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Mayor: HB6’s destination-based sales rule costing Hobbs an estimated $10–15 million a year
Summary
City officials told the Hobbs City Commission that the 2023 change from origin- to destination-based gross receipts taxation (HB6) has shifted oilfield service revenue away from the City, costing Hobbs an estimated $10–15 million annually and prompting continued state-level advocacy.
Mayor Brandon Cobb and city staff told the City Commission on Feb. 18 that a 2023 change to the state’s gross receipts taxation — commonly referred to as HB6 — has moved substantial oilfield service revenue away from the City of Hobbs.
The mayor said the city previously received gross receipted tax (GRT) proceeds from service work performed by Hobbs-domiciled businesses even when that work occurred outside city limits; under the destination-based system, those receipts now often go to other counties or the state. “In my estimate, it's costing us anywhere from 10 to $15,000,000 a year in lost revenue,” Mayor Cobb said during the commission’s discussion item on HB6.
Why it matters: commissioners and staff said the shift affects the city’s ability to pay for parks, employee benefits and other quality-of-life services. City staff presented comparative GRT figures showing Hobbs’ monthly receipts declined relative to neighboring counties and the state since HB6 took effect. Commission comments and staff math emphasized that the change primarily hit oilfield service receipts, not ordinary retail sales.
Toby (staff member) and the mayor walked commissioners through the numbers and the policy background: before HB6, local service businesses’ gross receipts often returned to Hobbs; after HB6, many of those receipts are received by the county where the service occurred or by the state. The presentation contrasted pre-HB6 and post-HB6 monthly collections and noted a large increase in the state’s take. The mayor said local retail would have to increase dramatically to make up the lost oilfield-related revenue.
City strategy and next steps: Commissioners said they have testified in Santa Fe and will continue to press lawmakers. The mayor and staff noted a state bill introduced by Senator Larry Scott and a House sponsor identified as “Senator Cortez” (as stated in the meeting) that would redistribute a portion of the state receipts back to counties; commissioners said they were unsure the measure would clear committee but pledged to continue advocacy. The mayor also urged local self-help measures to reduce reliance on hoped-for state fixes.
Discussion only: No formal action or new ordinance was adopted at the Feb. 18 meeting. City staff said they will continue tracking receipts and advocacy in Santa Fe.
Ending: Commissioners asked staff to keep updating the commission on fiscal impacts and state-level developments.
