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F I S C A L I M P A C T R E P O R T
SPONSOR Robinson
ORIGINAL DATE
LAST UPDATED
2/20/07
3/15/07 HB
SHORT TITLE Motor Vehicle Insurance Tax Rebate
SB 760/aSPAC/aSFC
ANALYST Francis
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
NFI
Recurring General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Public Regulation Commission (PRC)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of SFC Amendment
The Senate Finance Committee strikes the Senate Public Affairs Committee amendment to
Senate Bill 760. This restores the bill to its original form.
Synopsis of SPAC Amendment
The Senate Public Affairs Committee amended Senate Bill 760 to include an additional credit
under the Low-Income Comprehensive Tax Credit (LICTR) program if the recipient uses a
portion for car insurance. The SPAC amendment also defines car insurance as “motor vehicle
liability insurance at the minimum limits required by the Mandatory Financial Responsibility
Act." The maximum additional credit is an amount up to 25 percent of the amount of car
insurance.
Synopsis of Original Bill
Senate Bill 760 allows recipients of the low-income comprehensive tax rebate (LICTR) to apply
pg_0002
Senate Bill 760/aSPAC/aSFC – Page
2
a portion of the rebate to the cost of basic motor vehicle insurance up to 50 percent of the
premium cost. The Taxation and Revenue Department will adopt rules for the administration of
the rebate, including for proof of insurance and direct payment from the rebate to the insurer.
There is no effective date so it is assumed that the effective date is June 15, 2007.
FISCAL IMPLICATIONS
SB 760 as amended by SFC does not change or modify the LICTR other than allowing the rebate
to be used for motor vehicle insurance so there is no fiscal impact.
SIGNIFICANT ISSUES
As written, a LICTR recipient does not have to apply a portion of his or her rebate to motor
vehicle insurance. Since LICTR is a refundable credit, the taxpayer receives a check from the
state for the excess over his or her liability. There are no restrictions on how the proceeds from
LICTR are used by the taxpayer and SB760 does not add any restrictions. Under current law, a
LICTR recipient can use some or all of the rebate for motor vehicle insurance.
New Mexico Vecinos United, a community organization, has reported that there may be
potential savings to all other drivers if the rate of uninsured motorists declines that are not shown
in this fiscal impact estimate. Since low income populations tend to have a higher uninsured rate
than the broader population, targeting this population for incentives to purchase insurance would
help lower the rate of uninsured motorists.
New Mexico’s average insurance premium in 2006 has declined 7.2 percent from 2005, moving
down one slot in the ranking from 20
th
highest premium to 21
st
. Overall, 38 states realized
declines in insurance premiums. See table at end.
Since there is no minimum premium, recipients will receive different amounts and so there may
be issues of equity. In other words, a recipient with a poor driving record and so a higher
premium will receive a higher credit than a recipient with a lower premium.
ADMINISTRATIVE IMPLICATIONS
It is unclear what TRD’s function will be since it is not a mandatory payment. They would have
to come up with forms for the direct payment and a method to pay the insurers if that is what
must be done.
TECHNICAL ISSUES
PRC: The term “basic motor vehicle insurance" contained in the new section is undefined. A
more accurate phrase would be “motor vehicle liability insurance at the minimum limits required
by the Mandatory Financial Responsibility Act."
ALTERNATIVES
If the intent was to require those receiving LICTR to have motor vehicle liability insurance, this
legislation does not do that. To achieve this goal, additional language would be required to either
provide proof of insurance with the rebate application or to provide proof the taxpayer does not
own a vehicle.
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Senate Bill 760/aSPAC/aSFC – Page
3
2006 Auto Insurance Pricing Report
State
2005
Premium
2006
Premium
2006 Ch
ange
from 2005
% 2006 Ch
ange
f
rom
2005
AL
$1,897.00 $1,846.68
-50.31
-2.70%
AR
$2,068.25 $2,118.02
49.77
2.40%
AZ
$2,050.79 $1,928.98
-121.81
-5.90%
CA
$2,075.72 $1,841.91
-233.81
-11.30%
CO
$1,827.79 $1,658.50
-169.29
-9.30%
CT
$2,052.77 $1,964.97
-87.8
-4.30%
DC
$2,716.94 $2,753.21
36.28
1.30%
DE
$2,331.46 $2,620.99
289.53
12.40%
FL
$2,134.16 $2,105.25
-28.91
-1.40%
GA
$1,885.55 $1,705.32
-180.23
-9.60%
IA
$1,554.52 $1,496.49
-58.03
-3.70%
ID
$1,630.88 $1,547.77
-83.11
-5.10%
IL
$1,644.51 $1,556.46
-88.05
-5.40%
IN
$1,707.83 $1,462.75
-245.08
-14.40%
KS
$1,836.83 $1,618.98
-217.84
-11.90%
KY
$2,447.91 $2,298.92
-148.98
-6.10%
LA
$3,015.55 $2,832.78
-182.77
-6.10%
MD
$2,528.57 $2,225.93
-302.64
-12.00%
ME
$1,474.12 $1,484.12
10
0.70%
MI
$2,110.63 $2,158.05
47.42
2.20%
MN
$2,042.92 $1,658.07
-384.85
-18.80%
MO
$1,588.32 $1,557.91
-30.41
-1.90%
MS
$2,173.83 $2,020.86
-152.98
-7.00%
MT
$1,897.04 $1,769.30
-127.74
-6.70%
NC
$2,198.51 $2,260.68
62.17
2.80%
ND
$2,003.95 $1,941.32
-62.63
-3.10%
NE
$1,963.00 $1,701.69
-261.31
-13.30%
NH
$1,843.06 $1,649.82
-193.24
-10.50%
NJ
$3,728.60 $2,736.71
-991.89
-26.60%
NM
$2,046.53 $1,900.06
-146.46
-7.20%
NV
$1,959.37 $1,941.77
-17.6
-0.90%
NY
$2,672.79 $2,713.94
41.15
1.50%
OH
$1,485.15 $1,358.09
-127.07
-8.60%
OK
$2,013.45 $1,894.32
-119.13
-5.90%
OR
$1,720.08 $1,648.06
-72.02
-4.20%
PA
$2,218.39 $1,924.95
-293.45
-13.20%
RI
$2,401.42 $2,552.75
151.34
6.30%
SC
$1,935.94 $1,717.15
-218.79
-11.30%
SD
$1,857.85 $1,811.98
-45.88
-2.50%
TN
$1,672.50 $1,547.53
-124.96
-7.50%
TX
$1,949.67 $1,801.50
-148.17
-7.60%
UT
$1,789.43 $1,797.44
8.01
0.40%
VA
$1,675.40 $1,575.29
-100.11
-6.00%
VT
$1,611.47 $1,554.28
-57.19
-3.50%
WA
$1,940.24 $1,792.22
-148.02
-7.60%
WI $1,605.40 $1,352.32
-253.09
-15.80%
WV
$2,408.44 $2,366.60
-41.84
-1.70%
WY
$2,166.22 $2,189.67
23.45
1.10%
NF/csd