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

SPONSOR SIAC

ORIGINAL DATE

LAST UPDATED

2/08/08

HB

SHORT TITLE Public Peace, Health, Safety & Welfare

SB 573/SIACS

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

NFI

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

New Mexico Association of Counties (NMAC)

SUMMARY

Synopsis of SIAC Substitute

The Senate Indian and Cultural Affairs Committee substitute for Senate Bill 573 would allow

counties imposing the 1/16 percent increment of the county local option gross receipts tax to

pledge revenue from that increment to payment of gross receipts tax revenue bonds. Under

current law, counties are allowed to pledge revenue from the first and third 1/8 increments of the

county local option gross receipts tax as well as any increment of the county infrastructure and

county capital outlay gross receipts tax.

FISCAL IMPLICATIONS

The bill would not allow county governments to impose more local option taxes, but would

increase the amount of revenue available to repay gross receipts tax revenue bonds. The table

below indicates the additional revenue each county could potentially pledge to repay gross

receipts tax revenue bonds through the 1/16 percent increment of the county local option gross

receipts tax in FY09. Twenty counties have already imposed the tax, but if all counties imposed

the tax it would generate about $29.4 million in FY09. The table below also indicates the

potential general fund revenue loss that would occur due to hold harmless provisions concerning

the food and medical deductions enacted in 2004 if all counties were to impose the tax.

Senate Bill 573/SIACS – Page

2

County

Potential Revenue

Pledged to GRT Bonds:

1/16% County GRT

Increment

Potential General Fund Loss Due

to Hold Harmless Distribution:

1/16% GRT Increment

Bernalillo

10,919,890

Already Imposed

Catron

21,431

(853)

Chaves

721,552

Hold Harmless Rate Frozen

Cibola

181,484

Already Imposed

Colfax

211,124

(9,594)

Curry

495,615

Already Imposed

De Baca

15,035

Already Imposed

Dona Ana

2,090,909

Already Imposed

Eddy

1,377,478

Hold Harmless Rate Frozen

Grant

327,366

(34,763)

Guadalupe

96,360

Already Imposed

Harding

7,781

Already Imposed

Hidalgo

58,846

Already Imposed

Lea

1,804,244

Hold Harmless Rate Frozen

Lincoln

314,684

(23,463)

Los Alamos

1,040,713

(31,027)

Luna

209,289

Already Imposed

McKinley

665,048

Already Imposed

Mora

15,797

Already Imposed

Otero

512,242

Hold Harmless Rate Frozen

Quay

88,283

Already Imposed

Rio Arriba

384,895

(33,758)

Roosevelt

160,525

Already Imposed

San Juan

2,552,663

Hold Harmless Rate Frozen

San Miguel

214,928

Already Imposed

Sandoval

1,137,746

Hold Harmless Rate Frozen

Santa Fe

2,482,618

Already Imposed

Sierra

93,377

Already Imposed

Socorro

124,440

(13,179)

Taos

401,079

Already Imposed

Torrance

134,366

Already Imposed

Union

76,697

Already Imposed

Valencia

489,869

Already Imposed

Total

29,428,376

(146,636)

Source: Taxation and Revenue Department, Office of Research and Statistics

SIGNIFICANT ISSUES

The county local option gross receipts tax may be imposed by any county at a rate up to 7/16

percent (0.4375 percent). The tax may be imposed in up to three 1/8 percent increments and one

1/16 percent increment. The second 1/8 percent increment of the tax must be dedicated to health

care of indigent patients.

NMAC reports the committee substitute would expand fiscal flexibility at the county level by

allowing some counties to continue to use the 1/16 percent increment as general revenue and

others to pledge the revenue for bond repayment.

Senate Bill 573/SIACS – Page

3

New Mexico’s municipalities and counties are authorized to impose over 4 percent of local

option gross receipts taxes (that figure excludes several additional local option taxes that have

been authorized for selected local governments). Due to increasing imposition of local option

taxes, the statewide gross receipts tax rate is increasing steadily. On average, a local option gross

receipts tax of about 1.9 percent will be imposed by local governments statewide by FY09.

Combined with the state gross receipts tax of 5 percent, the statewide tax rate is therefore 6.9

percent.

TECHNICAL ISSUES

TRD notes that some county ordinances might need to be amended to allow dedication of the

1/16 percent county local option gross receipts tax increment to be dedicated for gross receipts

tax bond repayment.

SS/bb