Inside the two-car garage of JJ’s Automotive, an auto body repair shop located in Hernandez, a fine powder, sanded off the doors and bumpers of an ever-rotating crop of cars and trucks coming in for repairs, sifts through the air and settles on the tops of every surface in the building.
The strong, chemical smell of solvents and bonding agents hangs thick in the air and just standing in the garage might give the average person a headache, but the atmosphere doesn’t faze shop owner Joey Montoya, because the dust and the smell mean vehicles are being fixed and money is coming in.
Montoya said he has only been open for about two months, but business has been good — so good that he expects his first Gross Receipts Tax Payment, which businesses are required to pay every three months, will be about $2,000.
That amount might be going up on Jan. 1.
The Rio Arriba Board of County Commissioners will vote on an ordinance that would increase the current County tax rate by .375 percent, during the next Commission meeting at 10 a.m., Aug. 31 in Tierra Amarilla. If the Commission votes against the ordinance, the current rate of 6.5 percent will hold.
Montoya didn’t know about the possible increase until Aug. 9.
He said that although he exclusively works with insurance companies and won’t have to pass the tax increase directly on to his customers, it would still impact him.
“It is already hard opening a business,” he said.
The Gross Receipts Tax, commonly referred to as GRT, by the elected officials and decision-makers in Rio Arriba County, is a tax on goods and services, according to the New Mexico Taxation and Revenue Department website. Food and most medical services are non-taxable.
County Finance Director Christine Montaño said the tax would bring in about $1.2 million a year.
Although $1.2 million seems like a big number, there is a trade-off. If the Commission decides to adopt the higher County tax rate, they are also agreeing to suspend the yearly Hold Harmless tax subsidy payment from the state of New Mexico.
According to documents presented at a Commission meeting in June, the County received a subsidy of $856,739 in Fiscal Year 2016-2017. The subsidy is set to end in 2030 and the payments counties receive will decrease every year.
Accounting for the loss of the subsidy, by raising the Gross Receipts Tax rate will bring in about $400,000 in new revenue to the County.
If the Gross Receipt Tax rate goes up, it means every time someone purchases a stick of deodorant, pays the mechanic for an oil change, stops for an ice cream cone on a hot afternoon or orders the newest electronic device, the total bill will be slightly higher.
The Gross Receipts Tax rate varies throughout New Mexico. Lincoln County’s rate is the lowest, at 5.5 percent. On the high end is the Taos Ski Valley, at 9.25 percent.
According to the Department’s tax rate schedule, the Gross Receipts Tax rate in Chama is 8.1875 percent, in Española, it’s 8.5625, and it’s 6.5 percent everywhere else in the County.
If the commissioners decide to pass the tax, the rate in Chama will rise to 8.5625 percent, Española will rise to 8.9375 percent and it will increase to 6.875 percent Countywide. This is equal to an extra 37.5 cents on every $100, about 8 cents on every $20 and about 2 cents on every $5 spent.
Montoya said that while he understands the need for taxes, he wants to know what the money will be used for.
Although the vote will take place in about two weeks, there’s no official word as to where the money will go.
In an email, County Attorney Adán Trujillo wrote that the section of the draft ordinance explaining where the money is headed “is blank and different proposals will be considered by the Commission as to the dedication of the revenue.”
In past Commission meetings, County Manager Tomas Campos said the tax could be made permanent by making the money go toward the County’s debt service.
He did not return several phone calls, by presstime, requesting comment.
Bill Moore, the owner of W.H. Cash Lumber in Hernandez, said he has been in business for almost 34 years, and like Montoya, he was also unaware of the possible tax increase.
“I know the tax rates are higher in the cities, but it would be good to know exactly where the tax dollars are being spent,” he said.
The community will have two chances to voice their opinions on the proposed ordinance.
A community meeting, which was only advertised on the County’s Facebook page, and was not posted on the County’s official website, was held at 6 p.m., Tuesday, at the senior center in Alcalde. The post received one like and was shared twice.
A legal notice in the Aug. 10 edition of the Rio Grande SUN containing information about the proposed increase states the ordinance is available to view on the County website. As of Aug. 15, the ordinance was not posted online.
Copies of the ordinance are available at the County offices in Española and Tierra Amarilla, the legal notice states. There may be “a reasonable charge for copies, if any are required.”
The second chance for community input will be at the Commission meeting at 10 a.m., Aug. 31, in Tierra Amarilla.
Commissioners Alex Naranjo, Barney Trujillo and Danny Garcia are expected to vote on the ordinance that same day.
During the last Commission meeting, July 27, Naranjo and Garcia said they support the tax, while Trujillo said he is against it.
Dianna Jaramillo owns the Chevron in Hernandez, and like Moore and Montoya, she also did not know about the possible increase.
“People here have no idea the taxes businesses pay,” she said. “They see the money coming in, but they don’t see the money going out.”
Jaramillo said that when customers see the total cost of their purchase is higher than usual, they will think it is because prices increased in her store, not because of higher taxes.
If the ordinance passes, the new tax rate will go into effect on Jan. 1.
Businesses in the part of Española in Santa Fe County, will not be impacted by this increase, but they will see their Gross Tax Receipt rate rise on Jan. 1, as the Santa Fe County Board of County Commissioners already approved a .125 percent increase to the county’s tax rate. The current rate is 8.9375 percent and it will change to 9.0625 percent.