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

SPONSOR:	Russell		DATE TYPED:	02/14/99		HB	271
SHORT TITLE:		Municipal Employee Retirement				SB
					ANALYST:		Eaton

APPROPRIATION

Appropriation Contained

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY99

FY2000

NFI

PERA Retirement

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Public Employees Retirement Association of New Mexico (PERA)

SUMMARY

Synopsis of Bill

This bill would give municipal employers the ability to contribute less than the seventy-five percent of total employee retirement contributions that the current law now requires (Section 10-11-5 NMSA 1978). This bill also has a provision that allows municipalities to adopt new coverage plans and the coinciding employer contribution rate.

Substantive Issues

Erosion of the local tax base through adoption of gross receipt tax exemption legislation at the state level may compel municipalities to lower the employer contribution rate in lieu of a diminished local tax base. Therefore, gross receipts tax exemption legislation at the statewide level, may negatively impact the retirement benefits of future municipal retirees throughout the state.

FISCAL IMPLICATIONS

This bill would have no significant impact on the PERA retirement fund.

POSSIBLE QUESTIONS

Can municipalities elect to have either defined benefit or contribution based plans under current legislation?
If municipalities have contribution based plans, could this proposed legislation have possible impacts on the total benefits receivable to future retired members?

Could new statewide legislation that reduces local gross receipts revenues (gross receipt tax exemptions) contribute to a municipalities decision to lower the municipal employers' contribution rate to retirement plans?

JBE/gm