BY MAIRE O’NEILL
A fund initiated by Los Alamos County around 2010 at a time when it became apparent that the County was going to have more income from gross receipts tax generated by Los Alamos National Laboratory became the subject of discussion last week during the County Council’s budget hearings. The fund is called the Progress Through Partnering Fund and County officials have described it as a means to “spread the wealth” of the GRT received by the County.
Up to now, the fund has generally been spent on four different programs – the short-lived Espanola Basin Regional Infrastructure Fund, the North Central Regional Transit District (NCRTD), the Regional Development Corporation and the Regional Coalition of LANL Communities. The fund has fluctuated over the years and seems to have settled at around the $600,000 mark, until the FY2020 budget when it jumped by $900,000 to $1.5 million.
What caused the jump? In February 2019, former State Rep. Joseph Sanchez, whose district included Rio Arriba, Mora, Colfax and San Miguel Counties, introduced a House Memorial in the legislature asking that the state’s tax law be investigated because the local revenue distribution from LANL GRT greatly benefited Los Alamos County and not the rest of Northern New Mexico. Sanchez’s position was that more than half of LANL employees were residing outside Los Alamos County and that LANL’s operations were impacting all of Northern New Mexico.
During last week’s budget hearings, in response to questions from Councilor David Reagor about the reason for the $900,000 increase in the Progress Through Partnering fund, County Manager Harry Burgess said the process of redistributing the GRT is fraught with problems.
“The way it’s structured now versus how that would actually relate into distributing revenue earned in one community to other communities would probably throw a wrench in the whole state tax structure. However, the thought was that if we put together some sort of fund that would help assist in those construction projects – we had a meeting with many of the representatives – that they didn’t have the monies to get the projects started – the match for various grants they were pursuing. So the thought was that this Progress Through Partnering could be that match,” Burgess said.
In February 2020, Councilor David Izraelevitz, who is also the treasurer of the RCLC board, proposed establishing a fund that would “expand the positive, permanent impact of Los Alamos County as a good neighbor to surrounding communities and to promote communication, interaction and collaboration”. The initiative was to be funded yearly by contribution from the County General Fund, most of which he proposed would be managed with a long-term investment strategy, and income from the fund was proposed to be allocated to members of the RCLC for local capital projects as determined and reviewed by the RCLC board.
While introducing the agenda item, then Council Chair Sara Scott said that one of the needs the County’s regional partners had expressed when speaking to them in 2019 was a fund that would help with capital outlay for projects that would have significant and long-term impacts for them. Burgess noted at that meeting that $900,000 in additional funds were put into the Progress Through Partnering fund for that year to address some of the more current concerns the County had received.
At that February 2020 meeting, Izraelevitz said the idea would be to develop a fund within the County that would be invested similar to the way that the County’s capital permanent fund is invested through the State Investment Council.
“The income from that fund would then be passed on to the RCLC as our regional partner and then the RCLC board would determine among the members what would be the best yearly use of those funds for capital projects,” Izraelevitz said.
He said Los Alamos through its participation in the RCLC would take a role in determining the policies for how these funds would be allocated and how the programs might be evaluated to see which ones have the highest return investment or highest value.
“But we would recuse ourselves from explicitly deciding among the projects in order to make sure there is a regional focus,” Izraelevitz said.
Izraelevitz said the proposal was $500,000 to $1 million a year and that it obviously would be at the discretion of current and future Councils. He suggested having a budget “add-on” that would be discussed at budget time to decide how much to add or how much the additional increment should be. He acknowledged that formal agreements would be needed to make sure the funds were processed appropriately.
Councilor Izraelevitz said he would like to introduce the proposal at the next RCLC meeting indicating that there istentative support from the Council so that the discussions could start. He noted that the proposal might be a way to invigorate the economic development side of the RCLC but that he hoped there would be other mechanisms, collaborations and joint proposals.
“Maybe this fund itself could be used where multiple communities come together to do some regional things. I hope this will spark that conversation and if it makes it more interesting and we get more participation, that’s fine,” he said.
In April 2020, during Council’s budget hearings former Councilor Pete Sheehey raise the issue of perhaps making some of the proposed funding available sooner rather than later to the regional entities because of the severe problem in existence with the pandemic.
“We can discuss where that ($1.5 million) goes later, but not too much later because I know some of our neighbors are seeing more severe problems than we have now. If we can get any updates on what we’re hearing from our neighbors, that would also be helpful,” he said.
Councilor Scott said there were meetings coming up that would help inform that and that she proposed waiting to hear what would come of those including some external discussion. She proposed approving the budget and discussing the issue at another time. Later Sheehey asked Scott if she anticipated that Council would discuss at another meeting what it was going to do with the full Progress Through Partnering fund.
In April 2020 Izraelevitz took the proposal to the RCLC board which voted to have its legal counsel work on a memorandum of agreement with Los Alamos County counsel.
Since that point, there has been no further public discussion of the proposal and it has not reappeared on a Council agenda for approval.
At last week’s hearing, Burgess told Reagor that over the last budget year, obviously with COVID and the other issues that the RCLC has been addressing, the County has not been able to pursue the fund.
“However that original $900,000 was never intended to be the only monies available. The whole thought was that we would have a corpus that would earn interest and the interest would be made available for various matches for grants. So we did continue in this present budget at a higher level….We would spend approximately $600,000 on those various three entities – the RCLC, the RDT and the NCRTD and the remainder would sit there and be carried if and until we could put together such a program with our various partner communities,” he said.
Council Chair Randall Ryti said at last week’s hearing that he thinks the idea was that Council was establishing a new fund that would be available to governmental entities, so it wouldn’t be available to just any kind of entity, but it would be working with the County’s governmental partner neighbors providing matching funding as was indicated to some project they had in mind.
“One of the mechanisms for getting the money out was potentially through RCLC although that was not the only possible option – there could be other things set up to do this as well. If we did set up something as you noted there is quite a bit of funding here…. It would be something the County Manager would be bringing to the Council for approval depending on the size, so likely the size of the project would be such that if we had funds available, whether or not we accumulate them for interest payments only or use some for immediate projects or some for building up the corpus,” Ryti said.
Izraelevitz responded that the reason it would be a long-term capital fund was “we wanted to develop a long-term relationship and collaborative environment with our region so the $900,000 would go into what in other situations would be called an investment fund or something like that, where we would not be using the capital but the income so that you could support multiple projects over a period of time so that you would be supporting different communities at different parts of the program,” he said. “So it’s not that $500,000 would go out the door to one community and the next year to another community but rather it would be a long-term investment and distribution process. Generally it was to promote that type of collaborative environment within our region because we do understand that we have a substantial tax revenue from the Laboratory and we do want to find a way of maintain ultimate fiduciary control over the funds, how we could impact the region with some of those funds.”
Councilor Scott said the the bottom line is “we had discussion about wanting to strengthen partnerships with our neighbors and the agreement that was approved after conversations between multiple councilors and neighbors – this kind of bubbled up as an option for having some meaningful projects that could be worked on and in some cases they could be mutually beneficial too I think. There was a number of ideas about if there were capabilities that we didn’t have that neighbors wanted to grow that would benefit us as well. So I think that was the main idea – just working to strengthen partners and relationships with our neighbors being something we value and wanted to move towards having some resources to accomplish that.”
Reagor said he wanted the budget to reflect the numbers Council knows it’s going to spend.
“And if we have a new thing coming up, we certainly engage in a Council meeting and appropriate money to do the extra $900,000 job or any fraction of it. It seems like the budget item should be $600,000 to match the previous year of the known expenditure for the plans that are in place. And of course if we have an initiative presented to Council – sure – we consider that and consider appropriating money to go with it. But I don’t think that belongs as a budget item in that form,” he said.
Not much was said at last week’s hearing about the RCLC’s role in disbursement of the proposed fund. At present, two entities – the City of Santa Fe and the Taos County are discussing possible withdrawal from the RCLC.
Council tentatively approved the $1.5 million amount as part of the County Manager’s budget 6-1 with Reagor voting against. Council has not adopted the final budget at this point but is expected to do so at Monday or Tuesday evening’s budget hearing.