Home Local News Eunice considers gross receipts tax hike

Eunice considers gross receipts tax hike

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EUNICE — City Manager Jordan Yutzy, seeking to cover costs of renovating Marshall Park after moving the rodeo arena to a new park area, suggested increasing gross receipts taxes.

Offering the first reading of a new ordinance Monday to the Eunice City Council, Yutzy indicated the Eunice voters already had approved the tax increase.

Customers pay gross receipts taxes to businesses at the time of the purchase of goods or services. Communities throughout the state operate primarily on revenue received from the GRT.

“This one was actually voted on in 2016. They voted on, I believe, (three) different GRT increases and one of them was enacted by council to pay for the road bonds,” Yutzy told the council. “What we’re asking now is to enact additional ones in the amount of .375% which will essentially raise our GRT rate up to what Jal is doing.”

The ordinance under consideration specifically calls for the additional funding approved in the 2016 election to be for “capital projects to improve the quality of life within the city,” Yutzy said, telling the council the first use of the funds will be to renovate the Marshall Park. He added the tax could continue to be used for other quality of life capital projects after the Marshal Park is completed.

Yutzy said he requested capital outlay funding from the legislators in the New Mexico Legislature to build the rodeo arena complex at the city’s lake park at an estimated cost of $2-2.5 million. No estimate of the Marshall Park renovation has been provided.

Eunice Mayor Billy Hobbs confirmed, “We’re not going to put it where we’re stuck with one project, right? Like last time, we did the roads on the gross receipts increase. That’s all we can use that money for. But this, we’ll designate differently. After the Marshall Park project, we can keep using this money to rebuild things within the city.”

Yutzy responded by pointing out the “quality of life” capital projects clause in the proposed ordinance.

There were three GRT questions in the March 1, 2016, city election with an explanation paragraph established by the council stating:

“The City of Eunice seeks voter approval to increase the gross receipts tax by ½ percent (from 6.8125 to 7.3125) to raise $10,000,000 plus or minus for the purpose of rebuilding city streets. This tax increase will sunset in 20 years or at the repayment of any financing, whichever comes first. This request for voter approval is broken into three questions (vote for or against).”

Whether that language actually appeared on the ballot could not be confirmed by deadline Tuesday.

The half-percent total came from a quarter percent on capital outlay, an eighth percent on infrastructure, and an eighth percent on municipal gross receipts. Each type of receipt required a separate question on the ballot.

Voters desiring improved roads approved all three questions.

Yutzy told councilors Monday only one of the questions was enacted and they could enact the other two, for a total of 0.375%, increasing taxes because the voters had already approved them.

The rate would go from 7.3125% to 7.6875% on July 1, if the council approves the new ordinance after a public hearing advertised to be held on Jan. 27.

According to News-Sun records, the 2016 election raised the GRT from 6.8215% to 7.3125%, a total of 50 cents on a $100 purchase, using all three questions.

Revenue from the increase went into a road fund and the city entered into an agreement with investment bankers George K. Baum & Co. (GKB) to help with selling bonds.

Only about half the total $10 million were approved for bonds initially, with city officials planning to bond the remainder when the initial funds were spent. Road improvements have been underway since.

A representative of GKB had helped prepare the current new ordinance, Yutzy told the News-Sun Tuesday, but the representative had not responded to a request for comment by deadline.

“The money is there and it’s already been approved by the voters, just never enacted,” Yutzy concluded.

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