Clovis officials introduce tax hike ordinance

As a means of offsetting a projected eight-figure financial hit spurred by “hold harmless” losses, the Clovis city commission voted unanimously Thursday to introduce a resolution to implement a one-eighth of 1 percent gross receipts tax increase.

Hold harmless, eliminated in the 2013 state legislative session, was a provision by which the state paid municipalities for lost revenues from the 2005 elimination of food and prescription drugs from gross receipts tax collection. As a condition of the waiver, municipalities are allowed to implement three “one-eighth” increments and the current ordinance represents the first increment for the city.

Officials said approval would generate $860,000 per year and be effective July 1 — provided it is approved by the end of March, as state law requires gross receipts tax changes be implemented at least three months before either July 1 or Jan. 1.

The city’s current gross receipts tax rate is 8.0625 percent.

“Fiscal year 2016 was the first year the city was impacted and we have an additional 14 years, unless the legislature chooses to increase that clawback and have that happen sooner,” City Finance Director LeighAnn Melancon said. “Clovis is one of 10 communities that even by implementing all of our one-eighths, the city would still be behind and not recoup everything entitled to under the current Hold Harmless. The loss through the end of 2017 is $554,000. With the one-eighth increase, we’re still looking at a $13 million deficit at the end of the 15-year period.”

Mayor David Lansford said the increase was unavoidable.

“It’s been my opinion the implementation of at least one-eighth percent gross receipt tax was inevitable at some point,” he said. “We delayed it for as long for as long as we could. I think it’s imperative we implement the one-eighth gross receipts tax to be effective July 1.

“It’s not something we want to do, but because we are going to lose $24 million over a 15-year period in revenue as a result of the equalization payments, I think we have no alternative, unless we want to cut services and personnel for the city. I don’t think that’s something the city would appreciate.”

Officials said a special meeting would be required in order to meet publication deadlines as a means of getting the measure adopted and sent to the state before April 1.