Gallup Council Weighs City Takeover, Questions MainStreet Funding

City of Gallup leaders confronted financial irregularities at Gallup MainStreet in early November, prompting a debate over whether the municipality should assume control of the nonprofit and whether taxpayers should continue funding its programs. The concerns emerged after MainStreet Executive Director Michael Bulloch submitted paperwork for a contract renewal and city staff discovered missing 1099 filings for vendors and a possible failure to file Form 990 for years when revenue exceeded reporting thresholds.

Chief Financial Officer Patty Holland raised the most immediate fiscal alarm at a special council meeting on November 3. Holland warned of possible IRS consequences tied to unfiled 1099s, saying, "If the IRS were to audit this right now, they would charge 28% backup withholding on each and every one of those payments that exceeds $600, maybe even on all of them because they have to be reporting this as income to those recipients of those funds." City staff also noted that nonprofit organizations that make $50,000 or more in a year are required to file the 990 form, a key transparency and compliance document.

The city allocated a total of $110,000 to Gallup MainStreet for Fiscal Year 2025, including $50,000 for the Leavitt Amp concert series and $60,000 for general operations. For Fiscal Year 2026, MainStreet requested $75,000 while New Mexico MainStreet accreditation rules require a municipal contribution of at least $52,750. The council had three funding options on the table, including funding the minimum required contribution using a mix of the city charitable fund and other sources, continuing limited support for the Leavitt Amp program, or ceasing funding altogether. The city had already set aside $30,000 for Leavitt Amp through Lodger's Tax for FY 2026.

City Manager Frank Chiapetti Jr. proposed that the city consider absorbing Gallup MainStreet into municipal operations, and Marketing and Tourism Director Matt Robinson estimated it would take about a month to fold the program into the tourism department. City Attorney Dave Eason, Chiapetti, and CFO Holland told councilors the city would not be liable for the nonprofit's past financial problems if it assumed control.

Councilors expressed reservations about resuming or increasing public support while compliance issues remained unresolved. Councilor Linda Garcia said, "I support MainStreet, it’s needed and wanted, but there’s just no way I can support taxpayers’ money being given to anyone who’s not in compliance." Councilor Ron Molina added, "I’m not comfortable or happy with a lot of what I’ve heard today."

Bulloch informed the council that the nonprofit will pursue reaccreditation with New Mexico MainStreet on December 17, and that the outcome of that process bears on the city decision. The council declined to take immediate action on November 3, leaving the future of Gallup MainStreet funding and operations unresolved until further review and the state reaccreditation meeting. For residents, the outcome will affect downtown programming, event continuity, and how public funds are supervised and audited going forward.