A total of 44 New Mexico cities and municipalities have joined a lawsuit charging the state with shorting them on tax revenue in litigation that has mushroomed from last year's start of just a few communities.
The cities are asking the Second Judicial Court and Judge Nancy Franchini to order the State Taxation and Revenue Department to compensate them for what they are alleging are unauthorized revenue reductions. The total could exceed tens of millions of dollars, according to the Albuquerque Journal.
William Fulginiti, executive director of the New Mexico Municipal League, a nonprofit advocacy group for cities and counties, told the Journal that the amount owed to local governments could reach $100 million, depending on how far back the revenues were shorted. State tax officials deny the allegations.
“The Taxation and Revenue Department is committed to ensuring that cities and counties receive timely and accurate gross tax-receipt distributions that are due under the law,” State Taxation and Revenue Department spokesman Charlie Moore told the Journal. “We agree with local governments on the importance of determining the accuracy of distributions from past years.”
The cities of Albuquerque, Santa Fe, Los Cruces, Roswell and Farmington are among the plaintiff cities claiming that revenues owed them have not been paid. City officials said the moneys are used for law enforcement, firefighting and other city and county services.
The suit alleges that shortfalls occurred over a number of years in gross-receipt taxes, taxes collected from consumers buying goods and services, the proceeds shared by state and local government. The lawsuit also alleges that the state reduced the amount of revenue based on tax-refund claims filed by businesses.
City officials said the amounts paid to them fluctuate with no explanation from the state. Further allegations against the Tax and Revenue Department accuse the body of violations of tax laws and regulations.
Fulginiti said cities and counties would cooperate in a settlement based on calculations of what each municipality is owed. The Municipal League also supports legislative action that would clarify how the distribution of tax revenue works, the Journal report noted.
“The suit has been slowed by legal maneuvering over the past year, but should be moving more quickly soon,” Fulginiti said. “There have been clashes over which attorneys can work on the case, among other disputes.”
The lawsuit began last year with a petition filed by Albuquerque and three other cities. It has since been amended to include other communities.
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