City’s $110M budget fails by one vote

July 30, 2014 • Local News

The city of Roswell’s proposed $110 million budget came up a vote shy of passage Tuesday night as city leaders literally scrambled after the meeting to find a solution.

Not submitting a final budget to the state Department of Finance and Administration by Thursday’s deadline will at least result in an audit finding against the city, said City Manager Larry Fry.

Other political and administrative consequences of not having a spending plan in place, while the city is a month into its 2014-15 fiscal year, were uncertain.

Seven city councilors attended Tuesday night’s special City Council meeting when a resolution approving the city’s final budget for the 2014-15 fiscal year was on the agenda, along with a few other “housekeeping” items that were expected to pass, and unanimously.

When the final budget came up for a vote, the City Council voted 5-2 to approve the resolution, but Fry noted a majority of the entire 10-member City Council must vote in favor of a city budget for a budget to be adopted.

City Councilors Jeanine Corn Best, Tabitha Denny, Caleb Grant, Natasha Mackey and Jason Perry voted in favor of the budget resolution.

City Councilors Steve Henderson and Juan Oropesa voted against it.

City Councilors Savino Sanchez Jr., Art Sandoval and Elena Velasquez did not attend Tuesday night’s special meeting.

Mayor Dennis Kintigh may [auth] only vote when there is a tie.

Henderson alerted city councilors he might vote against the budget resolution prior to the roll call, while Oropesa did not tip his hand.

Henderson told his colleagues he was apprehensive about projected gross receipt tax collections. He said the budget is predicated on the expectation the city’s GRT collections will increase 2.5 percent in the city’s 2014-15 fiscal year, which began July 1.

The city of Roswell, Chaves County, and state of New Mexico collectively impose a 7.125 percent gross receipts tax on property and services sold in the city, including leasing or licensing property. Businesses pay the total gross receipt taxes to the state, which then distributes portions to the state’s counties and municipalities.

Henderson told the council he was dubious about the projected 2.5 percent GRT increase in the city’s budget.

“It’s a fairly substantial increase,” Henderson said. “In my own mind, I question if we’ll have the revenues to cover that.”

Henderson said he also had concerns about a decade-old state law that has reduced the amount of gross receipt taxes collected by counties and municipalities around the state since they may no longer tax food and medicine.

The state has been making up the shortfalls in GRT revenues to the state’s various counties and municipalities, although that “hold harmless” program is phasing out beginning in 2015.

Henderson said Roswell would lose 11 percent of its hold harmless aid from the state.

The hold harmless aid to counties and municipalities is scheduled to be completely phased out by 2030.

Henderson said the city may legally raise its gross receipt tax rate by three-eighths of 1 percent, adding a tax rate of 0.375 percent to the city’s current rate of 7.125 percent.

Parts of Espanola, Red River, and two water and sanitation districts in Taos County currently have the state’s highest GRT rates at 8.4375 percent.

Rural Lea County and Lovington’s industrial park have the state’s lowest GRT rates at 5.5 percent.

“In my mind, this budget ought to be preparing for a reduction,” Henderson said of diminishing hold harmless aid.

Henderson said the city could raise taxes by three-eighths of 1 percent to make up the shortfall.

“We’ve either got to pass the tax to replace that loss or pare back about $3 million, or 11 percent of the budget,” Henderson said.

Henderson said if the city proceeds with plans to hire three or four more police officers, the city might have to lay off the police officers this time next year. Henderson proposed waiting until January, the midpoint of the city’s fiscal year, to hire police officers or proceed with building demolitions, “so I can support the budget.”

Fry said the city would lose only 6 percent of its hold harmless aid in the first year of reductions in the city’s 2015-16 fiscal year. Fry said the city stands to lose $250,000 to $300,000 in the first year of hold harmless reductions, and a total of about $3.6 million by 2030.

“I think Councilor Henderson makes a very valid point,” Fry said. “I still believe this budget is sufficiently protected.”

“I appreciate the concerns,” Kintigh said of Henderson’s fiscal apprehension.

“As far as sacrificing police officers, I’d vote to cut the parking lot before I voted to cut police officers,” Grant said.

At the end of Tuesday’s meeting, Henderson offered to meet with the City Council’s Finance Committee “and see if we can come up with some type of agreement” on the budget.

Kintigh said he would arrange a Finance Committee meeting.

After the meeting, Oropesa said he would also meet with the Finance Committee. Oropesa said he preferred to express his budgetary concerns to the Finance Committee before making them public.

“There were several things that I’m not too happy with in the budget,” Oropesa said.

The city’s proposed $110,332,668 budget adds three police officers, one animal control officer and a part-time custodian to the city’s 600-employee workforce.

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