City’s gross receipts tax revenue falls less than expected
19 percent decline was not as big a hit as projected
Finally, some good news for the cashstrapped city of Santa Fe.
While gross receipts tax revenues fell 19 percent in April compared with a year ago, the overall $1.6 million decrease wasn’t as ugly as City Hall had expected, thanks in large part to increases in two industries: construction and professional, scientific and technical services.
“We knew we were taking a hit,” Mayor Alan Webber said Monday during a virtual news conference. “We thought it would be worse than this.”
Webber said the city was bracing for a much bigger decrease only a month ago, based not on hard data but on various indicators, “things like the absolute catastrophic fall-off in airline arrivals, at the huge unemployment rise, at the closure of hotels [and] the closure of restaurants.”
The gross receipts tax is one of the city’s primary sources of revenue for its general fund, which pays for day-to-day operations.
“I think if you had asked [Finance Director Mary McCoy] a month ago what would be a fair and reasonable expectation just using those indicators, she would probably tell you a 40 percent, 50 percent fall-off in gross receipts tax would not be out of the question,” Webber said.
“To land in the neighborhood of 20 percent instead of, let’s say, 40 or 50 percent means that for at least the month of April, construction and professional, scientific and technical services really provided a ballast to those other losses,” he said.
While other sectors took a beating in April, the construction industry increased 5 percent, and professional services grew 16.5 percent, the mayor said.
While Webber cautioned the city government isn’t out of its financial hole yet, he said several pieces of legislation making their way to the governor’s desk from the special legislative session that
was set to end Monday could lessen the impact of what he called the city’s “very, very serious budget crisis” in the current and upcoming fiscal year. The city’s Finance Department projected a $46 million budget deficit in the fiscal year that ends June 30 and an unprecedented $100 million budget shortfall in the fiscal year that begins July 1.
“The work underway [at the state Capitol] so far is very good news for Santa Fe, and we’re very optimistic about what it will mean for us going forward,” the mayor said. “It doesn’t solve our problems, but it really demonstrates that the governor and the Legislature were listening not just to Santa Fe but to cities all around New Mexico and recognize that the COVID-19 virus and then the economic shutdown that resulted because of it have had enormous consequences for cities all over the state.”
Webber said the city went into the special session with a very clear agenda: “We need help from the state because we haven’t gotten any help from the federal government.”
The city could receive “something in the neighborhood of $10 million” under a bill that provides CARES Act funding for reimbursements for unanticipated expenditures related to the coronavirus pandemic, he said.
“If we can take that money, we can use it to fund things like the emergency homeless shelter that we stood up at the midtown campus and … reallocate city funds to take on more traditional essential services,” he said.
A bill that would create a local government emergency relief fund would provide $100 million for local governments to borrow, he said.
“It’s not an outright grant,” he said. “But it would be the kind of thing that we could lean on as we go forward, perhaps to fund a one-time need.”
Webber said the city also is poised to receive an internet sales tax distribution early under another measure.
“I think it would take us from what we had anticipated of being in the neighborhood of $750,000 probably into the neighborhood of $1.5 million,” he said.
“Little by little,” Webber added, “you can see that they’re trying to piece together a way to not have a budget that, while is severe, doesn’t really represent cutting so deeply into city services that we are going to have to produce a city budget that leaves us really cut to the bone.”
Despite what he called “good news,” Webber said his administration is still working on delivering a balanced budget. “We’re looking for other revenue sources and other ways to plug the gap,” he said. “We still believe that the greatest source should come from the federal government.”