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Gross‑receipts shifts and one‑time clawbacks squeeze Hobbs City's revenue outlook
Summary
Finance staff told the commission that grocery/gross‑receipts tax growth has flattened, mining‑related windfalls have receded, and one‑time clawbacks from covenant and waste‑management payments reduce near‑term revenue projections.
Chief Financial Officer Toby Spears and staff told the Hobbs City Commission on May 5 that changes in the composition of the gross‑receipts (grocery) tax and several one‑time clawbacks are the primary drivers of the FY 2026 revenue outlook.
"So the biggest driver, grocery receipts tax, kinda where we're at," Toby Spears said while reviewing the FY 2026 preliminary revenue assumptions.
Spears and staff presented a multi‑year view showing the grocery/gross‑receipts tax split between a largely flat retail component and a mining component that produced past windfalls. Finance staff said a covenant clawback tied to construction drove roughly a $1,700,000 decrease in one year and a separate one‑time clawback tied to waste‑management reporting accounted for about $4,800,000. Overall, staff said they are projecting a modest general‑fund revenue increase of about 2.5 percent on a $142,000,000 total revenue budget (most of that in enterprise funds), while noting buying power is constrained as costs and salaries rise faster than that growth.
Spears showed an index prepared with EDC input tracing grocery/gross‑receipts tax growth from 2004 to 2025 and said that retail revenue at the base has been relatively flat while mining produced a large portion of historic growth. Commissioners asked several clarifying questions about the waste‑management clawback and the basis for the projections.
Speakers cautioned the commission about relying on occasional outside grants or county appropriations to fund ongoing projects; Mayor Cobb and other commissioners said such grants are helpful but likely not permanent. Staff reiterated that DFA guidance shapes how revenue and reserve assumptions must be reported in the preliminary submission.
Finance staff will include the underlying detail on clawbacks and a revised projection for commission review before the May 19 presentation and the June 1 DFA upload.
