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

SPONSOR Varela

ORIGINAL DATE

LAST UPDATED

1/26/08

2/1/08 HJR 10

SHORT TITLE Statewide Millage Rate for School Funds

SB

ANALYST Aguilar

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

$251,000.0 Recurring Public School

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to HB 241

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

House Joint Resolution 10 proposes an amendment to the New Mexico Constitution increasing

the current twenty mill limit to twenty five mills and dedicating the additional five mills to fund

public schools in the state.

FISCAL IMPLICATIONS

The revenue stream projected to be generated by the increased millage is a recurring revenue

source dedicated to the Public School Fund to be used to fund public k-12 education in New

Mexico. The latest property valuation statewide was $46.9 billion and grown at a rate of

approximately 3.5 percent (which is lower than the past few years which have seen tremendous

growth) yields a property value of $50 billion for tax year 2010. Because the amendment has to

go to the voters in November, 2010 is the earliest tax year that the change will be effective.

This amount would generate approximately 70 percent of the total revenue needed to implement

the formula.

House Joint Resolution 10 – Page

2

SIGNIFICANT ISSUES

Currently, the state constitution limits the total millage excluding debt service to twenty mills

annually on each dollar of the assessed valuation for real or personal property.

This bill increases this limit to twenty-five mills with the additional five mills being imposed

statewide and distributed to public schools through the state’s public school fund.

As a constitutional amendment, it must be approved by the voters of New Mexico before

becoming effective.

This bill is one of the recommendations adopted by the Public School Funding Formula Task

Force and provides additional funding for the public school funding formula in order to provide a

sufficient education pursuant to the state constitution.

Revenue available as a result of the millage increase is estimated as follows:

dollars in thousands

FY10

$251,000.0

FY11

$259,500.0

FY12

$268,300.0

FY13

$277,500.0

FY14

$286,900.0

FY15

$296,600.0

FY16

$306,700.0

Source: LFC Files

TRD raises important issues about the yield control formula: It appears that the proposed new

rate would not be subject to the yield control mechanism, hence the rate would not be adjusted

downward as assessed value of properties increase. If the rate is indeed not subject to yield

control, voters should probably be informed that it is not prior to considering the issue.

TECHNICAL ISSUES

TRD is concerned that using the term “shall" rather than “may" will force the legislature to adopt

the 5 mills if the voters approve it.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

There are many property tax bills and resolutions pending before the legislature. Many of them

exempt property owned by different groups of taxpayers (for seniors, veterans’ organizations,

and members of the National Guard). One bill, SJR 14, would limit property tax overall to no

more than 1 percent of property value which would conflict with this bill for many communities.

PA/nt:bb