By Daniel J. Chacón
Santa Fe Mayor Javier Gonzales and at least half of the City Council on Tuesday proposed that the city raise taxes and continue to tap the city-owned water utility in the form of a $4.7 million franchise fee to help close an estimated $15 million budget shortfall.
The proposal, intended to provide city staff with a framework as they draft a budget for the fiscal year beginning July 1, also calls for $4 million in unspecified spending cuts and $2.5 million in increased debt collections and fees to help close a the projected budget deficit.
Meanwhile, Gonzales said during his annual State of the City address that he also wants to use millions of dollars in water utility surplus funds — built up after years of rate increases — to fight poverty and combat climate change.
The mayor proposed that the city invest $50 million in cash reserves from the city water division with the State Investment Council. He declared that he would do “everything in my power” to get city councilors to support what he calls the Santa Fe Verde Fund, an initiative he discussed when he ran for mayor two years ago.
“The Verde Fund will operate essentially as an endowment, generating annual revenue between $1.5 million and $2 million,” he told a crowd at the Santa Fe Community Convention Center. He added that the money could be invested in a way that “ensures it is there when the water fund’s infrastructure and debt requirements need it.”
Gonzales said in an interview that the proposed fund would allow the city to put the money “into a vehicle that will generate revenues” and “start putting more money into our sustainability initiatives and our efforts to fight poverty.”
“Right now, basically it’s earning a fraction, if anything, to house that money in banks that charge us for actually storing that kind of money in their banks,” he said. “This is an effort to really put that money to work while it’s sitting in the water company until we need it in the future to fund these kinds of initiatives.”
Even if the council moves forward this summer with a plan to pay off $34 million in bonds issued to help pay for improvements to the water system, he said, “that will still leave sufficient money to have that $50 million in play for at least the next three years.”
Gonzales also announced plans to ask the council, after it develops a balanced budget, to approve creation of an Early Childhood Commission to oversee a citywide early-childhood education program, including full-day pre-kindergarten. That was another idea he proposed while on the campaign trail.
During his speech, the mayor said that if the proposed commission identifies a need for a dedicated source of revenue and can present a detailed plan that “shows exactly what we would be getting for our investment, I will ask the City Council to enact a portion of our property tax mil levy to back it up.”
In the interview later, Gonzales said, “Right now, we would wait to see how much is needed, if anything. It’s hard, right now, to say what that would be because we don’t know until we get this initiative started what the costs would be and at that point we’ll clearly be able to determine what the impact on a homeowner would be.”
While some councilors declined to comment about the mayor’s proposed initiatives, saying it was the first time they had heard about them or didn’t know the details, his speech generated mixed opinions from audience members.
“Loved the vision, hated the math,” an unidentified woman in the audience said.
The mayor’s remarks came shortly after the council’s Finance Committee voted 3-1 on Tuesday to recommend approval of a deficit-closing “framework” that includes $3.8 million in new taxes. Councilors Signe Lindell, Ron Trujillo and Chris Rivera voted in favor of the proposal while Councilor Joseph Maestas voted in opposition, saying he couldn’t support such a tax hike proposal.
“I think we just need to work a little harder at solving this situation without raising taxes,” said Maestas, who recently championed a 2-cent-a-gallon gasoline tax to raise money for street improvements, which his colleagues shot down in January.
Councilor Carmichael Dominguez, who chairs the Finance Committee Committee, co-sponsored the budget “framework” measure.
“We must move ahead to remedy this deficit,” said Dominguez, who has held office for 1o years and served as Finance Committee chairman for several years. “Tough decisions are always going to have to be made. But the consequences of not doing anything or delaying this, I think, are irresponsible and, quite frankly, in my opinion, they’re very unacceptable.”
The full council is expected to consider a budget resolution at its meeting scheduled for 5 p.m. Wednesday, Feb. 10, at City Hall.
Former Councilor Karen Heldmeyer, who frequently monitors City Hall meetings, said the proposed framework endorsed by the committee will affect all Santa Fe residents financially.
“To raise money in this proposed budget, it’s not just taxes,” Heldmeyer said. “It’s also franchise fees and other increases in rates. Whether it’s a rate or a tax, people are going to pay more.”
Gonzales, who had said in recent months that the city shouldn’t “rush to raise taxes or fees,” said in the interview following his speech that the city has few options.
“The truth is, as we became more involved in the detailed aspects of the budget, it became apparent that we couldn’t cut our way completely out of this deficit,” he said. “It became very apparent that we couldn’t raise taxes to cover it, so it had to be an assortment of solutions that came to the table.”
Lindell called the proposed $4.7 million franchise fee to be charged to the water utility “reasonable.”
“If that were a privately run company, which that’s what we ask enterprise funds to be — to operate as if they were a privately run company — we would be charging that, so it’s reasonable enough to charge that,” said Lindell, the other co-sponsor.
Lindell said she would support a combination of a gross receipts tax increase and a property tax increase.
“The city hasn’t raised their share of the property taxes in this city for eight to 10 years,” she said. “I know that people get property tax increases, but those have come from the county and from the different educational institutions. The city itself has not gotten one cent of increased property tax.”
The proposed framework calls for closing the budget deficit in a year. Other proposals the committee had previously considered called for a multi-year strategy and taking or borrowing money from the Water Division, a practice that councilors voted to end last year.
“We made a promise to the citizens of this city that we would not raid the water fund again,” Lindell said, “and I think that it’s important to keep that promise.”
Contact Daniel J. Chacón at 505-986-3089 or firstname.lastname@example.org. Follow him on Twitter @danieljchacon.