Audits of tax revenues need not be partisan


June 11, 2017

Imagine the impact on your personal finances if your monthly income fluctuated by double-digit percentages from month to month, even though you worked the same hours every week at the same rate of pay.

That’s precisely what happens to New Mexico municipalities when the state collects gross receipts taxes — levied on most goods and services — and distributes them, minus the state’s take, each month back to the local governments.

Although some fluctuation in gross receipts taxes is normal because of a community’s economic activity — receipts from December, for example, are typically higher than those in, let’s say, April — huge swings are not the norm.

The proper distribution of gross receipts tax revenues is critical because they typically account for about three-fourths of the revenue used to operate city governments.

So when Albuquerque City Councilor Isaac Benton noticed inexplicable swings in month-to-month gross receipts distributions from the state, he asked state Auditor Tim Keller to look into it.

Benton said the city’s October revenue from the GRT shot up 19 percent compared to the same month a year earlier, and then fell 12 percent the next month.

That can’t all be Halloween candy.

As you’d expect, that kind of fluctuation makes financial planning a bit tricky.

William Fulginiti of the New Mexico Municipal League says other cities also have concerns, with potential litigation against the state under consideration.

Keller has asked Albuquerque to provide data going back three years to help determine whether there’s a problem and has pledged to do extra testing during an annual audit of the city’s revenues. That should either provide a satisfactory explanation for the erratic range or pinpoint a problem.

Meanwhile, Ben Cloutier, a spokesman for the state Taxation and Revenue Department, says a team is doing an internal audit and welcomes an outside audit — just not by Keller, a Democratic candidate for Albuquerque mayor. Keller’s office says the GRT review will, as usual, be conducted in conjunction with an independent auditing firm.

Sure, Keller is running for office and could make political hay out of findings. And yes, Tax and Rev has been without a Cabinet secretary since Gov. Susana Martinez appointee Demesia Padilla resigned in December after the state Attorney General’s office executed a warrant at the agency for tax documents connected with Padilla and her husband. (No charges have resulted from the investigation to date.)

But answering Benton’s request for a review of GRT distributions should be a nonpartisan exercise, and the folks in charge of ensuring municipalities meet their bottom line need that information. And sooner rather than later.

— Albuquerque Journal


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