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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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

SPONSOR Leavell

ORIGINAL DATE

LAST UPDATED

1/23/06

1/24/06 HB

SHORT TITLE Gaming Tax Revenue Distribution to Cities

SB 132

ANALYST Schardin

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

2,343.0

Recurring

Local Governments

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

(2,343.0)

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Gaming Control Board (GCB)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 132 creates a distribution to counties and municipalities in which a racetrack casino

is located in the amount of 1/26 of net gaming excise tax receipts from the racetrack casino lo-

cated in that municipality or county. Local governments that receive a distribution of gaming ex-

cise tax revenue will be allowed to use the money for the “provision of local public services.”

The effective date of these provisions will be July 1, 2006.

Senate Bill 132 – Page 2

FISCAL IMPLICATIONS

The LFC expects gaming excise revenue paid by racetrack operators to total $60.9 million in

FY07, based on a 26 percent tax rate. The bill would distribute 1/26 of this amount, or $2.3 mil-

lion, to the five municipalities in which racetrack gaming operators are located. This amount is

estimated to be distributed as follows: $1,162.5 thousand to Sunland Park, $151.7 thousand to

Albuquerque, $114.6 thousand to Ruidoso Downs, $309.0 thousand to Farmington, and $605.1

thousand to Hobbs.

SIGNIFICANT ISSUES

Currently, New Mexico has five racetrack casinos, all of which are located in incorporated mu-

nicipal areas: Sunland Park in Sunland Park; Albuquerque Downs in Albuquerque, Ruidoso

Downs in Ruidoso Downs, Sun Ray in Farmington, and Zia Park in Hobbs.

Local governments in which racetrack casinos are located have often requested distributions

from the state share of gaming excise tax in recent years. The rationale for these requests is that

casinos cause local governments to incur infrastructure costs. Unlike most other businesses,

which pay a share of gross receipts tax to the local jurisdictions in which they are located, race-

track casinos pay only the gaming excise tax.

During the 2005 Legislative Session, Senate Bill 837 increased the gaming excise tax rate on

racetrack casinos from 25 to 26 percent.

ADMINISTRATIVE IMPLICATIONS

TRD reports the bill will have a moderate administrative impact. TRD will need to change gam-

ing tax forms and instructions. Computer systems will have to be modified. There will also be a

need for greater coordination between TRD and the Gaming Control Board.

SS/yr