In a blow to local interest groups that backed the measure, New Mexico Gov. Susana Martinez (R) vetoed a bill Wednesday that would have increased taxes for nonprofit entities that operate Department of Energy national laboratories in the state.
Martinez vetoed the measure — which would have levied the states gross receipts tax on nonprofit national laboratory operators — only a month or two before the Department of Energy’s National Nuclear Security Administration (NNSA) expects to award a new management and operations contract for the Los Alamos National Laboratory (LANL). The agency estimates the deal will be worth more than $20 billion over 10 years, including options. Annual fees for the winner could be as high as $50 million.
Nonprofits are generally exempt from the state gross receipts tax. Local interest groups fear a nonprofit has bid on the contract and would, if successful, not have to pay the tax that has been levied on the privately operated LANL incumbent, Los Alamos National Security. The contractor paid about $25 million just last year, the Regional Coalition of LANL Communities estimates.
In a veto message posted online Wednesday, Martinez said raising taxes on nonprofit lab operators could be bad for business.
“[T]he revenue loss will be less than what it is claimed to be,” Martinez wrote. “Requiring a nonprofit to pay a tax that it currently is not required to pay could cost the state many jobs and puts New Mexico at a competitive disadvantage throughout this process.”
With the state 2018 legislatve session over, Senate Bill 17 is now dead and would have to be reintroduced next session, by which time the NNSA expects to have a new LANL manager on the job.
The top executive in the Los Alamos County government told Nuclear Security & Deterrence Monitor he was “understandably disappointed” with the veto.
“Without the assurance of a continued taxable status that would have been possible if SB17 was enacted into law, revenue collection for Los Alamos County and the region will be uncertain every time the federal government considers management changes at the Laboratory,” Harry Burgess, Los Alamos county manager, wrote in a Wednesday email. “[O]ur future is now in a predicament as we await a decision in the next few months about the LANL [Management and Operations] contract award.”
