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

SPONSOR Trujillo

ORIGINAL DATE

LAST UPDATED

1/31/07

HB 473

SHORT TITLE Local Government Gaming Impact Fund

SB

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

(5,179.8)

(5,433.6) Recurring General Fund

5,179.8

5,433.6 Recurring

Local

Government

Gaming Impact

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates SB 629

Relates to HB 661 and SB 647

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Taxation and Revenue Department (TRD)

Gaming Control Board (GCB)

SUMMARY

Synopsis of Bill

House Bill 473 creates the local government gaming impact fund, a non-reverting fund that will

receive its own interest earnings. Starting on July 1, 2007 and on every July 1 thereafter, an

amount equal to 10 percent of all tribal revenue sharing payments paid into the general fund

during the previous fiscal year will be transferred to this new fund.

Money in the new fund will be appropriated to the local government division of the department

of finance and administration for distribution to each county or municipality in which an Indian

gaming facility is located. Distributions to local governments will be made in proportion to the

House Bill 473 – Page

2

amount of revenue paid by the associated Indian casino. The local government division will be

required to make a distribution to each eligible municipality and county by July 31 of each year.

If an Indian casino is located in the “planning and platting jurisdiction" of a municipality, that

municipality will receive the distribution. Otherwise, the distribution will be received by the

county. Currently, the City of Española, in which San Juan Pueblo’s Big Rock Casino is located,

is the only municipality that will qualify for a distribution created by this bill. All other

distributions will be made to counties.

Because no effective date is provided in the bill, its provisions will become effective 90 days

after the 2007 legislative session adjourns on June 25, 2007.

FISCAL IMPLICATIONS

The December 2006 consensus estimate for tribal revenue sharing payments, adjusted for actual

FY06 revenues, is $51.8 million in FY07, $54.3 million in FY08, $57.1 million in FY09, and

$59.9 million in FY10.

On July 1, 2007, an amount equal to 10 percent of FY07 tribal revenue sharing payments, or

about $5,179.8 thousand, will be transferred from the general fund to the local government

gaming impact fund. Although this transfer will be based on FY07 revenues, the transfer will

occur in FY08 so the impact is to reduce FY08 revenues. The bill is expected to reduce FY09

revenues by 10 percent of FY08 revenues, or about $5,433.6 thousand.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

SIGNIFICANT ISSUES

Counties and municipalities in which Indian gaming facilities are located have often requested

distributions from the state’s tribal revenue sharing payment in recent years. One rationale for

these requests is that tribal casinos cause local governments to incur infrastructure costs in the

form of police, fire and ambulance services, as well as utility system maintenance. Unlike most

other businesses, which pay a share of gross receipts tax to the local jurisdictions in which they

are located, tribal gaming facilities pay only tribal revenue sharing payments. This bill does not,

however, does not in any way limit the activities for which local governments may use their

distributions.

Another rationale for this type of local gaming distribution is that gaming facilities located close

to municipalities reduce local gross receipts tax collections by detracting from spending at non-

tribal businesses.

House Bill 473 – Page

3

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 473 duplicates Senate Bill 629.

House Bill 473 relates to House Bill 661 and Senate Bill 647. These bills would appropriate 20

percent of tribal gaming collections from the Pueblo of Santa Clara’s Big Rock Casino to the

City of Española.

TECHNICAL ISSUES

This bill does not limit the use of local government distributions in any way. LFC suggests the

bill could be amended to include a requirement that distributions created pursuant to this bill be

used for acquisition, construction or improvement of government infrastructure or providing

police or fire protection services (see language in House Bill 661 or Senate Bill 647).

The bill does not explicitly state who will be responsible for calculating the amount of the

appropriation to be made to the affected municipality. Tribal revenue sharing payments are

collected by the State Treasurer’s Office and overseen by the State Indian Gaming

Representative.

SS/csd