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

SPONSOR Griego

DATE TYPED 2/15/2005 HB

SHORT TITLE Revise Athletic Competition Privilege Tax

SB 713/aSIAC

ANALYST Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Uncertain

Recurring Athletic Commission

Uncertain

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Regulation and Licensing Department (RLD)

SUMMARY

Synopsis of SIAC amendments

The Senate Indian and Cultural Affairs committee (SIAC) amendments are technical in nature.

They strike references to the privilege tax and replace them with the word “fee”. These changes

have the effect of making the language in the bill consistent.

Synopsis of original bill

Senate Bill 713 revises and renames the Privilege Tax on Athletic Competition and the Privilege

Tax on Closed Circuit Telecasts or Motion Pictures.

The Privilege Tax on Promotions is renamed the Regulatory Fee on Promotions; and the Privi-

lege Tax on Closed Circuit Telecasts or Motion Pictures is renamed the Supervisory Fee on

Closed Circuit Telecasts or Motion Pictures. The fee structure provided in the bill is different

than the tax structure in that the tax structure imposed specific tax rates: 4 percent of gross re-

ceipts for the Promotion Tax and 5 percent of gross receipts for the Supervisory Fee, while the

fees established in the bill could not exceed those rates. Revenue from the fees like the tax they

replace would be deposited in the “athletic commission fund”.

Senate Bill 713/aSIAC -- Page 2

The bill also provides for cooperative agreements with tribal governments. The athletic commis-

sion is empowered to enter into cooperative agreements with Indian nations, tribes or pueblos for

management or control of professional contests in New Mexico. It provides rules governing

money collected pursuant to the agreements, stating: “Money collected by the commission on

behalf of the Indian nation, tribe or pueblo in accordance with the agreement is not money of the

state and shall be collected and disbursed in accordance with the terms of the agreement, not-

withstanding any other provision of law.” To become effective, the agreements must be signed

by the governor.

FISCAL IMPLICATIONS

Renaming the tax a fee should have no fiscal impact. Theoretically, the fee structure could be

lower than the tax, but currently there is no reason to assume that is so. RLD notes that reducing

the fees may encourage more events in the state, but an increase in the number of such events is

not estimated.

However, the provisions allowing for cooperative agreements between the state and Indian gov-

ernments may have a fiscal impact. In particular, the quoted language regarding money being

collected and disbursed in accordance with the agreement, not-withstanding any other provision

of the law would appear to provide the possibility to waive by agreement other taxes that may

normally be required. As of this writing, the Taxation and Revenue Department had not ana-

lyzed this bill. Their interpretation of this provision will help determine the potential fiscal im-

pacts, if any. This analysis will be updated upon receiving information from the department.

ADMINISTRATIVE IMPLICATIONS

RLD’s analysis reports no administrative impact.

TECHNICAL ISSUES

The civil penalty provisions of the bill provide a penalty for failure to pay when due the regula-

tory or supervisory fee. The penalty is not to exceed ten percent of the tax due. Perhaps, for

consistency purposes this should read ten percent of fees dues.

BT/yr