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Lab's pit production ramp-up has been nuclear enrichment for Los Alamos County By Carina Julig cjulig@sfnewmexican.com
From left, Roberto Herrera, Trevor Chama and Francisco Carreon install new water lines Friday along DP Road to make way for more commercial and residential growth, one of many construction projects underway in Los Alamos County. The county has invested in aging infrastructure and deferred maintenance with its budget increasing by more than $150 million over the last five years as Los Alamos National Laboratory spends big as it preps for pit production. The Los Alamos County Council passed a $371 million budget in April for fiscal year 2025. It was a whopping sum for a community of 19,400 residents. The city of Santa Fe, with about 91,000 residents, has a $440.1 million budget this year. Los Alamos’ wealth — staggering in comparison to other New Mexico municipalities — is almost entirely due to the presence of Los Alamos National Laboratory. As the lab prepares to begin production of bomb cores known as plutonium pits as part of a mission to modernize the U.S. nuclear arsenal, tax revenue tied to construction projects at the lab to improve and expand its facilities has poured into Los Alamos County coffers, increasing its budget by more than $150 million over the past five years. After pit production begins in earnest, however, that money will decline due to a manufacturing exemption in New Mexico’s gross receipts tax law. In the meantime, county leaders are taking advantage of the windfall — investing in aging infrastructure and deferred maintenance — and preparing for when it goes away.
Trevor Chama, left, Roberto Herrera and Francisco Carreon install new water lines as part of a project to make way for more commercial and residential growth in Los Alamos. Jim Weber/The New Mexican Los Alamos National Laboratory provides about 77% to 79% of the county’s gross receipts tax, County Manager Anne Laurent said in a May interview. “The thing that’s hard for people to understand is it’s not a direct link to the spending of the lab or the budget that’s approved in Washington,” she said. “It’s how they spend the money and whether it’s taxable.” Over the past several years, the lab has been spending large amounts of money on preparations for producing 30 plutonium pits a year by 2030. It hired 2,500 new workers last year, the most ever, and its budget swelled to an all-time high of more than $5 billion, $2 billion of which went to preparations for pit production. Thanks largely to the lab’s construction spending, the county’s annual operating budgets have soared in recent years, rising from $199 million in fiscal year 2020 to $382 million in the past fiscal year. While pit production, too, might seem to be a financial boon to the county, the opposite is true. Under New Mexico law, manufacturing is exempt from gross receipts tax collection. The county is planning for when the revenue starts to taper off, which Laurent said is expected around 2027 or 2028. The new money has gone into infrastructure improvements, environmental sustainability and the creation of an open-access broadband network, she said, as well as routine costs. The county recently negotiated a new agreement to provide fire response services for the laboratory, which Laurent said accounts for about 75% of the fire department’s budget. About $50 million goes to electric and gas distribution, services most other municipalities don’t provide directly. Another $100 million goes toward capital projects. “If you just look at our budget overall ... we get under $200 million pretty quickly,” Laurent said. That’s still a lot of money — so where is it going? A lot of places, Laurent said. One of the county’s big endeavors, finally nearing the finish line after about a decade, is the Jemez Mountain fire protection project. That includes installing a water line up the ski hill to be used for firefighting and snowmaking, as well as putting electrical lines up the mountain underground as a fire mitigation measure. The county, which operates a joint emergency operations center on lab property, also is working to create its own emergency center in White Rock, and it gave $7 million to Los Alamos Public Schools for capital projects at two elementary schools in White Rock. “The additional money was able to expand their gym and some of the meeting rooms beyond what the state would pay for,” Laurent said, noting the county gives additional money to the school district every year. Other projects include replacing the chiller at Los Alamos’ outdoor ice rink, which is nearing the end of its life span, and making investments in parks and play fields, some of which Laurent said are “in pretty poor shape.” “We’ve got a lot of gophers,” she said.
Los Alamos County parks worker Alex Archuleta works on taking apart the old skateboard ramps to make way for new ramps at Piñon Park in White Rock. The county has used its LANL windfall to create its own emergency center in White Rock, and it gave $7 million to Los Alamos Public Schools for capital projects at two elementary schools in White Rock. Jim Weber/The New Mexican Laurent has worked on and off for the county since 2008 and is familiar with the boom-bust cycle of Los Alamos’ budget. Part of preparing for financial swings tied to lab operations or federal drama is rigorous long-term planning and beefing up reserves. After the lab-related tax revenue begins to drop, the county is planning to dial back the pace of its work and to implement a quarter-cent gross receipts tax increase, which would go into effect in July 2026, generating about $7 million a year. Laurent said the county estimates its revenue will decrease by about $15 million, even with the $7 million in new tax money, after pit production begins. Not everyone is happy about the tax exemption. Rep. Kristina Ortez, D-Taos, sponsored a bill earlier this year to remove national labs from the manufacturing exemption. House Bill 117 cleared its first committee, the House Commerce and Economic Development Committee, but didn’t get a hearing in the House Taxation and Revenue Committee. Ortez declined Wednesday to comment on the legislation and said she is unsure whether she will try to bring it back in a future session. In a text message, she wrote she plans to have conversations with Los Alamos County residents and lab officials “to determine the next steps.” The tax exemption was created to boost manufacturing and encourage companies to relocate to New Mexico, Laurent said. “I guess the question is, does the federal government and their laboratories fit into that intention?” she said.
Los Alamos County engineer Eric Ulibarri talks about a new fuel depot under construction at the Los Alamos Municipal Airport amid its massive budget. The county has also seen an “unprecedented increase in visitors” and tourists after the release of the blockbuster Oppenheimer made the city and lab a destination. Jim Weber/The New Mexican The county didn’t lobby for the bill, but Laurent said if it were introduced in a future session and was successful, the county would not need to implement its quarter-cent increase. Los Alamos might be the envy of other Northern New Mexico communities, with its ability to hire people at higher pay, but there are downsides to being a company town. The county is more affected by what happens in Washington than at the Roundhouse, and could be seriously impacted by a federal shutdown that stalls work at the lab. “Our policies around maintaining reserves and everything else are quite conservative for a reason,” Laurent said. “If the federal budget isn’t passed or if there’s a shutdown or a major [reduction in force] at the federal level, it directly impacts us.” Costs are also higher in the county for just about everything. It competes with the lab for employees and faces rising construction costs, with a limited labor force and the town’s remote location. “When you only have one bidder, you sort of don’t have a choice but to take what their price is,” Laurent noted. To buffer against the impact of the lab, Laurent said the county is hoping to diversify its economy by bringing in more small businesses and expanding tourism. The lab helped with that indirectly after the release last summer of Christopher Nolan’s blockbuster Oppenheimer, which made the small community a destination. The movie led to an “unprecedented increase in visitors” to Los Alamos County, according to the fiscal year 2025 budget, including a 60% increase in visitors at the Los Alamos History Museum and Fuller Lodge, and a 50% increase in visitors at the lab’s Bradbury Science Museum. Laurent said the county experiences many of the same challenges as other municipalities, just on a different scale. “We have really good problems here,” she said.
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