Special session should kill county’s new tax increase

There could be a silver lining for Bernalillo County taxpayers in an upcoming special legislative session. Make that close to a $30 million silver lining. Thanks to a 3-2 Democrat commission majority, the public has been paying over and over again — and is scheduled to pay even more come July 1 — at cash registers for the state’s 2005 repeal of the food tax. While the county lost an estimated $10 million annually with the repeal, it has instituted around $60 million in new gross receipts taxes via two tax hikes — in addition to the $10 million check it currently gets from the state under legislative “hold harmless” provisions that accompanied the food tax repeal. Around $20 million of the first tax increase is earmarked for behavioral health programs, and nearly $30 million of the total would come from a gross receipts tax the County Commission approved just last month.

Now county officials are worried that a bill that died in the recent legislative session — which would have prohibited counties and municipalities from imposing any additional gross receipts taxes not currently in effect — might be resurrected in an upcoming special session and take away that almost $30 million.

To be clear, that’s tens of millions in taxes the county never should have imposed because it did not honor the intent of the legislation: to hold municipalities harmless for the food-tax repeal, not enrich their coffers six-fold without having to get voter approval.

During the session, House Bill 412 had bipartisan support and proposed a massive overhaul of the state’s tax structure. Gov. Susana Martinez, who is expected to call for a special session soon to work out a state budget for the coming fiscal year, has said she would support comprehensive tax reform as part of the budget package — leaving the door open for key provisions of HB 412.

And because the county’s latest gross receipts tax hike doesn’t go into effect until July 1 — the start of the new fiscal year — it could, and should, be vulnerable.

Here’s why: In addition to raking in around $70 million a year in public money to replace the $10 million in food tax revenue it lost annually, Bernalillo County takes almost $100 million in other GRT annually, and that number has steadily increased from around $88 million in fiscal 2010 to $96 million in fiscal 2014, the last year there was no hold-harmless tax imposed. And its other major revenue stream, property taxes, has increased as well — from around $110 million in 2010 to a projected $127plus million in fiscal 2017. Then, there’s the tens of millions of dollars from fees, license, permits, grants, reimbursements, investments and interest.

Yet officials routinely say they need more — at the same time they admit the county has a history of “living beyond our means.”

The $60 million in GRT increases have come courtesy of the Democratic majority — Chairwoman Debbie O’Malley and Commissioners Maggie Hart Stebbins and Steven Michael Quezada — with Republicans Wayne Johnson and Lonnie Talbert voting against. Johnson said during the vote “until we get our spending under control, it makes no sense to reach into people’s pockets. I disagree morally with what we’re doing.”

At some point — hopefully sooner rather than later for taxpayers — the state’s whole “hold harmless” tax scheme must be scrapped and never again repeated. It has proven to be too tempting for tax-and-spend politicians who ignored the Legislature’s intent. If that puts the county in a bind, it’s one of its own making, and perhaps officials will finally have to learn how to live within their budget — what their constituents have to do every day.