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City begins planning next year’s budget

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Finance Director Monica Garcia and other city staff say that departments will be asked to keep their budget requests for the 2021 fiscal year at the same level as their 2020 allocations while the city begins its budget preparations. The preliminary budget is due to the state in June, after public hearings and City Council approval. (Lisa Dunlap Photo)

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Staff to ask for ‘0% increase’ for department spending

The city of Roswell is starting its fiscal year 2021 budgeting process with current funds well in the black and with the possibility that a new state law will allow more flexibility for use of local gross receipts tax revenues.

But city staff also said that departments will be asked to submit budgets with no increases in total expenses.

Finance Department employees talked Thursday morning about next fiscal year’s budget during a Roswell City Council Finance Committee meeting.

The meeting began with an overview of the current financial situation.

The city had a total of $50.34 million cash balance as of Dec. 31, according to information presented to committee members Steve Henderson, Judy Stubbs and Margaret Kennard. Jacob Roebuck was absent.

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While some funds within the city’s budget are operating at a deficit for the current 2020 fiscal year, the cash balances carried forward from the previous fiscal year means that no fund is in the red at the current time, according to information presented by Finance Director Monica Garcia and other finance department employees.

The city does have debt, though. Total current debt is $56.77 million, which includes $22.36 million for long-term bond debt.

Its gross receipts tax revenues, some of which are used to make payments on $21.23 million of the bond debt, is $24.11 million as of Jan. 31, $3.89 million above budget projections for the 2020 fiscal year.

Finance employees at this time project that gross receipts tax revenues will increase by about 1.48% during fiscal year 2021, which runs from July 1, 2020, to June 30, 2021.

The city also plans to work with New Mexico Taxation and Revenue Department economists to assist in tax revenue projections, said Senior Accountant Becky Hicks.

Hicks said the Finance Department will meet with department heads during the coming months to ask that the departments provide line-item budget requests, rather than lump sum requests, for their 2021 budgets. Departments also will be asked to specify which projects they have planned, such as breakroom renovations. The details will give staff a better opportunity to “cut the fat,” Hicks said.

She added that departments will be asked to hold their operating expenses at a “0% increase.” They can change how they allocate the budgeted money, but not the amount they can spend for the coming year.

The city is planning for a 1.6% cost-of-living increase for employee salaries and for boosts in pay for employees who are given their “step increases” for years of service.

Something Mayor Dennis Kintigh described as a “huge deal” is the possibility that municipalities can soon begin using local gross receipts tax revenues for any municipal purpose, rather than abide by prior restrictions on how the money is spent. The city of Roswell has three local gross receipts taxes in effect.

A law passed by the New Mexico Legislature in 2019, House Bill 497, which takes effect July 1, would permit gross receipts taxes imposed by municipal governments to be used for any municipal purpose. But the law prohibits money being taken away from bond service if doing so would have an adverse effect on repayment.

To use the money differently than as specified when the taxes were originally passed, the City Council would have to enact new ordinances.

Stubbs said she agreed that the city needed to start researching the issue, but counseled against rushing into action.

“Some of that has language of a two-year implementation. I was going to say, let’s hold our breath because they (the Legislature) are in session right now, so they could do something new and different,” said Stubbs. “I say we don’t need to jump into something.”

Kintigh suggested that the city hold a separate workshop about the issue.

Garcia said the state is encouraging cities to act soon because it does not want all municipalities to make changes July 1, but she agreed that further discussions needed to be held before the city decides how to proceed.

A preliminary fiscal year 2021 city budget is expected to be submitted to the state by June 1, after the city holds public hearings and the City Council votes on it. A final 2021 budget is due to the state by July 31.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.

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