The move has created a ‘full-scale financial crisis’ in Santa Rosa, where officials have raised the specter of the city declaring bankruptcy.
The Guadalupe County Communicator reports that the N.M. Tax and Revenue Department is taking back more than $1.4 million in gross receipts tax funds previously distributed to local governments around the state, creating a “full-scale financial crisis” for the City of Santa Rosa.
Santa Rosa and Guadalupe County learned late last month that they must return at least $554,000 to the state, following an undisclosed corporation’s successful tax appeal. Santa Rosa is to pay $400,000 of that sum, which is expected to grow as the state continues to calculate just what is owed to the company for its past overpayments.
Grants was similarly hit with a $800,000 tax take-back, and the villages of Jemez Springs and Causey have had to return $40,000 and $10,800, respectively, The Communicator reports.
Citing $2 million in wildfire-related emergency requests from other local governments, the state Board of Finance rejected Santa Rosa’s request for an emergency loan. But the Department of Finance and Administration will allow the city to use funds from its “1/12” reserve account to maintain operations while it pays back at least $400,000 in monthly payments.
Even so, the clawback means Santa Rosa will have to cut staff and reduce city services, city officials told the paper. Monthly tax revenues for the city will drop by $10,000 to $17,000 a month, officials estimate. Santa Rosa officials have raised the specter of the city declaring bankruptcy.
The Taxation and Revenue Department is attempting to improve the notification process so local governments receive “some forewarning” about tax appeals that may result in tax take-backs, TRD Chief Financial Officer David Robbins said.
Bryant Furlow is a freelance health care and government journalist based in Albuquerque.