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Finance director: Hobbs is "trending about $60 million" in unrestricted revenue but HB 6 and inflation have cut capacity
Summary
Finance Director Toby Spears told the Hobbs City Commission the city is tracking roughly $60 million in unrestricted gross receipts tax revenue through February, but HB 6 and inflation have reduced mining revenue and left about $13–14 million less per year to cover rising costs and deferred capital.
Toby Spears, Hobbs' finance director, told the city commission that the city is "trending about $60,000,000 in unrestricted dollars" through February while costs have risen about 30% since 2019. He said a decline in mining-related gross receipts — which represented roughly 25% of the tax base in 2019 and is now about 7.76% — and the effects of HB 6 mean the city is operating with substantially less revenue than in prior years.
The presentation gave commissioners a multi-decade look at the unrestricted general fund and a breakdown of GRT by industry. Spears noted the city budgeted $56 million in the general fund and is "trending right at" roughly $60 million through February. He described compensating tax receipts and said those have shown unexpected variability; the city has received ACH payments in recent months that suggest clawbacks or timing shifts the finance team will analyze during the preliminary budget process.
Commissioners and staff pressed on the practical implications: deferred capital projects, constrained contractor capacity and higher bid prices, and the need to preserve basic services such as police, fire and roads while remaining economically competitive. One commissioner warned that deferred sewer and road projects can only be delayed so long before failure. Spears said the city has moved $10 million toward a sinking fund and that an in-depth review of compensating tax will be part of the budget cycle.
Spears also compared Hobbs' local-option tax rate (part of the 6.5625% total GRT) against neighboring communities and showed that municipalities such as Carlsbad levy higher local-option taxes, which can increase revenue but also the local cost of doing business. He emphasized the purpose of the briefing was informational, not a formal proposal for a tax increase.
The commission thanked finance staff for the analysis and acknowledged the tension between maintaining local tax incentives to attract business and the city's need to address deferred capital and rising operating costs. The finance briefing will feed into the preliminary budget discussions this spring.
