Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Miera

ORIGINAL DATE

LAST UPDATED

2/2/07

2/14/07 HB 597/aHTRC

SHORT TITLE County Correctional Facility Gross Receipts

SB

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

*See Narrative

*See Narrative Recurring

County

Governments

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates SB 742

Conflicts with SB 144, HB 265

Relates to HB 316

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of HTRC Amendment

The House Taxation and Revenue Committee amendment to House Bill 597 lessens the impact

of the bill by changing the maximum rate at which the county correctional facility gross receipts

tax may be imposed to 0.25 percent. The amended bill allows an additional 1/8 percent

increment, rather than the additional 3/8 percent increment contained in the original bill.

Synopsis of Original Bill

House Bill 597 increases from 0.125 to 0.5 percent the maximum rate at which a county

correctional facility gross receipts tax may be imposed. Counties will still be able to impose the

tax in any increment of one-sixteenth percent.

House Bill 597/aHTRC– Page

2

The effective date of these provisions will be July 1, 2007.

FISCAL IMPLICATIONS

The fiscal impact of this bill depends on if and when county governments choose to impose

county correctional gross receipts tax rates above the current limit of 0.125 percent. TRD

provided the table below to indicate the potential revenue increase to each county if an additional

0.125 percent tax were imposed in FY08.

FY 2008

Taxable Gross

Receipts

Revenue from

Additional

1/8% Tax

Bernalillo County

$18,007,800,533 $22,509,751

Carton County

$45,398,509

$56,748

Chaves County

$1,288,243,597 $1,610,304

Cibola County

$221,462,045

$276,828

Colfax County

$320,643,295

$400,804

Curry County

$893,731,953 $1,117,165

DeBaca County

$45,206,628

$56,508

Dona Ana County

$3,583,835,026 $4,479,794

Eddy County

$2,695,714,130 $3,369,643

Grant County

$535,737,390

$669,672

Guadalupe County

$284,455,853

$355,570

Harding County

$6,171,312

$7,714

Hidalgo County

$94,012,098

$117,515

Lea County

$3,133,096,430 $3,916,371

Lincoln County

$555,456,255

$694,320

Los Alamos County

$914,176,908 $1,142,721

Luna County

$498,746,830

$623,434

McKinley County

$1,103,313,383 $1,379,142

Mora County

$22,916,717

$28,646

Otero County

$868,728,115 $1,085,910

Quay County

$107,209,748

$134,012

Rio Arriba County

$691,702,965

$864,629

Roosevelt County

$348,126,854

$435,159

San Juan County

$4,310,992,010 $5,388,740

San Miquel County

$336,084,200

$420,105

Sandoval County

$2,396,433,606 $2,995,542

Santa Fe County

$4,189,459,380 $5,236,824

Sierra County

$174,862,825

$218,579

Socorro County

$268,437,579

$335,547

Taos County

$710,489,941

$888,112

Torrance County

$164,692,727

$205,866

Union County

$83,209,858

$104,012

Valencia County

$898,587,912

$1,123,235

TOTAL

$49,799,136,612 $62,248,921

Source: Taxation and Revenue Department

House Bill 597/aHTRC– Page

3

SIGNIFICANT ISSUES

Any county in New Mexico may impose the county correctional facility gross receipts tax.

Imposition of this tax does not require approval by a majority of county voters, although voters

may petition an election to approve or disapprove the tax.

County revenue collected due to a county correctional facility gross receipts tax is restricted for

use in operating, maintaining, constructing, purchasing, furnishing, equipping, rehabilitating,

expanding, or improving a judicial-correctional or county correctional facility. Revenue may also

be used to transport or extradite prisoners or to pay principal and interest on county correctional

facility gross receipts tax bonds.

Currently, counties are experiencing escalating costs to extradite and transport prisoners. For

example, Bernalillo County reports that the county jail’s operating budget grew by an average of

9.5 percent per year from 1995 to 2007.

Under current law, New Mexico’s local governments are authorized to impose up to 4.6875

percent of local option gross receipts taxes (that figure excludes several additional local option

taxes that have been authorized for selected local governments). On average, a local option gross

receipts tax of about 1.6 percent is actually imposed by local governments statewide. Combined

with the state gross receipts tax of 5 percent, the statewide tax rate is therefore 6.6 percent.

ADMINISTRATIVE IMPLICATIONS

The administrative impact on TRD will be minimal.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 597 duplicates Senate Bill 742.

House Bill 596 relates to House Bill 316, which creates a recurring appropriation of $5 million

per fiscal year to assist counties with expenses incurred to incarcerate certain felony offenders.

This bill addresses the problem of growing county correction expenses through appropriating $5

million per year rather than giving each county the option to pay the costs through a tax increase.

House Bill 597 conflicts with Senate Bill 144 and House Bill 265. These bills, which would

impose local option compensating taxes, also amend Section 7-20F-3 NMSA 1978.

SS/nt