NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

MAES

 

DATE TYPED:

1/27/03

 

HB

 

SHORT TITLE:

Amend Lab Partnership/Small Business Act

 

SB

12

 

 

ANALYST:

Neel

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

(2,400.0)

(2,400.0)

Recurring

General Fund

 

 

 

 

 

(Parenthesis ( ) Indicate Revenue Decreases)

 

Duplicates HB 21 Amend Lab Partnership/ Small Business Act

______________________________________________________________________________

SOURCES OF INFORMATION

 

LFC files

 

Responses Received From:

 

Taxation and Revenue Department (TRD)

 

No Response

 

Department of Economic Development

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 12 amends the Laboratory Partnership with Small Business Act (LPSBA), to increase the tax credits the national laboratory can qualify for to $15.0 in rural areas and $10.0 in non-rural areas.  Previously the tax credits were capped at $10.0 and $5.0 for rural and non-rural areas, respectively.  Additionally, the maximum allowed under LPSBA is increased to $4.2 million from the current $1.8 million.  SB 12 amends the definition of qualified expenditures to include fringe benefits and employer payroll taxes in the allowable calculation for administrative costs.  Previously administrative costs were limited to 49 percent of employee salaries and wages. 


Lastly, SB 12 adds an oversight and reporting section to the LPSBA, where national laboratories are required to report quarterly to TRD on businesses where assistance is provided. Annual reports are required to TRD, Department of Economic Development and the appropriate legislative committee. 

 

FISCAL IMPLICATIONS

 

TRD estimates $2.4 million impact to the General Fund for FY04.  In 2000 the estimated fiscal impact of LPSBA was $1.8 million.  TRD does not note its fiscal impact assumptions.

 

OTHER SUBSTANTIVE ISSUES

 

The LPSBA grants a tax credit to qualified national laboratories to encourage them to provide technology and expertise to small businesses.  The act is administered by TRD and allows the labs to claim a tax credit against their state gross receipts taxes not to exceed $5.0 of qualified expenditures for each small business assisted in a calendar year or $10.0 if the small business is located in a rural area. 

 

Other New Mexico Small Business Assistance programs include:

 

  • NM  Manufacturing Extension Partnership
  • Technology Ventures Corporation
  • Small Business Development Centers.  
  • Space Alliance Technology Outreach Program
  • NM 9000
  • TVI’s Workforce Training Center
  • Incubators

 

ADMINISTRATIVE IMPLICATIONS

 

TRD notes that it has no special expertise in the area of small business development assistance, or the personnel to validate the quarterly or annual reports.  

 

POSSIBLE QUESTIONS

 

1.   When the original legislation’s fiscal impact ($1.8 for FY02) is added to SB 12’s projected fiscal impact, the total equals the allowable tax credit of $4.2 million.  If the goal of this legislation is to enable small business, maybe the tax credit cap should be increased?

 

2.  What was the total state gross receipts paid by Sandia in calendar year 2001?

 

SN/prr