The following appeared on KRWG on August 14, 2018
Las Cruces voters are currently casting mail-in ballots to decide the fate of a proposed property-tax hike aimed at generating millions of dollars for various expenditures that proponents claim will improve the city’s “quality of life.”
Unfortunately, there is often a good deal of misinformation about the overall size and impact of tax hikes, especially increases in property taxes. Voters need all the facts before making their decisions.
The 2.1 percent millage rate hike now being considered represents a 7.3 percent tax increase for most residential property owners. That is a sizeable expansion, especially given the rapid rate of growth in the city’s gross receipts tax. Today, the GRT rate in Las Cruces is 8.3125 percent. Back in 2014, that rate was “just” 7.5625 percent — meaning that the levy’s burden expanded by approximately 10 percent over the last four years alone.
Supporters of the property-tax hike, including the Greater Las Cruces Chamber of Commerce, cite “investments” made by competing cities, such as El Paso. But the Sun City has not increased its sales tax in recent memory. And remember that El Paso is part of Texas, a state without an income tax. Yet Las Cruces’s neighbor to the south is growing its economy rapidly.
Since May 2009 – the month before the nation’s recovery from the Great Recession started – El Paso has seen job growth from 277,000 to 318,200, a 15 percent increase. Over the same period, Las Cruces has seen job growth from 69,400 to 70,800, only a 2 percent increase. So El Paso’s growth rate has surpassed Las Cruces’s by a factor of 7.5.
Workers flocking to El Paso have, not surprisingly, boosted overall economic output (and prosperity). Since the end of the Great Recession, El Paso’s gross domestic product grew from $23.4 billion to $25.4 billion. In contrast, Las Cruces’s GDP actually dropped from $6.3 billion to $6.0 billion. This means that even though the number of jobs rose slightly in Las Cruces over the last decade, the real value of their work actually fell.
It’s clear: Raising taxes is a foolish strategy if the goal is to boost a city’s quality of life. Growing the economy must come first — then the focus can be on tennis courts, dog parks, and biking trails. If there are other “investments” already in place that make these new spending proposals impossible, then it becomes an issue of priorities. The political leadership of Las Cruces needs to make some tough decisions and voters need to hold them accountable.
Notably, as has been widely reported, the city has been collecting GRT on the “hold-harmless” prior to that source of revenue being eliminated. In other words, taxes have been raised in anticipation of revenues (from the state) being phased out over 15 years.
If quality-of-life expenditures are such a high priority, then perhaps some of the “surplus” GRT being collected today could be allocated to these projects. The City of Albuquerque shifted operating dollars to a capital project several years ago to build the Paseo del Norte and I-25 interchange. There shouldn’t be a problem if Las Cruces were to do the same. We’re talking about a surplus of $6.3 million in 2018 alone, on top of what the city has already collected. That’s been “play” money for politicians to spend for the last few years. It’s time voters made politicians put that money to work, if these “investments” are so critical.
Las Cruces is a beautiful city, with many natural and man-made assets, but like New Mexico as a whole, it tends to suffer from economic mismanagement. While it is unlikely that state leadership in Santa Fe will do what needs to be done to compete with low-tax, right-to-work places like El Paso, this month, local voters have an opportunity to kill a sizable – and completely unnecessary – tax hike.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.