Santa Fe County considers gross receipts tax hike
Unlike sugary drink tax, new levy would not need voter approval
SANTA FE — The same day Santa Fe voters rejected a 2-cent-per-ounce tax on sugary beverages, the Santa Fe County Commission began discussions on another potential tax increase, on a much broader category of consumer goods.
The commission is considering raising the gross receipts tax — the tax that hits consumers at the check-out counter or on bills for services, but not on food thanks to an exemption. County officials say the
new revenue would primarily go to public safety and to increase behavioral health services.
At a budget study session on May 2, commissioners looked at three different proposed increases in GRT. They’ll take up the issue again at a meeting on Tuesday.
A 1/16 of one percent increase would bring in an extra $2.3 million a year, a 1/12 of one percent increase would bring in $3 million and a 1/8 of one percent increase would generate an extra $4.6 million, according to county data. For every $100 spent, those increases would cost consumers 6.25 cents, 8.3 cents or 12.5 cents, respectively.
Within the Santa Fe city limits, the current GRT is 8.3125 percent — that includes tax rates levied by the state, county and city. In the unincorporated parts of the county, the rate is 7 percent. Consumers buying in the portion of Española that extends across the Rio Arriba County line into northern Santa Fe County pay 8.9375 percent in GRT.
County Manager Katherine Miller said via email Thursday that commissioners will be presented with various options and may draft an ordinance summary based on one of the budget options. A public hearing will be held May 31 if the board supports a GRT increase, and the increase would go into effect Jan. 1, 2018, Miller said.
The county fire department stands to get the most in all three scenarios, with the top priorities being for more firefighters and paramedics. Between six and 18 extra employees would be hired under the three proposed increases. “These are some of the things we’re concerned about, because our staffing level in the fire department is well below an acceptable needed level, and it’s been that way for a while,” District 4 Commissioner Anna Hamilton said.
The money would also go toward hiring more sheriff’s deputies, emergency dispatchers and corrections personnel, county officials say.
In addition, the county wants to hire a behavioral health manager with a salary of $88,000 and a senior services “navigator” for $77,000 a year, and take steps to fund a county mental health crisis triage center. Hamilton said there’s a lack of mental health care in the county and that rampant alcohol and drug abuse needs to be addressed.
Santa Fe County voters approved a non-binding question in the November general election ballot in support of increasing the GRT by 1/8 of a percent for additional mental health services. “The question helped (the board of commissioners) gauge community support for such a tax increase,” Miller said.
Unlike the sugary beverage tax proposed by the City Council, a county GRT increase doesn’t need to be approved by voters.
“That puts a greater burden on us to do it responsibly,” Hamilton said. “I really respect that people might be adverse to new taxes, but these are critical services needed. As elected officials, we take the issue of raising taxes seriously. A GRT increase can impact individuals and businesses.”
The city of Santa Fe’s sugary drinks tax would have hit consumers at cash register. Although GRT tax does the same thing, District 3 Commissioner Robert Anaya said he doesn’t see any comparison between a GRT increase and the failed soda tax, which would have been used to fund prekindergarten programs. “I don’t think there’s any relevance or comparison to what we’re doing,” he said. “I’m just giving you my perspective. In this case it’s prominently for public safety.”
The county is authorized to raise GRT under a tax deal the Legislature and Gov. Susana Martinez reached in 2013. The resulting legislation phases out over 15 years so-called “hold harmless” payments from the state to city and counties intended to make up for revenue lost to local governments when the Legislature removed GRT from food and medicine. In return, cities and counties were granted authority to raise GRT by up to 3/8 of one percent. Santa Fe County implemented a 1/8 of one percent increase in 2015, so it still has authorization to raise the tax another 2/8 of a percent.
In practice, local governments for now have been able to take in extra government under this arrangement, as they continue to get “hold harmless” payments, albeit at lower amounts and can more than offset their losses with higher GRT rates.