Bill aims to preserve tax revenue from New Mexico labs

February 25, 2019

SANTA FE, N.M. (AP) — Legislation that would allow New Mexico to continue taxing the contractors that manage national laboratories operating in the state — even when they have nonprofit status —has cleared another legislative hurdle.

The state House of Representatives voted unanimously Sunday in favor of the measure. Since the House amended the proposal, the Senate must still sign off before sending the bill to the governor for consideration.

At stake are tens of millions of dollars in gross receipts taxes paid annually by the contractor running the Los Alamos National Laboratory and the contractor that oversees Sandia National Laboratories in Albuquerque.

Sandia is currently run by a for-profit. The management group that took over Los Alamos last year includes Battelle Memorial Institute, the Texas A&M University System and the University of California — all of which are nonprofits.

The bill seeks to amend the section of state statute that exempts nonprofit organizations from paying gross receipts taxes. It would create an exception permitting the state to tax nonprofits that have been contracted to operate a national laboratory.

Former Gov. Susana Martinez vetoed similar legislation last year.

The House passed the bill with a minor amendment that broadened the exception to include contractors running state-owned research facilities as well, though that does not currently exist in New Mexico.

Rep. Christine Chandler, D-Los Alamos, said the bill would protect the state and Los Alamos County should Triad National Security LLC, the contractor that runs Los Alamos lab, 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.

The bill is not likely to affect Sandia anytime soon as a subsidiary of Honeywell International took over management there in 2017 under a 10-year contract.