BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE:  February 19, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: HB-684

SPONSOR: Representative Taylor

BILL SHORT TITLE: Distribution of Compensating Tax to Municipalities

DESCRIPTION: The bill proposes a new distribution to municipalities funded by compensating tax collections. The amount of new funding for the cities is $1,500 per month per city or $18,000 per year. Albuquerque, Santa Fe, Farmington and Las Cruces receive their taxable gross receipts share of a pot equal to 1.225% of net compensating tax collections. This distribution consumes about 5% of net compensating tax collections to add to the current law 10% distributions of comp tax collections to small cities and another up to 10% distribution to small counties. 

EFFECTIVE DATE: July 1, 2001

FISCAL IMPACT (Thousands of dollars):  		Note: Parenthesis ( ) indicate a revenue loss:

		Recurring or		
Estimated Impact on Revenues	Nonrecurring	Funds 	
	 FY 2002 	Full Year	     Impact     t     	             Affected          .             	
	(1,900)	(2,100)	Recurring	General Fund	
	1,900	2,100 	Recurring	Municipalities	

Except for the four largest municipalities, each village, town or city will receive 18,000 per year under this proposal.

ADMINISTRATIVE IMPACT: possibly significant. While this could and will be implemented as a stand-alone, after-the-fact distribution and mailed in a separate warrant with virtually no increase in resources, it is far more preferable to include this amount in the regular gross receipts tax warrant. The Department will probably include the $1,500 per month per municipality in the regular warrant and calculate the exact amount -- after the fact -- for the four largest municipalities.

TECHNICAL ISSUES:
As pointed out in several bills this session, “Taxable gross receipts” is not actually defined in this bill or in statute. We all know what it means, but it should be carefully spelled out. Gross receipts is carefully defined. Some definitional exclusions are explicitly mirrored in the exemptions section of the GR&CTA; others are not. Thus, a definition of taxable gross receipts is somewhat more than just gross receipts less any appropriate and allowable deductions. Exemptions must also be excluded.

OTHER IMPACTS AND ISSUES:
1.	
Albuquerque	$231,095	
   Santa Fe	$53,045	
   Las Cruces	$31,167	
   Farmington	$29,300	

2.	If this distribution is argued on tax policy grounds – that cities share in the gross receipts tax through local option and through state shared gross receipts tax – it is difficult to see why the counties shouldn’t also come in for a share.