Schools, others face delay collecting tax revenue
Gap is a side effect of state’s new local elections law
For some, the taxman is coming a bit later than usual this year. And county treasurers say it’s putting them in a tight spot.
But a lawmaker who co-sponsored new legislation triggering the delay says it’s necessary and counties had plenty of time to prepare.
House Bill 407, passed by the Legislature in the last session, is leading 11 New Mexico counties to delay property tax collections, which will likely cause some school districts and other local entities to receive large chunks of funding later than usual.
Here’s why: The bill allows school districts to put a property tax question on the ballot in the November election. Traditionally, local elections that included such mill levy questions were held earlier in the year.
Given the change, 11 counties that have such questions on the ballot this year, including parts of Santa Fe County, are postponing property tax bills for the first half of tax year 2019 to December instead of November, so they can wait for the election outcomes.
As a result, some school districts in those counties, which usually receive large distributions from the collection of this tax in December, will not receive those distributions until January.
Counties say it’s an unwelcome effect of a small provision within a piece of legislation that called for updates to election law. Treasurers say they weren’t given time to prepare for the change, and say it could have negative consequences on taxpayers and schools.
“In the past, with something that
impacts the whole state, they would earmark it, saying this will go in effect in 2021, for instance,” Santa Fe County Treasurer Patrick Varela said. “But this way, it was basically just shoved down our throats.”
The measure impacts schools, county treasurers say, because they won’t get the same level of distributions they’re accustomed to receiving before winter break and often use for repairs and other projects while school is not in session.
“Schools are used to getting the distributions before holidays and now will get them in January,” Varela said.
However, Sen. Daniel Ivey-Soto, who cosponsored the bill, says counties have been able to get ready since July and have received ample support from state agencies to prepare. He added that a delay of a few weeks is much better than school districts not being able to put their proposed levies on the ballot at all.
“The reason for the delay was to make sure that communities that want to provide services to their schools are able to do that,” said Ivey-Soto, D-Albuquerque. “I find it distrustful that county treasurers are more interested in their inconvenience than in the well-being of the schools in their counties.”
Counties affected by the change this year include Santa Fe, Bernalillo, Sandoval, Taos, Rio Arriba and San Juan, according to a document from the Sandoval County Treasurer’s Office. Affected school districts include Española, Pojoaque, Mesa Vista and Albuquerque.
A spokeswoman for Albuquerque Public Schools said the district is making spending adjustments this year to account for the change and will budget accordingly in future years.
Acting Pojoaque Superintendent Sondra Adams declined to comment, saying she wasn’t well versed in the issue, while Española Superintendent Bobbie Gutierrez did not respond to a request for comment.
Some of the counties, such as Santa Fe, are only delaying property tax bills for some residents because not all of their school districts have a property tax question on the ballot, Varela said. Others, such as Bernalillo and Sandoval, are delaying collection for all residents.
When asked about the changes, the state’s Department of Finance and Administration said it has worked with counties and other agencies throughout the year to help prepare them.
For example, the department helped counties produce two separate tax certificates, which establish tax rates for each county — one for each possible outcome of the local elections — so that property tax bills could be issued as soon as possible after the elections.
“The best solution wasn’t a 100 percent ideal process, but based on the challenges it’s ultimately a pretty smooth and efficient process,” said Donnie Quintana, director of the department’s local government division.
Some treasurers said their voices weren’t heard during the legislative process. In late March, Sandoval County Treasurer Laura Montoya sent a letter to co-sponsors of the bill detailing a number of her office’s concerns.
“There are several unintended consequences that will arise if this bill is signed,” Montoya wrote in the letter to Ivey-Soto and Rep. Linda Trujillo, D-Santa Fe.
One of those effects, Montoya said, was that taxpayers will be responsible for paying the levy during the holiday season, when residents, government employees and mortgage companies tend to take more vacations, according to the letter.
“There is a lot of negative impact from this bill,” Montoya said Tuesday.
Bernalillo County Treasurer Nancy Bearce said Tuesday she was concerned some residents who pay their bills at the last minute might not be able to claim property tax deductions on their federal tax returns.
That’s because residents have to pay their property taxes by Dec. 31 in order to make that claim on that year’s federal income tax return, she said. The final due date for Sandoval County will be postponed to Jan. 10, while it will be Jan. 19 in Bernalillo County.
“Our smooth timeline of how we do it got really jumbled up,” Bearce said.
Yet Quintana at Finance and Administration said officials worked hard to establish a timeline that would still allow residents to pay before the end of the year.
“The main goal was to get it out as quickly as possible,” he said.
On Tuesday, Ivey-Soto criticized Montoya’s comments about the delay.
“She wants to be in Congress as a public servant,” he said, referring to Montoya’s candidacy in the race for New Mexico’s 3rd Congressional District. “But she’s not willing to roll up her own sleeves and put in a little bit of extra effort in order to support the schools in her community. I find that really disturbing.”
Counties said they are spending extra funds to inform taxpayers about the delay. Varela said Santa Fe County will spend an estimated $12,000 for that purpose.
The Bernalillo and Sandoval county treasurers said they hadn’t yet calculated the costs they would incur, but they are making announcements on radio and television and in newspapers. Both counties have also announced the changes on their websites.
“When you’re a policymaker in Santa Fe, you have to know the flipside of what it’s going to cost when you tinker with this,” Bearce said.
Bearce added that her county commissioners would be deciding how to foot the bill for the extra costs, while Montoya of Sandoval County said she planned to ask the state for reimbursement.
“I am putting together a spreadsheet. I plan on sending it to Senator Ivey-Soto so he can pay me back,” Montoya said, referring to the senator who co-sponsored the bill.
Ivey-Soto responded that it wasn’t a requirement for counties to spend money on such announcements.
“There was no requirement that they do that,” he said.
The measure calling for the property tax delay is on pages 319 through 322 of the 425-page bill called “Election Laws 50-Year Tune-up.”