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Bernalillo County weighs gross receipts tax increase

Copyright © 2017 Albuquerque Journal

Bernalillo County commissioners are scheduled to vote this evening on whether to increase gross receipts taxes throughout the county by $30 million annually to avoid what County Manager Julie Morgas Baca has described as another round of painful budget cuts this year.

But at least one commissioner doesn’t think the tax hike is necessary, and he’s pledging to vote against it.

“The simple fact is you can’t tax your way out of a spending problem, and I cannot and will not support balancing the county budget on the backs of an already-overburdened public,” District 5 Commissioner Wayne Johnson, a Republican, wrote in an op-ed column published on Page A7 of today’s Journal.

The commission meeting begins at 5 p.m. at Commission Chambers in City Hall. Members of the public will be allowed to provide input.

The county administration is pushing for an increase of three-sixteenths of 1 cent on the gross receipts tax, which is similar to a sales tax and is tacked onto most goods and services purchased in the county. If approved, the new tax will add 18.75 cents to the cost of a $100 purchase. The increase would go into effect on July 1, the beginning of the new fiscal year.

The tax increase doesn’t require approval from voters.

Morgas Baca has previously told commissioners that without the tax increase, the county may be forced to consider reductions in public safety spending and layoffs.

“The county manager takes very seriously her responsibility to continue managing county operations in a fiscally responsible manner,” Tia Bland, a county spokeswoman, said in a statement late Monday. “The county will continue to live within its means no matter what the outcome is regarding the proposed gross receipt tax increase.”

Bland said the county is still facing the uncertainty of a special legislative session. She said the county stands to lose $10 million in “hold-harmless” payments from the state, money the state has has been providing to cities and counties to compensate them for revenue they lost when the state eliminated the gross receipts tax on groceries and medicine.

“The county manager believes we need to position ourselves to be proactive, anticipating the possibility that the state might reduce the amount of gross receipt taxes the county currently receives and is eligible to enact,” she said. Bland said that without the tax increase, Morgas Baca will require all departments to cut their budgets by 4 percent for the coming fiscal year.

She said cuts would include:

• An immediate hiring freeze.

• A reduction in the number of county employees through elimination of vacant positions.

• Mandatory furloughs.

• Cuts to or elimination of community programs and county contracts.

Johnson, who is running for mayor, notes in his op-ed column that the County Commission imposed a three-sixteenths of one cent gross receipts tax increase in 2015 “to replace the $10 million of ‘hold harmless revenue’ from the state.

“Now, the commission is considering sticking their hands back into your pockets to grab the rest of the $60 million they didn’t get the first time around.”

Johnson said he doesn’t buy county management’s argument that additional revenue is needed to be able to continue providing basic services.

“Last May, Bernalillo County was looking at a $17.7 million budget deficit,” he said. “It was hard work, but we owed it to the public to find a way to live within our $248 million means – and we did.”

The county balanced the budget partly through a hiring freeze and employee furloughs. Johnson said this year’s deficit is just $8 million, and the county has made progress in reducing operational expenses.

The proposed tax increase consists of two separate hikes.

The first would impose a one-eighth percent increase. That measure would bring in an estimated $20 million a year and is authorized by the state to compensate cities and counties for revenue lost when the state exempted gross receipts taxes on food and medicine.

The second part of the proposed increase would reimpose a one-sixteenth percent gross receipts tax that was repealed by the commission in 2015. That measure would bring in about $10 million a year in new revenue.