BY JAMES WERNICKE
Los Alamos

Los Alamos County Council is preparing to vote on whether to raise the Gross Receipts Tax (GRT) to close their budget shortfall. LANL Director Thom Mason has said it will hinder economic growth and urges the County to be more efficient. County Chair Theresa Cull and County Manager Anne Laurent argue it is necessary to provide services to attract highly skilled workers. Local investigative reporter Stephanie Nakhleh also urged LANL not only to engage the County on GRT, but also land use and traffic safety. All of these concerns—economic growth, stable public revenue, land use, and traffic safety—are negatively affected by our dependence on GRT. It’s telling that New Mexico is the only state that still uses this tax broadly. Rather than double down, Los Alamos should show the state the way out.

GRT is particularly insidious because it relies on pyramiding which allows politicians to advertise a low rate while the effective tax rate is typically much higher. As a New Mexico Legislative Finance Committee report explains, “taxation of business-to-business services result[s] in multiple layers of taxation … this pushes up the real rate of taxation.” A 7.0625% GRT doesn’t just add to the final sale—it adds it to every local transaction in the supply chain. The result is a compounding tax on productivity that incentivizes businesses to relocate or find exemptions.

Taking a bigger slice of a shrinking pie doesn’t address the structural weaknesses in our economy—it deepens them. Economic vitality comes from expanding productive activity—adding residents, businesses, and visitors—not taxing it.

The County’s own data shows that local small businesses are struggling. It points to an increase in business licenses as a sign of economic growth, but as any entrepreneur knows, the first years are the hardest, and even established businesses are running on thin margins. In the County’s business survey, affordability ranked among the top concerns.

Brick-and-mortar businesses represent a serious investment in our community through their leases, but that same commitment makes them especially vulnerable to GRT increases. The Los Alamos MainStreet lease-rate survey confirms above-average commercial rents and persistent vacancies—clear signs of inefficiency. By responding to declining revenue with higher GRT, the County is punishing the people who are producing value.

Before slicing itself a bigger piece, the County needs to grow the pie.

Nakhleh is right: our community needs more housing, and while some worry higher density could worsen traffic, forcing thousands to commute long distances is the real traffic-safety problem.

We are not out of usable land. What’s scarce is efficient land use. Current policies favor low-density development that spreads infrastructure thin and limits tax productivity. Higher-density housing would mean more residents, more businesses, less driving, more efficient public infrastructure, and a stronger revenue base—all without raising rates.

So why do we let prime parcels sit vacant for years while prices rise? Part of the problem lies in Article VIII, §1 of the State Constitution, which caps property-tax valuation growth—making it cheap to hold land and expensive to improve it—and limits local governments’ flexibility to incentivize development. Los Alamos County could—and should—advocate for reform.

A universal building exemption—where land remains fully taxed, but buildings and renovations are temporarily or partially exempt—would flip the incentive structure. Owners would no longer be rewarded for vacancy or punished for productivity, and local governments would maintain stable revenue by taxing land, an asset that cannot be moved or hidden. Economists have long supported this approach because it doesn’t distort market behavior, and can be administered transparently and cheaply. As the Lincoln Institute of Land Policy puts it, “taxing land encourages development; taxing buildings discourages it.”

Even without new state authority, Los Alamos can already unlock development—raising revenue without raising taxes. Industrial Revenue Bonds (IRBs) let the County to help developers access private capital at reduced cost while temporarily holding title to projects—without putting public funds at risk—and negotiate outcomes such as local-hire commitments and completion timelines. Metropolitan Redevelopment Areas (MRAs)—like the one downtown—and Tax Increment Financing (TIFs) can channel projected tax growth into public improvements—streets, utilities, parks, etc.—serving that area. The County can also reduce fees and expedite reviews for projects that bring vacant space back into use. These tools raise revenue by expanding the base—not by raising the rate.

We want outcomes, not outputs.

One of the County’s deepest systemic issues—and cause of its budget shortfall—is its focus on outputs instead of outcomes. The budget tracks work items—permits processed, invoices paid, millions spent—but offers little evidence these efforts yield affordable housing, stronger businesses, or better quality of life.

In their response to Mason, Cull and Laurent reaffirmed “shared responsibility to sustain a thriving community” and cited awards for fiscal stewardship. Awards aren’t outcomes. Taxpayers deserve to know not just that reports are produced, but that something useful is delivered.

When the District Court found the County had abused its permitting process against a local entrepreneur, what accountability followed? The County cites its IAP accreditation for fast permit turnaround, yet permits often take months, not days. The County publishes no real data on processing times or bottlenecks.

These delays don’t just hurt builders. Chamisa Elementary’s opening was delayed this year because County inspectors failed to approve occupancy, even after state fire inspections cleared the school 8 days before. Parents had to miss work, shrinking productivity across the community.

While the County has taken steps to improve transparency with news articles, a Procurement Portal, and a Performance Metrics Dashboard, it still negotiates too many deals opaquely with major landholders and hides leadership compensation behind bureaucratic friction. This fosters the perception that government serves a few rather than the many.

Rather than raise GRT, Council should direct staff to:

1. Publish outcome-based performance metrics—housing units built, vacant spaces reactivated, permit turnaround times, and private investment unlocked.
2. Set service-level standards and public reporting in permitting. Track and publish metrics such as average age of applications, oldest in queue, percent on-time, and total processing time across departments, with quarterly updates identifying bottlenecks and corrective actions.
3. Adopt concurrent, checklist-based review across departments so Building Safety, Fire, Utilities, and Planning to review applications simultaneously, not sequentially. 
4. Activate and enforce incentive tools for productive land use. Use IRBs, MRAs, and TIFs proactively to catalyze redevelopment, with clear performance requirements, deadlines, and penalties for projects that stay vacant.
5. Pursue state-level reform to align property taxation with productivity by advocating to amend Article VIII § 1 to allow local jurisdictions to set valuation growth caps and universal building/improvement exemptions.
6. Increase fiscal transparency and equity. Publish detailed compensation and benefits for senior leadership and require public accountability reports for every major land or development negotiation.
7. Tie management evaluation to outcomes, not paperwork. Link leadership goals to measurable improvements in housing affordability, business survivability, and service delivery.

A higher GRT might patch this year’s budget, but it won’t fix structural inefficiency, rebuild trust, or create long-term prosperity. The County’s success shouldn’t be defined by how many reports it files or awards it earns, but by how many residents it can house, how many businesses can thrive, and how much value it creates. If the County prioritizes land use over speculation, outcomes over outputs, and transparency over opacity, it can grow the whole pie.

It’s time to move beyond a Gross Receipts Tax.