Commission approves two GRT revenues
For what may be the first time ever, taxes got a round of applause at last week's county commission meeting.
Two new gross receipts taxes were unanimously approved, and commissioners and staff are hopeful it will keep the county's finances healthy.
The two GRTs, which total a half percent, will eventually increase revenues and allow the county to improve services. The larger tax — three-eighths — will replace the subsidy the county received from the state for lost GRT on groceries and prescription medications.
Two years ago, the state announced it would begin cutting back the money for cities and counties of more than 10,000 people. Locally, only the village of Los Lunas and the county were hit by the rollback of the hold harmless subsidies.
In that same legislation, the state gave local agencies a way to make up the lost revenues. They could raise local taxes by up to three-eighths. Following months of debate and meetings, the commissioners decided to enact the tax to increase county revenues.
They also decided to add another eighth, specifically for the county detention center, which has been a drain on the general fund, impacting the commission's ability to adequately fund other departments.
There is a long list of uses for the jail GRT, most of which center around the repair, expansion and upkeep of the facility.
Warden Joe Chavez said he was very happy to see the tax pass, especially on a unanimous vote.
"When they held the public hearing (on July 9), there was nothing said (by the public). I think that speaks well to us being able to give the public and the commissioners better information and an understanding of why it's important," Chavez said. "This tax has been rejected twice before."
When the jail GRT originally expired in 2009, the commission voted to continue the tax. But this particular tax is subject to what is called a negative referendum. If enough signatures are gathered, the public can take it to a vote.
Nearly five years ago, that's what happened, and it failed on a 2-1 margin.
"If there was a split vote, it would be easier for a commissioner to advocate for those signatures," Chavez said.
In January, the commissioners considered a correctional GRT once again, but it was defeated on a 3-2 vote. That final vote was commissioners Mary Andersen and Charles Eaton in favor, and commissioners Alicia Aguilar, Lawrence Romero and Jhonathan Aragon against.
During the budget planning sessions this spring, county finance director Nick Telles presented the commissioners with a bleak picture. If they didn't find a way to increase revenues, by the end of next fiscal year the county would be $1.8 million in the hole.
The decision to implement the two GRTs was the outcome of months of commission meetings.
To help sell the tax to the public, Chavez, Telles, along with Valencia County Manager Jeff Condrey and the occasional commissioner began hosting public meetings around the county.
Both Chavez and Condrey said those were key to helping people understand the county's financial struggles.
"The public came in and looked at all the issues that were creating the projected shortfall," the warden said.
During the meetings, residents were able to talk to the staff and understand how they worked through different scenarios of what could be cut from the budget, Chavez said.
"I think it was good because they saw that we really had looked at everything," he said. "They really understood what the ramifications were of not having this revenue."
The bottom line of not having new revenues was cuts to employees, Telles told the commissioners during budget hearings.
While the process was long, Condrey said it was well worth the effort.
"The community meetings, they were all cordial with good input from the public. Most were very understanding once they saw the trends and once they had a chance to hear from the warden (and other county department heads)," Condrey said. "I think it was a matter of people not understanding the very complicated system New Mexico has adopted, with different increments and restricted taxes."
While there was initial opposition to the tax increase at most of the meetings, Condrey said by the end, most of those in attendance understood the need.
Commissioner Alicia Aguilar raised the issue of whether the taxes would expire, saying it was "not in opposition, but I was asked to ask."
Condrey said neither of the taxes had an expiration date.
"I think universally the public wants accountability that these taxes are not just more revenue for bloated government that has nothing to show," he said. "There was some discussion about a sunset but there was also some discussion that that is the purpose of elections. Every two years, a portion of the commission is up for election. It's up to the commission to reduce (the tax) if it's not being used properly or the revenues are excessive."
The county manager said the correctional GRT would be subject to a negative referendum as it was in 2009. Residents have until the middle of September to gather about 2,000 qualified signatures to trigger a public vote.
Condrey went on, saying that as it has been stated in previous public meetings, the fiscal year that started on July 1 will still be extremely difficult, even with the GRTs in place.
Due to the timing of the enactment of the taxes and when the county will actually receive disbursements from the state, in previous meetings Telles said the county can realistically expect to only receive a quarter of the revenues the GRTs will generate.
Annually, the .5 percent increase will bring in about $4 million, but the county will only see about $1 million of that in the 2014-15 fiscal year. The taxes will go into effect in January 2015 and disbursement from taxation and revenue usually lags about two months, Telles said.
"The action you take today will be helpful down the road, particularly in 2016 and beyond," Condrey said. "I think this will be a red-letter day for Valencia County if we can establish recurring revenue streams. With that, we can deliver services the public expects and deserves and we have not been able to do to this point."
Aguilar made the motion to approve both GRTs and Commissioner Mary Andersen called it her "privilege" to second it.
After both of the GRT ordinances passed, there was a round of applause from the audience.
"I think that's the first time taxes have been applauded," Andersen said.
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