Gross receipts tax hike fills Bernalillo County coffers

February collections up 21.2% from 2017

Bernalillo County might need to get a larger mailbox when it gets gross receipt tax revenue distribution checks from the New Mexico Taxation and Revenue Department.

The county will receive about $15.3 million this month for business activity conducted in February, an increase of about 21.2 percent compared with the near $12.6 million it collected at the same time a year ago.

Much of that growth is likely attributed to a GRT increase of three-sixteenths of 1 percentage point imposed by the county last year along with increased economic activity, according to Shirley Ragin, deputy county manager for finance.

Budget writers factored in growth of about 1½ percent, she said, and took into account a reduction in “hold harmless” funding.

Ragin also said one-third of the tax rate increase is earmarked for public safety agencies.

“We focus a lot on public safety and their needs,” Ragin said.

The state has been providing “hold harmless” funding to cities and counties since 2004 to compensate for revenue lost when the state eliminated the gross receipts tax on groceries and medicine.

But state officials started phasing out those subsidies in 2013 with 6 percent or 7 percent cuts annually over 15 years. Cities and counties were allowed without voter approval to increase the gross receipts tax by up to three-eighths of 1 percentage point to make up for it.

The GRT increase, which county officials estimated would generate an estimated $30 million a year, went into effect last July.

The county has collected about $65.4 million in GRT revenue so far this year, according to Taxation and Revenue Department figures. That’s a 21.4 percent increase when compared with the first four months of 2017.

Gross receipts are comprised of the total amount of money or value of other consideration received from selling property, leasing or licensing property, granting a right to use a franchise, performing services and selling research and development services performed outside New Mexico, the product of which is initially used in New Mexico.

Although the gross receipts tax is imposed on businesses, according to the Taxation and Revenue Department, it is common for a business to pass the GRT on to the purchaser either by separately stating it on the invoice or by combining the tax with the selling price.

The Taxation and Revenue Department distributes tax collections two months after the business activity month.

The city of Albuquerque will receive about $29.2 million this month, an increase of about 1.1 percent when compared with the same month last year.

“Any rise in gross receipts tax revenues reflects increased economic activity in the city, which is a good sign for our families and communities,” stated Alicia Manzano, a spokeswoman for the mayor’s office, in an email. “Mayor (Tim) Keller will continue to focus on fostering economic opportunity in the city.”

The city has collected about $127 million in GRT revenue so far this year, an increase of 1.9 percent over the same period a year ago.

A GRT increase of three-eighths of a percentage point passed by Albuquerque city councilors last month does not go into effect until July 1.