Cash crunch: Aztec looks for ways to cut spending

Aztec considers delaying North Main Avenue extension project

Hannah Grover
Farmington Daily Times
The future of the building housing a business Incubator and 550 Brewing in Aztec, seen in this file photo, came up Thursday as Aztec's city commissioners wrestled with ways to find cash in the face of a very lean municipal budget.
  • Delaying the North Main Avenue extension project could mean the loss of rights of way and grant funding.
  • The City Commission likely approve a preliminary budget on Tuesday.

AZTEC — The city of Aztec could end fiscal year 2019 with just $4,000 in its general fund if does not cut spending, according to finance director Kathy Lamb.

The City Commission may approve a preliminary budget of $26.5 million — about $7.3 million coming from the general fund — when it meets at its 6 p.m. Tuesday in City Hall, 201 W. Chaco St.

Commissioners Thursday discussed revenue-raising ideas that included raising gross receipts taxes and possibly selling the building known as the HUB, a recent city purchase which includes a business incubator and a brewery as its tenants.

The preliminary budget anticipates a 13 percent increase in gross receipts tax revenue, which is based on the increase in revenue that the city saw during fiscal year 2018. That document can be viewed online at

Project priorities reshuffled

The dire fiscal outlook has commissioners working to triage scheduled community improvement projects.

The City Commission decided Thursday that the city must focus on the East Aztec Arterial Route as its top priority.

“I think everything else hinges on that,” Mayor Victor Snover said.

Other projects, including the North Main Avenue extension project, may be delayed.

The project would connect downtown to Aztec Ruins National Monument. It includes an outdoor plaza. The city also hopes it would encourage property owners in the area to develop vacant parcels of land.

Delaying the North Main Avenue project could mean the loss of $300,000 of grant funding, as well as rights of way that property owners have donated to the city, Lamb said.

City has leaned on cash reserves

Lamb said the city has been relying on its cash reserves during the economic downturn.

“Each year that cash balance — that reserve — has continued to drop,” she said.

 Lamb said $4,000 is not enough of a cushion as the city enters fiscal year 2020.

“It is a budget that can be submitted for the preliminary, but I don’t think it’s one we want to adopt,” Lamb said.

She said it will not be possible to save enough money to get back to the $2 million to $3 million balance that had been in the reserve. Lamb said she would like to end fiscal year 2019 with $500,000.

Utility fund boost won't save the day

The budget for the current fiscal year includes a $650,000 transfer into the general fund from the joint utility fund.

“That’s one of the reasons you see '18 and '19 looking very different,” Lamb said of the two fiscal year budgets.

She said she did not feel comfortable transferring money from the joint utility fund into the general fund because the city is raising utility rates to build fund reserves to pay for major projects, such as a new electric substation. The second substation near Navajo Dam Road could cost $8 million.

Electric utility director Ken George said there is currently a single substation and transmission line serving Aztec. If anything happens at the existing substation, the entire city could be without electricity for hours.

Tax hikes, HUB sale discussed

Commissioner Rosalyn Fry brought up the Aztec business incubation center, also known as the HUB. The building, which is owned by the city, currently houses 550 Brewing.

“I think people have got emotionally attached to 550,” Fry said.

She said she would rather have the North Main Avenue extension project completed than have the city continue operating a business incubation center.

“Even if we didn’t continue with the HUB, that’s not going to fund North Main,” Commissioner Sherri Sipe said.

She voiced support of the HUB as a way to encourage business development and potentially increase revenue from gross receipts tax in the city.

Community development director Steven Saavedra brought up the possibility of selling the HUB to someone who would continue operating it as a business incubator.

Snover brought up the possibility of raising the gross receipts tax. He said the city will not necessarily raise the tax, but he said it is something the city needs to discuss.

“We’re literally digging into the couch cushions right now,” Snover said.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at