A year after beginning to collect additional tax revenue that was supposed to offset lost state dollars, the City of Las Cruces is sitting on a pot of extra money.
Las Cruces moved more quickly than many other local governments around the state to increase taxes after the policymakers in Santa Fe shifted tax burden from corporations to cities and counties in 2013.
That year the state approved a phase out of so-called “hold harmless” payments — funds to help cities and counties to make up for revenue lost when the state stopped taxing groceries in 2005.
In response, the Las Cruces City Council approved a 3/8 of 1 percent increase in the gross receipts tax (GRT).
“The increase will help offset revenues lost as a result of the state legislature’s repeal of the Hold Harmless reimbursements,” City Manager Robert Garza wrote in his weekly newsletter just before the tax increase took effort in 2014. “…The amount of lost revenue to the City from repeal of the Hold Harmless is approximately $8.5 million annually.”
The hold-harmless payments are being phased out slowly — over 15 years beginning last month. So the city doesn’t need most of the money it’s been collecting to plug a budget hole, at least yet.
Officials are now considering proposals for how to spend millions of unallocated dollars.
Some Las Crucens said they aren’t happy with the situation.
“I feel misled,” Tito Meyer wrote in a discussion NMPolitics.net facilitated on Facebook. “… Not surprised, though. Unhappy, yes. I do not want my money being used for so-called ‘economic development.'”
Kathe Stark agreed.
“We were told the increase was to make up for funds lost when Hold Harmless was eliminated, not as a new source of funding,” she said.
‘We have been taken advantage of’
Greg Lennes of Las Cruces pointed out that the city has one of the highest GRT rates in the state – 8.3125 percent.
“New Mexico local taxes just keep going up and up! There is no relief for the poor and residents on fixed incomes,” Lennes wrote.
“I thought we needed this money to survive with the decrease in hold harmless funds,” wrote Vince Vaccaro of Las Cruces. “We have been taken advantage of.”
“New Mexico cities and counties should not have raised their gross receipts tax until they actually needed it,” Lennes said. “Now they got a windfall off the backs of the poor and those New Mexicans on a fixed income. These local and county governments are acting like a set of drunken sailors spending our tax dollars.”
Lennes was also referring to the Doña Ana County Board of Commissioners approving its own increase in the GRT earlier this year.
Roy Lemons of Belen had a suggestion.
“Maybe New Mexico should pass a law that says that a tax must be used only for what it was intended and can not be used for any other reason,” he wrote. “If it is not needed for the reason it was taxed then the money should be returned to the taxpayer.”
Officials are looking for ways to spend the money that will have a financial benefit, the Las Cruces Sun-News reported. From the newspaper:
The list, developed by an economic panel chaired by Councilor Nathan Small, includes a proposed expansion of the city-owned Las Cruces Convention Center on University Avenue; funding the construction of a sound stage for film and TV productions; investments in buildings, such as a “spec” building that could be tailored later on to attract a new company; business incubator activities, such as helping people create business plans; and improvements to the city-owned airport, said city Economic Development Coordinator Gary Camarano.
Also, a second set of projects that aren’t bricks-and-mortar — such as funds to spend through a state incentive program called the Local Economic Development Act — also could receive a share of the dollars, Camarano said.
Mayor Ken Miyagishima said the goal of the spending is to get an economic return throughout the city.
“If we spend $1, we should receive $2 out in the public,” he said.
Some Las Crucens suggested other ideas in the NMPolitics.net discussion on Facebook.
From Karen Trujillo:
Las Cruces really needs to consider facilities for kids. The rec center and fields here are not suitable for tournaments for any sport. The city relies on NMSU for swimming, basketball, and volleyball facilities. There aren’t even enough soccer fields and hundreds of kids are involved. The only thing the city really supports is baseball and softball. It would be nice if new recreational facilities were part of the plan.
From Adam Black:
It would be great if LC could invest in a city and surrounding areas wide Fiber Optic network and then charge a much more affordable rate then verizon or comcast currently do. I was in Lafayette, LA and they had one of those. They had already made back what they spent. It would encourage businesses growth, pave the way for a higher information flow, and allow internet to those previously denied it.
And from Meg G. Freÿermuth:
I’d love to see some of the funds used for improving properties with public art. More murals, which could be done with school children and local artists, should definitely be considered. It actually could be a low cost way to improve public space: pay for supplies and pay artists for their time. Improving roads and getting empty buildings/lots filled with business, public art, and community gardens are several ways the city should focus some of this money. Another Keep Las Cruces Beautiful campaign maybe?