Santa Fe finance staff outline gross receipts tax trends, warn against counting on large windfalls

Assistant Finance Department Director Alexis Lautaro told the City of Santa Fe Finance Committee on March 10 that gross receipts tax (GRT) remains the city’s main general-fund revenue source and that recent spikes driven by remote-sales tax changes and tourism may not continue at previous levels.

Lautaro reviewed historical GRT receipts and comparisons with similar New Mexico cities, saying Santa Fe’s total GRT receipts reached about $166.7 million for fiscal 2024, compared with roughly $130.3 million in Las Cruces and about $80 million in Rio Rancho. Lautaro said the biggest year-over-year jump occurred between fiscal 2021 and fiscal 2022 after the full implementation of the Internet/remote sales tax.

The presentation stressed how the city treats “unanticipated” GRT—receipts that exceed the revenue estimate used when the budget was adopted—by using them for one-time expenditures, because budgets are set before those receipts are finalized. Lautaro said the city budgeted $159 million in GRT for the year and collected nearly $167 million, creating some one-time excess, but cautioned the committee that economic signals suggest the surplus may not be sustained.

“We budgeted $159,000,000 in GRT, and what we took in last year was $166,000,000, almost $167,000,000. There may be a little bit of unanticipated GRT, but I’m really concerned that it’s not going to be at the $20,000,000 level where we’ve seen it in the past few years,” Lautaro said.

Committee members and staff discussed causes of Santa Fe’s relatively high GRT collections. Lautaro and others told the committee tourism is the primary driver of higher GRT relative to other cities, and that aggregate receipts are affected by both local spending patterns and statewide allocations (county and city shares). Committee members also asked about the timing of GRT reporting; Lautaro said the city receives GRT figures from the New Mexico Taxation and Revenue Department with a roughly two-month lag, so March numbers typically are not available until early May.

Finance staff highlighted calendar effects: the city’s larger receipts typically fall in late summer and holiday months, while January–March are lower months; winters with weak ski seasons can also depress receipts. Staff noted the December memo showing collections that “were tracking flat” and that the city had not yet distributed the December memo widely to the public.

Committee members used the presentation to frame upcoming budget discussions, with several stressing the need for caution in committing recurring expenses to a revenue stream that can swing with tourism and national economic conditions. Lautaro and Finance Director Andy Osterholm said GRT remains a strong revenue source but is subject to volatility—property tax is steadier—and that the Internet-sales tax implementation in 2021–22 produced the largest recent increase.

Lautaro and committee members said staff will provide additional budget context at the formal budget hearings and circulate the GRT breakdown slide that shows the components of the city’s 8.1875% combined rate.

The committee did not take formal action during the presentation; the discussion was presented as context ahead of the FY26 budget process.