BernCo’s GRT grab a bad sequel to its 2015 tax hike
Like the child in “Poltergeist” says, “They’re ba-ack.” If the latest gross receipts tax hike being proposed by Bernalillo County Commissioners sounds familiar, it should. The commission passed a similar tax hike just two years ago. Together, the two increases amount to a $60 million ask to cover what is not even a loss of revenue yet. Let’s explain: Back in 2005, when the state repealed its gross receipts tax on food and medicine, it began making “hold harmless” payments to counties in order to offset the anticipated loss in tax revenues — about $10 million to Bernalillo County. In 2013, the Legislature authorized counties and municipalities to increase their gross receipts taxes by up to three-eighths of 1 percent — without going to the voters — as it started to phase out those state payments starting in 2016.
Like many of its brethren, Bernalillo County saw the chance to increase taxes sans voter approval and, in 2015, went for half of what was authorized to generate around $30 million. Of that, $20 million was to go to behavioral health programs and $10 million to the general fund. That $10 million was to replace the estimated $10 million a year in food and medicine taxes the county lost. However, the county still received around that amount in hold-harmless checks from the state. County Commissioner Debbie O’Malley said at the time “we have a window of opportunity. I think we need to take advantage of it.” Now the county administration is opening the window again. This year’s proposed tax hike, which will raise another $30 million or so for general county operations, is what the county still has authorization for under the “hold harmless” provision and again would not require voter approval. One-sixteenth percent, which raises around $10 million, is being reimposed after the commission repealed it in 2015.
County administrators say the increase is needed to cover the costs of county operations without further reducing the general fund balance, which has fallen from $207 million in 2012 to $131 million in 2016. Like its 2015 twin, this tax hike would again add three-sixteenths of 1 percent to the tax rate, currently set at 7.3125 percent in the incorporated parts of the county and 6.25 percent in the unincorporated. It would again raise the cost of a $100 purchase by about 19 cents and would go into effect on July 1.
That means, just in time for Independence Day, people who buy goods and services in Bernalillo County could be paying almost 40 cents tax on every $100 purchase so that county administrators can rake in $60 million a year to cover a $10 million loss that isn’t a loss yet — and those consumers have absolutely no say in the matter. And it bolsters the argument that all consumers would be better off paying a small GRT on groceries, goods and services instead of letting counties and municipalities take them to the hold-harmless cleaners again and again.
It doesn’t seem to matter that Bernalillo County’s other revenue stream, property taxes, increased 13.1 percent from 2010 to 2016. How many consumers in the county have seen their incomes go up 13.1 percent?
Yes, County Manager Julie Morgas Baca is in the unenviable position of having to balance today’s budget based on yesterday’s questionable decisions, including a treasurer investment scandal that cost the county $17 million. Yes, her team has tightened some belts — including $20 million from the jail, $6 million in unfilled positions and millions in needed maintenance deferred.
No, the county can’t keep draining its reserve funds — as it has done since 2013 to keep the county running. By statute, that fund should remain at a level that could keep the county operating for three months, about $71 million. At the rate the county has been dipping into its reserves the past two years, that’s simply not sustainable.
And still, there continue to be unbelievable cases that put the county’s fiscal responsibility in question. Longtime director of human resources, Renetta Torres, just resigned after an internal investigation raised troubling questions about nepotism and potential special treatment of her son and daughter-in-law, both of whom were county employees often absent from work, but protected by the HR director, according to other employees.
The bottom line to all this is that grabbing the so-called “hold harmless” taxing authority — not just once, but twice — to in part backfill a budget the administration told Journal editors has amounted to “living beyond our means” does not honor the intent of the enabling legislation.
Yet Bernalillo County commissioners can absolutely do it March 28. And that should upset consumers much more than any scary movie.