The City of Truth or Consequences 2025-2026 budget is a whopping $102.2 million, exceeding all prior budgets.
Capital projects comprise most of the budget–nearly $73 million. Only $29 million is for one year of operations.
City Manager Gary Whitehead presented the “interim” budget to the city commission at their regular May 14 meeting. They had very few questions or comments, which Mayor Rolf Hechler said was due to Whitehead and staff’s “hard work”, resulting in a “very clear and precise” budget.
The public hearing on the interim budget had no public questions or comments, in keeping with the last six budgets as well.
The new streaming of the meeting on the city’s Facebook page, with its much-improved audio, resulted in 10 listeners, however, with several informal comments being made.
The interim budget is due to the New Mexico Department of Finance and Administration on June 1, therefore the city is ahead of schedule.
The final budget is due to the DFA on July 31, which will also go to public hearing before the city commission approves it.
Some key points on the interim budget follow.
Payscale study
Whitehead presented the results of a recent payscale study, which the city had done to help address its difficulty in hiring and keeping employees.
It divided city employees into two categories, salaried or “exempt” employees and hourly or “nonexempt” employees.
To get the salaried employees’ compensation up to market value would cost about $34,000 in FY26. It would cost about $108,000 to make nonsalaried positions competitive, or $142,000 in all.
But then there is “compression.” Whitehead gave an example. If a two-year employee’s pay were brought up to market rate, and if their new pay then equaled a four-year employee’s pay, then the older employee would need a bump.
Addressing compression and getting pay up to a competitive rate would cost $70,000 for salaried and $236,000 for hourly employees, or $306,000 total, which Whitehead said “seems very achievable.”
The intermediate budget approved on May 14 by the city commission includes the usual 3 percent increase that is given to all employees each year they remain. It does not include any increases based on the salary study. But Whitehead purposely had staff swell the budget by asking them to assume every position was filled–119 positions in all–including all retirement and benefits costs.
Whitehead said he will probably find enough money to address the payscale study increases from vacant positions and from those employees who chose not to be covered by city insurance, choosing instead to be covered under their spouse’s insurance.
Last year’s budget, which ends July 1, estimated $26.7 million for operations, which is nearly $2.3 million less that the $29 million Whitehead is allowing, of which $8.7 million is for pay and benefits, therefore it is likely he will find the $306,000 needed to incorporate the payscale study increases.
City Commissioner Merry Jo Fahl minced no words, telling Whitehead “to find the money.”
City Commissioner Ingo Hoeppner asked that the federal cost-of-living rate be added to subsequent pay-scale schedules. Mayor Hechler asked that the cost-of-living increase be added to the payscale study amounts for the 2025-26 budget under consideration, to ensure “it’s not out of date already.”
Debt
The yearly debt payments for each of the city’s loans is on pages 95 through 98 of the city packet: https://www.torcnm.org/5-14-25%20CC%20Agenda%20Packet.pdf
It totals $1.46 million a year.
Whitehead remarked that when Assistant City Manager Traci Alvarez meets or talks with state and federal agencies in her efforts to receive grants and loans for capital projects, they scrutinize the city’s debt load and capacity to pay it off.
“We’re getting to the maximum of our debt limit,” Whitehead said.
Fahl said, “We have a lot of debt. People ask, ‘why don’t you get more money?’ They don’t realize we have to pay off these loans.”
“We have a mortgage too,” Whitehead summarized.
The budget doesn’t give an overview of the city’s long-term debt, since it’s a one-year projection, but the year-end audit for FY24 https://sierracountycitizen.org/t-or-c-audit-for-fiscal-year-2024-some-thoughts/ stated that at that time, June 30, 2024, nearly a year ago, it was about $16.3 million for past capital projects. The total long-term liabilities amount was $26.7 million, which includes loan debt and the city’s PERA or employee retirement match.
Most of the city’s debt is with the New Mexico Finance Authority, which gives low interest rates, and the highest interest rate is 3 percent, Whitehead said. He also pointed out that last year and over the next three to four years, the city will have taken on over $60 million in water projects, only $15 million of which is loan. That means only 25 percent of the cost of those projects will be paid for by city residents; 75 percent will be paid for by grants.
Capital Projects
This part of the budget will take a lot of finicky matching of account numbers to projects, so I will do a follow-up article on the $73-million portion of the budget.
Capital Outlay
Governor Michelle Lujan Grisham and local representatives Gail Armstrong and Rebecca Dow, as well as local state Senator Crystal Brantley gave portions of their discretionary capital outlay money to the city.
Lujan Grisham gave $1 million for work at the wastewater treatment plant.
Whitehead said the WWTP has about $2 million in needed repairs to get out from under a New Mexico Environment Department administrative order.
Two fixes are needed to get the WWTP “totally operational,” Whitehead said, which would hold the city for five years, giving it time to get an “end to end” study of the city sewer system done in order to guide and phase needed upgrades.
The first fix is to “weirs” that are attached to the clarifiers. “The clarifiers are not in balance,” Whitehead said. “We tried to put this off for five or six years, but the environment department said, ‘not acceptable,’” Whitehead said.
The second fix is to the “head works” that strain out the “big pieces,” Whitehead said, which were damaged in the July 2020 flood and have been operated manually ever since. This is dangerous for the workers, who have to lower themselves into a pit amid sewer gases. The city has already received $455,000 in grant/loan from the NMFA colonias infrastructure fund to fix the headworks.
The $1.455 million will be supplemented by about $545,000 in general obligation bond money, Whitehead said. The city’s residents passed a $3 million bond issue for water, wastewater and road repairs two years ago.
Dow, Armstrong and Brantley gave $125,000, $125,000 and $250,000 respectively or $500,000 total to complete the animal shelter expansion.
The animal shelter desperately needs more room for kennels, customer area, and backroom activities, such as doing laundry. Two years ago Brantley gave about $400,000 for this expansion. It’s been designed and went out to bid, the lowest of which was a whopping $1.5 million.
“This is excessive,” Whitehead said. “It’s a very small building, about 2,000 square feet.”
Whitehead said the city is probably going to go with a different procurement method other than the bid process–design build–which would allow the city to find and work with a contractor to keep the price at $900,000.
Dow, Armstrong and Brantley gave the city $100,000, $100,000 and $160,000 respectively or $360,000 total for the new police building renovation, the former PNC bank building at 210 Main St.
The renovation will probably cost $1 million, Whitehead said. The city will take $200,000 from the police department’s .25 percent gross receipts tax revenue, will use $200,000 of general fund money and will probably sell the current police building on McAdoo St., which is appraised at $300,000 to get to the $1 million needed.
Whitehead warned, however, that the city pays $25,000 a year to lease a building at 523 N. Broadway in downtown T or C to house the Geronimo Trail Scenic Byway visitors’ center. The city may want to instead put the visitors’ center in the old police building.