After a long and complicated debate that a newly elected city councilor described as “crazy,” the Santa Fe City Council approved a new budget framework late Wednesday night that relies on projected savings from the current fiscal year to help balance the budget for the fiscal year that begins July 1.
While total revenue in the current year is performing 2 percent above projections and expenses are coming in lower than budgeted, totaling more than $7 million in savings, the plan to tap into expected savings was a cause for concern.
“We’re counting money that we don’t have,” Councilor Joseph Maestas said. “I’m just a little uneasy about whether we even have that today and whether we may have that at the end of June. I would hate for that to kind of go up in smoke.”
It was a concern echoed by city Finance Director Oscar Rodriguez.
The new plan calls for the city to use up to $3.5 million in projected savings to help close an estimated $15 million to $18 million budget deficit. But Rodriguez told the mayor and councilors that the “very most” that might be available is $2 million.
“That would be stretching it,” he said.
After the meeting, Rodriguez said he would work to implement the council’s new plan.
“We’re going to try,” he said. “I think what it would mean is higher cuts just to be absolutely sure. We’ll do our best going in that direction.”
In addition to tapping into projected savings, the new plan still includes a franchise fee from the water utility, $4 million in cuts, $2.5 million in increased debt collections and fees, and rededicating a gross receipts tax for the general fund.
The new budget plan won’t increase the local gross receipts tax rate or property taxes, after a proposal to raise property taxes failed in a tie vote.
The property tax increase proposal would have cost the owner of a home with an assessed value of $300,000 an additional $153 a year.
Maestas and Councilors Mike Harris, Peter Ives and Renee Villarreal voted in favor of the increase. Mayor Javier Gonzales and Councilors Carmichael Dominguez, Signe Lindell and Chris Rivera voted in opposition.
“The framework moving forward does not have any tax implications for the people of Santa Fe, and that’s exactly how this budget should be solved,” Gonzales said after the meeting. “They didn’t get us where we are today, and they shouldn’t have to bail us out.”
Under the new plan, the city would charge the water utility a franchise fee of up to $1.5 million. That’s lower than the original budget framework that called for a $4.7 million franchise fee, but it’s higher than an alternate proposal introduced by the mayor that called for a transfer of $700,000.
“I think the franchise fee is defensible,” Harris said.
The plan also calls for the council to eliminate at the end of the year a voter-approved gross receipts tax of one-quarter of 1 percent that is dedicated to paying off bonds issued to finance water system improvements after a refinancing frees up the tax.
But taxes aren’t going down. That’s because the council voted Wednesday to enact a new gross receipts tax in the same amount that goes into effect Jan. 1. The estimated $3.5 million generated by the tax over the second half of the fiscal year will be used for general fund operations.
The new budget proposal leaves unchanged a part of the budget framework initially approved by the council that calls for $4 million in spending cuts and $2.5 million in increased debt collections and fees.
Contact Daniel J. Chacón at 505-986-3089 or firstname.lastname@example.org. Follow him on Twitter @danieljchacon.