Jul 30, 2007

LANL Tax Payments Lower Than Early Estimates

By Raam Wong
Journal Northern Bureau

LOS ALAMOS— Los Alamos National Laboratory's annual gross receipts tax payments could be significantly lower than previously projected, meaning less money for state and local government coffers.

The lab became subject to the tax when a for-profit corporation took over lab management from the University of California, a nonprofit, in June 2006.

Then, LANL and state officials estimated the lab's annual tax payments could total nearly $90 million. Now, officials say payments are more likely to be between $50 million to $80 million.

The reason for the revised estimate is that the lab's new corporate manager, Los Alamos National Security, has been in continuous discussions with the state Taxation and Revenue Department and an independent accountant in an effort to pinpoint exactly what lab business is and what is not taxable.

One exception found so far: the lab's out-of-state work, most notably weapons research at the Nevada Test Site, will not be subject to the tax, LANL spokesman Kevin Roark told the Journal on Friday.

Other nontaxable activities include educational outreach and contracting with small or minority businesses.

The lab is also looking at whether it can deduct its production of nuclear weapons triggers, known as pits, which are shipped to the Pantex nuclear weapons plant, in Amarillo.

"It's one of those negotiating points," Roark said. The state tax department is conducting an ongoing audit of the lab's gross receipts tax payments, Roark said.

The lab formerly paid about $35 million in gross receipts taxes annually because its manager, University of California, was exempt from a large share of the taxes because of its nonprofit status.

When the lab management was transferred to Los Alamos National Security, state lawmakers salivated over the estimated windfall— $50 million a year to state coffers and $40 million to Los Alamos County.

In March, county officials announced plans to share some of that new wealth with surrounding cities and counties in the form of regional transportation projects, health care and other initiatives.

But lab officials said the lab's tax bill was intentionally overestimated to avoid budget problems.

"No one realistically thought (the tax) was going to be that high," Roark said.
The lab's new estimate of between $50 million and $80 million includes the approximately $35 million that the lab was already paying.

Rep. Jeannette Wallace, R-Los Alamos, acknowledged that state and local governments would likely see less tax revenue from the lab than previously thought.

But she added that lower tax payments make it less likely that the cash-strapped lab will have to lay off workers. "There's been a pro and con all along," Wallace said.

LANL director Michael Anastasio on Friday cited the new tax liability as one reason money is so tight at the lab. Anastasio told the state Legislature's LANL Oversight Committee that the lab has had to cut contract positions, travel, maintenance and other expenses to make ends meet.

Before the management switch, the idea of taxing the lab— northern New Mexico's largest employer— had been bandied about by legislators and others for years. Supporters of such a move pointed to Sandia National Laboratory, which provides similar services but pays the tax because it is operated by a private corporation.


Anonymous said...

With $2 billion to play with, rest assured the Lab will get its tax burden reduced. Toss a few bones at our legislative mutts forever on the lookout for another campaign contibution and walla...you've got an exemption for the Lab. The Guv will make sure his lap pups in the legislature deliver and they, in turn, will get a little tummy rub in return for their service. Ah yes...the stench thickens.

Anonymous said...

Anyone have early info on other discussions stemming from the July 27 meeting of the state Legislature's LANL Oversight Committee? There's mention of "LANL Overview, Update, Budget Status and Contingent Reductions in Force Impacts" that looks very interesting at http://www.legis.state.nm.us/lcs/agendas/lanlagejul27.07.pdf in the agenda. No minutes posted though.

Anonymous said...

"The lab is also looking at whether it can deduct its production of nuclear weapons triggers, known as pits, which are shipped to the Pantex nuclear weapons plant, in Amarillo."

How about spending some time figuring out ways to lower the costs on doing science rather than pit production?

Anonymous said...

You think that just because your houses' value is dropping through the floor and you are about to loose your job that property taxes are going to go down? Remember that little thing called 529? That item fiscal convervatives said was a really bad idea? And party on types said would pay for itself with all the money people were borro... I mean spending? The one that on top of this could double and triple the property taxes on that giant, 500K McMansion you bought at the top? Yeah me too. Hope you enjoy your new shoping mall. Going to be a ghost-mall before its built.

Anonymous said...

You people are amazing. You whine about LANS and FTE costs, then you whine when LANS does their jobs in trying to reduce the tax burden and cost of doing business by finding legitimate deductions -- as any of us do on income tax -- to take (such as shipping products out of the state).

What a bunch of lab-bashing morons you all are.

Anonymous said...

So with the advanced business practices brought by Bechtel and Co., they can't do any better than estimate the tax burden to be somewhere between 50 million and 80 million? There isn't much difference between the previous estimate of "nearly 90 million" and 80 million, is there?

Anonymous said...

For 11:16AM nothing matters so long as we keep our inflated egos intact and our nice fat paychecks coming in. Opinions that are contrary to such priorities are automatically labeled "Lab-bashing." Those expressing such opinions are automatically labeled "morons." Unfortunately, 11:16 is just too representative of the narrow-mindedness I've experienced with so many of my scientific colleages. I suppose that's why many, including myself, feel we must share our perspectives on this blogg anonymously for fear of the 11:16AM's of the world. And at Los Alamos believe me, there are many.

Anonymous said...

Well, if you "bought" something priced at $80M, don't you think you would negotiate the final price? This isn't your normal property tax bill...

Anonymous said...

Hey, 11:16 PM. Is that you, Terry? Or perhaps it's Foreslund or Stradling?

Anonymous said...


Once again you make statements like
"inflated egos" and " too representative of the narrow-mindedness I've experienced with so many of my scientific colleages."

I am at LANL and these blanket statements you make about the majority of the scientific staff are just complete nonsense. I can
understand if you have a specific problem with poster 11:16AM, however this is one individual and you have no idea if that person even works at LANL. On the other hand I suspect that you do not actually work at LANL.

Anonymous said...

Yeah, 7/30/07 10:38 PM...

Prop 529 = Mormon

Anonymous said...

11:44AM. Why drag Dave Foreslund into this muck-raking activity? I haven't seen or heard much from him for a couple of years, and even then, it has been minimal and quite pro-lab. I can understand having a grudge against Terry and Alan and others who are still actively playing political games around the lab, but why talk nasty about someone who tried to do something positive when the lab was turning itself inside out during the Nanos debacle, and has since been fairly silent? Am I detecting some bitterness from many years past? Dave is a good guy who did what he thought was right in the interest of the laboratory - why don't you focus your vitriol towards people who actually are actively doing bad things to the lab in the present.

Anonymous said...

Why? Because those who don't study and understand their past are bound to repeat it. That's why.

As I recollect, Stadling was fairly pro-Nanos and Foreslund bent over backwards to help defend UC's handling of the whole ugly situation.