Jules Rochon, left, and her mother, Karen Chaplin, buy groceries Monday with help from Justin Chavez and Sheri Trusty at Kaune’s Neighborhood Market in March 2013. Under a last-minute tax deal that year, lawmakers voted to phase out reimbursement payments to cities and counties for lost revenue under the ‘hold harmless’ provision of a law passed in 2004 that eliminates gross-receipt taxes on food and medicine. New Mexican file photo
Jules Rochon, left, and her mother, Karen Chaplin, buy groceries Monday with help from Justin Chavez and Sheri Trusty at Kaune’s Neighborhood Market in March 2013. Under a last-minute tax deal that year, lawmakers voted to phase out reimbursement payments to cities and counties for lost revenue under the ‘hold harmless’ provision of a law passed in 2004 that eliminates gross-receipt taxes on food and medicine. New Mexican file photo
The Santa Fe County Commission on Tuesday unanimously approved an increase in the gross receipts tax rate that will add almost 13 cents to every $100 purchase.
The vote came after the commission held a public hearing at which no one showed up to testify for or against the tax hike.
The increase, which takes effect July 1, will affect most business transactions both within city limits and in unincorporated areas of the county.
The one-eighth of a percent increase is intended to make up for revenue reductions due to the state phasing out payments intended to reimburse local governments for money they lost when New Mexico exempted groceries and medicine from the gross receipts tax in 2004.
Although the state initially reimbursed cities and counties for their lost revenue under the “hold harmless” provision, state lawmakers decided in 2013 to phase out those payments through 2030. However, local governments can make up the revenue by imposing a higher gross-receipts tax rate within their jurisdictions.
“Because the way the current statutes read, they don’t take it all away at once,” County Manager Katherine Miller told commissioners. “We would actually experience a little more revenue than what we will be losing for the first few years of their reduction. One of the things that we want to make sure we do is address some of the needs that the county has.”
The ordinance approved by commissioners dedicates the revenue to capital and maintenance expenditures for facilities and infrastructure. That includes issuing about $30 million in bonds for the redevelopment of the old judicial building on Catron Street downtown into a county administration building.
“About half of the revenue received would go to pay for the debt service and then the other half would go towards maintaining and fixing our other facilities,” Miller said. “We have several millions of dollars in deferred maintenance and improvements needed on our facilities.”
Miller said the revenue would create construction and other jobs, as well as efficiencies and savings for the county by consolidating government offices in the new administration building.
“We’re spread out throughout probably five or six different campuses,” she said. “We experience quite a bit of inefficiency with staff having to constantly drive to get to the personnel office, to get to the finance office, to get to the legal office and to get to the various meetings. So, we won’t only experience several hundred thousand dollars of savings in leases of office space, we will also experience a great deal of operational efficiencies.”
The increase will generate about $4 million annually, but only about $3.4 million the first year, since the county wouldn’t receive an entire year of revenue right away.
Contact Daniel J. Chacón at 986-3089 or dchacon@sfnewmexican.com. Follow him on Twitter at @danieljchacon.
