Committee tables proposal to remove national labs from manufacturing tax deduction after divided debate

The House Commerce & Economic Development Committee voted 6-3 to table House Bill 504, a proposal to exclude federally designated national laboratories from the state's gross receipts tax (GRT) manufacturing deduction. Supporters framed the bill as a way to restore taxable capacity and direct revenue toward legacy waste cleanup and impacted communities; opponents warned the change could reduce procurement, harm local small businesses and jeopardize jobs.

Sponsor testimony described the proposal as targeted to federally established labs that may begin manufacturing activity that otherwise would qualify for the manufacturing GRT deduction. “If the federal government is going to make these [components] here, then they could pay their taxes just like anybody else coming into the state,” the sponsor said in committee. A cosponsor said the measure aims to raise funds for environmental cleanup and community support in areas historically affected by lab operations.

Representatives of the New Mexico Chamber of Commerce and the national laboratories—Los Alamos and Sandia—testified in opposition. Allison Riley of the New Mexico Chamber told the committee the change would “have an adverse effect on our national laboratories,” citing procurement and local spending. Witnesses from Sandia and Los Alamos said recent fiscal-year payments to the state were large: both labs reported GRT contributions in the roughly $130 million to $138 million range for the prior fiscal year; Los Alamos estimated the bill would add about $30 million in annual GRT liability to its operations. Laboratory representatives warned that increased state tax burdens could affect hiring and procurement decisions.

Committee members considered broader policy trade-offs—those advocating for the bill emphasized revenue available for remediation and community needs, while opponents highlighted the labs’ local economic footprint, including procurement to New Mexico small businesses and significant employment numbers. After extended questioning and debate, the committee voted 6-3 in favor of a motion to table the bill; the motion passed, leaving the measure inactive pending further action.

The record includes multiple requests from members for additional analysis and conversations with economic development officials and stakeholders. The sponsor said she was open to further modifications and discussions with affected parties.