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

SPONSOR Harrison

DATE TYPED 2-23-2005 HB 797

SHORT TITLE Hospitality Training Tax Credit Act

SB

ANALYST Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($1,000.0) ($2,000.0)

Similar Recurring

General Fund

($600.0) ($1,200.0)

Similar Recurring Local Governments

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department

Tourism Department

SUMMARY

House Bill 797, the “Hospitality Training Tax Credit Act”, creates a tax credit for businesses in

the hospitality industry that fund training for their employees.

The credit is equal to the cost of the training. The amount of the credit may not exceed $3 thou-

sand per taxpayer per year. The credit may be claimed against gross receipts tax, personal in-

come tax or corporate income tax liabilities. The credit claimed cannot exceed the aggregate tax

liability for the tax against it is claimed.

Credits would only be allowed for training programs approved by the New Mexico Tourism De-

partment, which is also charged with adopting and publishing rules for the hospitality training

program.

The Tax Administration Act applies to the administration and enforcement of the Hospitality

Training Tax Credit Act.

The bill does not carry an effective date. It is assumed to become effective 90 days after the end

of the legislation session.

House Bill 797 -- Page 2

FISCAL IMPLICATIONS

TRD estimates that the full-year fiscal impact of the legislation is a revenue loss of $3.2 million:

$2 million to the state general fund and $1.2 million to local government funds. Their analysis

notes that they have limited information on the hospitality industry’s training expenditures, and

the estimate is uncertain and may understate the eventual impacts of the bill.

They note that the industry is large, with total employment of more than 85 thousand persons.

ADMINISTRATIVE IMPLICATIONS

TRD reports minor administrative implications. The Tourism Department indicates that the re-

sponsibilities assigned to them would require a significant time commitment and a rearrangement

of priorities.

BT/lg