Reporter Dennis Domrzalski on his blog ABQ Reports published an article that offers a real explanation as to why Albuquerque is facing a crisis in falling gross receipts tax revenues. (See ABQ Reports: The Cleansing of Bernalillo County)
A financial forecast for the City reports that the City is facing a budget shortfall of nearly $40,000,000 next fiscal year.
(See December 17, 2017 Albuquerque Journal, page A-1, $40M budget deficit possible for ABQ; City Council to hear next fiscal year financial forecast Monday.)
The $40 million deficit is being attributed to reduced gross receipts tax revenues going to the city, state cuts in appropriations to the city, additional operating costs for new capital projects built by the Berry administration, the need for increase funding for public safety and police just to mention a few.
The reduced gross receipts tax revenues to the city for the general fund and for essential services is only a symptom and not the cause of the reduced tax revenues.
According to the ABQ Reports article, since 2010, Bernalillo County and in return the City, has lost a whopping 17,522 HOUSEHOLDS representing $1 BILLION in adjusted gross income with no real end in sight as people continue to leave the state.
The harsh reality is Albuquerque may be becoming a dying city.
Following is the article in full as published in ABQ Reports:
The Economic Cleansing of Bernalillo County
December 18, 2017
Last week I wrote about how New Mexico’s brain drain has been taking people and money with it to other states.
The numbers were stunning. Since 2010, the state has suffered a net loss of 17,522 taxpaying households and nearly $1 billion in adjusted gross income.
Today I’m looking at Bernalillo County, and what can only be called a sort of economic cleansing. Since 2010, the county has suffered a net loss of 6,909 taxpaying households and $523.6 million in adjusted gross income to other states. That’s a massive loss of wealth and it accounts for half of the state’s total net loss.
But here’s the kicker: during that time, the county has been trading higher-income households for lower-income ones.
The average AGI of 52,967 households that left Bernalillo County for other states during that time was $52,059. The average for the for the 46,067 households that came here from other states was $48,500.
And here’ another scary stat: the average AGI for the net 6,909 households lost to other states was $75,788. Again, our wealthier residents have been leaving, and New Mexico and Bernalillo County have become poorer.
One economic development expert who reviewed the figures said “the term economic cleansing comes to mind” for both the county and state. A state or county that continually has a net loss of wealth can’t sustain the services it already provides to its residents. It either has to cut back on those services or raise taxes on residents who remain.
And the loss of wealthy households can have some real-world consequences. The city of Albuquerque is looking at a potential budget shortfall of $10 million.
Because gross receipts tax revenues to the city have increased by about half of the predicted 3 percent. Could it be that people with less money spend less? The massive loss of wealth has to be one reason for the city’s tax revenue lag.
Neither of those is a good option and both are likely to send even more people fleeing to other states.
And remember that in the past several years, New Mexico has been losing residents to other states. The loss of wealth, of course, coincides with the loss of people.
Between 2010 and 2016, the state had a net outmigration of 37,780 people, according to the U.S. Census Bureau. It means that that many more people left the state than came here from other places.
Between July 1, 2015 and July 1, 2016, the state’s net outmigration totaled 7,111 people.
Between 2010 and 2016, the state’s population grew by a measly 21,817 people, or 1.1 percent.
So here’s a quick look at the tax statistics for Bernalillo County and the state from 2010 to 2016. All the information is from the Internal Revenue Service:
6,909 – Net loss of taxpaying households from Bernalillo County to other states.
$523.6 million- Net loss of adjusted gross income from Bernalillo County to other states.
$52,059 – Average AGI of households that left the county for other states.
$48,500 – Average AGI of households that came to the county from other states.
17,522 – Net loss of taxpaying households from New Mexico to other states.
$953.7 million – Net loss of AGI from New Mexico to other states.
$48,789 – Average AGI of households that left New Mexico for other states
$48,190 – Average AGI of households that came to New Mexico from other states.
$54,339 – Average AGI for net 17,552 households that left New Mexico.
Mayor Keller, the Albuquerque City Council, not to mention the City’s business community have their work cut out for themselves over the next few years.
Let us hope something is done soon before the City flatlines.