Six proposed city charter amendments are on the ballot for Rio Rancho municipals elections, with the biggest change being the institution of a $10 million permanent fund.
Early voting starts Tuesday, with Election Day on March 1.
The charter itself, the city’s foundational document, requires a charter review, after which changes can be put before voters, at least every six years.
“It is a living, breathing document,” said City Manager Matt Geisel.
Voters cast ballots on each proposed change individually.
“The permanent fund, from a staff level, we think can have an everlasting impact on the community,” said Geisel.
How the permanent fund would work
The city is proposing to invest the $10 million, with an estimated average annual return of $833,000 from interest for the first 13 years. By the 13th year, projections indicate the permanent fund would have made $10 million.
Half of those earnings, or an average of $416,600 a year, would go to the general fund, which pays for much of the city’s operation. The other half would go back into the permanent fund to grow the principal, so it would produce more interest in the future.
The earnings in the general fund would be allocated through the city’s budget process, which offers multiple opportunities for public input. A future charter amendment could remove the permanent fund, if voters approved that move.
The State of New Mexico and some local governments within the state have had permanent funds for years.
Where the city found the money
After an economically difficult first few months of the COVID-19 pandemic, Geisel said, the city’s retail GRT revenue set records, and construction boomed, as did tax income from it.
With more people working from home, he said, they shopped in the city more, and Rio Rancho has a lot of essential businesses that stayed open. Plus, governments within New Mexico began collecting gross receipts tax on internet sales.
“We have a one-time windfall,” Geisel said. “Do we spend it now?”
If the city spends the $10 million on such things as roads or parks, the money will be gone and the things built with it will incur ongoing maintenance costs, he said.
With road construction costing around $1.5 million for a mile of two-lane road, the city could pave or rebuild 7-10 miles of neighborhood roads with $10 million, Geisel said. That’s 2.2-3.1 percent of the roughly 320 miles of residential roads within the city.
“There are going to be real winners and losers if we do that,” he said. “The permanent fund would benefit everybody forever.”
The current high revenue may not last. If workers go back to offices in other cities and if the construction boom ceases, city revenue could drop.
A permanent fund would provide a new revenue stream without increasing taxes and would be done more reliably than trying to grow the economy enough to produce the same amount of money.
“It’s not as simple as ‘snap your fingers and make the economy grow,’” Geisel said.
To add $833,000 in GRT revenue every year, it would take the average taxable spending of 2,418 households that shopped only in Rio Rancho, eight to 19 new restaurants, 184 or more new single-family home building permits or almost 232,000 new online orders, according to city information.
Other proposed charter amendments are:
• Increasing the time span between required charter reviews to eight years, although it could still be reviewed more frequently. Geisel said the change would allow more time to test the efficacy of new charter amendments;
• Increasing the time to appoint a successor for a governing body member who leaves office between elections from 45 days to 60. Geisel said 45 days sometimes isn’t possible, but 60 days almost always is.
• Update the process of recording and codifying ordinances to match current technology and procedures, such as allowing e-signatures.
• Requiring an acting city manager to be paid no less than the minimum salary set for the permanent city manager position.
• Allowing the city to fill vacancies on volunteer boards and commissions “as soon as practicable” instead of within 30 days. Geisel said it’s not always possible to get applicants within 30 days.