LAS CRUCES, N.M. - Those shopping in Las Cruces could be paying more in sales taxes soon.
The City Council is looking to raise the sales tax. A decision could be made in just a few weeks.
The city will lose more than $124 million in state funding by 2030.
City councilors want to offset the loss by raising the gross-receipts tax.
Mayor Ken Miyagishima said they have no choice.
"I don't know how much faith I can put in the legislature that they're going to uphold that end of the deal," he told ABC-7.
This year the state legislature decided to phase out hold harmless funds. This is money the state has paid local governments since 2004, when the state decided to remove gross-receipts taxes from food and prescription medicine. The money is intended to make up for the taxes lost.
"When they cut off hold harmless basically results in about $8 million, so 10 percent of our operating budget," Miyagishima said.
The state is allowing cities to raise sales taxes up to 3/8 of 1 percent.
"Now they've given us this 3/8, and I'm hearing some rumblings they're going to take it away. We have no choice but to take the worst-case-scenario and that is a full 3/8. We can always get that back. We can always reduce the tax rate," Miyagishima said.
As of now, the hold harmless funds are expected to phase out over 15 years starting in 2015, but state Senator Mary Kay Papen told ABC-7 if cities raise taxes, the legislature may cut the funding sooner.
That's why the mayor said it needs to be done now.
"I guess if I'm shopping in the city or spending money in the city, which I do, if it goes to a worthwhile purpose, I'm not objected to it," one Las Crucen said.
"After a while it starts becoming a slippery slope. They already charge 7 cents. Now it's 4 cents for every $10. It seems like its kind of snowballing," another Las Crucen said.
Miyagishima said the City Council could put the tax raise on the agenda August 19. It could go up for an official vote on September 3.
The city is holding public sessions about the proposed tax hike. Here are their dates and locations:
- Thursday, Aug. 8 at 6 p.m. at the Good Samaritan Village creative arts room, 3025 Terrace, with Councilors Greg Smith, District 2; and Olga Pedroza, District 3
- Tuesday, Aug. 13 at 6 p.m. at the Doña Ana Community College East Mesa Campus, 2800 Sonoma Ranch Blvd., Room 232, with Councilors Gill Sorg, District 5; and Mayor Pro Tem Sharon Thomas, District 6