RIO COMMUNITIES — In an effort to increase revenues to provide additional services to residents, the Rio Communities City Council will soon be considering an increase to its gross receipts tax — a tax levied on the sale of most goods and services.
The councilors approved a 14-day public review of the proposed .25 percent tax increase last week, and will make a final decision at next week’s meeting, which is scheduled for Tuesday, March 23.
The gross receipts tax in Rio Communities is currently 7.6875. If approved, the additional revenue could bring about $40,000 per year to the city’s coffers. The increase would begin July 1.
During last week’s council meeting, Mayor Pro Tem Peggy Gutjahr explained the city’s budget has been flat over the past year during the COVID-19 pandemic even though they had increased the GRT last July.
“To inform the community … we did pass one last July in hope to do additional programs,” Gutjahr said. “But that actual $40,000 generated carried us through COVID. Otherwise, it would have been a struggle. That’s where we are now as well.”
City Manager Martin Moore said the city has made it a goal to be diligent and careful how they are spending the “people’s money.” He pointed to services such as the now-being-built library at city hall and pothole repairs around the city.
“We wanted to make sure the budget we’re working on is going to get us where we need to go — not only taking care of services but taking a step forward …,” Moore said.
The new city manager said with the .25 percent increase in GRT, the city would be able to provide additional services as well as following through with commitments and be fair to the public and provide quality of life to residents.
“You do have seven employees who care about the city, and how we can save money and make the city better,” Moore said.
When the council voted on the last GRT increase, one councilor voted against it — Councilor Bill Brown. While the vote last week was to only publish the proposed increase, Brown voiced his support.
“A couple of years ago, we had a proposition to add .25 percent GRT, and I couldn’t find a good, compelling reason to do so,” Brown said. “The proposal passed 3 to 1, and I was the one that voted against it. I now see a compelling reason to add a .25 percent tax.”
Councilor Jim Winters said the biggest concern for him is the unknown amount of internet sales tax they will be receiving starting in the next fiscal year. The governor signed legislation last year that would require the state to pay cities and counties their direct share of the revenue generated by taxing internet sales.
“The biggest reason why we need (the increase in GRT) is for a cushion just in case we don’t get enough from the internet sales,” Winters said. “We don’t even have a clue. No one in the state can even tell us.”
“We have no idea what the internet sales (tax) will be,” Gutjahr said. “There’s no way for us to track it.”
Moore said the problem the city of Rio Communities has is it shares the same ZIP code as Belen — 87002 — even after years of imploring the United States Postal Service to get its own. While some living and operating businesses in the newest incorporated city in Valencia County use Rio Communities in their address, a lot don’t.
The city manager said if someone living or doing business in Rio Communities puts Belen as where the tax is paid — through the internet or otherwise — they lose out on the revenue.
Councilor Josh Ramsell said the state determines the tax per municipality not the ZIP code, but when you order something online, some companies will only ask for the ZIP code, not the name of the municipality. In those cases, Winters explained, Belen would receive that tax.
“That is why it’s important for people conducting business here in Rio Communities to make sure they use the Rio Communities tax code,” Moore said. “Some people think they can’t change, but they can. I am more than willing to help people and provide that level of support.”