A big thanks to our Governor for her veto of Senate Bill 17! Our Legislature should advocate for policies that bring more job creators to our state, not drive them away. Susana Martinez was right to veto this onerous and flawed tax policy on the #1 job creator in Northern New Mexico.
Senate Bill 17 failed to meet the following Legislative Finance Committee tax policy principles:
1. Adequacy: Revenue should be adequate to fund needed government services. Our elected representatives lobbied vigorously for SB 17, not to secure funding for necessary government functions, but to support our excessive, out-of-control spending habits. Khalil Spencer wrote an excellent commentary, “ Is ‘Bombs For Profits’ A Good Model For A Nuclear Weapons Lab?,” in which he questions putting “the county’s demands for more amenities above the national good.” Indeed, the Los Alamos National Laboratory exists to serve the national interest, not to fund our island of privilege.
2. Fair and Equitable: Our Governor said, “This bill is designed to require one specific nonprofit to pay gross receipts tax when others are not. This is poorly crafted tax policy. A proposed amendment would have remedied this issue – requiring all nonprofits with revenues over a certain threshold to pay GRT.” The sponsor withdrew the amendment: why? SB 17 did not level the playing field, but made it more uneven. Specific tax entities should be subject to the same rules.
That being said, there is a growing number of abuses in our tax-exempt system. I fully support measures to ensure more oversight and accountability for nonprofit entities. One example, the recently passed Tax Cuts and Jobs Act imposes a tax on nonprofits who pay executives more than $1 million per year.
Additionally, our State Legislature could do the following:
- Strengthen regulations governing all nonprofits. We must adopt specific rules that prevent nonprofits from engaging in financial deals that personally benefit its board members.
- Require a percentage of the budget to be used towards community development, educational support, or charitable causes. Nonprofit hospitals should be required to allocate a percentage of their budget for uninsured patients. LANL has given millions to our community and to our schools, under nonprofit management. We could secure such a commitment through the state tax code.
- Ensure the New Mexico Taxation and Revenue’s budget includes regulatory oversight of nonprofits.
Establish appropriate “checks and balances” for accountability and transparency for both nonprofits and those that monitor nonprofits.
Analysis of SB 17 revealed that a “nonprofit organization would have the benefit of operating with the existing GRT exemption for nonprofits and propose the use of the savings to increase programs at the laboratory … it would also benefit the local community by providing increased employment opportunities.” Indeed, strengthening LANL’s science and technology programs is vital to its long-term mission success. Providing more job opportunities would certainly strengthen the economy for our District and for our State. Unemployment is crippling our state and shrinking our middle class.
The Governor said, “[SB 17] could cost the state many jobs and puts New Mexico at a competitive disadvantage … I will not sign a bill that has the potential to do such harm to New Mexico and its citizens.”
Thank you, Governor Martinez!