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Mayor warns county commissioners against tax increase

June 16, 2017 GMT

Mayor Javier Gonzales on Thursday warned county commissioners against raising gross receipts taxes, saying residents are in no mood to pay more for government services, a lesson he learned after a stinging defeat of his proposed tax on sugary beverages in a special election last month.

The mayor’s comments came during a daylong joint planning session between county commissioners and members of the city governing body. A main topic of discussion was the county’s proposal to raise the tax rate on the sales of goods and services, known as gross receipts taxes, by up to 0.2 percent, to pay for salary increases and additional public safety, senior and behavioral health services. The proposal comes just two years after the county raised the same tax by 0.1250 percent, leaving many residents questioning why it needs more money.

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“Since the election, since the loss of that proposal, I’ve had an opportunity to sit down with many people in our community to listen to their concerns, and there were a wide range of concerns regarding the proposal,” Gonzales said, referring to his soda tax proposal. “One that was very clear was this sense that people in our community just feel like they’re being taxed too much.”

Gonzales added that many people he has spoken with don’t believe they’re getting a sufficient return on the money they pay in taxes.

“I think we’ve got a ways to go until we’re able to have a sense in this community that the taxation that occurs is truly one that provides a direct benefit back,” he said.

Yet some Santa Fe County commissioners defended plans that would boost the tax rate on most business activity in the city of Santa Fe, which already is among the state’s highest, to up to 8.52 percent, while the rate in unincorporated areas of the county would rise to 7.2 percent, also one of the highest in the state.

Commissioner Anna Hamilton, a volunteer firefighter, said the county fire department needs new revenue to hire more than 20 firefighters. She said county firefighters are shorthanded on every shift.

It would be “irresponsible” for the county to walk away from its obligation to provide fire protection to residents, she said, and the issue is too big to address in the short term through making cuts in the county’s budget.

The five county commissioners have voiced support for putting much of the $6.9 million to $7.6 million in potential new revenue from gross receipts tax hikes into increased public safety, senior and behavioral health care services, including staffing for a new behavioral health crisis triage center that voters approved in a November bond election.

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The county’s proposed spending plans also include a 2 percent pay increase for county employees, including County Manager Katherine Miller, whose $179,000 annual salary has grown 63 percent since 2007.

Commissioner Robert Anaya, who has been one of the most vocal advocates for increasing the tax rate, said he has been fighting for higher cost-of-living increases for the county’s more than 800 employees.

“I’ve been fighting for three and I’m going to continue to fight for three,” Anaya said of the percentage increase in pay.

Yvonne Chicoine, who chairs the Republican Party of Santa Fe County, told commissioners that many private sector workers have not seen such pay increases and that the county should work to find savings in its budget before raising taxes.

She cited the county’s budgeting of up to $99,000 to redesign its logo and a $4 million project to build an equestrian center in Stanley as unnecessary expenditures.

“Government has no money unless it has been taken from someone else who has earned that money,” she said.

The five-member commission at its May 30 meeting stalled a vote on proposed tax increases so it could discuss its plans with city officials at Thursday’s meeting. In doing so, the commissioners heeded calls from city councilors who noted that most of the revenue raised from the potential county tax hikes would come from within city limits. The county proposals could add up to 19 cents in new taxes on every $100 spent on taxable transactions.

Thursday’s more-than-four-hour joint meeting included staff presentations on how much money the city and the county put into shared services such as the regional emergency dispatch center. The countywide base tax rate is 7 percent, but tax increments imposed by the municipalities of Santa Fe, Edgewood and Española push up rates in those communities. The current gross receipts tax rate within the city of Santa Fe is 8.3125 percent.

Don Moya, county finance manager, said the state of New Mexico’s gross receipts tax rate is 5.125 percent. Santa Fe County currently tacks on 1.875 percent to the tax rate.

Commissioners are scheduled to vote at a June 27 meeting on adding an additional one-eighth-of-a-cent levy on each taxable dollar spent, plus either one-twelfth or one-sixteenth of a cent on top of that.

The one-eighth increment would generate an estimated $4.6 million a year in new revenue for the county. The one-sixteenth increment and one-twelfth increment are mutually exclusive, meaning that per state policy, the county can only impose one of them. The one-sixteenth increment would bring in about $2.3 million, while the one-twelfth increment would raise $3 million annually.

The city’s gross receipts tax rate would climb to 8.52 percent if commissioners imposed additional one-twelfth-of-a-cent and one-eighth increments. The city’s tax rate would grow to 8.5 percent if commissioners imposed an additional one-eighth and additional one-sixteenth of a cent.

The state Taxation and Revenue Department is still in a legal dispute with the county over whether the one-twelfth or one-sixteenth increments are subject to a popular referendum. The county has said they are not, while the state says otherwise.

Pressed on the issue by City Councilor Joseph Maestas, Deputy County Manager Tony Flores said the county and state are still trying to resolve the issue.

Maestas said the city and the county are victims of poor taxation policy imposed by the state of New Mexico, which, according to the county manager, is taking away up to $3.5 million annually in state support to balance its own budget while granting tax breaks for corporations.

Maestas said state policy is pitting the county and the municipalities within its boundaries against each other. The councilors and commissioners agreed to have more joint meetings to discuss the issue as well as to search for items where the two governing bodies can find savings by combining resources.

Contact Justin Horwath at 505-986-3017 or jhorwath@sfnewmexican.com.