FARMINGTON — Discussion on how to balance the city's nearly $4.4 million budget deficit turned into a political skirmish over possible tax increases at Tuesday morning's city council work session.

The council majority and Mayor Tommy Roberts approved a city staff study of a number of options for closing the deficit, including tax increases. Councilman Jason Sandel and Councilwoman Mary Fischer both said a tax increase should be off the table.

"I've been on this council during a similar economic crisis, and I'm afraid that this one is going to be worse," Fischer said. "Raising taxes and raising utility rates is not the answer."

Roberts said that a tax increase would be considered only as a last resort option to balance the budget.

"There are several different scenarios to be considered," he said. "We need to be stressing the impact of these decisions."

It is likely that the budget will be done by the end of July, not by June as is usual most years, Roberts said. Extra time to assess the budget will be needed, he said.

A decision by state legislators to repeal payments to local governments that made up for tax exemptions on food and medicine, the so-called "hold-harmless" payments, will add more revenue losses beginning in two years, Fischer said.

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The impact on Farmington's economy and the city's ability to fund essential services and programs, such as paying public safety employees, could be devastating, she said.

Roberts said that the tax bill that repealed the payments is aimed at accomplishing real tax reform on the state level — something that has been needed for a long time.

But the effects of the hold-harmless payment repeal are still a major concern, he said.

"That rollback will have different impacts on different communities," Roberts said. "San Juan County has a shrinking tax base."

The pending closure of units at Four Corners Power Plant and San Juan Generating Station, tightening environmental regulations on coal and plummeting natural gas prices are key factors in the economic crunch striking Farmington and the surrounding area.

A tax increase would, in theory, provide more money to fund city services and programs such as the municipal court, Four Corners Regional Airport and the library.

Sandel echoed Fischer's concerns, and said that raising taxes is the wrong solution.

"The mayor and council majority continue to say that raising taxes is an option, and I'm opposed to that," he said during a Thursday telephone interview. "I want the option of raising taxes off the table."

The proper solution would be to scale back the city's spending, he said.

"I just can't think of any reason to justify increasing taxes," Sandel said. "I think the resolution is quite simple."

The city's budget 18 months ago, during fiscal year 2011, was $48 million, he said. The budget has since increased to $55 million, and is slated at $58.9 million in the first draft of the fiscal year 2014 budget.

"At the time, I argued that we were spending beyond our means, and look at where we are now," he said. "We're talking about a tax increase."

For Sandel, the issues boils down to simple economics.

"We survived quite well 18 months ago at a budget of $48 million."

Greg Yee may be reached at gyee@daily-times.com; 505-564-4606. Follow him on Twitter @GYeeDT