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Chaves County plans to extend tax

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County Manager Stan Riggs, shown at a May 2017 meeting. (Lisa Dunlap Photo)

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Chaves County aims to pay off some debt in 2019 and wants to extend an existing tax to fund upcoming road and capital projects, according to County Manager Stan Riggs.

He told the Chaves County Board of Commissioners at its Thursday meeting that the county plans to pay off two bond obligations and possibly a state loan during the next calendar year, which is expected to save the county about $150,000 to $200,000 in interest payments.

As part of that plan, county staff also want to continue a Hold Harmless tax now due to expire in about a year so that the county will continue in future years to have that revenue to fund projects.

The Board of Commissioners approved a public hearing during its December meeting to consider a proposed resolution regarding the Hold Harmless tax. The new resolution, O-102, would replace an existing resolution, O-089. The existing tax is due to expire in 2020. If the new resolution is approved, the tax will take effect in July 2019 but have no expiration date.

But Riggs said nothing would prevent future commissioners from eliminating that tax or reducing property taxes should they decide that amount of revenue is not needed.

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“Our goal is to get everything paid off and then use this tax for other projects down the line, and not have to go to the voters for anything and not have to raise taxes,” Riggs said.

The Hold Harmless tax generates about $710,000 a year for the county, according to county Finance Director Joe Sedillo.

The tax is one-eighth of one percent, or 0.125 percent, which translates into 12.5 cents for every $100 spent. It will apply to most transactions for services and goods in the county, although direct satellite broadcast services and transportation services to locations outside the county are exempt.

The debt the county expects to retire includes a 2007 bond issue originally made for $10 million in 2008 and now totaling $1,876,504, and a permanent fund bond originally made in 2016 for $4 million with a current balance of $1,012,000. The county also hopes that the state will allow it to pay off a 2013 New Mexico Finance Authority loan for $5 million with a current balance of $2,615,000, Riggs said.

According to the New Mexico Taxation and Revenue Department, all of Chaves County gross receipts taxes for January to June 2019 now total 6.5208 percent, or about $6.52 cents per $100 transaction. The Hold Harmless tax will not increase that tax rate, said Riggs, but it will extend the time for which that one tax will be collected.

“We really need that tax longer than 2020,” he said. “How long is a good question.”

He said the idea is to begin saving the Hold Harmless tax money for a few years so that the funds can be used for ongoing road projects as well as other projects, such as replacing the windows at the historic Chaves County Courthouse.

At some point in the future, commissioners might decide to have another bond issue for a big project, but that is not the plan at this point, Riggs said.

“We think this puts us in a good, flexible position,” said Riggs. “If you don’t have any debt and the future commissioners say we can live with what we are getting from the state, then we can do away with the tax. But if they can’t live with what they have or if there is not enough money to go around, then they can say, well, we will use this tax for this.”

The public hearing regarding the ordinance is scheduled for 9 a.m., Tuesday, Dec. 18, at the Chaves County Administrative Center.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.