Chaves County officials are considering raising gross receipts taxes starting next year, with a discussion and vote planned for next week on the proposed ordinance.
County Manager Stanton Riggs said that the tax increase, to be used for general funding purposes, are prompted by uncertainties regarding state and federal budgets and legislation.
“There are a lot of unknowns right now,” Riggs said.
The city of Roswell just voted to increase sales taxes, too, by a quarter of a percent. That increase was approved by the Roswell City Council in February to pay for a new $18 million recreation and aquatic center to be built by fall 2018. The new city sales tax takes effect July 1.
The proposed county ordinance, O-098, calls for increasing gross receipts taxes by 1/12 of one percent, or 0.0833, and would be implemented starting Jan. 1 if approved. The current tax rate is 6.4375 percent. The increase is expected to raise an additional $800,000 a year, according to Riggs.
He said discussions about increased taxes began before the May special session of the Legislature and the approval of a state budget.
“When we proposed it,” he said, “two or three issues were involved.”
The first involved the $600,000 of the “hold harmless” receipts taxes that the county now receives from the state. Those funds have been approved for the upcoming fiscal year, but could be at risk for future years, Riggs said.
The second issue involves the Payment in Lieu of Taxes, or PILT, payment the county receives each year from the federal government for federal lands. For the upcoming year, that payment is expected to represent about 13 percent of county operating revenues, $3 million.
Legislators have discussed using PILT monies to pay for federal forest service operations now that another mechanism for funding them has expired.
“They are more seats at the table, more hands out,” said Riggs. “We’ve heard that we could be losing from $400,000 to $600,000 of that.”
The third factor affecting county budgets is indigent care and the Affordable Care Act. The county is paying more for indigent care in recent years, and Riggs said that it is unclear what the ACA repeal or new federal health care legislation will mean in terms of what the county will pay in future years.
Riggs said that the county only has until July 31 to enact this particular tax allowed by the state legislature, although the county has the authorization to increase other taxes. Specifically exempted from the proposed tax increase would be direct satellite services and transportation of people or items from within the county to outside it.
“They might not pass the ordinance, or they could pass it and decide to kill it later,” Riggs said. “They could decide before January that we don’t need it.”
The one tax that commissioners for years have refused to increase is property taxes, said Riggs.
“They make a point to say that we have the same property taxes as we did in 1998,” he said.
In fact, the last time that the county raised sales taxes, in June 2015 to help fund roads and the detention center, the county also decreased property taxes rates by 1 mill, from 10.35 to 9.35 mills. The 2015 sales tax increase raised the gross receipts tax in the county by 0.375, from 6.0625 to 6.4375 percent.
The city tax increases, scheduled to remain in effect until 2037, are expected to bring in about $2.8 million in additional gross receipts taxes for the city. The quarter-percent increase, from 7.5 percent to 7.75 percent, will mean that people purchasing items in the city will pay 25 cents more for every $100 in taxable items they buy.
The Chaves County Board of Commissioners is scheduled to hold a public hearing and vote on the tax ordinance during its June 15 meeting at 9 a.m. at the Chaves County Administrative Center.
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 310, or at firstname.lastname@example.org.