Los Alamos County Council Wrestles With Increasing GRT

Los Alamos County Council is considering raising the gross receipts tax by .5 percent. Photo by John McHale/ladailypost.com

Los Alamos Daily Post

During the budget hearings for Fiscal Year 2024, Los Alamos County officials predicted a grim looking future for its budget, which has raised the question – what should be done?

Ultimately, County Council directed County Manager Steven Lynne to present council with two ordinances to possibly raise the gross receipts tax (GRT) by .5 percent. One ordinance would make this effective January 2024 and the other would make the increase effective starting July 2024. Once presented with these ordinances, council will need to decide whether to approve one over another or vote both down.

This motion passed 5-2 with Councilors Randall Ryti and David Reagor opposed.

Lynne explained during the first budget hearing on April 17 that although the County is enjoying a healthy GRT revenue from Los Alamos National Laboratory (LANL), this is expected to decline in 2026 and 2027.

He said LANL is moving into pit production in future fiscal years and the state has significant exemptions for paying GRT on manufacturing and LANL is expected to take advantage of those exemptions.

“In the long term we are projecting a major decline in gross receipts tax revenues,” Lynne said. “The magnitude of the decrease is about $15 million.”

If the GRT is increased, Lynne said LANL and individuals would be impacted. For instance, if a household of four with net income of $60,000 spent $5,000 on taxable items such as clothing, household goods, etc., the tax would be $25. The last time council approved a change in GRT was in 2007.

April 18, Lynne presented options Council faces and consequences of waiting to raise GRT:

  • Agree to a .5 percent increase and timing to implement it in January 2024.
  • Agree to a .5 percent increase but want to defer between six months and a year. This means the budget would need to be reduced by $6.5 million for each six-month deferral.
  • Agree to a .25 percent increase, which would require the budget to be reduced by $6.5 million annually.
  • No increase is approved, meaning significant cuts would be needed in operating and capital budgets annually.

Council weighed in on these options.

Councilor Melanee Hand said she favored going with option one.

“The reason why is because our community survey says we want and need certain things and that budget responds to those citizens’ needs,” she said. “One way or another we’re going to have to pay but waiting most likely means it will be more expensive later and we already waited too long for many of the things on that list.”

Councilor Suzy Havemann said she understands the “jolt” that comes from a tax increase, however, “I feel like this tax is for the most part going to impact Triad and the laboratory’s budget. I think the benefits outweigh the half cent increase.”

As a result, Havemann said she supports option one.

Reagor disagreed; he said he supported not raising the GRT.

“I think if we raise it now all that money will be spent and if a crunch comes up in the future you have to raise it again … that surplus will be gone by the time we get there when the lab’s contribution shrinks, that surplus will all be gone and we’ll have to raise it again for that future surprise or cutback,” he said. “So, I think we wait until we see that for sure and understand it’s in the planning but it’s not here, so we don’t worry about it.”

Ryti said he felt other options need to be explored.

“What other options do we have,” he asked, “I am somewhat reluctant without knowing we exhausted all the options available to us.”

During the final budget hearing on April 24, Vice Chair Theresa Cull made the motion to consider the two ordinances.

She said she wrestles with the issue of if $6.5 million is cut from FY2024, what is $6.5 million and does council do that again in FY2025 and how does it impact the out years.

“…Without actually having some kind of analysis … showing what effect that might have and what we might cut, it’s really hard to actually postpone the increase,” Cull said. “I also thought about possibly reducing it by half starting in January 2024 and then adding the other half in July 2024, again, the same issue – what would you cut?”

She explained she wanted to see more information about increasing the GRT in January and in July.

Council will consider this question soon.


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