Despite some strong opposition, a bill aiming to increase Rio Arriba County’s gross receipts tax to fund several school district capital projects passed the New Mexico Senate, March 5.
Senators approved Senate Bill 105, with a vote of 27-13 and two abstentions, by Senate President Pro Tempore Mary Kay Papen, D-Doña Ana County, and Sen. John Ryan, R-Bernalillo and Sandoval counties.
Sponsored by Sen. Richard Martinez, D-Los Alamos, Rio Arriba, Sandoval and Santa Fe counties, the bill aims to establish the Special County Education Gross Receipts Tax — a 0.75 percent tax increase that will raise money for educational capital outlay improvements.
The tax will benefit four of Rio Arriba County’s five school districts for the next 10 years. Dulce School District declined to be part of the bill.
Charter schools can also access money from the tax “upon finding of need,” the bill states. To qualify, charter schools should be located within County boundaries or 50 percent of its students must be County residents.
If the bill is signed into law, County voters will have to vote on the tax in the next general election before it can be imposed.
The bill did not pass without contention from Republican senators. Sen. Pat Woods, R-Curry, Quay and Union counties, said the tax increase is unnecessary when districts have access to bonds to fund capital projects.
But Martinez said additional bonds are not an option for participating districts at this point.
“Most of the schools are bonded at maximum capacity, so it’s the only route we have,” he said.
The Jemez Mountains School District is 97 percent bonded and the Española School District is at 93 percent capacity, Martinez said.
He said the Chama Valley School District, for which voters approved an $8 million general obligation bond during the Feb. 3 School Board election, is in the process of selling $4 million in bonds, while the Mesa Vista School District is in the process of selling $1.7 million in bonds. This will bring the two districts at full bond capacity.
The schools’ bond condition worried Sen. Craig Brandt, R-Sandoval County. He said because the bonds are tied to County residents’ property tax, an increase in the gross receipts tax will prove to be a further burden.
Brandt, a member of the Senate Education Committee, said he didn’t remember voting for the bill, although it passed the Committee unanimously, Feb. 11.
If the bill passes and voters approve the tax, the County’s gross receipts tax rate will increase from 6.5 percent to 7.25 percent. Chama’s gross receipts tax rate will increase from 8.19 percent to 8.94 percent, while Española’s will increase from 8.56 percent to 9.31 percent.
Brandt said he’s also concerned the bill is not fair to schools in other counties.
“If we’re allowing this, why are we only doing it for this county and not for the entire state?” he said.
Sen. Steven Neville, R-San Juan County, said the increase will make Rio Arriba County one of the counties with the highest tax rate, while being one of the poorest, in the state.
“That’s going to put you close to a 10 percent gross receipts tax,” he said. “I just want everyone to know, we’re opening the flood gates here. We’re looking at some very high gross receipts tax. It can be real detrimental to the economy.”
Sen. Ron Griggs, R-Doña Ana, Eddy and Otero counties, said he thought using a tax increase to fund schools is “inappropriate.” Instead, he urged school districts to look into reassessing the current gross receipts and mill levy taxes to possibly find more funds for schools.
The only legislator to voice support for the bill, Sen. Carlos Cisneros, D-Los Alamos, Rio Arriba, Santa Fe and Taos counties, persuaded senators to vote for the bill.
Cisneros, who primarily represents Taos County, said a similar gross receipts tax for school districts has been successful in his jurisdiction.
“I rise in support of Senate Bill 105,” Cisneros said. “I can tell, from experience in Taos County, that they’ve been able to do things that they would not have otherwise. It’s truly helped those institutions who are trying to educate our children.”
In 2000, legislators passed a bill repurposing an existing 0.5 percent gross receipts tax, initially approved by voters in 1990 to fund improvements of Taos’s Holy Cross Hospital, for schools’ capital improvements.
Taos voters have continually approved the educational gross receipts tax every two years.
Senate Bill 105 now goes to the state House of Representatives to seek ratification. The bill was scheduled to be heard by the House Government, Elections and Indian Affairs Committee March 11, but was since removed indefinitely from the agenda.
The legislative session ends Saturday.
Martinez said he was glad to see support from senators. He said if the bill passes, he expects County voters to show up en masse at the polls.
“I’m sure the voters of Rio Arriba County will vote their hearts out,” he said.