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Bill to ensure tax levies for labs clears committee

SANTA FE – A renewed attempt to ensure New Mexico can keep levying a tax on contractors that run the state’s national laboratories – whether they’re nonprofits or private consortiums – cleared its first Senate committee on Friday.

The current operating contract for Los Alamos National Laboratory expires in September, and three university systems are known to be among the groups bidding for a new contract.

That has raised the possibility that New Mexico might lose out on between $25 million to $30 million annually in tax revenue, according to a fiscal analysis of the bill, since nonprofits don’t currently pay gross receipts tax.

Local governments could also face a loss of funding.

Before voting 6-0 on Friday to endorse the measure, members of the Senate Corporations and Transportation Committee questioned the legality of singling out certain nonprofits for taxation and whether the legislation might deter potential bidders.

But backers of the legislation, Senate Bill 17, insisted the legislation is on solid legal ground.

“There’s nothing in the Constitution that prohibits the state from taxing pretty much anything,” said Sen. Carlos Cisneros, D-Questa, one of the bill’s sponsors.

In addition, Andrea Romero, executive director of the Regional Coalition of LANL Communities, said supporters of the measure have been up front with bidders about the pending legislation.

Specifically, the bill approved Friday would repeal an existing tax break for nonprofits – but only when it comes to receipts stemming from operating a national lab.

LANL contractors have historically been subject to the state’s gross receipts tax, including current contractor Los Alamos National Security LLC, a private consortium.

Meanwhile, the three university systems known to have submitted proposals to the federal government to run LANL are: University of California, Texas A&M and the University of Texas. There could also be other bidders.

The bill is not likely to affect New Mexico’s other national laboratory – at least not any time soon – as a subsidiary of Honeywell International, a private company, took over management over Sandia National Laboratories last year after winning a $2.6 billion contract.

The legislation, which failed to win approval last year at the Roundhouse, now moves on to the Senate Finance Committee.