LL council looks to increase GRT
Los Lunas village residents might see a rise in taxes on their purchases in 2015 when the village will be able to add a three-eighths of 1 percent sales tax to recoup revenue losses from the Hold Harmless Act.
The Hold Harmless Act allows New Mexico residents to purchase food, prescription drugs and some medical expenses tax-free. Counties and municipalities have been compensated for the gross receipts tax loss by the state, but compensation will be rolled back starting in 2015.
During last year's legislative session, a bill was passed that repealed the Hold Harmless compensation, said Mayor Charles Griego.
Now, counties with a population of more than 48,000 and municipalities with a population of more than 10,000 will see this funding retracted. Los Lunas, with a population of nearly 15,000, falls into that category.
To help wean counties and cities off state Hold Harmless funding, Valencia County and Los Lunas can impose a three-eighths of 1 percent gross receipts tax increase on nonfood sales by adoption of an ordinance, and no election is required.
"The village can actually begin implementing the tax as early as January 2015," said Monica Clarke, the village's finance officer.
The council was presented with a model ordinance for the tax increase, but chose not to move forward with it until they have their annual budget workshop in May.
Gross receipts tax in the village is currently at about 7.6 percent. If the sales tax is raised by three-eighths percent, it would be about 7.9 percent.
An item costing $10, excluding food and prescriptions, would be taxed at $0.79, a three cent difference, said Clarke.
"If Valencia County implements the Hold Harmless GRT as well as the village, the tax rate would go up to 8.3125 percent â€• if implemented at the full three-eighths of 1 percent," Clarke said.
The village has been receiving about $1.7 million in state compensation annually. The cutbacks will be incremental starting in 2015, when the state will begin reducing the compensation over a 15-year period until it is cut to zero.
The rollback will begin at 6 percent a year for the first five years, and then increase to 7 percent for the next 10 years, said Clarke.
The first year, the village will lose about $102,000 in funding, but then it doubles each year from there: $204,000 in 2017, $307,000 in 2018, $409,000 in 2019 and so forth, said Clarke.
"We will actually be in the red in fiscal year 2021," she said. "Even with the three-eighths percent local tax option implemented, the village will still stand to lose about $551,803 annually."
Several other cities, such as Roswell, Gallup, Alamogordo, Española and Silver City, also might end up in the red even after imposing the tax increase.
"There are actually some cities that will come out ahead implementing this tax, but we're not one of them," Clarke said.
The council requested more information for the upcoming budget workshop scheduled for April 30 and May 1.
In other business, the council:
â€¢ Approved posting a five-hour-per week position at the Los Lunas Library.
â€¢ Griego signed a proclamation recognizing May 1 as National Service Recognition Day in honor of senior citizen volunteers who work throughout the county in food pantries, senior centers, libraries, schools, hospice, museums and nursing homes.
Bertha Flores, director of the Retired Seniors Volunteer Program, explained that the program has 200 volunteers who put in about 69,000 to 70,000 man hours per year.
â€¢ Approved a final plat for the Jubilee subdivision Phase 2A-2.
â€¢ Denied a request to change the utilities office hours or hire additional staff until the new budget is discussed. Rudy Archuleta, the public works director, requested a change in office hours to provide staff with more time for operations and paper work, suggesting the office close at 4 p.m. so staff would have a designated time for their other duties.
The department has new software that could expedite operations, but staff need to be trained in it. Councilor Amanda Perea said she has received a lot of complaints about customer service in that department, but any staff additions were put on hold until the new budget is reviewed.
â€¢ Denied a replacement hire for a code enforcement vacancy. A hiring freeze was imposed in the 2013-14 budget with replacement hires subject to council review. Until the new budget is developed, major hiring is on hold, but the code enforcement division can receive assistance from the Open Space department. Councilor Gerard Saiz was the lone vote in favor of filling the position.
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