A Tax Increase, Explained

Cutting Services Not A Progressive Option

\ Mar 08, 2018

6 min read

The city of Albuquerque will have to raise taxes. Soon. A projected $40 million deficit for the fiscal year that begins July 1, 2018 has been on the mind of our city’s leadership for some time.

And although Mayor Keller told voters last year that he wouldn’t raise taxes without voter approval, he now finds himself in a precarious though previously understood situation. Keller announced that there would be problems with a looming deficit as soon as he took office and put his administrators to work find solutions.

In an executive summary released at the end of last month, Keller detailed the economic problems facing Burqueños. The report emphasizes at its beginning that the financial issues addressed are outside of the city’s control. It places their origin within a macro-economic framework that shows this country continuing to struggle with items like maintaining infrastructure and providing basic services in a time of diminishing returns from federal and state sources.

First to be considered: a $25 million “structural deficit” that is the result of a gap in revenue from once solid sources that have suffered because of slow economic growth, have been eliminated altogether (the grocery tax, which ended due to state intervention in 2004) or been replaced (online shopping has taken its toll).

Second, recurring costs for items such as medical insurance, water and compliance with the Department of Justice in its mission to fix our city’s police department have strained city coffers. Further, millions will be needed to address the training and equipment needs of first responders. This includes revenue desperately needed to process “large backlogs in fingerprint and DNA testing at the [city] crime lab, which ultimately delay, for several years, the criminal justice system in Albuquerque.”

Keller’s report focuses on the public safety issue underlying the budget deficit, at one point stating that “The city must increase public safety resources to counter ever worsening crime trends,” writing that the goal of increased funding for local law enforcement hinges upon preventing and protecting the public “from dangers involving safety, such as crimes and disasters and to create positive community relations.”

Besides tax increases to fulfill his progressive vision—and keep the city afloat in stormy economic times—Keller’s executive report also makes suggestions about methods of revenue generation that may be available for use by raising fees on certain city services. These include potentially increasing planning and permit fees to see revenue from those sources rise to about $5 million annually, lifting bus fares by 25 percent or raising the cost of child care services, golf course usage and museum rental scheduling.

The revenue to be gained by such changes, unfortunately, pales when compared to the funds available from sources of further taxation. The executive summary lists such potential tax increases, such as a small increase in the gross receipts tax. A 3/8 cent increase would provide at least $44 million in additional revenue over a year’s time. An increase in the property tax operational mill levy would result in $11 million in additional funding going into the city coffer on an annual basis.

Finally, the document also addresses budget cuts as means of reducing the deficit. Such unfortunate measures would include cutting community events at the KiMo and South Broadway Cultural Center (a move that would save about $3.6 million per year) and permanently cutting 200 currently unfilled city work and administrative positions to save approximately $13.3 million per year—a move that the report warns would result in far reaching impacts to citizen services.

Flash forward through winter: On Monday, March 5, the City Council voted on legislation—introduced by Council President Ken Sanchez and long-time centrist Councilor Trudy Jones—aimed at raising the city’s gross receipts tax (the tax money citizens pay when they purchase goods, except groceries) in order to fully fund Albuquerque’s embattled, understaffed police department. The increase will raise the current level of taxation—which is eight percent—by 3/8 of a cent per dollar. Council President Sanchez reckons the increase will generate up to $55 million in additional revenue per year, over $10 million than Keller’s projections.

As readers may recall, during his very successful campaign for Albuquerque’s top spot last year, Keller told the masses that he would only raise taxes with voter approval as a last resort, and then only to fund public safety projects. He sees the writing on the wall and so should you, dear citizens. Keller’s call for a tax increase is not a violation of his promise but rather a realistic evolution of a leader set on reframing and recharging this city.

Using taxes, and yes, raising taxes instead of cutting vital services to make sure government has the capital necessary to provide needed services for citizens has always been the source of much debate in the American political dialogue.

Republicans generally run on the “no new taxes” platform. In this case, hard-line Republican Councilor Brad Winter was the sole member of the Council who did not vote for the tax increase.

President Ronald Reagan built the entirety of his macro-economics on the premise that taxes, especially for those in the top 10 percent of earners, should be cut and cut again to encourage growth and profitability. The extra money made by such drivers of the economy would result in more feria for all, as those on top hired more, raised incomes and then went golfing frequently at municipal courses (the ones still open and being watered), thereby giving back to the system.

The thing is, trickle down economics never works. It’s a sham. Cutting services never works either. Such methodologies only serve to perpetuate economic disparity and give further agency to our Trumpian overlords.

On the other hand, reasonable tax increases work. And 3/8 of a cent per dollar spent is affordable—even on my modest means as a journalist. That number seems doable and citizens should respect our mayor’s economic acumen and his call for tax increases as a solution that prevents reduction in services or a continuing public safety crisis. It’s simple and effective economic medicine for a growing city.

Citizens should stand behind the mayor’s plan to set things right, especially if the alternative would see more closures, reductions and a negative impact on civic safety.