An ordinance increasing the city’s gross receipts tax by three-eighths of a percentage point will be introduced to the Albuquerque City Council at its Wednesday meeting.
The legislation is cosponsored by Councilors Ken Sanchez and Trudy Jones.
Revenue generated by the tax hike would be used for general municipal purposes, but Sanchez said public safety would be the first priority.
“We are at an extremely critical time,” Sanchez said. “Our police department staffing is facing some major deficiencies.”
He said the Albuquerque Police Department currently has around 850 officers and 1,200 would be optimal.
Sanchez said the city has lost $25 million in revenue due to the state’s “hold harmless” agreement, which is gradually being phased out.
After doing away with state taxes on food and medicine in 2005, the state agreed to pay local governments “hold harmless” money to ease the burden of the lost revenue. That money has been tapering off since 2016.
The Legislature allowed municipalities to impose a three-eighths percent gross receipts tax – without taking it to voters – to make up for those losses. That’s what the councilors are asking to be implemented.
The city’s upcoming fiscal year’s budget is already looking slim.
“Just this coming fiscal year, we are facing a $40 million shortfall,” Sanchez said.
The 0.375 percent gross receipts tax would be applied to most goods and services sold in the city and would bring the city’s gross receipts tax rate to 7.875 percent.
Sanchez said depending on when it is implemented, the tax could raise anywhere from $22 million to $55 million the next fiscal year.
It’s not clear how other councilors will vote, but Jones said she’s hoping they will be supportive.
“They all have the same budget information I do,” she said. “I’m reasonably positive they will be.”
According to the letter of introduction for Wednesday’s meeting, the ordinance will be heard by the council at the March 5 meeting. If approved, the tax increase would not go before voters.
Sanchez said he has discussed the ordinance with Mayor Tim Keller.
“This is an incredibly tough budget environment. Our city is facing a huge budget shortfall as a result of losing state funding,” Keller spokeswoman Alicia Manzano said. “It’s important to put all options on the table and prioritize public safety. We all have a part to play in addressing our city’s challenges.”