Serving Clovis, Portales and the Surrounding Communities
It’s clear that public entities see rough times ahead, with the COVID-19 pandemic’s effect on commerce, oil prices and anything else you can imagine that funds governments.
What the rough times specifically mean, however, is still tough to tell.
Disbursement of gross receipts tax revenue falls two months behind collection, and local municipalities will know on Friday what they can expect to receive from March revenues. The state closed schools March 16, and restrictions on businesses began later that week.
The New Mexico Legislature anticipates holding a special session in June ahead of the upcoming fiscal year, but the session is yet to be called by Gov. Michelle Lujan Grisham.
The News asked various public entities what they were anticipating over the next few months with diminishing returns from GRT and other various revenue sources.
Curry County
Curry County Manager Lance Pyle is planning a preliminary budget for the Curry County Commission to consider at its May 19 meeting. He took the 2018-19 fiscal year as a template and applied a 2% overall cut. Next, he went to the first three months of the 2020-21 fiscal year and calculated an additional 25% reduction.
“That may change when I get to the final budget,” Pyle said, “but that’s what I’ve done for the preliminary.”
The county receives 49.4% of its funding from property taxes, around 41.89% from GRT and the rest from various sources like fees and accrued interest.
As far as what those cuts mean, Pyle didn’t want to give specifics without first presenting them to the commission. He did, however, feel safe saying he would not recommend any new county positions and that all departments have made cuts.
Roosevelt County
Roosevelt County Manager Amber Hamilton said the county will have a better understanding once GRT numbers come in Friday, but that its budgeting processes have been conservative over the last few years.
“At this point,” Hamilton said, “everything is on the table and there will be numerous options for the commission to consider.”
Hamilton credits county staff and elected officials for being willing to think outside of the box on solutions, and while she is confident in local Legislature representation, counties don’t have the option to wait to see what Santa Fe decides on matters.
“In local government, we work to continue to provide essential services daily,” Hamilton said. “I believe we must budget and prepare for the worst and pray for the best.”
City of Clovis
City Manager Justin Howalt noted that so far, the city’s GRT revenues are up $1.5 million from this time last year but the lodgers tax revenues are down $117,000.
“I think it is too early to predict how this will impact the remainder of the fiscal year,” Howalt said. “However, all spending is being closely monitored.”
The preliminary budget for the upcoming fiscal year is flat, with Howalt saying projections would be modified based on March returns. He also noted the state has frozen capital outlay for all 2019 and 2020 expenditures without a notice of obligation approved.
City of Portales
City Manager Sammy Standefer noted there is little to no historical information for the effects of the pandemic, but anticipates a large decrease in GRT revenues.
He anticipates drops of 75% in food and accommodations, 50% in construction, 40% in healthcare and 30% in real estate and retail. There aren’t anticipated drops to agriculture, utility, manufacturing, wholesale trade or transportation.
Overall, he estimates a $700,000 drop in GRT revenues from the last fiscal year’s estimated $6.3 million but notes new data could vastly change those estimates.
“As far as ending the current year, I anticipate we will be able to limp across the finish line. We have projected expenditures that we will not use and should be able to finish the year close to balanced,” Standefer said. “We will not be waiting on anything from a potential special session from the state of New Mexico. We still have to serve our citizens regardless of what the state of New Mexico decides to do.”
He is hopeful the state will remember the local governments and the services they provide and not balance shortfalls on the backs of local governments.
ENMU
Scott Smart, vice president of finance, told regents during Friday’s meeting the operating budget he’s working on is “worth the paper it’s written on” because it only reflects appropriations made during the regular legislative session that concluded in February.
Using the current year’s budget as a reference point, Smart is anticipating a 5% enrollment drop and a funding gap of about $2.4 million. Flat enrollment would reduce the gap to $1.4 million.
The university annually dedicates $2 million to its building renovation and replacement fund, and could use most of that money while only funding critical renovation and replacement issues.
Because a majority of university dollars go to staff salaries, Smart said, “There has to be a reduction of employees; there’s no way around that.”
Following the 2008 recession, ENMU cut $5 million over a three-year period and eliminated much of its employment through attrition, but Smart noted conditions were different. For one, the university was able to offset many of the cuts with record enrollment and doesn’t anticipate that will happen again. Regarding attrition, Smart said the challenge is moving employees around when the wrong spots go vacant.
“It’s going to be a challenge,” Smart said, “but I think we have the resources to carefully (navigate) through this.”
Regent Dan Patterson moved for a working budget with a 10% cut of the 2019-20 budget, noting he felt it was silly the university had to send Santa Fe a budget that nobody expects will be realistic.
“We just have to roll with the punches, I guess,” Patterson said, “and have faith in our staff to make it work.”
Public schools
Portales Superintendent Johnnie Cain said GRT revenues do not directly affect budgets, but there is an indirect impact because GRT impacts the state’s general fund.
“The declining oil prices are probably the largest revenue stream in New Mexico that affects education, but that is because state revenues fall and there is less money to pass around to education and other state agencies and needs.”
Cain does not anticipate any large declines through the current fiscal year, but anticipates there will be cuts from appropriations made during the regular legislative session and is unsure what they will be until a special session takes place in June.
“If they do not cut too deep, it is our intent to continue forward with a budget similar to the 2020 budget year,” Cain said. “We will not cut salaries or make drastic (if any) reductions to programs we have in place. However, we will take the year to determine where budget cuts could be made for the 2022 fiscal year if GRT and state oil revenue does not increase adequately in 2020-2021.”
Property taxes are largely used for capital expenditures, Cain said, and make up less than 0.49% of the budget.