Pongratz: Why Care About The Gross Receipts Tax?

Los Alamos County Councilor

Where do New Mexico municipalities get their revenue?
The attached figure (# 1) from a presentation by John Monforte, acting secretary of the New Mexico Tax and Revenue Division, shows the Gross Receipts Tax (GRT) provides about 80 percent of the revenue for New Mexico Municipalities. I am serving my seventh term on the Los Alamos County Council, but this letter is my own initiative, independent of our local governing body.

Why the GRT?
The GRT is a measure of business activity. Business activity is a measure of the need for municipal services.  Another measure of the need for services is the size of the workforce in a municipality.  Workforce is a measure of the number of folks employed in a municipality.  The size of the workforce governs the municipality’s need for streets, police, fire, recreation, social services, etc. (and revenue).

Who pays the GRT?
Almost everyone doing business in the state of New Mexico pays the GRT.  The GRT rate differs from municipality to municipality.  More than half of the GRT goes to the state. Current New Mexico law grants exemptions to some businesses, for example, 501(c)(3) organizations. The 501(c)(3) designation applies to religious, educational, charitable, scientific and literary organizations among others.

How does this affect Los Alamos?
Figure #2 shows the workforce distribution in Los Alamos. Nearly 70 percent of the Los Alamos workforce is employed by LANL.  An exemption from GRT for a business employing a majority of a municipality’s workforce effectively strips that community of their main revenue source

Should TRIAD be granted a GRT exemption?
Under current state law TRIAD may qualify for a 501(c)(3) GRT exemption, despite the fact this would strip from Los Alamos its dominate source of municipal revenue.  It seems unfair to me to expect a minority of the local workforce to pay more than their fair share of the cost of providing municipal services.  A recent LA Daily Post story (Aug. 2, 2018) says that LANL will make “pits” for nuclear weapons.  Not sure how this would be received by the University of California faculty senate… Also note that the word “scientific” has been removed for the LANL title!  

Doing the right thing
While I think that TRIAD has a moral obligation to pay for their impact on Los Alamos I also think that Los Alamos does not need all the GRT we were getting from LANS.  In a Dec. 21, 2017 op ed in the Daily Post I suggested lowering the GRT rate.  Los Alamos needs to “Do the right thing” also.


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