Tax hike more popular when paired with info

A survey conducted by the city of Las Cruces reported broad support for a tax increase that could grow the city’s revenues by $20 million per year.

The increase would address funding gaps that staff say are slowing down park improvements, public safety upgrades and other capital projects. The money would allow Las Cruces to be more proactive when addressing capital projects like transportation infrastructure, public buildings, and much more, officials said. 

“What I’m taking away is that when you ask people if they want their taxes raised, they say no,” City Councilor Becki Graham said. “But when you tell them what this actually entails, support goes up substantially.”

Chris Faivre, deputy director of economic development, presented the survey on May 13 during a council meeting as well as more information about the proposed increase to gross receipts taxes. Faivre said the city conducted about 400 interviews, mostly over the phone but some over the internet, from May 1 to May 5.

The survey first asked people what they thought the biggest needs in Las Cruces were and if they thought using GRT for public safety, park improvement and quality of life facilities (like libraries) was a good use of that money. Most said yes.

Next, the survey asked what the respondents specifically wanted to see funded. Two-thirds said public safety and streets/traffic calming, while about half said park improvements and quality of life improvements.

Across three questions, the survey showed that the more information the respondents had about how much the increase would be and what it would be used on, the more likely they were to support it.

Faivre said the survey found that, with the right messaging, support for a tax increase grew from about 51 percent to about 63 percent.

Forget the messaging. What is the increase?

Las Cruces has a lower GRT than many of its peer cities. Sunland Park, Anthony and Ruidoso all have higher GRT as do Taos, Española, Santa Fe, Los Lunas and Farmington.

There are two options for the city to increase GRT. First, the council could pass an ordinance and raise the rate by about 0.27 percent. That would raise about $9 million in recurring revenue. Second, the city could ask the voters to approve a 0.32 percent increase that would raise about $11 million in recurring revenue. 

Faivre said that would mean an increased burden on consumers of about .56 cents per $100 spent on certain goods and services. There is no GRT collected on groceries or medicine in New Mexico, per state law.

“It’s important to note that the return on investment for the residents would be substantial,” Faivre said.

Other options

Faivre also discussed other sources of funding but noted issues with those sources that prevent them from being reliable. The alternative funding sources were capital outlay, general obligation (GO) bonds, and raising property taxes.

Capital outlay is money directly from the state of New Mexico’s coffers, funneled to brick-and-mortar projects via municipalities. It cannot be used for maintenance or operations.

But, as Faivre pointed out, capital outlay is not guaranteed. It also depends on the whim of the legislator.

“Capital outlay is a great source for incremental funding,” Faivre said. “But it’s no guaranteed revenue option.”

Faivre also noted GO bond funding. GO bonds are debt municipalities take on and repay with property tax revenues. They need to be approved by a majority of the voters before they can be implemented.

Nearly all municipalities in the state of New Mexico rely heavily on GO Bonds to fund projects. The city of Las Cruces has four active projects meant to increase the supply of affordable housing, a new fire station, a new recreational center and to improve several parks in the city.

Faivre said the city could take out another $83 million in GO bond funding. But that would increase property taxes by 4.7 percent and the city would not be able to move on that until 2026, Faivre said.

Raising property taxes outright is another option. Faivre said the council could raise $6 million in recurring money by passing an ordinance. Doing so would add about $100 per year on a house with an assessed value of $100,000.

“The downside of property taxes is that they’re not shared by everyone,” Faivre said. “Specifically, county residents and overnight visitors, those people do not pay property taxes to the city.”

Faivre said the goal, if the council signals their support for it, would be to get a tax increase on the ballot in November. To do that, the city would need to pass a resolution by July and submit a ballot question in August.