needed to be done to preserve the approximately $76 million in gross receipts tax paid through the Los Alamos National Laboratory to the state every year – but committee members just aren’t sure what.

At Tuesday’s hearing, the Regional Coalition of LANL Communities pressed the issue, since it now seems more than likely a non-profit contractor may be the winning bidder for LANL’s management and operations contract.

The University of California is interested in putting in a bid, and University of Texas System and Texas A & M University are also interested. Many of the contractors listed on the National Nuclear Security Administration’s website are non-profits.

In New Mexico, non-profit organizations are exempt from paying gross receipts tax.

The RCLC wants the state legislature to eliminate that exemption.

According to the latest data provided by the regional coalition, $76 million in gross receipts tax was paid to the state in 2015. Los Alamos County received $34 million of those taxes, and the state received $41 million.

“I’m here to advocate to this legislature that you support legislation that would allow for stabilization of GRT revenues regardless of who the contractor of Los Alamos is for the simple reason that local governments are highly dependent, not only on property taxes, but gross receipt taxes to support our economies, to make sure that we are able to provide basic services when it comes to roads, economic development, and when it comes to supporting members of our community,” RCLC Chairman Javier Gonzales said to the committee.

Since 2006, LANL’s management and operations contract has been with Los Alamos National Security, a private contractor.

“...If this legislation is not adopted, if a (non-profit) contractor were to be selected to manage Los Alamos, there would be a massive loss of gross receipts revenues needed to support not only the people of Los Alamos but the people in the region that rely on basic infrastructure and safety in Los Alamos.”

Committee member and State Rep. Jason Harper (R-57) thought the exemption was a bad idea.

“This is bad tax policy, and it’s also dangerous,” he said, calling the regional coalition’s request “an exemption to the exemption.”

He did agree with the regional coalition, however, that there is a problem, one that he blamed New Mexico’s tax code for.

“It’s a result of our disastrous tax code. It’s a direct result of our Swiss cheese, loophole, winners and losers, friends of politicians, lobbyists disaster of a tax code,” Harper said. “Instead of trying to fix this hole with Swiss cheese, we’re  proposing to make another hole in that hole. To me, that’s terrible tax policy.”

Harper said the proposed exemption may result in the Department of Energy moving some of its lab operations out of state.

“I look at this, and it’s like taking a stick and poking the DOE in the eye,” Harper said. “I get it that there’s a huge investment in Los Alamos and Sandia in the nuclear weapons program, we’re probably not going to see that go away.

But, there are huge programs at Sandia and Los Alamos that are absolvent. There are many programs like cybersecurity and simulation work that I’m pretty sure would be easy for them to move.”

State Sen. Peter Wirth took issue with Harper’s interpretation of the regional coalition proposal, noting that gross receipts tax being charged to LANS is being reimbursed by the federal government, and that all the regional coalition wants to do is allow non profit contracts to seek that reimbursement also.

“I’m a little concerned with the concept of ‘poke in the eye.’ It sounds more like passing this would maintain the status quo,” Wirth said.

RCLC Executive Director Andrea Romero said the coalition will be working closely with state legislators to find a solution, hopefully before the next contractor is selected in 2018.

“We will work with Rep. Harper and anyone on the committee that has the right language we’re missing to get it passed… before it is potentially too late.

Committee Chairman State Sen. Carlos Cisneros, (D-6) also believes that the immediate solution may just involve making some language changes to make the exemption more compliant with New Mexico’s tax laws. He said it was language that ultimately killed the last exemption bill.

“Clearly the state stands to lose $76 million and it will have a definite impact. We’re aware of that. Part of the rationale behind the demise of house bill 332 would have been primarily in language and definition,” Cisneros said to the regional coalition at the hearing. “So we clearly request that you all listen to Rep. Harper and others that may have a better language mechanism to get us to where we want to go.”