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F I S C A L I M P A C T R E P O R T

SPONSOR Cisneros

ORIGINAL DATE

LAST UPDATED

1/27/06

HB

SHORT TITLE Affordable Housing Gross Receipts

SB 369

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

(932.0)

(932.0) Recurring General Fund

(622.0)

(622.0) Recurring Local Govern-

ments

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

Responses Received From

Energy Minerals and Natural Resources (EMNRD)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 369 adds a new section to the Gross Receipts and Compensating Tax Act to allow for

a deduction from gross receipts or governmental gross receipts the sales of tangible property to

an organization that builds affordable housing.

The effective date is July 1, 2006.

FISCAL IMPLICATIONS

The gross receipts and governmental gross receipts revenue would decline in FY07 and subse-

quent years. TRD estimates that the fiscal impact would be $1.54 million per year in reduced

gross receipts tax collections for the state and the counties. This is based on an estimate of the

materials cost of a typical NM house for 800 houses.

Senate Bill 369 – Page

2

The impact will also affect the Government gross receipts fund which will reduce revenue dis-

tributed to the Energy Minerals and Natural Resources Department.

SIGNIFICANT ISSUES

The buyer of building materials will have to get a non-taxable transaction certificate (NTTC) to

deliver to the seller so the seller can claim the deduction.

ADMINISTRATIVE IMPLICATIONS

TRD reports that the bill does not establish who is a qualified grantee and how a grantee be-

comes qualified. This information would be need to grant an NTTC.

OTHER SUBSTANTIVE ISSUES

The New Mexico Affordable Housing Tax Credit Program, signed into law April 2005, provides

tax credits to individuals, businesses and local governments that provide donations to affordable

housing projects approved by the New Mexico Mortgage Finance Authority. Credit can be taken

on income taxes, gross receipts taxes and compensating taxes (excluding local option gross re-

ceipts tax imposed by a municipality or county, or the government gross receipts tax) to any eli-

gible individual, business, and local or tribal government that donate land, buildings, cash or ser-

vices for an affordable housing project approved by MFA or for a trust fund administered by the

MFA.

NF/mt