In politics, this is a version of what is called being damned if you do and damned if you don’t on any number of levels of city government.
On Monday, March 5, 2018, the Albuquerque City Council voted to raise the city’s gross receipts tax rate by three-eighths of a percentage point without putting it to a public vote which is within their power.
The measure was jointly sponsored by Democrat City Councilor Ken Sanchez and Republican City Councilor Trudy Jones.
The tax was imposed by the council on an 8-1 vote, enough to override any veto by Mayor Tim Keller.
Voting yes to pass the tax increase were Democratic City Councilors Ken Sanchez, Pat Davis, Diane Gibson, Isaac Benton, Klarissa Pena, Cynthia Borrego and Republicans Trudy Jones and Don Harris.
Republican City Councilor Brad Winter was the sole no vote and argued that it should have been put to a public vote.
The tax imposition has no sunset clause.
The gross receipts tax of three eights of a cent could potentially raise $30 to $40 million this year when it goes into effect July 1, 2018 and upwards of $55 million each year thereafter.
The tax increase represents 38 cents more paid in gross receipts tax for every $100 in purchase sales and will in all likely be passed on to consumers by merchants.
The current gross receipts tax is 7.5% and the new tax will push it to just below 8%.
TAX INCREASE VOTED BEFORE CITY BUDGET SUBMITTED
Mayor Tim Keller is due to announce his first budget on April 1, 2018 and city council budget hearings will be held on each of the city’s 19 departments over three months.
The City Council must adopt and approve the city budget on or before July 1, 2018 when it becomes effective for the new fiscal year of 2018-2019.
The City is facing a $6 million deficit for this year.
The city is also facing $40 million-dollar deficit for the next fiscal year which begins on July 1, 2018.
For the last eight (8) years, the Albuquerque City Council strongly resisted raising the gross receipts tax at all costs despite the effect that budget cuts were having a severe impact on essential services and a disastrous effect on public safety.
The City Council has not raised the gross receipts taxes on its own since the year 2000.
The tax increase will go into effect on July 1, 2018, unless it is vetoed by the Mayor and if the City Council does not override the veto with six or more votes.
The overwhelming majority of the revenues generated by the tax will in all probability have to be applied to the $40 million-dollar projected deficit and other incurred debts before it can be applied to public safety and increasing the size of the police department.
THE CITY COUNCIL’S RUSH TO ENACT THE TAX
The media has failed to report exactly why the Albuquerque City Council was on a breakneck speed to rush and approve a three-eighths of a cent increase in the gross receipts tax a full three weeks before Mayor Keller submits his budget on April 1, 2018 and with very little public input.
The reason why is that there was a deadline that had to be met and the City Council has been aware of the $40 million deficit for some time, at least since early December, 2017.
The City Council had to enact the tax now for it to be on the books by April 1, 2018 and for it to commence being collected by the State on July 1, 2018 when the city budget for fiscal year begins for the city.
Without the guarantee of the tax revenues generated by the new tax, the budget deficit of $40 million could have only been resolved by severe cuts, including layoffs, furloughs and elimination of services.
The city council is required by law to enact a fully balance budget with the revenue it has and to deal with any deficits before they occur.
Had the City Council enacted the tax after April 1, 2018, it would not go into effect nor collected until January 1, 2019.
The City Council could have put the tax increase on the ballot for a vote with a special election, but again, had it passed, it would not go into effect nor collected until January 1, 2019.
Had the tax not passed with a public vote, the council and the Mayor would be back to square one after January 1, 2019 on enacting a balanced budget without sufficient revenue.
Had the council called for a special election and put it on the ballot, it would have been a mail in ballot costing $500,000 for printing of ballots and postal costs, money the city does not have.
There is also always a significant risk that voters will say no to a tax even if it is dedicated to public safety, which is what happened when Mayor Chavez tried to get a public safety tax enacted years ago and it failed at the polls.
Had the council called for a special election to get voter approval, without any guarantee of the outcome of the election or of a guarantee revenue flow to deal with the deficit, the Mayor and the City Council would have to enact a budget by July 1, 2018 based on speculation of the outcome of the public vote on the tax.
TO VETO OR NOT TO VETO, THAT IS THE QUESTION
The city council’s tax increase now goes to Mayor Keller for approval or his veto.
Mayor Tim Keller is taking heat from the public and the media for beginning to backtrack and breaking his campaign “promise” to have a public vote on any tax increase.
It is likely Mayor Tim Keller will sign the tax increase thereby breaking his campaign promise not to raise taxes without a public vote.
Even if Mayor vetoes it, there are enough city councilors who voted for it to override his veto.
A promise not to raise taxes without a public vote by any candidate for Mayor is meaningless when said from the get go and is nonsense that should not be taken too seriously.
No candidate for Mayor really knows what is going on with city finances until they actually look at the books, and Keller making the promise as a candidate was at best idealistic and at worse being very foolish to garner votes just to get elected, which is how politicians lose their credibility with voters.
The truth is, it is the City Council and only the City Council that can enact a tax increase, with or without a public vote, not the Mayor.
Candidate Keller also said he would draw from various agencies, departments and programs where large, misappropriated budgets existed to deal with any city deficit.
What candidate Keller said about “misappropriate budgets” sounded fantastic but not very realistic after the 8 years of budget cuts and downsizing of government by his predecessor.
The problem is, any candidate for office usually regrets making promises regarding raising taxes to get elected, just ask former President George H.W. Bush (41) when he said “Read my lips, no new taxes!” and lost reelection to President Bill Clinton.