BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE:  March 8, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY

BILL NUMBER: Senate Corporations and Transportation Committee Substitute for SB-858 as amended by Senate Floor Amendment 1

BILL SHORT TITLE: Exempting a Museum from Property taxation

DESCRIPTION: As amended, this would specifically exempt from property taxation "...a museum that 1) has been granted exemption from the federal income tax by the Unites States commissioner of internal revenue as an organization described in Section 50 (c) (3) of the Internal Revenue Code of 1986, as amended or renumbered; and 2) is used to provide educational services".

EFFECTIVE DATE: Applies to the 2002 and subsequent property tax years.

FISCAL IMPACT: No significant fiscal impact to the state would result from enactment of the proposed legislation. The potential impact for the City of Santa Fe and the Santa Fe School District would be small.
 
ADMINISTRATIVE IMPACT: The measure would impose no significant administrative impacts on the State of New Mexico or local governments.

TECHNICAL ISSUES: 
(1) Exemption of real property is provided solely by Article VIII, Section 3 of the New Mexico Constitution. The Legislature does not have the authority to exempt real property from property taxation. AG Opinion No. 6267, August 30, 1955, states that “It is obvious that the Legislature may neither enlarge nor diminish the exemptions granted in and by this section.”  See also, Dillard v. New Mexico State Tax Commission, 53 N.M. 12, 201 P. 2d 345.  Article VIII, Section 3 is reproduced below.

	The property of the United States, the state and all counties, towns, cities and school districts and other municipal corporations, public libraries, community ditches and all laterals thereof, all church property not used for commercial purposes, all property used for educational or charitable purposes, all cemeteries not used or held for private or corporate profit and all bonds of the state of New Mexico, and of the counties, municipalities and districts thereof shall be exempt from taxation. 
Provided, however, that any property acquired by public libraries, community ditches and all laterals thereof, property acquired by churches, property acquired and used for educational or charitable purposes, and property acquired by cemeteries not used or held for private, or corporate profit, and property acquired by the Indian service and property acquired by the United States government or by the state of New Mexico by outright purchase or trade, where such property was, prior to such transfer, subject to the lien of any tax or assessment for the principal or interest of any bonded indebtedness shall not be exempt from such lien, nor from the payment of such taxes or assessments. 
	Exemptions of personal property from ad valorem taxation may be provided by law if approved by a three-fourths majority vote of all the members elected to each house of the Legislature.

If the real property of tax-exempt museums is property used for educational purposes, then there is no need for this bill. If that property is not educational, then the Legislature does not have the authority to exempt it.
The Senate floor amendment unfortunately simply begs the question. The dispute between the assessor and the museum is precisely whether or not the museum’s property is used for educational purposes.

(2)  The Legislature may exempt personal property by a three-quarters vote of each house.

(3)  If enacted, the county assessor is handed an opportunity to challenge the constitutionality of dummy bills, simply by refusing to grant the exemption.