BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  February 22, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: SB – 727 (Revised for Title)

SPONSOR: Senator Kidd

BILL SHORT TITLE: 1/3rd of Gaming Tax to Lottery Scholarship Fund; Allow Up to 1,200 Slot Machines at Racetrack Casinos; Divert Public School Capital Outlay Share of Net Lottery Revenue to Lottery Scholarship Fund.

CONFLICTS, DUPLICATES, COMPANIONS: SB – 225 proposes an expansion of racetrack casinos without limit; SB – 803 proposes that Sunland Park Racetrack Casino in Dona Ana County be allowed 800 slot machines.

DESCRIPTION: this bill has a number of minimal changes and three substantial changes. The first of the substantial changes is that 100% of lottery net proceeds will benefit the Lottery Scholarship Fund, with the former 50% share to the public school capital outlay fund repealed. The bill then proposes to augment the Lottery Scholarship Fund with 1/3rd of the proceeds of the Gaming Tax imposed on racetrack casinos and slot machine operations conducted by a number of veterans and fraternal organizations. The final substantive change is to expand the 300 machine limit up to 1,200 machines, provided that the tracks offer live racing days. For the 1,200 level, the track must offer at least 91 live racing days.

EFFECTIVE DATE: emergency clause – effective on signing.

FISCAL IMPACT (Thousands of dollars):  		Note: Parenthesis ( ) indicate a revenue loss:
		Recurring or		
Estimated Impact on Revenues	Nonrecurring	Funds 	
FY 2001	 FY 2002 	Full Year	     Impact     t     	             Affected          .             	
(1,200)	2,400	6,500	Recurring	General Fund	
3,600	23,000	26,800	Recurring	Lottery Scholarship Fund	
(2,400)	(9,500)	(10,000)	Recurring	Public School Capital	

The December revenue estimate pegged the gaming tax at $24.0 for FY 2001 and $24.5 million for FY 2002. This represents approximately $1.6 million from the veterans and fraternals and the remainder from the racetrack casinos. The first six month’s of FY 2001 collections of this tax are running 33.5% ahead of last year. If this persists, total collections for the FY 2001 fiscal year will be about $24.7 million. The 1/3rd diversion of current gaming tax revenue to the lottery scholarship fund would be about $8 million. The repeal of the 50% sharing  would increase the flow of revenue to the lottery fund by 50% of net revenues after about 55% payout ratio and 25% adminstrative costs on about $95 million in annual sales. The major augmentation, however, will be from the expansion of slot machines, particularly at Sunland Park and to a lesser extent at Sunray Park and Albuquerque Downs. An unpublished model, built to assess the impact of SB-225, estimates that economic forces would increase the total number of racetrack slot machines in the state from 1,200 to 2,690 and total gaming tax revenues would increase by $21 million to $45.5 for FY 2002. 20% of this amount will be transferred to the Lottery Scholarship Fund.

ADMINISTRATIVE IMPACT: minimal. This proposal would not expand the number of gaming taxpayers, and the change in distribution is a spreadsheet application. Changes would be minimal for Lottery Board, as well.

OTHER IMPACTS AND ISSUES:
	GF	PSCOutlay	Lottery Scholarship	
Base	(8,167)		8,167	
100% of Net Lottery to Scholarships 		(9,500)	9,500	
Expansion	14,100		7,100	

FY 2001	FY 2002 (75%)	FY 2003		
(1,200)	2,400	6,500	 General Fund	
3,600	23,000	26,800	 Lottery Scholarship Fund	
(2,400)	(9,500)	(10,000)	 Public School Capital Outlay	

1.	See http://www.postsecondary.org/privatevalue.htm website for an article entitled “Value of a College Education to Individuals: Private Economic Benefit/Cost Ratios of a College Investment for Men and Women, 1967 to 1999, November 2000”. One of the startling statistics reported in the study is as follows: “For males graduating from a public 4-year institution in four years with a bachelor’s degree, each $1.00 spent on institutional charges produced $34.85 in increased lifetime income. Another conclusion: a male college graduate will earn $1,160,000 more than will a high-school graduate over a 40-year working career.