The gross receipts tax in Las Cruces rises to nearly eight percent Tuesday. Las Cruces says the tax increase was necessary due to the state legislature’s decision to gradually reduce the so-called “hold harmless” payments to local governments over a 15-year period. The payments helped compensate localities for the loss of revenue when the state stopped taxing food and medicine. The hold harmless payment reductions were instituted to pay for a corporate tax cut approved by the legislature and Governor Martinez last year.
Las Cruces could use the revenue for another reason. The weekly newsletter from city manager Robert Garza says GRT revenue was actually down this fiscal year…the first time that’s happened since fiscal year 2009.
GRT revenue was down 1.7 percent…evidence of a local economy still struggling. Interestingly, city retail sales were actually up 2.1 percent this past year. But construction spending was down 29.1 percent. The city manager’s report says it’s expected the building sector will show growth over the next six months, with significant road projects in the pipeline.