Friday, February 5, 2010

What Local Governments Fear

My story in today's New Mexican is about a revenue bill that represents a move city and county officials have feared for many months.

Senate Bill 247, introduced earlier in the week by Senate President Pro Tem Tim Jennings, would phase out provisions of a law that kept city and county governments from taking major hits in their revenue when the state exempted food and medicine from gross-receipts taxes in 2004.

The buzz phrase is "hold harmless." Local governments are "held harmless" from losing revenue from their share of the taxes they got on food and medicine.

Last year the state paid local governments about $121 million in revenue they would have received had the taxes on food and medicine not been lifted. That $121 million would be a big chunk of he $600 million budget shortfall. (Jennings' bill would reduce the "hold harmless" distributions by 20 percent a year for five years.)

As Carter Bundy of AFSCME told me, "The only way they got (the food tax repeal) through was by agreeing to hold cities and counties harmless."

The city of Santa Fe receives about $10 million a year from the "hold harmless" distributions. Municipal League director Bill Fulginiti told me that some local governments would be even more hard hit. The town of Hatch, for instance gets nearly 30 percent of its budget from the "hold harmless" distributions.

No committee hearing has been scheduled yet for SB247. Its first stop would be the Senate Corporations Committee.