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It’s no secret. Las Cruces has infrastructure problems.
Some feel the parks need a facelift. Others want to see the police department increase capacity. Still, others point to numerous public works projects on the “to-do list” as a top priority. During a presentation about Las Cruces’ budget on March 22, city staff outlined many of these problems before proposing an ambitious two-part solution.
First, the plan would be to spend about $22 million of the city’s “Telshor fund.” That would get the ball rolling, they said. But this fund is not recurring. Once the money is gone, it’s gone.
Second, the city would launch a campaign to increase gross receipts taxes. This way, they argued, Las Cruces would have a recurring source of money to fund those sorts of initiatives.
The maximum increase would require a referendum by voters. If passed, Las Cruces would be unable to raise GRT rates again unless changes occurred at the state level. At its highest, the proposed increase would mean spending an additional .56 cents for every $100 spent.
“We’re just behind, and we need to get caught up with a lot of things. We need to spend some money for our public safety and for the greater good of our community,” Mayor Eric Enriquez said.
Staff identified about $20 million worth of needs in Las Cruces. They said:
Each department head also spoke about the specific needs of their area.
When the city leased land along Telshor Boulevard, they received about $26 million in 2004. That money has since been invested and grown. The fund contains about $43 million today.
The money has a limited scope, however. According to the agreement, it can only be spent on improving community health and safety. Barbara Bencomo, the city’s chief administrative officer, said the city has allocated about $5.4 million to six projects in the past.
Most of those projects were related to affordable housing. Others include efforts to alleviate homelessness in Las Cruces.
The fund is also restricted so that only the council can allocate the money. The city has maintained conservative spending on the fund. The lower the fund's value, the less the city can invest. Fear of losing out on investment return kept previous councils from spending down the fund.
If the council follows the staff’s proposed plan, the fund’s value will decrease drastically, from about $42 million to an estimated $14 million.
But, as staff argued, it could significantly impact poverty, infrastructure and safety.
“What I’m in favor of is ,we spend the Telshor fund to get caught up on a lot of things that have been neglected, such as our parks,” Mayor Enriquez said.
Chris Faivre, the deputy economic development director, also outlines other options for increasing Las Cruces’ revenue. He highlights the challenges of each alternative while touting a GRT increase.
“We need to consider bold options for Las Cruces’ future success,” Faivre said.
The city relies on capital outlay for brick-and-mortar projects such as remodeling a recreational center. The money comes from state legislators. The problem with relaying that, Faivre said, is that it's subjected to the whims of legislators and limited in scope.
Faivre also noted a property tax increase would not distribute the share of the burden on non-residents, such as tourists who visit Las Cruces.
A general obligation bond was another option. Faivre said the challenge was that GO bonds are only available to Las Cruces every four years.
Cannabis excise tax money would likely not be enough. Besides, Faivre and other staff said they’d like to use that money to support economic development on S. Solano Drive, El Paseo Road and W. Picacho Avenue.
That leaves a GRT increase.
Faivre estimated that two changes could secure revenue of as much as $20 million. Doing so requires two actions — one by the city council and one via voter referendum.
The city council could raise GRT by 0.2375 percent through an ordinance. The increase would grow revenues by $9 million per year. A referendum would increase GRT by $11 million with a 0.3250 percent increase.
Faivre said that moving quickly on the latter option would allow the issue to get onto the ballot in November.
“Part of what you (Faivre) said is that these are bold options,” District 4 Councilor Johana Bencomo said. “Bold can sometimes be scary. I think we’re in a time – coming out of Covid; inflation is high – there are important considerations to be made and to have conversations with the public about just how expensive everything is right now.”
As that applies to household budgets, so, too, does it apply to the city, Bencomo said.
The council mostly reserved comments on the proposed increase while acknowledging the issues involved and saying more conversations with Las Cruces residents need to happen.
“For this conversation to move forward, it’s really important that we do town halls and community outreach meetings,” Bencomo said. “Is that something that staff has talked about?”
Faivre said there’s been discussion about bringing the tax increase back to council in another work session, which could be in early June.
“There is a timeline that we need to adhere to if we’re going to get this on the ballot in November,” Faivre said. “Which means we’d have to have consensus by early August.”
“If we do a work session on GRT, I’d love to understand all of our options,” Bencomo said, referring to property tax increases as one example.
When things or services exchange hands, the government takes a small slice.
Technically, the tax is imposed on businesses, but nearly all businesses pass the tax along to the purchaser. GRT also varies throughout the state, since municipalities set different rates.
According to the state Taxation and Revenue Department, the range is between about 5.125 and 8.6875 percent, depending on the business's location and what taxes it's subjected to.
However, data presented by the city suggested some rates are higher. Staff presented 10 municipalities with a range of 7.6215 percent to over 9 percent. The breakdown was:
Las Cruces sits at 8.0625 percent, according to the presentation.
