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F I S C A L I M P A C T R E P O R T
SPONSOR Moore
ORIGINAL DATE
LAST UPDATED
1/25/06
1/25/06 HB 299
SHORT TITLE
SMALL CITIES ASSISTANCE FUND
DISTRIBUTIONS
SB
ANALYST Schardin
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
FY08
(3,037.5)
Recurring General Fund
3,037.5
Recurring Small Cities
Assistance Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
House Bill 299 would increase the share of compensating tax revenue transferred to the small
cities assistance fund from 10 to 15 percent. In addition, it would increase the minimum amount
per city from $35 to $75 thousand. Finally, the “municipal share” used to calculate municipal
distributions would be decreased from 1.35 to 1.225 percent.
The effective date of these provisions is July 1, 2006.
FISCAL IMPLICATIONS
Under current law, 10 percent of compensating tax revenues goes to the small cities assistance
fund, 10 percent goes to the small counties assistance fund, and the remaining 80 percent goes to
the general fund.
The bill would reduce general fund revenue by 5 percent of compensating tax revenue and in-
crease small cities assistance fund revenue by 5 percent of compensating tax revenue. According
to the December 2005 consensus revenue estimate, general fund compensating tax revenue will
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House Bill 299 – Page
2
be about $48.6 million in FY07. This implies that total compensating tax revenue will be about
$60.8 million ($60.8 million X 80 percent). The fiscal impact of House Bill 299 will then be
about $3.0 million ($60.8 million X 5 percent).
TRD provided a table illustrating the estimated FY07 impact of HB299 on each of New Mex-
ico’s small municipalities, which is found at the end of this analysis.
SIGNIFICANT ISSUES
The formula by which small cities assistance fund revenues are distributed to municipalities is
found in Sections 3-37A-1 to 3-37A-3 NMSA 1978. The distribution is calculated each February
and funds are distributed in March. TRD reports that this formula is very complex and uses a
large amount of data from numerous sources and time periods.
ADMINISTRATIVE IMPLICATIONS
TRD reports that House Bill 299 will cause minimal administrative impacts.
TECHNICAL ISSUES
TRD notes that the calculation contained in House Bill 299 is very complicated and that all
changes to the current tax code should be kept as simple as possible.
SS/mt
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House Bill 299 – Page
3
Illustration: Possible Fiscal Impacts of the Proposal Changes in Small Cities Distribu-
tions
MUNICIPALITY
Estimated distribution
in March 2007 with
HB299 changes
Estimated March
2007 distribution un-
der Present Law Change in Distribution
Angel Fire
75,000 35,000 40,000
Aztec
148,092 107,550 40,542
Bayard
148,092 107,550 40,542
Belen
75,000 35,000 40,000
Bernalillo
148,092 107,550 40,542
Bloomfield
75,000 35,000 40,000
Bosque Farms
148,092 107,550 40,542
Capitan
148,092 107,550 40,542
Carrizozo
148,092 107,550 40,542
Causey
75,000 35,000 40,000
Chama
75,000 35,000 40,000
Cimarron
102,053 107,550 (5,497)
Clayton
148,092 107,550 40,542
Cloudcroft
75,000 35,000 40,000
Columbus
148,092 107,550 40,542
Corona
75,000 35,000 40,000
Corrales
148,092 107,550 40,542
Cuba
75,000 35,000 40,000
Des Moines
75,000 35,000 40,000
Dexter
120,216 107,550 12,667
Dora
75,000 35,000 40,000
Eagle Nest
75,000 35,000 40,000
Edgewood
75,000 35,000 40,000
Elephant Butte
148,092 107,550 40,542
Elida
75,000 35,000 40,000
Encino
75,000 35,000 40,000
Espanola
75,000 35,000 40,000
Estancia
80,713 95,847 (15,134)
Eunice
75,000 35,000 40,000
Floyd
75,000 35,000 40,000
Folsom
75,000 35,000 40,000
Fort Sumner
148,092 107,550 40,542
Grady
75,000 35,000 40,000
Grants
148,092 107,550 40,542
Grenville
75,000 35,000 40,000
Hagerman
148,092 107,550 40,542
Hatch
148,092 107,550 40,542
Hope
75,000 35,000 40,000
House
75,000 35,000 40,000
Hurley
148,092 107,550 40,542
Jal
148,092 107,550 40,542
Jemez Springs
75,000 71,076 3,924
Lake Arthur
113,728 107,550 6,178
Logan
148,092 107,550 40,542
Lordsburg
148,092 107,550 40,542
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House Bill 299 – Page
4
Los Ranchos
148,092 107,550 40,542
Loving
148,092 107,550 40,542
Lovington
148,092 107,550 40,542
Magdalena
148,092 107,550 40,542
Maxwell
75,000 52,980 22,020
Melrose
148,092 107,550 40,542
Mesilla
148,092 107,550 40,542
Milan
75,000 35,000 40,000
Moriarty
75,000 35,000 40,000
Mosquero
75,000 35,000 40,000
Mountainair
148,092 107,550 40,542
Pecos
148,092 107,550 40,542
Questa
148,092 107,550 40,542
Raton
148,092 107,550 40,542
Red River
75,000 35,000 40,000
Reserve
75,000 35,000 40,000
Roy
75,000 35,000 40,000
Ruidoso
75,000 35,000 40,000
Ruidoso Downs
75,000 35,000 40,000
San Jon
75,000 35,000 40,000
San Ysidro
75,000 36,344 38,656
Santa Clara
148,092 107,550 40,542
Santa Rosa
75,000 35,000 40,000
Socorro
148,092 107,550 40,542
Springer
148,092 107,550 40,542
T or C
148,092 107,550 40,542
Taos
75,000 35,000 40,000
Taos Ski Valley
75,000 35,000 40,000
Tatum
75,000 35,000 40,000
Texico
148,092 107,550 40,542
Tijeras
75,000 35,000 40,000
Tucumcari
148,092 107,550 40,542
Tularosa
148,092 107,550 40,542
Vaughn
75,000 75,625 (625)
Virden
75,000 38,327 36,673
Wagon Mound
79,677 88,339 (8,662)
Willard
75,000 62,024 12,976
Williamsburg
132,909 107,550 25,360