Clovis city officials address gross-receipts tax concerns

Payment of gross receipts tax revenue bonds; that’s in there because, if this quarter percent passes, we will have the ability to bond some of these projects immediately, so we can immediately start to work.

CNJ: The ordinance is still not specific. It talks about water; it doesn’t talk about Ute water specifically. It talks about projects as a whole, whether equipment or whatever. Why not use specific language restricting what it can be spent on for each point?

Mondragon: The city attorney made a phone call to Santa Fe, to see what exactly we can place in the ordinance. We followed the state statute. … We could not limit ourselves to the Ute water and that’s why we put police and firefighting equipment and, also, the construction and reconstruction of municipal streets. We know that is specific to streets or alley ways, roads or bridges.

CNJ: How much would the quarter-percent increase yield?

Mondragon: It’s expected to yield $1.2 million a year. It’s a penny out of every $4 being spent in Clovis. It’s 25 cents out of every $100 being spent, in the city limits.

CNJ: How much of that will go to the Ute Water Pipeline project?

Mondragon: Right now, they didn’t break it down. I think it’s important that we get this passed, and once it’s passed the commission will make decisions on that. We do have a pamphlet where it has about $250,000 toward Ute and $250,000 toward police and fire, so there’s going to be a breakdown. Exactly how they’re going to break it down they haven’t really decided yet.

CNJ: So they could change their minds at any time? The money is just there for these four things in any percentage you want it to be?

Thomas: Part of the reason for that … Ute Water is a good example. They’re hoping to get an 80-10-10 funding on that — 80 percent federal, 10 percent state, 10 percent local. If they get into it and some of the other funding sources deviate more or less — if you have dedicated “x” amount to that, and you don’t need that much — without it being a little more open ended there it makes it a little tough to use it for something else; or if you need a little bit more, to pull it from somewhere else.

CNJ: So it’s conceivable that all of the money could end up on number three.

Thomas: I think that’s stretching it, but it’s conceivable. But all the money collected is going to go for one of those four things.

Mondragon: I can say with certainty that this commission and this mayor are committed to the issues we outlined. And I think, when we point that out, one of the issues in this community has been salaries for public safety. Well, it’s not just public safety. I’ve got 377 public employees. Currently, the city commission has committed $10,000 to do a salary and wage study. We’re hoping that will be completed by the end of February. Once the study is completed, we want to raise the salaries.

CNJ: The gross receipts tax can’t be used to fund employee raises. How will that affect employee raises?

Mondragon: We’re hoping to make sure we find the money in other areas within our budget, where we could fund capital expense using the quarter percent, then using some of those funds that become available to fund the pay increases.

Thomas: Last year, for instance, our gross receipts increased by over 13 percent. Right now a good portion of that increase is going to be needed for these capital improvement items. If we can get funding to take care of that, then we can free up money for salaries or whatever.

CNJ: If our gross receipts taxes are improving, why not simply take the increase in gross receipts taxes and use that toward these four goals? Why do we need a quarter percent more in the gross receipts tax?

Thomas: We’re having to expand sanitation routes because the city’s expanding. If you’re growing, it takes more money to operate.

Mondragon: I think it’s real important that we continue the momentum that we have. We’ve done a lot of external things to attract economic development. … We continuously get calls, we’ve become a metropolitan statistical district working with Portales. I’d rather be a step ahead than a step behind and I think we have a momentum here, and I think our citizens want better security. … Economic development folks ask about that all the time. ‘What’s your crime like?’ They want better streets; they want better drainage. We’re currently working on water policy issues; that’s real important, we feel. I think we’re heading in the right direction. Implementing this quarter percent would allow us to continue in that right direction.

CNJ: But, again, despite the increase in gross receipts tax revenue from recent years, is that increase not enough to do the things you’ve outlined here and fund employee raises without raising the rate?

Mondragon: No. I don’t think it’s enough. You still have issues like street improvements; you have the Ute Water Pipeline project; you have Cannon Air Force Base and the (federal base closure) issues; you have downtown revitalization (and other issues). … I’d rather look ahead, than us play catch up. I think an important thing in our infrastructure … is that we have been playing catch up.

Thomas: The way that you get a gross receipts tax increase is that you’re getting bigger. The economy’s getting bigger, the footprint of the city’s getting bigger. Because of that, there are more services that you have to provide. You’ve got to cover a bigger area. Law enforcement officers have to cover a bigger area. Like I said, you need to add at least one more route for the sanitation trucks. That takes additional funds.

CNJ: Right now you pick up sanitation twice a week. Why wouldn’t you say, ‘OK, we’re just going to pick up once a week and that allows us to stretch those people to add a route?’

Thomas: Because a lot of times, with twice a week pick up, we’re getting calls for additional pick ups in the interim, because of the amount of solid waste being generated. Most of the businesses are picked up daily already. But it’s not unusual to get calls for extra pick ups in residential areas.

CNJ: As we grow that means we’re going to get more people, which means more taxpayers. So you’re going to get more tax revenue in. Those have to be extra dollars that aren’t in the equation now, aren’t they?

Thomas: To maintain the same level of service to those extra people will take more people, more equipment and more time. You have to have some way to fund that. You’re still static at that point. You’re not going back to fix streets that haven’t been dealt with in 10 years or replacing sanitation trucks that are 1988 models or police cars that have 125,000 miles on them.

Mondragon: Why sit back and wait until these people move in and start using gross receipts, when we can hopefully pull ahead to implement this and start working? The (term) we’re using is “gearing up for growth.” We can either sit back and watch this town grow and not do anything about it or we can look ahead and invest positively for the future of our community.

CNJ: What you’ve said (about planning) is the same thing you said in 2002. What makes you think the voters are going to like that story this time? What’s changed in two years?

Mondragon: I think the increase in economic development. Stores are being located, residences are being built, we’re seeing that there is progress going on. They’re seeing we are working together as a team to make things happen.

CNJ: Why not take the Ute Water Project and make it a separate bonding question, give people a chance to vote on whether they want to provide that money? Chop it in half, make it one-eighth percent for the Ute Water Project and one-eighth for infrastructure?

Thomas: Let’s face it. The project is 100 percent dependent on some federal funding. If that never materializes, then the project never happens and we’ll have allocated “x” amount of dollars and that money can never be used.

CNJ: But that means you wouldn’t enact the tax, right? Or do you still have to collect it?

Thomas: The reason we’re shooting for this time line is to be able to start collecting it in July. If it passes and we don’t know at that time if it’s going to be funded federally, it’s still going to start being collected. And if you’ve got a lot collected that you can’t do anything with … that’s just one scenario.

CNJ: Has there been any talk from the city along the lines of “We think the people will approve money for Ute Water, therefore, let’s add some other things on there to piggyback on Ute Water?”

Mondragon: No.

CNJ: How about the other way, “We know the city employees want a raise and we can argue this is a way of having more money in the city coffers to get that raise. We want to piggy back Ute Water on that?”

Thomas: No. In every discussion I’ve been on, each of these items has been handled individually: We need streets; we need fire equipment; we’re going to have to deal with water issues. I’ve never heard we should add one because the other is more likely to pass.

CNJ: Talk about the commissioners’ recent decision to vote themselves a pay raise. Have you talked to them about how this might affect the gross-receipts item? Have you talked to them about maybe rescinding the pay raise?

Mondragon: That’s an issue the commissioners are going to have to resolve themselves. Yes, I’ve had conversations with city commissioners about this matter and it has been of concern to staff. … But when you look at it they have not had a pay increase since 1986 and the percentage was about 1.6 per year. Was it bad timing? Yeah. Should it affect the quarter percent? As city manager, I’m focused on the quarter percent and what we need for the future of our city.

CNJ: But, you didn’t answer your own question: Will it affect the passage of the gross receipts tax increase, the way citizens respond to the gross receipts tax increase?

Mondragon: I hope it will not affect it. If the Clovis News Journal continues to run polls, absolutely, I think it will have some effect.

CNJ: What happens if the gross receipts measure fails again this time? Are you prevented from raising it again?

Mondragon: I believe it goes away in 2005.

Thomas: This would be the last regular election that it could be presented before the ability to enact it sunsets.

CNJ: Speaking of sunsets, why couldn’t you sunset the quarter percent? Say you get Ute Pipeline. You get the roads redone. You get the cop cars and the fire trucks replaced. When you’ve adequately dealt with roads and expansion of the city and routes and new employees ... when all of that happens, why do you still need the quarter percent?

Thomas: When is that going to happen? Is it going to be five years, 10 years, two years. How do you know when to sunset?

CNJ: Well, how do they know to sunset anything in the state Legislature? They put a time frame. You have to do your best estimate, don’t you?

Thomas: Yes, and a lot of times when they do that they come back at the period when it’s supposed to sunset and re-enact it.

CNJ: If the gross receipts does not pass, what happens?

Mondragon: We continue. We move on, and I think we’re going to have to be very creative in finding ways to operate. We did that in the last election. This is what I told my department heads: Even if this doesn’t pass, if I have to capitalize, if I have to take away capital needs, I will to make the salary issue competitive. We’re in a position where we have to make this happen now. If we don’t make it happen now, I don’t know what will happen later.

CNJ: But if this doesn’t happen now, city workers will still get a salary increase somehow or another?

Mondragon: Somehow or another. I think we’ll find a way, but capitalize in other issues. In other words, we will cut down on equipment needs, for example. I’m going to capitalize on other needs to make this happen.

CNJ: When you start giving out raises is it going to be a very gradual thing or do you want to get them up to speed right away?

Mondragon: It’s real important that we get them up to speed right away, especially in the public safety sector.

CNJ: Have you talked to city commissioners? Are they all on board on this?

Mondragon: I believe a majority of the commissioners, if not all, agree about the salaries, that we need to do something with that.

CNJ: Let me have you boil it down. Besides “gearing up for growth,” why should someone vote for this project? Is it for pay raises? Is it for growth in the city? So we get ahead of the curve? So we get up to the curve? ... Why do they vote for this issue in March?

Mondragon: I think it’s important that we continue the growth, continue the momentum. For economic development, we have to continue our infrastructure, our streets, our drainage. Public safety is really important. Business owners ask about the crime. They ask about the fire department. They ask about insurance ratings.

We want to provide a good quality of life for people. I think it’s important that we do that. And we’re hoping they support this quarter percent.

Thomas: For the previous probably 10 years, up until a year, maybe 18 months ago, the city had been pretty well stagnant. We have started to pick up momentum, we are seeing new businesses come in, we are receiving a lot of inquiries about other new businesses coming in. To maintain your momentum, you’re going to have to maintain your infrastructure; you’re going to have to maintain your services. You’re going to have to increase, in some cases, to cover a bigger area. It takes more money to do it.

CNJ: If you lose … I’ve heard some commissioners and the mayor say they are not interested in increasing property taxes. But would you have any other place to go to pay for some of these things?

Mondragon: That would be the only way to go. But I don’t believe the support is there for a property tax. I know there was a commissioner who made a comment, and you quoted him in the paper, about a property tax increase, but I don’t think the support is there on the commission.

CNJ: So it’s gross receipts tax or nothing at all?

Mondragon: I think that I can safely say that I don’t expect the commission to look at property taxes unless the city started going to hell in a hand basket.

CNJ: How close are we to going to hell in a hand basket?

Mondragon: We’re not. I think we’re holding our own, but we’ve got to gear up for the growing pains we’re going through. Another thing I think is real important, is that everyone who comes in and shops pays for it (with a gross receipts tax). With property taxes, only the property owners pay the tax.