With no opposition voiced during a public hearing, four county commissioners voted Thursday to approve a new sales tax.
The one-twelfth of 1 percent increase, or 0.083 percent hike, could go into effect Jan. 1. It also could be rescinded before the new year, should county officials determine that the extra revenue is not needed.
The increase raises the gross receipts tax from 6.4375 percent to 6.5208 percent and would mean an additional 8.3 cents in taxes for every $100 in taxable goods or services purchased within the county.
County staff said that consideration of a tax increase was needed due to budget uncertainties, with timing determined by the fact that the legislative authority for enacting the tax expires July 30.
”If, in fact, we approve it and things really turn around and we get funded for everything that we get funded from, we might come back to you before January and say, ‘Kill the tax.’ We are obviously just trying to prepare for the unknown,” said County Manager Stanton Riggs at the Chaves County Board of Commissioners meeting, where the public hearing occurred.
Riggs added that the tax has no required sunset. If the tax goes into effect, commissioners could vote to retire it at any point.
“This is an increase that we estimate to bring in at least $800,000 to $850,000 a year,” said Riggs.
He explained that it could help offset increases in county expenses, due to rising indigent care costs. It also could bring in needed revenues, should the state decide to retain “hold harmless” taxes that now bring in about $600,000 a year to the county. Should the federal government decide to use some of the Payment in Lieu of Taxes funds for other purposes, that could reduce the $3.1 million the county now receives in PILT monies. Commission Chair Robert Corn said that other state government decisions also are affecting county budgets.
“If you don’t approve it today, this particular tax will go away,” Riggs said. “The state law that allows this tax, which is a one-twelfth tax … sunsets July 30, so if you don’t approve this tax today, there would be no way to ever approve this particular one again.”
Riggs and Commissioner T. Calder Ezzell Jr. explained that the tax authority was given to counties by the state in 2014 after the state decided to withhold one-twelfth of 1 percent of gross receipts taxes collected by counties for Medicaid matching money. The state then enacted the legislation allowing counties to implement a gross receipt tax increase to bring in additional funds if needed, giving counties only three years to enact the law if needed.
“I think it is important that the public understand that this is not a tax increase just because we want money,” said Ezzell. “It is to replace money that we no longer get.”
Commissioner Will Cavin said that the county could consider a decrease in property tax rates at some point if it was determined that the county had enough revenues.
Only one person spoke about the matter during the hearing, Roswell resident Larry Connolly. He expressed his support for the increase after asking questions of the commissioners about their ability to terminate the tax even if it is implemented in January.
Commissioners Ezzell, Corn, Cavin and Jeff Bilberry voted for the tax increase. James Duffey did not attend the meeting.
The tax specifically exempts direct satellite services and transportation services to places outside the county.
Roswell consumers now pay 7.5 percent in gross receipts taxes. They will pay 7.6875 percent starting July 1 when two new sales taxes take effect. Those tax increases were approved by the Roswell City Council in February to fund the $20 million aquatic and recreation center to be built at the Cielo Grande Recreation Area by fall 2018. (A third sales tax, passed by the city, was not approved by the state and is being restructured for another vote by the council and a possible January effective date. That tax is a one-sixteenth of 1 percent increase.)
If the new county tax takes effect in January, people buying goods and services in Roswell will pay 7.7708 percent in sales taxes, before the third city sales tax increase is added.
Based on information from the New Mexico Taxation and Revenue Department regarding tax rates as of July 1, the Lake Arthur tax rate would see an increase from 6.8125 percent to 6.8958 percent. The rate in Dexter would go from 7.3125 to 7.3958, and the rate in Hagerman would go up from 7.5 to 7.5833 percent.
The sales tax rates for neighboring counties as of July 1 will be 5.5 percent for Lea County, 5.875 percent of Eddy County and 6.625 percent for Roosevelt County.
How the state distributes gross receipts taxes intended for local governments is the subject of controversy in some areas. According to press reports, five cities in New Mexico have hired legal representation as they consider a lawsuit against the state regarding its collection and distribution actions in some instances.
Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext 310, firstname.lastname@example.org.