LAS CRUCES, N.M. — The gross receipts tax increase for the City of Las Cruces will not be implemented by the state on what appears to be a technicality, potentially costing the city millions, according to Mayor Ken Miyagishima.
In a letter to Miyagishima, the state's taxation and revenue department says the ordinance approved by council for a 3/8 of a percent increase does not conform with the law due to language on the ordinance.
"They're disqualifying it because we included the words 'food and medicine exemption'," Miyagishima said. "Right now we don't tax it, all it does is reiterate it."
The city voted to increase the tax on goods in early September after the state eliminated the Hold Harmless Act.
The act would compensate municipalities for not taxing food and medicine.
Miyagishima said the city will pursue other legal options and has reached out to the attorney general for a ruling.
The mayor also replied to the letter questioning why the city manager or city attorney were not notified but instead the department informed a lower-level attorney.
If a new ordinance has to be drafted, it would then go into effect July 1st of next year costing the city about $4.4 million.