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| SPONSOR: | Salazar | DATE TYPED: | 02/23/01 | HB | 675 | ||
| SHORT TITLE: | Excise Tax to Fund Water System Projects | SB | |||||
| ANALYST: | Eaton | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY01 | FY02 | |||
| $ 1,066.0 | $ 2,673.0 | Recurring | Espanola Water & Wastewater | |
| $ 33.0 | $ 82.0 | Recurring | TRIMS/NMFA Admin. Fees | |
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
This bill would authorize the city of Espanola, with voter approval, to impose the local option gross receipts tax at a rate up to 1 percent to fund municipal water systems and wastewater systems financed by special obligation bonds. The increments of the tax are imposed at rates of 1/16 of 1 percent. The limit of $9 million in the amount of bonds would be eliminated.
This bill has an emergency clause and would become effective immediately upon signing.
Significant Issues
The supplemental municipal gross receipts tax was effectively eliminated by the legislature in 1986. Currently, the cities of Raton and Ruidoso got in under the wire and impose the tax, each at a rate of 1 percent.
The statewide weighted average gross receipts tax rate is about 5.89%. The tax rate in Albuquerque, one of the lower tax rates in the state at 5.8125%, has a strong influence on that weighted average, and the majority of municipal locations have tax rates in excess of 6 percent. The tax rate in Raton is 7 percent and the tax rate in Ruidoso is 7.1875%. Espanola currently has a tax rate of 6.1875%.
FISCAL IMPLICATIONS
The Taxation and Revenue Department (TRD) estimate that this bills full year impact would provide approximately $2.7 million in revenue for Espanola water and wastewater systems. This level of revenue should be able to support approximately $33 million in bonds for water and wastewater systems (assuming 20 year bonds at 5 percent and a coverage ratio of 1-1.
The 3% TRD administrative fees are directed to TRIMS bonds issued through the New Mexico Finance Authority (NMFA) through December 2006 or the date the bonds are fully discharged. After that date, TRD administrative fees are directed to the general fund.
The TRD warns that since this local option tax is designed to be pledged toward special obligation bonds, and no legislative action may interfere with existing bonds, the legislature might find its options somewhat more limited when dealing with gross receipts tax issues in the future.
ADMINISTRATIVE IMPLICATIONS
Minimal.
JBE/njw