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Bills could give lifeline to NM cities, counties

The Roundhouse in Santa Fe.

Copyright © 2020 Albuquerque Journal

SANTA FE – Cash-strapped New Mexico cities and counties could be getting some financial relief from state government under several bills passed during the just-ended special session.

But whether the funding is sufficient to ride out a steep drop in local tax revenue caused by the coronavirus pandemic and state-ordered business closures appears to be far from certain.

“It is just brutal at the local level,” Senate Majority Leader Peter Wirth, D-Santa Fe, said during a floor debate last week on a budget solvency bill.

Specifically, a budget solvency plan approved by New Mexico lawmakers during the special session would appropriate $150 million in federal funds for cities and counties hit hard by the coronavirus pandemic – and an extra $15 million for three counties in the state’s northwestern corner.

Local governments could also apply for up to $50 million in low-interest loans under a separate financial relief bill.

However, the relief funds allocated by the Legislature – under the federal CARES Act – can be used only for “necessary expenditures” in response to the public health emergency.

Taos Mayor Dan Barrone, whose tourist-reliant city faces a $2 million revenue shortfall, said those limitations on the $150 million in funds will make things difficult for cities and counties.

“It’s a start, but we really wish the federal government would look at revenue replacement,” Barrone told the Journal.

“We’ve got to decide if we can continue to provide the services we did before this started,” he added.

Roswell Mayor Dennis Kintigh said his city has already started furloughing employees and launched a voluntary buyout program to encourage early retirements.

He also said any federal funding Roswell receives from the state should be treated as one-time money and used on infrastructure projects and other nonrecurring expenditures.

“There’s still huge amounts of uncertainty,” Kintigh said.

There’s also the question of how the $150 million for cities and counties will be distributed under House Bill 1, if it’s signed into law by Gov. Michelle Lujan Grisham.

Top legislative budget officials said it will be up to the state Department of Finance and Administration to determine the formula for divvying up available funds, although lawmakers stipulated that the most up-to-date population estimates be used if the agency decides to use population as a criterion.

In addition, Albuquerque will not receive any of the aid funding. That’s because the state’s most populous city – along with Bernalillo County – got a share of the state’s $1.25 billion under the federal CARES Act.

As for the state loans, local governments that experience at least a 10% drop in their gross receipts tax revenue during the final quarter of the 2020 budget year would be eligible to apply under the legislation, Senate Bill 3.

The state’s $5 billion Severance Tax Permanent Fund would be the source of the loans, which would be administered by the New Mexico Finance Authority.

When a loan is approved, cities or counties would have three years before they would be required to start paying the loan amount back.

In addition to the loans and federal funding, cities and counties could also get increased payments from the state during the budget year that starts July 1 under a third bill – House Bill 6 – passed by the Legislature.

Those payments are tied to a 2019 tax bill that authorized the state to impose its gross receipts tax on internet sales but delayed cities and counties from getting a share of those tax dollars until the 2022 budget year.

“I still think they’re making out like bandits,” Kintigh said of the state.

And while special session bills would provide relief to hard-hit cities and counties, some Republican legislators argued that a bill mandating body cameras for law enforcement officers could pose additional costs for local governments.

Top-ranking Democratic lawmakers say most law enforcement agencies already use body cameras, while also touting the financial aid package for local governments.

But House Speaker Brian Egolf told reporters during a Tuesday news conference that the economic relief would not be a panacea, saying, “I think it helps, but it probably doesn’t fix the problem entirely.”

He cited his hometown of Santa Fe, which is facing a projected $100 million deficit and could be forced to make deep budget cuts, in addition to employee furloughs that have already been approved.


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