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.
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F I S C A L I M P A C T R E P O R T
SPONSOR Steinborn
ORIGINAL DATE
LAST UPDATED
1/22/08
1/30/08 HJR 6/aHVEC/aHTRC
SHORT TITLE Veteran’s Organization Property Tax
SB
ANALYST Francis
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY08
FY09
FY10
NFI – See Narrative
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Department of Finance and Administration (DFA) FIR from 2007
Response Received From
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of HTRC Amendment
The House Taxation and Revenue Committee amended Senate Joint Resolution 9 as amended
striking the HVEC amendment and expanding the definition of “veterans’ organizations" to
require that the property be primarily used by veterans and their families."
Synopsis of HVEC Amendment
The House Voters and Elections Committee amended House Joint Resolution 6 expanding the
definition of “veterans’ organizations." The property no longer needs to be used by local, state,
or federal government entities or nonprofits.
Synopsis of Original Bill
House Joint Resolution 6 proposes to amend the NM Constitution to exempt veterans’
organizations chartered by the United States from property tax if the property is used by local,
state or federal government entities or by nonprofit community organizations or other veterans’
organizations. If passed the question will go to the voters at the next general election.
pg_0002
House Joint Resolution 6/aHVEC/aHTRC – Page
2
In 2007, House bill 719 was enacted (Laws 2007, Chapter 167) which changes the tax code
contingent on a joint resolution in that session being passed. It is unclear whether this joint
resolution will serve to allow the change to the tax code or if a new bill must be considered.
FISCAL IMPLICATIONS
Assuming each property is valued at $250,000, the 500 veteran’s organizations that would
qualify would own $125 million in property. The taxable value is $41.7 million and the liability
would be approximately $1.1 million statewide. If more of the organizations are in Bernalillo
County, the impact could be much higher as Bernalillo County has a higher property tax rate.
Since most counties adjust the property tax rate according to their funding needs, any property
tax exemption for one group of taxpayers has the effect of raising property tax rates for all other
taxpayers.
SIGNIFICANT ISSUES
The Department of Veterans’ Services believes that many veterans’ organizations need this
exemption from property tax to forestall the closing of many facilities that provide services to
veterans particularly in rural areas.
Department of Finance and Administration (DFA), from analysis of HB719 in 2007 session:
Current assessments for these organizations would be excluded from the tax roles and
property tax collection and distribution would be diminished. Fiscal impact would likely
be spread throughout the state. NM counties, cities and schools will take the big hits on
operating revenues. With voter-approved bond issues, the total debt service is divided by
the current taxable value to get a debt rate. Thus, the effect of this bill on capital would be
to shift burden from the veteran’s organizations to the general public. The county that
would probably take the hardest hit would be Bernalillo County, due to the fact that the
county has the largest number of veterans’ organizations headquarters.
This legislation exempts from property taxation the VFW, DAV, American Legion and
AMVETS along with many smaller organizations chartered by the US Congress. In NM
there are between 500 and 600 active chartered veterans’ organizations. Out of the
approximately 600 organizations, probably the majority rent out space to governments for
events or to other community organizations. Since the bill does not quantity how much
community or government use is necessary to qualify for the exemption, we must assume
that every active chartered veteran’s organization that owns property will qualify for this
exemption.
TRD:
1) Provisions of the proposed measure would require the legislature to exempt veterans’
organization facilities from property taxation rather than allowing the legislature to
consider the issue and subsequently enact enabling legislation. 2) Participants in similar
organizations that do not benefit from property tax exemptions, for example Elks, may
view the exemption provided to veterans’ club attendees as unfair. 3) Similar proposals
sometimes contain provisions allowing individual communities to vote on the status of
property tax exemptions for fraternal organizations. This type of provision is not in the
proposed legislation.
NF/bb:nt