On the March 1, 2022 ballot, there is a question about establishing a permanent fund. A permanent fund is like a savings account and would create more money to pay for government public services without a required tax or fee increase. The decision to establish a permanent fund is dependent on Rio Rancho voters and only Rio Rancho voters would be able to modify the investment in the future.
How it Works
The City is proposing to take $10 million and put it into a permanent fund (savings account), and invest it. Each year, half of the interest money generated would go toward funding public services such as roads, police, fire response, emergency medical services, parks, and libraries. The other half of the interest generated would be put back into the permanent fund. Over the years, the permanent fund and money available will grow and grow. This will help address the public services needs of existing and future generations. View estimate of Permanent Fund value.
Where the Money Comes From
The City of Rio Rancho has $10 million in one-time, unanticipated revenue due to actual revenues exceeding COVID-19 economic projections, the historic number of homes built in Rio Rancho since 2020, and City staff's conservative annual budget planning. The money stems from economic activity occurring within Rio Rancho that local government uses for general government purposes and initiatives.
When the pandemic began in March 2020, the City was in the process of developing its operating budget for the next fiscal year that spanned July 1, 2020 to June 30, 2021.
With so many unknown variables regarding how the pandemic might impact the economy short-term and long-term, the City projected its main funding source (gross receipts tax which is applied to and generated from the sale of goods and services within the community) for the coming year to decline significantly. In addition, other expenses were reduced.
As it turned out, spending in the City and generation of gross receipts tax was not impacted by the pandemic. In fact, gross receipts tax revenue was more robust than previous, non-pandemic years. Additionally, due to State law changes, for the first time, the City became the beneficiary of gross receipts revenue stemming from internet transactions. Also, record numbers of new homes continued to be built as the local construction industry was not impacted by the pandemic.
As a result, the City finds itself with more available one-time revenue than originally projected and budgeted.
View a presentation given by the City Manager to the Governing Body on Feb. 10, 2022 about the Permanent Fund.
The City's existing Municipal Code regarding Investments, including detail about the City's Investment Advisory Group, can be found in Chapter 36 via the following link. The City's current Investment Policy, last amended and approved by the Governing Body on June 10, 2020, can be viewed via the following link. The City's external financial advisors are secured via a procurement process dictated by State and local regulations.