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F I S C A L I M P A C T R E P O R T
SPONSOR Sanchez, M.
ORIGINAL DATE
LAST UPDATED
2-20-09
HB
SHORT TITLE Environmental Conservation Tax Initiatives
SB 952
ANALYST Aubel
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
$150.0 Non-Recurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates HB 889
Relates to HB 318 and HB 386
SOURCES OF INFORMATION
LFC Files
Responses Received From
New Mexico Environment Department (NMED)
Energy, Minerals and Natural Resources Department (EMNRD)
Department of Finance Administration (DFA)
No Response
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
Senate Bill 952 appropriates $150.0 thousand from the general fund to the New Mexico
Environment Department for the purpose of studying the feasibility of a program entitled “Green
Both Ways", which is a market-based approach to environmental conservation and protection
through property tax incentives.
FISCAL IMPLICATIONS
The appropriation of $150.0 thousand contained in this bill is a non-recurring expense to the
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Senate Bill 952– Page
2
general fund. Any unexpended or unencumbered balance remaining at the end of fiscal year
2008 shall revert to the general fund.
SIGNIFICANT ISSUES
The bill does not specify what type of market-based approaches “Green Both Ways" program
would include. Other states have primarily used property tax incentives to encourage renewable
energy and “green" construction of buildings. Such incentives include property tax exemptions,
special assessments, or reduced property tax rates for renewable energy systems or facilities that
produce or transmit renewable energy.
According to EMNRD, 26 states have property tax incentives for renewable energy. Most
provide that renewable energy equipment cannot be valued at a higher rate than conventional
equipment, even if the renewable energy equipment cost more. Other states, such as Indiana and
Louisiana, do not include the value of a renewable-energy system in the assessment of buildings
or other structures to which the equipment is attached.
In June 2005, the Nevada Assembly passed a law that provides for partial abatement of property
taxes for property that has a building or structure that meets or exceeds the United States Green
Building Council’s LEED Silver rating system.
Other types of programs that might be studied under this bill are pollution-trading programs or
green or pollution offsets or property tax structures that give preference to agricultural or
conservation use. In Georgia, property devoted to agricultural, timber or conservation use
through a 10-year covenant is taxed at 75 percent of fair market value. Green-offsets occur
where a developer takes action outside a development site but near to it to reduce pollution. The
developers either take the action themselves or pay others to conduct it on their behalf. They
include such measures as re-vegetating and stabilizing river banks, building better road surfacing
and drainage to reduce the flow of sediments and nutrients into waterways, installing pollution
control equipment at other off-site sources, installing vapor recovery units at gas stations, or
assisting small businesses to install cleaner technology to reduce emissions.
NMED maintains that from a policy perspective, creating economic incentives to achieve
environmental compliance is an effective approach and concludes that studying the issue of
market-based environmental conservation is a valid approach in tailoring such incentives to New
Mexico. The study would also assess the idea of creating a "bank" for publicly trading
environmental credits, such as the program conducted nationally at the Chicago Climate
Exchange.
PERFORMANCE IMPLICATIONS
Because of the broad and open-ended nature of a feasibility study, performance implications are
indeterminate beyond the production of a study. DFA notes it is not clear how the
“environmental bank" concept may either complement or conflict with the Governor’s Chicago
Climate Exchange initiative; however, any efforts that would reduce greenhouse gas emissions
would benefit both this initiative and New Mexico’s environmental and public health.
If the study resulted in property tax incentives that encouraged green building or installation of
renewable energy systems, the study would promote EMNRD’s mission to encourage renewable
energy use and increased energy efficiency.
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Senate Bill 952– Page
3
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicates HB 889.
Relates to HB 318 (mercury emissions reduction) and HB 386 (greenhouse gas emission
reduction.)
ALTERNATIVES
Because EMNRD is the lead agency on implementing the executive initiatives in making New
Mexico a leader in energy efficiency, and also appears to be the most knowledgeable regarding
the issues this study may involve, one option would be to make the appropriation to EMNRD.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Market-based incentives will not be studied and the possible benefits derived from implementing
a market-based approach to environmental conservation and protection through property tax
incentives would be left unrealized.
MA/mt