Taxes on table for FY2015

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County > Staff lays out options for revenue increases

By Arin McKenna

The Los Alamos County Council weighed several options for a long-term plan to address decreasing revenues at Tuesday’s mid-year budget meeting.

After a lengthy discussion, it was determined council would delay any consideration of new property taxes until FY2015.

“We need to realize that we are not poor,” Council Chair Geoff Rodgers said. “What we’ve done, is we have had increased revenue coming in over the last few years. We’ve grown the county to meet that, and now we’re at a point where it’s not a crisis, but the high water mark is receding and we need to find in an orderly fashion how to recede back out. And we have options, so let’s not get into that crisis mode. I think it’s too early to look at new taxes.”

Deputy County Administrator/Chief Financial Officer Steven Lynne did agree that council could probably defer any hike in taxes until FY2015 without a damaging impact.

Throughout the meeting, the council contemplated a number of options.

One of the most polarizing options on the table was whether to increase property taxes to replace diminishing gross receipts revenue from Los Alamos National Laboratory.

County staff laid out two options for revenue increases.

One option was a tax increment of no more than 1/4 percent GRT. Los Alamos County’s GRT ranks 23rd lowest of 33 counties. An increase of 1/16 would bring its ranking to 22nd.

Lynne did not recommend that option.

“Part of our situation here in Los Alamos is an overconcentration of GRT revenue. If you look at our most recent changes in taxes, what we’ve done is increase GRT increments over the past five years and we’ve lowered our property tax. So one of our risks, being a one horse town, is having an overconcentration of GRT,” Lynne said.

“So if we’re considering new revenues, we think property tax would, from a strategic perspective, provide a little greater diversity of revenues and be a more appropriate place to look first.”

Council agreed with Lynne on that assessment, and removed increasing the GRT as an option.

“I think GRT increments we should hold off on, because essentially it hurts the laboratory. They’re the main subject of GRT expenditures, so essentially we’re making the difficulties the laboratory now has more difficult,” Councilor David Izraelevitz said. “On the other hand, our property taxes are substantially lower than surrounding communities, and, frankly, a community of our economic standing can probably absorb this.”

Izraelevitz also noted that the county should be seeing some increased GRT revenue from construction of the Smith’s Marketplace and in local consumption once it is in operation, as well as some possibility of construction at LANL.
Council’s opinions on raising operating mils through property taxes — which would increase revenues to the general fund — ran the gamut.

Los Alamos has the lowest imposed property tax rate of any New Mexico county.

As a county, council has the authority to levy 11.85 in operating mils, but imposes just 8.85 mils. Council also has the authority to impose 7.65 mills as a municipality, but the current municipal levy is 1.748 mils.

An increase of two mils would raise $1.4 million in revenue, and the county would still have the lowest imposed rate of any county. A one mil levy would increase property taxes on a $300,000 home approximately $200 a year.

Staff recommended re-implementing $1.5 million in property tax revenues that were removed in FY2011.

Councilor Pete Sheehey was at one end of the spectrum, making a motion for staff to prepare two budget options, with one option showing no revenue increases.

Councilor Frances Berting asked Lynne if long-term budgets could be balanced without revenue increases.

“Based upon the projections and scenarios we’ve run, and realizing there’s a lot of potential variability in the future, I think in order to show future years being balanced, we would need to throw in some sort of new revenues,” Lynne said.

The motion failed due to lack of a second.

Berting agreed with the staff proposal to reinstate $1.5 million in property taxes and was willing to go further.

“I think we may want to double that. It depends on how much we need,” Berting said. “It shouldn’t make that much difference to people in this town to put in a little more money in property tax, because we need to emphasize the fact that we really are at the bottom of a very poor state. Everybody else is paying more percentage on their property than we are and we’re the richest county in the state. So this makes no sense. I think people need to realize that they need to pay for what is going on and we can really do it.”

Councilor Kristin Henderson also felt citizens might be willing to accept increased property taxes if they understood the issues.

“I know that people are pretty sensitive about what they pay for their property tax, despite the fact that we have the lowest in the state, but I think it should at least be on the table,” Henderson said. “I don’t think everyone is going to jump up and down and want to go there, but it depends on what they want. Do they want to have high services and decent facilities or to continue with the low tax rates? We really need to talk to the community and get a feel for what people want.”

Councilor Rick Reiss was the first to suggest delaying consideration of property tax increases.

“Property taxes may be the only incentive that we have for people to come here. Property taxes being low are an incentive to come to our community,” Reiss said. “We can turn that tax on fairly quickly. I think we are responding very quickly to a large problem, but we have enough reserves that we could actually wait to implement that solution, as a solution in our back pocket.”

Lynne did clarify that new property taxes could only be levied once a year, during the budget approval process, and that the proposed increases would have to be approved by the state before they could be implemented.

In the end, council approved a motion by Izraelevitz to delay any consideration of new property taxes until FY2015. The council passed staff’s recommendations for addressing long-term budget issues–with Izraelevitz’s motion and a few other amendments as well–by a 7-0 vote.