2018 New Mexico Legislative Summary

The 2018 legislative session is over. The extra revenue from oil and gas removed the urgency for tax reform during the thirty day session.

One tax reform bill was Senate Bill 17, Gross Receipts for Certain Nonprofits, which passed, but was vetoed by Governor Martinez.

The bill was intended to ensure that the national labs pay tax regardless of the structure (for profit or nonprofit) of the their management corporations. The Defense Department complained that the national labs were singled out for taxation by the state of New Mexico.

The Los Alamos National Laboratories' management contract is currently out for bid.  Three universities have submitted proposals.  If a nonprofit wins the management contract, the state will lose approximately $25 million in revenue.

If one of the universities wins the management contract for Los Alamos National Labs, we can expect legislators to propose another bill in 2019 in an attempt to stop further loss of taxes.

One amendment that was proposed in 2018 as a work around to singling out the national labs was to tax nonprofits with revenues over $150 million, with the exception of nonprofit hospitals.  The way the amendment was written, the bill would only tax national labs, if they were managed by a nonprofit entity.

Creating a threshold for taxing nonprofits sets a dangerous precedent.  Once the public has accepted taxing nonprofits, legislators can lower the threshold, putting all nonprofits in jeopardy.

The Revenue Stabilization and Tax Policy Interim Committee will begin meeting in June.  It seems likely that comprehensive tax reform will be on the agenda.  New Mexico Thrives is working on creating a data report about nonprofits to share with state legislators so they can make informed decisions.