Las Cruces City Council passes new ordinance to raise sales tax

The city of Las Cruces could lose more than $4 million. It’s all because the state said the city wrote an ordinance incorrectly.

“Without any question, I think they’re technicalities,” Las Cruces City Manager Robert Garza told ABC-7.

The City Council passed a gross receipts tax hike in September to offset the future loss of state funds.

The state rejected the ordinance, saying it did not meet state requirements. In a letter from the state tax and revenue office to the city, officials wrote: “(The ordinance) does not conform to the requirements…in that it seeks to add exemptions not included in the Act by including a separate exemption for sale of food at retail stores and payments by health care provider services. The ordinance also omits the exemption contained in the model ordinance for direct broadcast satellite services.”

Garza explained all of those exemptions, whether included or not, are mandated by state and federal laws.

“We think that if our ordinance, the original one went into effect, it would be substantially in compliance,” he said.

City officials said they had to move quickly to beat the deadline to get the tax in place by Jan. 1. The council met on Wednesday morning for an emergency session, where it passed a new ordinance identical to the model ordinance provided by the state.

In order for the tax hike to take effect on Jan. 1, the ordinance needed to be passed at least three months before then.

“It’s an emergency because of the potential loss of financial revenues to our community, but there is no risk that if we don’t receive these funds we’re going to have to shut City Hall down,” Garza said.

Garza said the city could lose $4.5 million if the tax hike gets pushed back.

Las Cruces residents weren’t happy to hear that.

“Whoever’s in charge of writing the law should do it correctlythe first time so we’re not wasting taxpayers’ money and otherpeople’s time,” said one Las Crucen.

“They need to do something to get their act together,” another Las Crucen said.

Garza believes the tax hike is crucial to a successful future for Las Cruces.

“That’s why we need to act today before we get there and realize we don’t have money to run our city. We don’t want to be Detroit and have to file bankruptcy as an organization,” he told ABC-7.

The new ordinance passed on Wednesday does not meet the deadline to take effect in January.

The council did not repeal the original ordinance. Garza said the city believes that ordinance serves as notice to meet the deadline.

Garza added the council will meet in closed session next week to discuss possible legal actions.