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F I S C A L I M P A C T R E P O R T
SPONSOR SFC
ORIGINAL DATE
LAST UPDATED
1/23/06
2/6/06 HB
SHORT TITLE Jet Fuel Gross Receipts Deductions
SB 9/SFCS/aSFl#1
ANALYST Schardin
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
FY08
(330.0) Recurring State Aviation Fund
(200.0) Recurring Local Governments
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Transportation (DOT)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of SFl#1 Amendment
Senate Floor Amendment 1 deletes Section 1 of the Senate Finance Committee substitute for
Senate Bill 9, which contained a drafting error.
Synopsis of Bill
The Senate Finance Committee substitute for Senate Bill 9 amends Sections 7-1-6.7, 7-9-83, and
7-9-84 NMSA 1978 to extend the current 55 percent gross receipts and compensating tax deduc-
tions for receipts from the sale of jet fuel permanent through the end of FY12, after which the
deduction will fall to 40 percent. Under current law, this 55 percent deduction is scheduled to fall
to 40 percent at the beginning of FY08.
The provisions the bill will become effective July 1, 2006.
pg_0002
Senate Bill 9/SFCS/SFl#1 Page 2
FISCAL IMPLICATIONS
TRD and DOT estimate total receipts from jet fuel sales will be about $46 million in FY08. With
this base, maintaining the 55 percent deduction would reduce taxable gross receipts by $6.9 mil-
lion (15 percent deduction X $46 million). 4.79 percent of this amount, or $330 thousand would
have gone to the state aviation fund, and 2.9 percent, or $200 thousand would have gone to local
governments.
SIGNIFICANT ISSUES
For several years, DOT has advocated increasing funding to the state aviation fund because 5
percent state and local matching from the state aviation fund can be used to generate a 95 percent
match from the federal aviation administration (FAA).
The rate of distribution to the state aviation fund was increased from 3.59 percent to the current
level of 4.79 percent of taxable gross receipts from the sale of jet fuel to hold it harmless when
the gross receipts tax deduction for jet fuel was increased from 40 to 55 percent in FY04. Al-
though at that time the deduction was only supposed to stay at the 55 percent level until the end
of FY07, there was no provision to reduce the rate of distribution to the state aviation fund back
to 3.59 percent when the deduction fell back to 40 percent. It can be argued that the 55 percent
deduction rate is more consistent with the 4.79 percent state aviation fund distribution contained
in current law.
ADMINISTRATIVE IMPLICATIONS
The bill will have minimal implications for TRD.
SS/nt:yr