Clovis commission approves gross receipt tax hike

CLOVIS — The Clovis city commission voted unanimously Wednesday evening to approve an ordinance to increase city gross receipt taxes by one-eighth of 1 percent.

The tax hike, effective July 1, is an effort to partially reconstitute the city for revenue losses from the phase-out of hold harmless.

The city’s gross receipt tax rate will be 8.1875 percent, which will equate to an extra 25 cents per $200 spent. City officials expect the tax to generate an additional $860,000 annually, to help offset a projected loss of $24 million over the next 14 years following the elimination of hold harmless.

The state Legislature voted in 2013 to eliminate hold harmless, a provision intended to compensate municipalities for revenue loss from the 2005 elimination of food and prescription drugs from gross receipts tax collection.

The tax hike is the first of up to three one-eighth rate increases permitted by the state as a condition of the phase-out. The second such increase will not occur until 2019 or 2020, said City Manager Larry Fry.

Among more than 100 municipalities in the state, Clovis is one of only 10 expected to still be left short even if all three incremental increases take effect.

“It’s going to be difficult for a lot of municipalities,” said Mayor Pro Tem Juan Garza, presiding in the absence of Mayor David Lansford. “We need to make sure that the money is spent wisely.”

The new tax revenue will go into the general fund, which “affords the Commission maximum flexibility on needs and uses of those funds,” said Fry.

Commissioner Chris Bryant said city officials considered “numerous ways to cut services or makes changes in our budget,” but still thought the tax hike necessary.

All commissioners voted to approve the rate increase after a brief discussion, with Commissioner Sandra Taylor-Sawyer weighing in by telephone.