In 1999, New Mexico enacted a law that allowed receipts “from selling uranium hexafluoride and from providing the service of enriching uranium” to be deducted from the gross-receipts tax.
Was the perk a wise “public investment” in “economic development”? The truth is, we don’t know. Counterfactuals are tough. Perhaps URENCO, the European uranium-enrichment company that benefited from the break, would have come to New Mexico without it — site-selection decisions are complicated. But in 2016, whatever its past “benefits,” the deduction is looking iffier and iffier.
Case in point: Exelon. On Thursday, the utility announced plans to close two of its nuclear plants. According to the Chicago Tribune, the “company, the parent of … utilities provider ComEd, said the Clinton Power Station would close June 1, 2017, and the Quad Cities Generating Station in Cordova would close June 1, 2018. The plants have lost a combined $800 million in the past seven years.”
Love them or hate them, nuclear plants are closing in the U.S. And the much-touted renaissance of domestic atomic power, predicted by many a decade ago, is fizzling. In URENCO’s 2015 annual report, the company disclosed that in North America, “historically low prices of fuel used for electricity generation, for example natural gas, combined with a decline or minimal growth in electricity demand continue to challenge the economics of both existing and proposed nuclear power projects.”
Enrichment customers can be found all over the world, of course, but for how much longer? Europe is denuclearizing. Sweden is speeding up the closing of its two reactors, from 2020 to 2018. Germany is planning to be fission-free by 2022. The developing world offers an opportunity, but China is ramping up its own enrichment capabilities, and globally, URENCO faces fierce competition from Russia.
In 1999, were the elected officials who approved URENCO’s GRT deduction “visionary”? It’s getting tougher and tougher to believe so. The freebie is another example of legislators and governors lacking the ability to predict which businesses and industries pose the greatest opportunities to build a vibrant private sector here.
New Mexico doesn’t need economic-development trickery. (And the kinda-sorta corruption that comes with it.) It needs to focus on the basics — low and simple taxes, reasonable regulations, appropriate infrastructure, meaningful school reforms — to turn around a state in dire need of job and wage growth.