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FARMINGTON — The majority of the people who spoke at the Farmington City Council meeting Tuesday voiced support for tax raises to replace millions of dollars in lost tax revenue, rather than cutting services, to cope with the state's plan to cut "hold harmless" payments.

Farmington hasn't raised taxes since 1998, but city officials say they have to consider the move now because recent legislation phases out payments the state has made to local governments since 2004.

By the end of the meeting, all of the councilors, except Mary Fischer, said they support tax raises to avoid making cuts to city services.

The council is scheduled to decide whether to approve the tax raises at its meeting at 6 p.m. Aug. 11 at City Hall, 800 Municipal Drive.

After repealing taxes on food and medicine in 2004, the state began making "hold harmless" payments to help local governments compensate for their losses in tax revenue.

But in 2013, legislators passed and Gov. Susana Martinez signed into law a bill that phases out the payments to most cities and counties over the next 15 years.

This year, Farmington will lose approximately $388,000. Because the losses compound each year, by fiscal year 2030, the city will lose approximately $5.8 million annually.

To compensate for the losses, the state allowed local governments to implement three, one-eighth of 1 percent gross receipts tax increments. In Farmington, a single increment would annually net approximately $2.4 million, and two increments would bring in nearly $4.9 million a year.

Fischer is the only councilor who has said she will not vote to increase taxes, saying that councilors should instead make cuts and spend money more wisely. The other three councilors and Mayor Tommy Roberts say the city will need to implement two of the tax increases soon and will likely also need the third one later.

If the council approves all three tax increments, Farmington's tax rate would still be lower than that of Aztec or Bloomfield, according to city documents.

Before the public spoke at Tuesday's meeting, City Manager Rob Mayes addressed the crowd as a presentation he prepared flashed on TV screens in the room.

"This is a significant point that needs to be understood as we contemplate our options as a community," he said.

The city is still 5.1 percent below its fiscal year 2009 gross receipts tax revenue, he said. And, since then, its expenses have risen by 14.1 percent. Overall, the city is down 19.2 percent in tax revenue and spending power, according to his presentation.

Without the tax raises, the council would have to consider cutting services. In his presentation, Mayes identified more than $6 million in possible cuts, including laying off police officers and closing swimming pools.

After the presentation, Tom Taylor, a Republican who previously represented San Juan County in the state House of Representatives, told the council that it should opt to store a majority of the new tax revenue in a special fund, if the tax raises are implemented. He said the city should use half the money for "rainy day" expenses and the rest for nonrecurring expenses.

Taylor added that when he served on the Farmington City Council — he was both a councilor and mayor — he voted to lay off employees to cope with deficits.

Several people who spoke Tuesday pointed out that Taylor's administration also raised taxes. Roberts, as well as eight of the 10 people who spoke during the public comment period, said they do not want services cut.

Among them was Melissa Kittelson, who often volunteers at The Daily Bread, a soup kitchen in the city.

"The days I've been there, average clients coming in is between 80 and 100 people," she told the council.

In his presentation, Mayes outlined possibly eliminating $15,000 for People Assisting The Homeless, which funds the soup kitchen. Kittelson, who also sits on the nonprofit's board, said that's not a lot of money to the city, but it is a lot to PATH.

"The problem with cutting services (is) it really hurts poor people," said longtime city resident Bob Lehmer, who supported the tax raises.

Without the new taxes, he worries what would happen. After Lehmer spoke, many in the council chamber clapped.

Carlos Perez, a student at San Juan College, said he does not support raising taxes. He told the council that would hurt him and other college students.

"I think you're hurting the public more than you're helping them," he said.

Dan Schwartz covers government for The Daily Times. He can be reached at 505-564-4606 and dschwartz@daily-times.com. Follow him @dtdschwartz on Twitter.

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