By KIRSTEN LASKEY
Los Alamos Daily Post
kirsten@ladailypost.com

Gross Receipt Tax (GRT) is hard to predict, Los Alamos County Administrative Services Director Helen Perraglio explained to County Council Tuesday night.

For instance, during the Fiscal Year (FY) 2026 budget discussion, the GRT was projected to dip 10 percent. This turned out not to be the case; the decrease was more, Perraglio said.

“What happened … when we adopted our budget in (FY) 26, we thought we were going to have a 10 percent decrease over what we had budgeted in (FY) 25,” she said. “It turned out to be a 14 percent reduction … it’s about $4 million lower than what we even presented to you with all our projections in the budget hearings.”

In response to the GRT’s unpredictability and to ensure the County can continue its operations, programs and capital improvement projects (CIP), council approved 6-1, with Councilor David Reagor opposed, to consider an ordinance that would increase the County’s GRT by 5/8 percent.

The ordinance will be introduced on Oct. 7; there will be a public hearing Oct. 28, and if it is approved, the new GRT rate would go into effect July 1, 2026.

Reagor opposed the new rate, saying more information was needed as well as more time to discuss the proposed increase.

“Well, it is way too soon to do this,” he said. “…I think there is a lot more discussion (needed) before you vote in favor of this.”

Council Vice Chair Suzie Havemann, who motioned to proceed with the ordinance, noted if the County wants to have nice things and a thriving community, then a higher GRT seems necessary.

“I am strongly in support of doing this,” she said. “Having nicer things in our community, and more amenities to serve our residents and supporting our regional partners is one of the main reasons I decided to try to be on county council. I lived here a long time and have repeatedly heard and experienced the sentiment, why can’t we have nicer things … and while we are so fortunate to have revenues to do a lot of things … there are still so many things that we seem to have restrictions or limitations because we don’t have the money for it. Yet we have the means to fulfill that budget need. I just think by increasing the GRT rate by 5/8 percent, which still keeps us relatively low compared to our neighbors … I think that’s a conservative approach, so we don’t find ourselves in a hole … I think it allows us to have some of the nice things that help our small business community …”

Perraglio offered several scenarios for council’s consideration.

Originally, Perraglio said a half percent increase was under consideration, but even with that the County’s revenue would be in the negative.

She explained the County would start to see a small decline in FY29 “but then it is greatly realized in 2030 and beyond.”

As a result, the County’s expenditures would need to decrease.

“…given what we know today it would look like we would need about a 10 percent reduction in expenditures or close to $11 million with the half cent,” Perraglio said.

Adding a 1/16 percent to the half percent would give more flexibility and target reserves would remain positive in the 10-year outlook.

“With 9/16 you have a little more flexibility and then it remains positive,” she said.

However, Perraglio said the ideal increase would be 5/8 percent.

“It gives a lot more room on your target reserves that are available,” she said.

It would allow for expansion in out-years as well as budget new transfers or do more transfers in good years, Perraglio said.

The worst scenario would be to do nothing; as Perraglio said, “We run into trouble immediately.”

That trouble includes no more targeted reserves and the County not having enough revenue to cover expenses. As a result, cuts would be needed.

GRT is important because it is one of the two main sources of tax revenue for the County, Perraglio said.

Property taxes make up 8 percent of the overall budget and mainly stem from residential properties, while GRT makes up 72 percent of the overall budget.

Although property taxes can be increased through a mil, Perraglio said GRT can be increased incrementally, and it is mainly passed on to the consumer.

She showed what the 5/8 percent increase in GRT would look like.

If someone spends $1,000 in Los Alamos, the existing GRT would be $70.63. If the 5/8 percent increase is implemented, the new GRT for a $1,000 purchase would be $76.88. Or $6.25 more on a $1,000 sale.

Perraglio offered more details. For example, if $100 is spent in Los Alamos, then the GRT, with a half percent increase, would be 50 cents higher. If the GRT was raised 9/16 percent, then it would be 56 cents more and if the GRT was raised 5/8 percent, then it would be 63 cents more.

She noted that compared to its neighbors including Taos, Santa Fe, Espanola and Albuquerque, Los Alamos has the lowest GRT. Even raising it keeps it as one of the lowest. Raising the GRT also allows the County to maintain healthy fund balances, which Perraglio pointed out helps support and supplement other programs in the County such as the CIP fund, the affordable housing fund, the economic fund that benefits Los Alamos Public Schools and University of New Mexico-Los Alamos as well as public/private partnerships such as the Local Economic Development Act.

There are also debt services to be considered, she said, including the revenue bond which bought the Municipal Building and the Pajarito Cliffs Site. New debt is being planned in preparation for the broadband project and other CIPs that total $75 million.

N.M. Rep. Christine Chandler spoke about how this situation arose. She explained that the state wanted to entice manufacturing into New Mexico.

“As a result, we created a couple of exemptions for manufacturing both in the purchases of goods and later in the purchase of services,” Chandler said.

What wasn’t realized was the laboratory services, namely at TA-55, that are characterized as manufacturing, she said.As the biggest contributor to GRT, the laboratory will feel the most impact by this increase, Chandler added. Still, she noted it will benefit the lab.

“We are encouraged to support lab activities and provide an environment so that employees will want to come here and recruiting efforts at the lab are successful,” Chandler said.