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

 

 

 

SPONSOR:

Boitano

 

DATE TYPED:

02/07/02

 

HB

 

 

SHORT TITLE:

Extracurricular Activity Contribution Credit

 

SB

416

 

 

ANALYST:

Gilbert

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY02

FY03

 

 

 

 

* See Narrative    $ (0.1)

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

Duplicates SB 423

 

SOURCES OF INFORMATION

LFC Files

 

No Response Received

Taxation and Revenue Department (TRD)

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 416 provides an income tax credit for contributions made to eligible public schools when such contributions support extracurricular activities and would become effective for tax years beginning January 1, 2002.


     Significant Issues

 

Taxpayers who file individual state income tax returns may annually claim a maximum tax credit of $250.00 for contributions made to eligible New Mexico public schools when such contributions are used to support extracurricular activities.  To qualify, eligible public schools must certify that contributions were used for extracurricular activities in support of one or more children enrolled in the school.

 

Extracurricular activity is defined to be a competitive sport or other activity that supports academic, social, leadership or other skills and that provides opportunities for youth, including academic decathlon, cheerleading, drill team, chess, journalism, mock trial, music, art, drama, science fair, speech, student council, homework club or other activities approved by the State Department of public Education.

 

The Taxation and Revenue Department (TRD) may require eligible taxpayers (who are not dependents of other taxpayers) to submit copies of appropriate receipts when claiming this credit.

 

FISCAL IMPLICATIONS

 

The resulting revenue loss to the general fund would be dependant upon the number of taxpayers who choose to make contributions to public schools for extracurricular activities. However, wide participation is expected since public schools are likely to widely publicize this credit.

 

TRD did not respond to the LFC’s request for analysis of this bill. However, the resulting loss to the general fund could be considerable. For example, if the $250.00 tax credit were claimed for only 15% of public school kindergarten through ninth grade students, the total loss in revenues would total $9.8 million. This conservative estimate is based upon 2001 school year enrollment figures provided by the State Department of Education.

 

ADMINISTRATIVE IMPLICATIONS

 

This bill requires the TRD to design and distribute a standardized receipt format to be used by public schools to certify that contributions were used for extracurricular activities.

 

RLG/njw

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