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

SPONSOR Rawson

ORIGINAL DATE

LAST UPDATED

1-25-06

HB

SHORT TITLE State Park Revenue Distribution to Counties

SB 10

ANALYST Woods

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

N/A

(506.6)

(506.6) Recurring Parks Revenue

(Parenthesis ( ) Indicate Expenditure Decreases) NOTE: allocation of State Parks revenue to counties will have the effect of

decreasing the revenue that the State Parks Division has to operate parks

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of Bill

Senate Bill 10, which relates to state park and recreation revenues, provides for a distribution to

certain counties of a portion of the revenues. Specifically, the legislation amends Section 1. Sec-

tion 16-2-7 NMSA 1978 (being Laws 1935, Chapter 57, Section 7, as amended) as follows:

B. For the purpose of making distributions to county general funds pursuant to Subsection B

of Section 16-2-19 NMSA 1978, after each calendar year, the secretary shall identify each

park and recreation area in which the number of visitors in that calendar year exceeded the

population of the county in which the park or recreation area, or any portion of the park or rec-

reation area, is located. When setting user fees for those park and recreation areas, the secre-

tary shall consider the effect of the distributions to the county general funds."

Additionally, Section 2. Section 16-2-19 NMSA 1978 (being Laws 1935, Chapter 57, Section 16,

as amended) is amended to read:

B. For each park or recreation area identified by the secretary pursuant to Subsection B of Sec-

tion 16-2-7 NMSA 1978, in the fiscal year following the identification, ten percent of the

Senate Bill 10 – Page

2

revenue derived from the operation of the park or recreation area shall be distributed to the

general fund of the county in which the park or recreation area, or any portion of the park or

recreation area, is located."

For the purpose of this legislation, “secretary” refers to the secretary of the Energy, Minerals and

Natural Resources Department.

FISCAL IMPLICATIONS

The Energy, Minerals and Natural Resources Department (EMNRD) notes that this legislation

would impact the state parks program by diverting 10 percent of the revenue derived “from the

operation of the park or recreation area” to counties in which the number of visitors in a calendar

year exceeds the population of the county in which the park or recreation area or any portion of

the park or recreation area is located. EMNRD adds that this legislation would negatively im-

pact the state parks program resulting in:

•

Poorly maintained facilities

•

Potential State Park layoffs

•

Higher fees and the attendant public outcry

•

Increased demands on the general fund

•

Compromised bond covenants and bonding capacity

EMNRD suggests that, based on county population estimates from the 2000 census, approxi-

mately 25 parks (74 percent) of the 34 State Parks would be impacted by this legislation. Trans-

ferring 10 percent of the revenue from these parks would amount to $506.0 paid to counties.

This would mean an annual decrease of $506.0 in revenues retained for operation of the state

parks, which equates to losing 10.7 percent of the total annual revenues for the state parks pro-

gram. Unless revenues were raised in some way to compensate for this large loss, state parks

might have to layoff employees, reduce facility maintenance, raise fees or receive additional ap-

propriations from the general fund.

DFA indicates that the legislation will provide additional general fund revenue only to the coun-

ties in which state parks are located, as opposed to a wider, statewide disbursement. Further, that

determining the amount of revenue on a calendar year vs. a fiscal year basis, may incur addi-

tional administrative costs.

SIGNIFICANT ISSUES

EMNRD indicates that the state parks program contributes $200 million to New Mexico’s econ-

omy annually. Although park visitation may increase costs for some counties in the areas of

medical care, law enforcement, road maintenance, etc., the local economic benefits to these

counties, many of which are rural and do not have a strong economic or population base, are

considerable in terms of lodging, food, gas, gross receipt taxes and employment. For example,

results from a 2002-2003 study by New Mexico State University concluded that a typical visitor

to Elephant Butte Lake State Park spends an average of $155.00 for a 2-3 day visit. These dol-

lars are directly contributed to the local economy. Data from the New Mexico Dept. of Tourism

for 2002 show that domestic travel expenditures for 2002 in Sierra County totaled $23,765.0

with $396.7 paid in local tax and $1,347.5 paid in state tax. In 2002, 352 jobs in Sierra County

were directly related to tourism. Finally, the entire municipality of Elephant Butte consists pri

Senate Bill 10 – Page

3

marily of retirees whose property values and property tax rates are dependent on the presence

and attractiveness of Elephant Butte Lake and operations of Elephant Butte Lake State Park.

Similar situations exist elsewhere across New Mexico.

PERFORMANCE IMPLICATIONS

EMNRD notes that the state parks program legislative performance measure that tracks the

“Self-generated revenue per visitor, in dollars” will be adversely affected by this legislation. Al-

though a previous performance measure that tracked the “percent of general fund to total funds”

was not recommended for FY07, State Parks continues to calculate this ratio and use this and

other statistical data to determine how successful the Division is in meeting its statutory mandate

“that each state park may be made as nearly self-supporting as possible.”

TECHNICAL ISSUES

EMNRD indicates that the proposed legislation doesn’t consider the fact that at least four lake

parks are located in two different counties. Two of these parks (Navajo and Elephant Butte) ac-

count for half of the state parks visitation numbers. The bill language suggests that the program

would pay 10 percent to each of these counties for a total loss of 20 percent of park revenue for

these particular venues. Further, the program also derives revenue from sources other than park

entrance and usage fees including sale of surplus equipment, boat excise fees, boat registrations

and Governmental Gross Receipt Taxes, and it is unclear whether the legislation intends to in-

clude these sources in total revenue from which to calculate payments to counties.

OTHER SUBSTANTIVE ISSUES

EMNRD observes that the program relies on revenue to repay bonds backed by Governmental

Gross Receipts Taxes and to match federal funds. If not made up in some other way, transfer of

SPD revenue to counties would violate the non-impairment clause in NMSA 1978 § 7-1-6.38

and compromise the program’s ability to leverage additional federal funds.

BW/mt