SANTA FE, N.M. — A bill that would offer tax breaks to certain massive economic development projects sailed through the state House of Representatives Wednesday night and will now head to the governor’s desk.
Senate Bill 1, which passed the House 59-8, amends the state’s Local Economic Development Act to add Gross Receipts Tax sharing for very large economic development projects. The New Mexico Senate passed the measure 28-10 on Tuesday.
For projects that receive LEDA approval and generate at least $350 million in construction and infrastructure costs, the bill will allow 50% of the GRT and state compensating tax generated during the construction phase of the project to be rebated, in order to reduce the tax liability of the project.
“What we’re saying here is for a project that big, we’re going to take half of the GRT — half that goes to the state portion and half that goes to the local — and we’re going to give it back to the business,” said Rep. Jason Harper, R-Rio Rancho, one of the measure’s sponsors. “So essentially we’re only going to charge them half of the GRT.”
Each local government agency involved would have to agree to utilize tax sharing for the tool to be implemented for a particular project, according to the text of the bill.
Los Alamos Democratic Rep. Christine Chandler, another co-sponsor of the measure, told fellow legislators there are currently three companies considering investing in New Mexico that could potentially benefit from the measure, but said their names can’t be released because of nondisclosure agreements. But Chandler said the “concept” of the bill was in the works before conversations with those companies began.
“This isn’t a sweetheart deal carved out for a particular company,” Harper said. “… This really is an additional tool in the tool chest that our economic development folks can try to use to bring some of these big projects to New Mexico when they do show up with interest. And that’s especially helpful right now as we’re trying to climb out of the impacts that the pandemic has caused on our state.”
Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce, said the LEDA program as it’s currently constructed is not always sufficient to draw large projects that carry a heavy tax burden.
She said SB1 offers local municipalities an extra tool to capitalize on large economic development deals as they present themselves — and bolsters efforts to diversify New Mexico’s economy.
“We are very excited and over the moon that the bill passed,” Cole said Wednesday night. “… If we can really land a large company … that’s a good thing for this city and state.”