Editor's note: San Juan County officials are considering many options to reduce an anticipated $6 million budget deficit. The Daily Times is examining some of those options — including tax hikes and layoffs — and the anticipated impacts in a three-part series. This second installment looks at proposed tax increases.

FARMINGTON — A tax increase is one way San Juan County officials are considering to reduce a more than $6 million deficit in a program that helps uninsured county residents pay medical bills and reimburses providers for care delivered to the uninsured.

The county is examining the impacts of three new taxes. If county commissioners approved all of them, shoppers in the county and three cities would pay about 5 cents more for every $20 purchase. The three taxes would generate an estimated $9.5 million.

Shoppers walk through the Animas Valley Mall on Wednesday in Farmington.
Shoppers walk through the Animas Valley Mall on Wednesday in Farmington. (Alexa Rogals / The Daily Times)

Under Senate Bill 268, which passed in the last legislative session, counties are required to pay one-twelfth of 1 percent of their gross receipts to a statewide fund known as the Safety Net Care Pool. That fund, similar to the county fund that now faces a deficit, helps the state's hospitals pay for uninsured health care.

San Juan County's payment to the fund is about $3 million, which is in addition to another approximately $3 million worth of obligations that account for the more than $6 million deficit.

Commissioners are considering cutting services, reducing county staff, raising taxes or a combination of those options to eliminate that deficit.

Nearly 100 people attended a commission meeting Tuesday evening, and only one of those who testified opposed a tax increase.

Commission Chairman Jack Fortner said the federal government is to blame for the county's situation. Federal efforts to end deceptive practices in qualifying for matching funds for local uninsured health care support programs have helped to create the situation, he said.

"I don't think we can ever put the blame on the governor or the legislature," he said.

But County Executive Officer Kim Carpenter and some legislators have blamed Gov. Susana Martinez, saying one of her line-item vetoes in the senate bill eliminated a necessary sunset clause, and now counties must pay in perpetuity.

Airel Homer, 22, left, and Correen Talley, 24, both of Farmington have lunch Wednesday at the food court inside the Animas Valley Mall in Farmington.
Airel Homer, 22, left, and Correen Talley, 24, both of Farmington have lunch Wednesday at the food court inside the Animas Valley Mall in Farmington. (Alexa Rogals / The Daily Times)

Martinez's spokesman Michael Lonergan has said that Martinez feels the safety net pool is a critical program and should be permanent.

"They're going to have to come to the rescue on this, either way," Carpenter said of the commissioners.

About $35 million worth of gross receipts taxes are collected annually in the county, and all except three affect businesses in and citizens of the county and three cities, according to county documents.

The county has state authorization to implement another roughly $64 million in gross receipts taxes through 13 different tax increments, according to county documents.

Carpenter said about 17 other New Mexico counties have a gross receipts tax rate that is roughly equivalent to or higher than San Juan County's, which is 6.375 percent.

Fortner has suggested commissioners adopt two gross receipts taxes, one for one-sixteenth of 1 percent and the other for one-eight of 1 percent. Both would be passed with sunset clauses, he has said, with the one-sixteenth tax expiring in two years and the one-eight expiring in three.

Before these taxes expire, he has said, other changes could be made to help the county's situation.

Martinez's line-item veto mandating counties pay into the safety net pool permanently could be removed. The state may reinstate "hold harmless payments" that had compensated counties and cites for a tax exemption lawmakers passed for food and medicine. And the economy could improve, he has said.

Initially, 75-year-old Joe Martinez said he opposed the proposed increases because taxes are high enough already.

"We've got to live accordingly," the Aztec resident said on Wednesday while sitting in an armchair in the Animas Valley Mall.

But when he heard alternatives to raising taxes could include cutting funding to the Alternative Sentencing Division or the Four Winds Recovery Center, he changed his mind. He'd rather see a tax increase, he said.

But paying more — even if it's pennies on the dollar — is hard for him, he said. He is on dialysis and said he cannot work, so his income is fixed.

"When that happens, buddy, what the hell you gonna do?" he said.

Correen Talley said 2.5 cents more on a $20 purchase would not be too bad. Considering the alternatives, a tax increase is preferable, she said.

"I'd rather pay a couple extra cents to keep things in the community than close some stuff down," the 24-year-old Farmington resident said.

Talley sat eating lunch in the food court with her friend, 22-year-old Airel Homer, also from Farmington. Homer agreed.

"What can you buy with a couple of cents?" she asked, pausing. "You can't buy anything."

Further down the mall, saleswoman Jennifer Murphy talked with Ken Raybon in front of the open hood of a red Hyundai Genesis.

They disagreed about taxes.

Raybon, a retired 64-year-old Farmington resident, said he can't see any way around a tax increase. And what bothers him is that the state passed the buck to the county, rather than raising taxes itself. Now the state is taking credit for not raising taxes, he said.

But Murphy, a 27-year-old single-mother of two children, said she already makes car payments, pays utilities, pays rent and pays insurance. And higher taxes — even a minimal amount more — would force her to fall back on government assistance, she said.

In an email she wrote to The Daily Times after the interview, Murphy said the government has enough money, adding, "Instead of a tax increase, the big wigs should have to take a pay cut to accommodate for the 'money that's needed.'"

Dan Schwartz covers government for The Daily Times. He can be reached at 505-564-4606 and dschwartz@daily-times.com. Follow him @dtdschwartz on Twitter.