County leaders eye GRT rate hike

Commissioners say new revenue could help fund public safety jobs

Some Santa Fe County commissioners on Tuesday expressed support for increasing the gross receipts tax rate throughout the county, including within city limits where tax rates on most sales of goods and services already are among the highest in New Mexico.

During a study session on the county’s budget for the fiscal year that begins July 1, County Manager Katherine Miller noted that the county has the option to impose three new gross receipts tax increments, which, if fully implemented, could add as much as a third of a cent to the tax on each dollar spent.

Miller and commissioners discussed pouring millions of dollars in additional tax revenue into the county general fund, where it could be used to expand various services, include increasing the number of paid employees of what is now a mostly volunteer fire department

that serves unincorporated areas of the county and hiring more sheriff ’s deputies.

“We are in need of building up to career staff levels,” Miller said of the fire department, which she said has seen a significant increase in call volume.

Commissioner Anna Hansen agreed, saying, “That is a priority for me — seeing permanent employees in the fire department.”

If the county hikes its gross receipts tax rate, much of the new revenue would come from business transactions within the city of Santa Fe, where the current rate is 8.3125 percent. Also affected would be the portion of Española that spills over into Santa Fe County, where the current gross receipts tax rate of more than 8.9 percent is the highest in the state.

The rate collected in unincorporated areas of the county is 7 percent.

Miller also floated the tax increase idea as a way to deal without reductions in state payments to county governments.

When state lawmakers in 2005 exempted groceries and medicine from gross receipts taxes, they agreed to protect local governments from revenue losses by making “hold harmless” payments. In 2013, however, legislators and the governor decided to phase out those payments in order to help balance the state budget. The state subsequently gave local governments the option to impose three gross receipts tax increments of one-eighth of a cent, Miller said. Santa Fe County in 2015 imposed one of those increments and now has the option of imposing the two remaining increments by June 30, she explained. Those two increments could raise $9 million a year, she said.

Miller said the county also has authority to add another increment of either one-twelfth or one-sixteenth of a cent to the gross receipts tax rate.

The county manager noted that increases in county rates make it more difficult for municipal governments to also raise gross receipts tax rates “without it being a fairly significant hit on businesses.”

In the 2015-16 budget year, the county took in $61.8 million in property tax revenue, while the county’s share of gross receipts taxes came in at $51.6 million. Revenue estimates for the current budget year, which ends June 30, are not complete, Miller said.

Commissioner Robert Anaya said the county should consider imposing the gross receipts tax increments and using the new revenue for public safety, senior services, employee training and to increase county spending on youth programs by 50 percent.

Anaya said he favors funding requests submitted by county departments for 31 new positions during the coming budget year at a total cost of $1.8 million. Most of those added jobs would be for public safety operations, such as sheriff ’s deputies and firefighters.

Miller said she can’t see how the county could fund all such requests without increasing taxes.

The discussion by county officials comes as voters in the city of Santa Fe are deciding whether to impose a 2-cents-an-ounce tax on sugary beverages to fund early childhood education programs. One argument raised by opponents of the tax is that it would encourage shoppers to buy such products outside city limits.

Commissioner Anaya said he is thinking “another revenue source could be selling Cokes at the county line in a couple weeks.”