BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  March 9, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY   

BILL NUMBER:  HB-471 as amended by the Senate Finance Committee (03/07/2001) & Senate floor

SPONSOR:  Representative Taylor

BILL SHORT TITLE:  Isleta and Sandia Pueblos Tax Credits

CONFLICTS, DUPLICATES, COMPANIONS:  SB-335

DESCRIPTION:  Under statutes enacted in 1999 and 2000 (and patterned after similar statute first enacted in 1997 for Santa Clara Pueblo), TRD may enter into agreements with Santa Ana Pueblo, Laguna Pueblo, and Nambe Pueblo to collect any gross receipts tax imposed by the Pueblo. To resolve dual taxation issues, if the Pueblo grants a 25% credit against its tax and meets other specified conditions, the state will grant a credit against state and local gross receipts tax due from taxpayers subject to both taxes. The result will be that taxpayers will pay the same tax as they would under the state and local taxes alone -- even after the Pueblo has imposed its tax.

The proposed bill allows the Secretary of Taxation and Revenue to enter into similar agreements with Isleta and Sandia Pueblos. 

The Senate floor amendment strikes the SFC amendments, leaving the bill in its original form.

EFFECTIVE DATE: July 1, 2001

FISCAL IMPACT (Thousands of dollars): 

	Estimated Impact on Revenues	Recurring or		
		Nonrecurring		
	Full Year      	    Impact    t	Funds Affected	
	Positive*	Recurring	Tribes and Pueblos	
	Negative*	Recurring	State General Fund	
	Negative*	Recurring	Counties	

*  Any agreement between additional Pueblos and the Department would probably not result in any significant revenue impacts in the immediate future.  It is uncertain when any agreement under this statute might become effective.

ADMINISTRATIVE IMPACT: Administrative impact is strongly influenced by the specific agreement negotiated between TRD and the Pueblos.  Computer programming changes are required, the complexity of which will vary depending upon the exact terms on any final agreement.  If even one taxpayer is covered by the agreement, the system will have to be adapted. The minimal amount of programming needed to implement each agreement is about 300 hours (under $15 thousand). 

OTHER IMPACTS AND ISSUES:

1)	The Department supports the general aims of this bill. It promotes resolution of the deduction problem, which creates a real disincentive to economic development on tribal lands. The disincentive tends to hurt tribes more than the state. In some cases, the disincentive will mean a business will simply chose not to open. But in most cases, the result of the double tax will be that the business will locate off reservation. The result is the state would be getting its full share of tax and the tribe would get nothing.

2)	This bill also promotes efficiency of administration and collection of state and Pueblo taxes through cooperative agreements and minimizes the total tax burden through mutual tax credits. This is preferable to a condition where State Taxation and Revenue Department and a Pueblo Tax Commission simultaneously expend  resources to collect taxes separately from the same taxpayers, with no mutual tax credit.

3)	Under the original legislation for Santa Clara Pueblo, only gross receipts tax from businesses located on Pueblo-owned land outside a municipality is subject to the revenue sharing arrangement unless the municipality annexed a portion of the Santa Clara land after July 1, 1997.  That particular credit cannot be applied against municipal local option taxes except in the case of annexation.

Presumably, there is no municipal land within other tribal or pueblo reservation boundaries or held in trust for any other tribe or pueblo, so this restriction is not necessary for them.

4)	The department entered into an agreement with Santa Clara Pueblo in 1998, and with Santa Ana Pueblo in 2000, but has not yet entered into any agreement with any other tribal or pueblo entity.