Letter From Commissioner Hansen to Santa Fe City Council Regarding GRT

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May 30, 2017

Dear Honorable Mayor Gonzales and Honorable Santa Fe City Councilors,

As reported in the local media, the Santa County Board of County Commissioners has engaged in recent discussions concerning the potential imposition of County Local Option Gross's Receipts Tax increments for the upcoming FY2018. While the media has reported some information and a few of you have weighed in on the County's potential actions I think it important to share some facts about the County's budget, with which you may not be familiar.

While Santa Fe County derives a substantial portion of its operational budgeted revenues from property tax the second most significant revenue source is GRT (gross receipts tax). Many of the countywide GRT increments, authorized by state statute, are provided to the County for the purpose of providing mandated state and county services for the benefit of county citizens regardless of whether they reside in the incorporated or unincorporated areas of the County.

Countywide revenues from property taxes and general purpose gross receipts taxes fund such county services as property valuation and assessments for residential, non-residential and personal property countywide, property tax collection for the state, the county, municipalities, school districts and special assessment districts, countywide elections and records management, probate services, mapping and addressing, road maintenance and solid waste collection, indigent health and burial services, DWI prevention, Teen Court, and Mobile Health Van services just to name a few. The County has also preserved and maintains over 6500 acres of open space and trails for the enjoyment of all county residents.

While it is true that the majority of our public safety services, except for detention services, are focused on the unincorporated areas of the county I would like to point out that our public safety agencies work very closely together and provide mutual aide to each other as needed without cost to the other. Additionally, the County has provided police; fire and animal control within the city limits and continues to provide fire and emergency services well past the date of annexation at no cost to the City in order to assist the City in transition.

What else some of you may not be aware of, is that the County is required to fund several state services and has been granted specific authority to implement GRT increments in order to fund these obligations. The equivalent of two increments, totaling almost $5.5 million annually, is required to be remitted to the state for Medicaid support. These funds are leveraged with federal dollars and provided back to local healthcare providers through Medicaid reimbursements. The County implemented a 1/16th increment many years ago but has not implemented the specific local option of a 1/16th or a 1/12th to fund the remainder of the obligation. The County has been paying the obligation from existing health services GRT revenues for the past two years at the expense of other county healthcare services. This 1/16th or 1/12th option is one increment the Board of County Commissioners is considering due to the fact the authorization expires on June 30, 2017.

Another significant portion of County revenues are dedicated to operations and debt service for the County Detention facilities. While it is true the City of Santa Fe and other governmental entities pay a per diem to house their inmates at SFC the rate charged by the County to other local entities is approximately half what an inmate’s care costs the County. Additionally, inmates booked into the adult facility on STATE charges become an obligation of the County regardless of the arresting entity and the inmates’ place of residence (incorporated or unincorporated area of the County). Youth offenders are completely the obligation of the County. Adult detention, youth detention and electronic monitoring and all the related services comprise approximately $21 million of the County’s annual operating budget, the majority of which is paid for by general tax dollars.

Counties are also required to house the State’s District Courts, the District Attorneys and the Public Health Offices. The County has invested over $70 million in capital in these Santa Fe facilities and pays millions annually in debt service, utilities, maintenance and security for these state mandated buildings and operations.

Another significant portion of Santa Fe County’s tax rate (.375) is attributed to two increments that were implemented countywide, by referendum, that directly pay for city services. Approximately 35-40% of what is referred to as the ¼% Emergency Communications and Emergency Services Tax pays for the Regional Emergency Communication Center operations, relieving the City of Santa Fe from operational costs of approximately $2.5 million annually for city dispatch services. The other increment of 1/8th is a pass through directly to the NCRTD for the NCRTD operations, Rail Runner service to Santa Fe and Santa Fe Trails.

While this list is inclusive, it is by no means exhaustive of all the services Santa Fe County provides for city and county residents alike using GRT revenues generated countywide. It is well known the majority of GRT revenues are generated within city limits, municipal annexation authority assures that will always be the case since the municipality will likely annex any economic development on the outskirts of a municipality. What the list demonstrates though, is that those tax revenues are invested right back into the entirety of Santa Fe County through numerous countywide services and facilities.

On a final note concerning County GRT discussions, the Board of County Commissioners is considering an additional 1/8th increment based upon the results of an advisory question to the voters in last year’s November General Election. Voters countywide responded in support of imposition of up to 1/8th of a percent increase in GRT for the purpose of providing behavioral health services for all residents of Santa Fe County. The County has taken the lead to address this and other healthcare issues and has dedicated $3.3 million in one time funding to create a healthcare navigation system, to include behavioral health services. The development and operation of the Behavioral Health Crisis Triage Center in Santa Fe is the next step in addressing this crucial need in our community.

I understand the Santa Fe City Council may have concerns about County decisions and I would like to invite you to express those concerns at the May 30th BCC public hearing. This would help ensure that the Board of County Commissioners is properly informed and can make the best decision with all pertinent information. The public hearing will take place at 5:00 pm on May 30, 2017 at the County Administrative Building in the County Commission Chambers located at 102 Grant Avenue, Santa Fe, NM 87501.