BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE: February 26, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: HB-831

SPONSOR: Representative Silva

BILL SHORT TITLE: Allowing counties to bill other entities in for costs of low-income property tax rebates. 

DESCRIPTION: Current statutes allow counties to offer several types of low-income rebates against property taxes. One such option is established by Sections 7-2-14.3 through 7-2-14.5 NMSA 1978. They allow counties to provide their citizens with rebates ranging from 35 percent of property tax liability for taxpayers with modified gross income (MGI) of between $22,000 and $24,000, to 75 percent of property tax liability when MGI is under $8,000 annually. The rebates may not exceed $350. The rebate are against property taxes paid to county and municipal government to fund operations. They do not rebate property taxes paid to service debt. The statutes allow county commissioners to fund the rebates by imposing a rate of up to $1 per $1,000 in net taxable value against property within their counties. The rebates are administered through the New Mexico personal income tax system and distributed by the Taxation and Revenue Department. After payment of the rebates, the Department is required to bill counties for the cost of the rebates. 
	The proposed measure would add a new section to Section 7-2-14.3 NMSA stating that after paying the Department for the cost of the rebates, county treasurers must "...bill each government entity for which property taxes were collected during the rebate period for their prorated share of the payment certified by the department.". 
	Partially due to confusion regarding what the rebates would cost, no counties have notified the Department of their intention to adopt the option, although it has been available to them since 1994. 

EFFECTIVE DATE: July 1, 2001.

FISCAL IMPACT (Thousands of dollars): The proposal would not impact state revenues in any way. How it would affect local revenues depends on whether counties adopt the rebate programs, as well as operating rates in effect when they do so. In most counties, the major operating rates imposed against property taxes are county operating rates. Municipal governments tend to impose property tax rates for debt service purposes. Hence, depending on how the term "prorated" is interpreted (see below), the proposed measure would probably provide little help to counties in financing the rebate program. 

ADMINISTRATIVE IMPACT: The proposed bill would impose no significant administrative impacts on the Department, although substantial systems costs are associated with the various rebate programs, including the one modified by the proposed legislation.

TECHNICAL ISSUES: Meaning of the phrase "prorated share of payment" in the measure is unclear. Since the rebate is against operating revenues imposed by counties and municipalities, the cost of the rebates would presumably be shared in proportion to county and municipal operating revenues. The phrase may, however, be interpreted to encompass all property tax revenues distributed by county treasurers, including payments from collecting taxes that are delinquent and payments for servicing debt.   At least the phrase “government entity” (p. 5, line 20) should be replaced by “municipality”.

OTHER IMPACTS AND ISSUES: Municipal governments would most likely object to imposing costs on them in response to a county initiative to fund a low-income rebate program.