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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
1/24/07
HB
SHORT TITLE College Event Admission Gross Receipts
SB 204
ANALYST Schardin
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
(46.9)
Recurring Public Project
Revolving Fund
(6.3)
Recurring
Youth
Conservation
Corps
(8.8)
Recurring State Parks
(0.6)
Recurring Cultural Affairs
Department
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates House Bill 143
SOURCES OF INFORMATION
LFC Files
Responses Received From
Higher Education Department (NMHED)
New Mexico Finance Authority (NMFA)
Department of Finance and Administration (DFA)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
Senate Bill 204 creates a new deduction from the gross receipts tax for receipts from admissions
to non-athletic special events such as concerts and plays held at post-secondary institution
venues within 50 miles of the New Mexico border that can accommodate at least 10 thousand
people. This deduction will be applicable in FY08 through FY12, when the deduction will
sunset.
pg_0002
Senate Bill 204 – Page
2
FISCAL IMPLICATIONS
Data from the Pan American Center suggests that about $1.25 million in receipts from
admissions to non-athletic events will be eligible for the new gross receipts tax deduction. These
receipts are currently taxed at 5 percent under the governmental gross receipts tax because the
events are sponsored by a post-secondary. The new deduction will cause the eligible venue to
change contract arrangements to make these receipts taxable under gross receipts tax instead of
governmental gross receipts tax, resulting in a loss of $62.5 thousand from governmental gross
receipts tax revenue.
Governmental gross receipts tax collections are distributed as follows: 75 percent go to NMFA’s
public project revolving fund, 10 percent go to the youth conservation corps program, 14 percent
go to state park and recreation area capital improvements, and 1 percent goes to the cultural
affairs department for capital improvements to state monuments.
SIGNIFICANT ISSUES
Currently, the only venue eligible for the new gross receipts tax deduction created in this bill is
New Mexico State University’s (NMSU) Pan American Center, which seats 13,000 people and is
located in Las Cruces, NM. However, if NMSU rents the Pan American Center to an event
promoter, receipts from the rental will still be subject to the governmental gross receipts tax
created in Section 7-9-3.2 NMSA 1978.
NMHED notes that the Pan American Center competes with facilities at the University of Texas
El Paso (UTEP) for special events. Since Texas does not charge a tax on tickets to these events,
the bill may help draw events to NMSU.
While individual credits, deductions and exemptions from the gross receipts tax may have small
fiscal impacts, their cumulative effect significantly narrows the gross receipts tax base.
Narrowing the gross receipts tax base increases revenue volatility and requires a higher tax rate
to generate the same amount of revenue.
Gross receipts tax deductions such as the one created by this bill do not guarantee whether the
tax reduction will result in larger profits for businesses or lower prices for consumers.
ADMINISTRATIVE IMPLICATIONS
TRD reports that the bill will cause minimal administrative impacts. CRS forms, instructions,
and publications will be revised.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Senate Bill 204 duplicates House Bill 143.
pg_0003
Senate Bill 204 – Page
3
TECHNICAL ISSUES
The bill might be clearer if “non-athletic special event" were defined.
The title of the bill indicates that the deduction applies to athletic events, but the bill applies only
to non-athletic events.
OTHER SUBSTANTIVE ISSUES
Due to the small fiscal impact this bill will have on governmental gross receipts tax collections,
NMFA believes the bill does not violate the non-impairment clause in Section 7-1-6.38(D)
NMSA 1978, which specifically states that the state legislature may not limit, reduce or alter the
distribution of net receipts from the governmental gross receipts tax while bonds payable from
that revenue are outstanding.
NMSU’s Pan American Center was ranked the sixth busiest university event facility by
Amusement Business Magazine in 2000.
SS/csd