County Commissioners voted on Wednesday to amend an existing ordinance and create a new ordinance that will redirect about $2.3 million of gross receipts taxes from San Juan Regional Medical Center to the county's general fund.
The final vote to implement the ordinances will be on March 29 and the ordinances would go into effect July 1, according to county documents.
Commissioners voted to amend a gross receipts tax county voters passed in 2003 that directed 0.125 percent of gross receipts to the hospital for improvement projects.
The amendment would reduce that tax to 0.0625 of gross receipts. The hospital will use the tax revenue to pay for renovations.
The same day the hospital's gross receipts tax reduction goes into effect, the county would impose a new 0.0625 gross receipts tax that will collect money for the county's general fund.
A 0.0625 gross receipts tax is expected to generate about $2.3 million this year, County Executive Officer Kim Carpenter said.
"This is not a tax increase of any kind," County Attorney Jim Durrett said. "It's an attempt to restructure the taxes you have now so they go to different purposes."
Durrett said the state's taxation and revenue department approved the restructuring.
He said the hospital was using revenue from the tax to pay off bonds it issued several years ago. He said the hospital has paid off those bonds and the reduced tax revenue still will cover rennovation expenses.
Carpenter said the county's new gross receipts tax is needed because the looming partial closure of San Juan County's coal-fired power plants, the sale of Navajo Mine to the Navajo Nation and the state of the local natural gas industry have forced county government to look for new revenue sources. Those businesses comprise a significant percentage of the taxes the county collects.
"This is the answer we are going after instead of raising property raises. The worst thing we could do right now is raise taxes," Carpenter said. "But if we sit back and do nothing it will be financial devastation."
County residents could force the county's new gross receipts tax to a vote if they file a petition within 60 days after the ordinance is implemented that was signed by 5 percent of registered voters. That would require 3,607 signatures, according to county documents.
Ryan Boetel may be reached at email@example.com; 505-564-4644. Follow him on Twitter @rboetel