Grants joins Santa Rosa in taking a big financial hit

The latest print edition of the Guadalupe County Communicator added a grim twist to the previous week’s big story about the sudden fiscal crisis gripping the City of Santa Rosa, N.M. — the fellow Route 66 town of Grants, N.M., faces a huge financial hit for similar reasons.

Santa Rosa learned in late June that the state is withholding about $400,000, due to an undisclosed business successfully appealing its taxes. The city is mulling layoffs, deep service cuts, or bankruptcy because of the abrupt cutoff in gross receipts tax funds. Guadalupe County also faces a $154,000 shortfall for the same reason.

The Communicator also reported that Grants was hit with $800,000 in surprise tax refund obligations. I’ve combed the website of the Cibola County Beacon, based in Grants. Apparently the newspaper hasn’t reported this, or it was not published online.

More from the Communicator’s story:

• The amount of money Santa Rosa must refund may actually be “much higher” than $400,000. The Taxation and Revenue Department is trying to confirm the real total.
• The city failed to get an emergency loan from the state. However, the state allowed Santa Rosa to dip into its reserve fund for immediate expenses. The city also is negotiating for a longer payback period for the $400,000. Even so, Santa Rosa likely will see revenues cut by $10,000 to $17,000 in July.
• The undisclosed business that won its tax appeal is believed to still be operating in Santa Rosa. Therefore, it may be entitled to a lower tax rate, depressing the city’s revenues even further.
• Because of the necessary cutbacks, Santa Rosa likely won’t create the eight new jobs required for the new Blue Hole Dive and Conference Center. If those jobs aren’t created, the city may have to return another $250,000 to the state.
• It’s believed a state law protects municipalities from more than a 10 percent decrease in revenues due to tax appeals. However, the Municipal League and the state Revenue Department disagree on how to interpret the statute. One official says a court challenge of the tax appeal may provide clarity on the law’s intent.

The fiscal crisis almost certainly will injure Santa Rosa’s chances in opening a Route 66 museum in the historic Ilfeld Warehouse. Just a few months ago, the state awarded a $325,000 grant to rehab the building. However, with the city becoming cash-strapped, it’s doubtful it can pay for all the warehouse’s necessary renovations and run a museum.

Sixty miles east, Tucumcari also seeks to land a Route 66 museum. In recent weeks, Tucumcari’s New Mexico Route 66 Museum was incorporated as an official entity, and the state also approved the museum group’s nonprofit status. An announcement for a Tucumcari museum site is expected by fall.