City drafts lean budget for next fiscal year
FARMINGTON – With the local economy struggling through tough financial times mostly due to low oil and gas commodities prices, the city has drafted a conservative budget for the upcoming fiscal year.
“This is going to be a very lean year,” City Manager Rob Mayes said during a public budget forum earlier this month. “Oil and gas has basically disappeared as a revenue source.”
While total revenue and expense estimates haven't changed drastically, Mayes said the city has braced for a 10.6-percent decrease in money collected from gross receipts taxes, or GRT. The taxes, levied on businesses, serve as a major source of funding for municipal coffers.
Mayes said the city will buoy itself through the spending cuts. An gross receipts tax increase that took effect in January will also provide some relief.
“We would be in absolute crisis if the city council had not put in that tax,” Mayes said. “We would be cutting police officers and closing fire stations.”
The tax hike is expected to bring in about $4.5 million. The city has also set aside $3 million from its cash reserves to help fill any financial gaps.
Mayes said he doesn’t anticipate any reductions in services or layoffs, but the city has put a freeze on pay raises for all employees. City officials said raises cannot be justified in this economy.
"You need look at what the market's doing," City Councilor Nathan Duckett said. "I don't think there are many organizations out there that are going to give out raises this year either."
The city will also refrain from hiring new employees to fill five currently vacant positions, as well as impose fuel savings measures on its fleet of vehicles, Mayes said.
Farmington has the fourth largest municipal budget in the state, with about $274 million in expenditures expected in fiscal year 2017. Mayes said the figure may seem high for a city of roughly 45,000 residents, but its situation is unique compared to many municipalities.
“We don’t fit benchmarks for normal cities,” Mayes said. “We’re a very large government organization.”
He said Farmington provides utility services throughout the county, and serves as a retail hub for a larger trade area of more than 220,000 people.
City officials have pushed to embrace this regional role as a way to prevent further financial chaos stemming from the boom-and-bust cycle of the oil and gas industry. Mayes said that in 2010, for every tax dollar the city lost when the industry crashed, all other sectors declined by 50 percent as well. But now, with the oil and gas sector still struggling, the city is seeing other sectors down by only 7 percent. Mayes said the trend shows a healthy transition away from reliance on a single, volatile source of revenue.
Speaking at the public forum, Mayor Tommy Roberts said the city needs to focus on remaining the retail capital of the Four Corners region. He pointed to an increase in tourism and the recent openings of new restaurants as good signs for the city's future.
"I'd say were are more diversified than we give ourselves credit for," Roberts said.
Brett Berntsen covers government for The Daily Times. He can be reached at 505-564-4606.