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

 

 

SPONSOR:

Taylor, TC

 

DATE TYPED:

2/22/03

 

HB

562

 

SHORT TITLE:

Municipality Compensating Tax Distribution

 

SB

 

 

 

ANALYST:

Neel

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

($12,700.0)

($12,700.0)

Recurring

General Fund

 

$12,700.0

$12,700.0

Recurring

Municipalities

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

LFC files

 

Responses Received From

 

Taxation and Revenue Department (TRD)

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 562 amends statute to allow for a new distribution to municipalities funded by compensating tax collections, which are taxes levied to protect New Mexico business people from unfair competition that would otherwise result from the importation of property into the state without payment of the gross receipts tax.. The distribution amount is the greater of $1,500 per month ($18,000 per year) or an amount calculated by multiplying the municipality’s relative share of taxable gross receipts times 24.5% of net compensating tax collections.  

 

     Significant Issues

 

Currently, 20% of net compensating tax collections go to small cities and small counties assistance funds.

 


FISCAL IMPLICATIONS

 

According to TRD analysis, the new distribution will expend slightly more than 26% of annual net compensating tax collections.  Fiscal year 2004 net compensating tax collections are expected to be $47.5 million.

 

An estimate of fiscal year 2004 distribution amounts is included at the end of this review. An estimated 61 municipalities will be paid the $18,000 annual floor amount, and the remainder a calculated share amount (attached below is municipal distributions under HB 562).

 

ADMINISTRATIVE IMPLICATIONS

 

TRD notes the provisions in this bill would place a significant administrative burden on the department. Computer system changes are necessary to make the appropriate local revenue distributions.  Reprogramming the system is possible.  However, the department is in the process of converting to a new computer system for processing gross receipts tax.  The changes required by this bill would have to be implemented in the new system.  This system is currently scheduled to become operational in October 2003.  Thus, it is unlikely the department will be able to implement the changes by the July 1, 2003 effective date specified in this proposal.  An effective date of January 1, 2004 should give the department enough time to incorporate the changes.

 

 

Estimated Fiscal Year 2004 Municipal Compensating Tax Distributions

   Alamogordo

              198,398

   Lordsburg

               21,540

   Albuquerque

           5,176,669

   Los Alamos

             294,031

   Angel Fire

                26,251

   Los Lunas

               80,984

   Artesia

              129,480

   Los Ranchos de Albuq.

               26,673

   Aztec

                41,785

   Milan

               27,045

   Belen

                93,280

   Moriarty

               26,931

   Bernalillo

                31,053

   Portales

               64,884

   Bloomfield

                42,386

   Raton

               51,474

   Carlsbad

              218,020

   Rio Rancho

             266,797

   Clovis

              230,819

   Roswell

             318,722

   Corrales

                26,562

   Ruidoso

               91,136

   Deming

                78,456

   Ruidoso Downs

               38,161

   Edgewood

                23,089

   Santa Fe

          1,167,539

   Espanola

              117,375

   Santa Rosa

               26,577

   Eunice

                19,791

   Silver City

             115,675

   Farmington

              717,107

   Socorro

               43,975

   Gallup

              249,719

   Sunland Park

               36,856

   Grants

                63,795

   Taos

             138,791

   Hobbs

              366,884

   Truth  or Consequences

               36,844

   Las Cruces

              734,524

   Tucumcari

               41,096

   Las Vegas

              108,773

   61 Remaining Municipalities

          1,098,000

 

 

Total

12,707,948

SN/njw