Maybe for the first time ever the city will not raid utility fees in order to cover deficit spending.
It’s been part of the city’s culture for so long that many citizens have stated they don’t want the city to sell the electric department because taxes will have to go up—as if using electric funds for other purposes isn’t a hidden, nontransparent tax—taxation without representation that hits the poor the hardest.
The city commission historically condoned the bad-government practice of tricking its utility-fee payers that their fees were going toward utility operations, maintenance and construction projects. Instead, the money went to the swimming pool, parks, airport, golf course and the ever elusive pursuit of economic development and tourism dollars.
Raiding utility funds created the current crisis—the all-at-once crumbling of the water, wastewater and electric infrastructures.
The city’s infrastructure is so bad the city commission finally realized, due to clear but moderate statements from City Manager Bruce Swingle, that all utility funds must be spent on the utility. The electric grid almost went down and the other 60-year-old transformer needs to be replaced, 43 percent of city water is lost due to leaky pipes and wastewater effluent is barely within pollution standards.
Swingle oversaw the last three budgets in two years. The latest budget is nearly his last act, since he is leaving May 31. Angela Gonzales will take over as city manager with two months of transition time with Swingle under her belt. Swingle’s foresight, not the city commission’s, will ensure a smooth transition.
Swingle said the city won’t have to transfer the usual millions in utility funds into the general fund to balance the budget because “we increased revenues.” The boom in gross receipts taxes was also essential, Swingle said.
The GRT boom is due to numerous construction projects, among them the New Mexico Department of Transportation’s three roundabouts and Highway 25 improvements, the expansion of the New Mexico Veterans Home and the T or C downtown water project.
Increased revenue is largely from increased utility fees. Water rates went up about 65 percent since 2020. Wastewater rates have gone up 5 percent a year since 2017. Solid waste fees have also gone up 5 percent a year since 2017. The city’s electric rates haven’t gone up since around 2009, but they have only recently reached parity with the state’s average cost of 13-cents per kilowatt. Soon rates will go up even more. The city commission approved a $41,000 water- and wastewater-rate study at the Wednesday, May 10 meeting that will project costs for future capital projects and needed rate increases to pay for them. A nearly $50,000 electric-rate study was approved by the city commission many months ago.
The prospect of revenue from the sale of the electric utility has hung over the last two budget hearings, albeit in snatched statements alluding to closed-door executive sessions. Swingle suggested selling the city’s electric utility to Sierra Electric Cooperative shortly after becoming city manager two years ago.
Sierra Electric paid about $30,000 for the first part of what could be a four-part study to assess the sale. The city commission approved about $40,000 for the “second part” of the study, the expense hidden in a budget adjustment document that was not discussed openly. Mayor Pro Tem Rolf Hechler mentioned a few months ago the city needs $15 million to make the sale feasible. During Monday’s budget session incoming City Manager Angela Gonzales asked when the decision will be made; “Not for many months,” Swingle said.
Tax increases were also part of the city’s revenue increases that stopped the raid of utility funds, at least for the upcoming budget year.
The city commission, with voter approval, approved the issuance of $3 million in general obligation bonds, which will more than double property taxes.
City gross receipts taxes were increased by .125, from $1.6875 to $1.8125 for every $100 purchase (food excluded) on Jan. 1, 2023.
The city commission also increased fees to increase revenues. The golf course will still cost $255,000 down from $280,000 or so from past years, although fees went up. The swimming pool will cost $177,000, down about $100,000, higher fees being a small part of the decrease in cost to the general fund. It is open seasonally instead of all year. The airport will cost about $160,000, also down about $100,000 in subsidies, increase in fuel costs closing part of the gap. Fees associated with the civic center, park facilities, the animal shelter and animal control were increased, as well as other fees.
At the same time the city increased revenues, it increased employee salaries. A salary study done last year uncovered the need for massive corrections to stop the exodus of workers. Salaries increased $800,000 over this year’s budget that ends June 30. There are salary increases this year, but only the mandated “step” instituted by the adopted salary study. Staff shortages are still massive in the water department, probably because they are called out at all hours to address leaks. Swingle reported 400 leaks mid-year. Shortages elsewhere seem to have slowed.
Last year the city commission passed a $47-million budget and this year it is $51 million. That is an insane amount for a city with a population of 6,042. Socorro, with a population of 8,414, had a $26-million budget this fiscal year ending June 30. Raton, with a population of 6,082 had a $17.6-million budget for fiscal year 2022.
The reason? The city’s infrastructure, allowed to rot for 50 or more years due to irresponsible fiscal oversight—the city commission’s duty and responsibility—must be repaired.
The capital-projects portion of the budget—$27 million—is greater than the $24-million operations budget.
What is even more insane? The city commission breezed through the budget on Monday with zero discussion of capital projects—just as it has done for the last four budgets.
This is a great article. Concise, clear, and very timely. Thank you!
I fail to understand why there is no talk of accounting for the wasteful spending and taxation to fund the Space Sport (Pork). When spending money in the city, shoppers are supporting a paved portion of the desert. If the city can’t afford to restore its decrepit infrastructure, why are the city councilors condoning residents subsidizing a folly such as the Space Port?