County Administrative Services Director Helen Perraglio
By KIRSTEN LASKEY
Los Alamos Daily Post
kirsten@ladailypost.com
With Los Alamos National Laboratory expected to take advantage of the gross receipt tax (GRT) exemption for manufacturing once it begins its pit production, Los Alamos County Council was asked how this shortfall in revenue should be addressed in future fiscal year budgets.
The question was posed to council during its work session Jan. 23. Council voted 6-1, with Councilor David Reagor opposed, to accept the County management’s recommendations for budget guidance for FY 2025 and to delay a proposed .25 cent incremental increase in GRT until FY 2027.
A .25 cent increase isn’t needed, Reagor said, explaining the County’s debt may need to be restructured or its capital improvement projects (CIPs) may need to be revised.
“I think we are fine financially,” he said “… we are very well off.”
In looking at preliminary numbers for the FY 2025 budget, Administrative Services Director Helen Perraglio said there is a target for an overall increase of 4 percent. This includes a 3 percent salary adjustment for non-union employees and within that percentage, 1 percent will be structured for all non-union positions and two percent will be merit. There are union salary adjustments and group health adjustments, she said.
Interdepartmental charges have gone up and all other non-labor is at 3 percent, Perraglio said.
As far as budget options, Perraglio said, “We generally keep the requests as absolutely necessary … we are asking to keep those to a minimum and to tie the requests to the council’s goals and strategic priorities.”
Regarding projections for GRT, Perraglio said they show GRT in FY 2025 higher than FY 2024.
GRT is expected to increase at the end of FY 2024 and have a surplus of $9 million. This is expected to change after FY 2026; Perraglio said the GRT is projected to fall starting in FY 2027, when the manufacturing exemption for the laboratory’s pit production takes effect. In response, County management proposed instituting a .25 cent incremental increase in GRT.
While the incremental increase will not raise GRT numbers, not approving it will paint a very different picture, Perraglio said. One that includes having the County’s surplus depleted, operating at a deficit, using unassigned fund balances to cover it, and drawing funds from the County’s reserves.
“It reduces our GRT revenue … and projects a much different picture,” she said. “There would be a significant deficiency and we would be outside of our policy as early as FY 2029. We would have to make choices of what our budget would be like …”
She emphasized that the numbers presented to council are not set in stone; councilors will be presented with the final numbers during the budget hearings in April.
Likewise, County Manager Steven Lynne said the GRT exemption for manufacturing may not become fact. He said a bill was introduced at the state legislature to remove the manufacturing exemption.
Council and members of the public voiced their mixed feelings on this proposed GRT increase.
Resident David Hampton said he concurred with all of Perraglio’s assumptions for the budget, but he opposed the .25 cent incremental increase.
“As we know even a small increment like that will be felt disproportionately with lower income people and with small businesses,” he said. “It makes it incrementally harder to survive in the county and incrementally harder for small businesses to thrive. And when you look at assumptions behind the increase, they assume that the lab will hit manufacturing in 2027, which is what the current plan is, but they might not hit it and we won’t experience significant impacts until FY 2029 so the only purpose of raising at this point is to generate more funds that we would use to offset reductions in the future. What I would propose is consider possibly reviewing this again next year and not take action until calendar year 2026 – that would be before we would experience any impact.”
Council Vice Chair Theresa Cull said she is concerned about the timing and the necessity of the incremental increase.
She added she would like to see, for planning purposes moving forward, what the budget would look like without the GRT increase and perhaps discuss other options.
Councilor Randall Ryti agreed, adding the state could pass the bill for changing the GRT exemption on manufacturing.
Councilor Suzie Havemann pointed out that if the laboratory will be exempt from paying GRT for manufacturing, she isn’t sure the County will be in a great place financially. Furthermore, she said she was unsure if the County could fund all its CIPs solely through fees.
There is a backlog of projects citizens would like to see completed, Havemann said, and there is a need to invest in the community for future generations. Still, she said she wasn’t sure if implementing the GRT increase now was necessary.
Councilor Keith Lepsch echoed the statement that other options should be identified. Council Chair Denise Derkacs pointed out that the timeline is looming.
She noted in FY 2027 with the manufacturing deduction in place, the County will be at a “break-even point” and then in FY 2028, the numbers will turn negative. So, FY 2027 is a critical point.
Work developing the FY 2025 budget began in December, Perraglio said. Finalizing department budgets begin this week and will go through mid-February.
The proposed budget will be posted to the public in March and the budget hearings will be held in April.
