LAS CRUCES, N.M. (AP) — Some Las Cruces officials are concerned about the financial health of city government.
The amount of gross receipt taxes collected by the southern New Mexico city continues to drop and initial projections for growth in the 2014 budget year might not materialize. This has prompted councilors to consider adjustments to the city’s operating budget.
“At this point, it’s nothing the city can’t handle,” Mayor Ken Miyagishima tells Las Cruces Sun-News (http://bit.ly/1amL8OZ ). “The economy is a little slow right now. I hope the public can understand this is what we use to pay for Meals on Wheels, operate the buses, run the library.”
Councilors plan to meet later this month to discuss the city’s finances and possible cuts to keep the budget in the black.
Miyagishima said the budget changes he expects the city to implement won’t include reductions in services.
To bolster long-term gross receipts tax stability, the mayor said the city needs state legislation that deals with Internet sales made by city residents. He said those sales are not subject to taxes, and the city could lose substantial future revenues if the practice continues.
“It’s only going to grow in popularity,” Miyagishima said of online sales. “If the state doesn’t do something … it’s going to affect all cities.”
Through the first six months of the fiscal year, Las Cruces’ gross receipt taxes were down 1.6 percent, $613,100, according to a report prepared by the city’s budget manager. For December, which reflected consumer spending in October, tax revenues were down 3.6 percent, or $217,901.
Assistant City Manager Mark Winson said the decline in gross receipt taxes could have implications for the city since its $280 million budget is based on a positive growth rate of 2.7 percent in gross receipt taxes.
While the outlook for the second half of the fiscal year is more favorable, city budget manager Dick Gebhart said it’s highly unlikely tax collections will recover from losses experienced during 2013.
The tax on sales and services accounts for 72 percent of the city’s revenue. That pays for most services and programs that city government provides to residents.