Published: 1:00 pm, Wed. Sep. 7th, 2016Updated: 3:45 pm
The Artesia City Council voted unanimously during a special meeting Tuesday at City Hall to approve an amended ordinance that pledges the city’s “hold harmless” Gross Receipts Tax (GRT) revenue toward bonds for the Public Safety Complex.
The council made the move in an effort to protect the hold harmless funds should the New Mexico Legislature attempt to recoup them as it seeks to compensate for the current budget shortfall.
“This, according to New Mexico state law, would protect that two-eighths and the proceeds of that, and the payments that we’re getting now on the hold harmless on a monthly basis are also, according to state law, protected from any kind of clawback,” Mayor Phillip Burch said Tuesday.
Municipalities around New Mexico are concerned about the ramifications of the state’s budget crisis. While, with the special legislative session called to address the issue not yet scheduled, no one is sure exactly what the Legislature’s actions might be, many cities and counties assume clawback of the hold harmless funds might be among them.
Cities and counties were authorized by the state to enact GRT increases of anywhere from one-eighth to three-eighths of 1 percent in order to address their own budgetary needs. The City of Artesia enacted two-eighths last summer but offset the impact on the general public by eliminating property taxes. Eddy County also enacted a one-eighth increase last summer.
The council speculated Tuesday the Legislature might find a way to take away the increase options not used by cities and counties, but any funds already being collected would be protected if pledged against a bond or other debt.
Councilor Bill Rogers pointed out the council’s action Tuesday does not create any new taxes, nor does it increase the city’s current GRT rate.
Rogers motioned to pass the ordinance and was seconded by Councilor Jeff Youtsey. The motion was unanimously approved, with Councilor Raul Rodriguez absent.
“We don’t know where the state is going to go,” Burch said, stating the annual meeting of the Municipal League last week was dominated by speculation as to how potential recalling of funds will affect communities statewide and particularly in Southeast New Mexico, which is bearing the brunt of the downturn in the oil and gas industry.
Burch said the state budget for the last fiscal year was out of balance by approximately $150 million.
“So the first thing they’re going to have to do in special session is find $150 million to balance last year’s budget to meet the requirement of the law, and then they’ll probably, in the February session, adjust the current year budget and find $500 million they’re short to balance that budget,” Burch said.
Mayor Pro Tem Terry Hill acknowledged the concern both in Artesia and beyond that has forced municipalities and counties into difficult decisions in an effort to save money wherever they can.
“It’s rough, but that’s what we’ve all been elected to do, and unfortunately we find ourselves in that spotlight, as well,” said Hill. “There’s other municipalities that have also had to make some unprecedented decisions in light of the situation we find ourselves in.”
That level of uncertainty is having an even greater effect on municipalities and counties that were not as financially secure prior to the downturn.
“All municipalities say the same thing: ‘We appreciate what you give us from state monies, but you never give us enough for the project,’” Burch said. “Just like our water tank, our last capital outlay – we only got $360,000, something like that, for a water tank that cost $1.2 million. So it’s nice that we had the money to do that, but most communities don’t.
“They kind of cobble together three or four years of appropriations, and all the state has to do is say, ‘We want it back,’ and it’s done. So there’s a lot of folks that are very concerned that they don’t know how the state’s going to manage their own finances.”
Also Tuesday, the council approved a resolution authorizing the mayor to execute a FAA grant agreement for the Artesia Municipal Airport for continuation of its runway rehabilitation.
City Clerk Aubrey Dunn stated the city’s portion of that grant is $211,000, which has been drawn from the infrastructure fund, with $3.7 million coming from the federal government and $200,000 from the state.
Councilor Kent Bratcher moved to pass the resolution, seconded by Councilor Luis Florez, and approval was unanimous.