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Gov. signs national labs tax measure

Los Alamos National Laboratory
(Eddie Moore/ Albuquerque Journal)

SANTA FE – Gov. Michelle Lujan Grisham signed off Thursday on a bill aimed at ensuring New Mexico can continue to tax national laboratory operators even if they have nonprofit status.

The signing of Senate Bill 11 comes nearly one year after Lujan Grisham’s predecessor, Republican ex-Gov. Susana Martinez, vetoed a similar measure, describing it as “poorly crafted tax policy.”

In contrast, Lujan Grisham, a Democrat who took office Jan. 1, called the legislation an “important safeguard.”

“I’m glad legislators addressed the issue with speed and that there was bipartisan agreement on its necessity,” the governor said in a statement.

This year’s bill was sponsored by Democratic lawmakers who represent districts that encompass or are near Los Alamos National Laboratory.

Its passage comes just months after Triad National Security LLC took over management of LANL, after winning the bidding to take over the $2.5 billion annual operating contract.

Triad, which is organized as a nonprofit, consists of the University of California, Texas A&M and Ohio-based scientific nonprofit Battelle Memorial Institute. A spokesman said in December that Triad was paying state taxes and had not applied to the federal Internal Revenue Service for tax-exempt status.

New Mexico could stand to lose $25 million to $30 million a year if the prime contractor of Los Alamos National Laboratory had tax-exempt status, according to a legislative analysis of the bill.

“This bill will see to it that those payments we depend on will continue to be made regardless of the tax exempt status of the lab’s primary contractor, bringing better economic security to northern New Mexico and our entire state,” said Sen. Richard Martinez, D-Española, one of the measure’s sponsors.

The bill is not likely to affect New Mexico’s other national laboratory anytime soon. A subsidiary of Honeywell International took over management of Sandia National Laboratories in 2017. According to the fiscal analysis, Sandia paid $95 million in gross receipts taxes in 2018.

The legislation leaves untouched in state law a tax exemption for most nonprofit groups, but carves out national lab contractors – and contractors running state-owned research facilities – from that exception.

Before landing on the governor’s desk, it passed the House 64-0 and cleared the Senate 29-6.

In all, Lujan Grisham has signed 44 bills approved during the ongoing 60-day session that ends March 16.

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