BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  February 25, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: HB-623 as amended on the House Floor

SPONSOR: Representative Lujan

BILL SHORT TITLE: Amendments to the Property Tax Code

DESCRIPTION: The limitation on increases in valuation of residential property is revamped. Now counties where median sales assessment ratios are under 85 percent (80 percent prior to amendment) in the 2000 tax year must reassess until they reach sales ratios of at least 85 percent by tax year 2003. Thereafter, they will be subject to the 3 percent value increase limit. If they reach the 85 percent ratio prior to 2003, they will be subject to the 3 percent limit. In counties where insufficient data exists to determine a statistically valid sales/assessment ratio, the Department must determine a ratio based on appraisals.
	The proposed measure also indexes the modified gross income (MGI) cap used in qualifying elderly low-income owners of single-family residential for the 0% valuation increase limitation by consumer price index for urban consumers. 
	The proposal further clarifies that new improvements to properties by individuals subject to the elderly low-income value limitation are not subject to the limitation. 
	House floor amendments 1) improve the manner in which the consumer price index is employed in the measure, 2) increase the limit whereby counties are subject to revaluation from a sales/assessment ratio of 80 percent to 85 percent, and 3) change several dates which the measure's provisions would become effective.

EFFECTIVE DATE: The measure's emergency clause would make it effective immediately upon enactment.

FISCAL IMPACT:  No significant impacts on state or local revenue sources would result from passage of the proposed measure. Fiscal Year 2000 sales/assessment ratios for New Mexico counties are shown in the illustration below. The number of counties in which the Department would be required to assess properties to determine sales/assessment ratios would depend on what is assumed to be an adequate sample size. However, reassessment would be required in at least 15 counties and possibly 6 other ones.

ADMINISTRATIVE IMPACT: The proposed changes could be administered with resources currently available to the Department. However, significant costs will probably result from the provisions requiring appraisal in cases where insufficient sales data exist to determine sales/assessment ratios.

TECHNICAL ISSUES: none

OTHER IMPACTS AND ISSUES:  
1) The proposal would generally improve equity associated with New Mexico's property tax system by allowing improved uniformity in assessment among counties where sales/assessment ratios are currently low. 
2) Indexing the MGI figures would prevent inflation from causing some low-income taxpayers to fail to qualify for the valuation freeze. Nonetheless, the fact that a person with a top qualifying income is eligible for the freeze, while a person whose income is one dollar more does not, may not be perceived as fair by some taxpayers. 
3) Under the proposed and current statute if an assessor did not reassess and, as a result, the county average sales/assessment ratio fell to, say 60 percent, no legal mechanism exists that would require assessments to be returned to approximate market values.

Illustration: 2000 Tax Year Sales Assessment Ratio Summary 	

County	Mean Ratio: Assessed Value to Sales Price (%)	Median Ratio: Assessed Value to Sales Price (%)	
Coefficient of Dispersion	Price Related Differential	
Sample Size	
Bernalillo	84.3	84.8	11.03	1.01	1594	
Catron	98.9	98.8	5.17	1.01	83	
Chaves	84.7	84.5	13.12	1.00	480	
Cibola	77.4	74.7	23.09	0.97	52	
Colfax	73.1	68.5	28.91	1.10	119	
Curry	98.5	97.0	15.30	1.04	338	
De Baca	NA	NA	NA	NA	ISS*	
Dona Ana	91.0	94.0	12.89	0.98	1252	
Eddy	86.6	84.7	12.07	1.01	246	
Grant	78.0	79.0	20.20	1.01	235	
Guadalupe	NA	NA	NA	NA	ISS*	
Harding	NA	NA	NA	NA	ISS*	
Hidalgo	79.7	73.3	25.29	1.10	37	
Lea	90.0	86.0	17.38	1.02	257	
Lincoln	95.0	92.0	12.39	1.03	508	
Los Alamos	81.0	80.3	9.34	0.99	158	
Luna	94.0	94.0	10.79	0.97	195	
McKinley	89.0	88.7	13.20	1.01	82	
Mora	NA	NA	NA	NA	ISS*	
Otero	85.0	86.0	16.07	1.00	1030	
Quay	73.8	72.9	22.07	0.99	46	
Rio Arriba	75.0	73.0	23.34	1.05	236	
Roosevelt	86.4	88.5	8.04	0.99	62	
San Juan	82.0	81.0	9.97	1.01	646	
San Miguel	89.9	89.8	19.36	1.04	58	
Sandoval	84.3	86.8	15.31	1.01	192	
Santa Fe	86.5	86.7	10.70	1.01	337	
Sierra	82.2	81.1	19.62	1.02	251	
Socorro	NA	NA	NA	NA	ISS*	
Taos	77.4	74.2	23.34	1.02	230	
Torrance	84.0	84.0	7.99	1.01	89	
Union	NA	NA	NA	NA	ISS*	
Valencia	86.5	84.2	10.98	1.01	231	
  Average	85.3	84.2	15.71	1.02	324	
*Insufficient sample size. Notes: 1) Bold print indicates insufficient sample size or median ratio below 85 percent. 2) Ovals indicate sales assessment ratio is under 85 percent. 3) Ratios shown in columns 2 and 3 reflect 1999 sales and 2000 tax year assessed values. 4) Figures shown above reflect revisions in estimates by the Property Tax Division for Bernalillo and Grant County.