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

 

 

 

SPONSOR:

Lopez

 

DATE TYPED:

3/06/03

 

HB

 

 

SHORT TITLE:

Regional Transit District Gross Receipts Tax

 

SB

420/aSCORC

 

 

ANALYST:

Reynolds-Forte

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

 

Indeterminate

Recurring

Regional Transit Districts

 

 

(See Fiscal Implications)

 

 

(Parenthesis ( ) Indicate Revenue Decreases)

 

Companion to SB34 and HB102

Relates to HB584

 

SOURCES OF INFORMATION

 

Responses Received From

New Mexico Taxation and Revenue Department

New Mexico State Highway and Transportation Department

 

SUMMARY

 

     Synopsis of SCORC Amendment

 

The Senate Corporations and Transportation Committee Amendment to SB420 effectively enacts a new section to the Gross Receipts and Compensating Tax Act (GR&CTA), and charges the Taxation and Revenue Department with administration of the regional transit gross receipts tax, rather than the State Transportation Commission. 

 

ADMINISTRATIVE IMPACT

 

The amendment would place a significant administrative burden on the Taxation and Revenue Department.  The local option gross receipts tax is not currently designed to function as a revenue source for special districts. The gross receipts tax system has been designed to function as a revenue source for state, county, and municipal governments; no gross receipts taxes are currently imposed by any other jurisdiction or entity.  Therefore, provisions of this bill would require massive computer systems and form modifications. 

 

Section 3 of the proposal (Specific Exemptions) creates special exemptions from the regional transit gross receipts tax.  Thus, the regional transit gross receipts tax base would be different than for all other state and local option gross receipts taxes.    This complicates administration considerably. 

 

In addition to the issues discussed above, there are still some technical problems with the proposal that should be addressed.

 

TECHNICAL ISSUES:

 

1.      Page 1, line 24 and 25:  the “county clerk” does not impose or administer the tax, the department is charged with this duty.

2.      Section 2, Subsection A still requires a regional transit district to deliver an ordinance imposing tax to the State Transportation Commission.  The ordinance should be delivered to the department.  The effective date should follow at least 3 months after voter approval, not after adopting the ordinance.

3.      Section 2, Subsection C requires the State Transportation Commission to furnish a model resolution for imposing the new tax.  The model resolution should be furnished by the department. 

4.      Section 2, Subsection D requires a certified copy of a resolution imposing or repealing the tax be delivered to the commission.  This should be delivered to the department.  The department needs to be notified at least 3 months prior to the effective date.

5.      The effective date of this bill is contingent upon passage of another bill.  It is not clear what happens if neither SB-34 nor HB-102 passes. 

 

     Synopsis of Original Bill

 

SB420 bill creates a “Regional Transit District Gross Receipts Tax” for management, construction or operation of a public transit system.  The tax is imposed on taxpayers in a “district area” which could be comprised of several county and local governments.  Imposition of the tax is subject to voter approval, and can be imposed in increments of one-sixteenth percent (.0625%) up to a maximum rate of one-half percent (.5%).   This proposal charges the State Transportation Commission with administering the new local option tax. 

 

 

The effective date of SB420 is July 1, 2005, contingent upon SB-34 or HB-102 of the current legislative session being passed and signed into law.  SB34 and HB102 create the Regional Transit Districts.

 

    Significant Issues

 

Gross receipts taxes are currently imposed by the state and by municipal and county governments; no gross receipts taxes are currently imposed by any other jurisdiction or entity.  The local option gross receipts tax is not currently designed to function as a revenue source for special districts

 

FISCAL IMPLICATIONS

 

SB420 has a July 2005 effective date contingent upon the passage of SB34 or HB102.  At that time the fiscal impact will be contingent upon which communities choose to implement the regional gross receipts tax.  The tax is imposed in increments of one-sixteenth percent up to a maximum rate of one-half of one percent.  The Taxation and Revenue Department has provided a table (see attachment A), which illustrates the revenue by county the imposition of various increments could raise.

 

ADMINISTRATIVE IMPLICATIONS

 

Both the Taxation and Revenue Department and the State Highway and Transportation Department have major concerns regarding administration of this tax as administered in SB420.  The State Highway and Transportation Department believes that the bill should be presented to the Taxation and Revenue Department for administrative consideration and direction as to the administrative form the bill should take.

 

The Taxation and Revenue Department notes that as the bill is currently written, no administrative responsibility is placed on them.  Under SB420, the new local option tax is to be administered by the State Transportation Commission (STC).  The STC, however, would experience a massive administrative burden, as it is not currently set up to collect and process taxes. 

 

The compliance burden for taxpayers in a district electing to impose tax would be substantial as well.  Taxpayers would have to report and pay regular state and local gross receipts taxes to Taxation and Revenue Department (TRD), then report the new local option tax to the commission.  

 

As a matter of good tax policy and in order to minimize the otherwise tremendous state administrative and taxpayer compliance complications, this bill should be totally restructured to charge TRD with administration of the tax, and to address the numerous important technical issues that would severely complicate administration.   

 

COMPANIONSHIP, RELATIONSHIP

 

SB420 is a companion bill to either SB34 or HB102; SB420 only becomes effective on July1, 2005 if SB34 or HB102 become effective.

 

SB420 relates to HB583, which imposes a local option vehicle registration fee for transit purposes.   

 

TECHNICAL ISSUES

 

Both Taxation and Revenue Department and State Highway and Transportation Department have numerous technical issues with SB420; these are listed below:

 

6.      Page 1, line 24 and 25:  the “county clerk” does not impose or administer the tax

 

7.      Section 2, Subsection A:  The effective date should follow at least 3 months after voter approval, not after adopting the ordinance.

 

8.      Section 2, Subsection D:  The administering agency needs to be notified at least 3 months prior to the effective date.

 

9.      Section 3 (Specific Exemptions): This section creates specific exemptions from the regional    transit gross receipts tax.  Thus, the regional transit gross receipts tax base would be different than for all other state and local option gross receipts taxes. 

 

10.  Section 4, Subsections A, B, and C:  The State Transportation Commission does not collect the state gross receipts tax, and therefore cannot deduct the administrative fee nor can it distribute money to the district.  The Taxation and Revenue Department administers gross receipts taxes; the State Transportation Commission has no administrative mechanism to administer such a tax

 

11.  Section 5, Subsections A and B:  The State Transportation Commission does not collect the state gross receipts tax, and therefore cannot be responsible for interpreting the provisions of the tax, nor for administering and enforcing the regional transit gross receipts tax.

 

12.  The effective date of this bill is contingent upon passage of another bill.  It is not clear what happens if neither SB-34 nor HB-102 passes. 

 

POSSIBLE QUESTIONS

 

SB 420 has a delayed effective date of July 2005.  The bill seems to have several technical flaws, should it be subjected to the scrutiny of the proposed Blue Ribbon Tax Reform Commission?

 

PRF/njw

 

Attachement A           

FROM: Taxation and Revenue Department

 

Potential Revenue from Countywide Imposition

(Illustration at Fiscal Year 2002 Levels)

 

 

 

 

 

 

 

 

Tax  Increment

County

Fiscal Year 2002

0.0625%

0.1250%

0.2500%

0.5000%

Taxable Gross Receipts

 Bernalillo

                      13,243,034,356

              8,276,896

          16,553,793

          33,107,586

        66,215,172

 Catron

                             19,691,501

                   12,307

                 24,614

                 49,229

               98,458

 Chaves

                           825,428,282

                 515,893

            1,031,785

            2,063,571

          4,127,141

 Cibola

                           221,578,697

                 138,487

               276,973

               553,947

          1,107,893

 Colfax

                           250,819,897

                 156,762

               313,525

               627,050

          1,254,099

 Curry

                           588,659,607

                 367,912

               735,825

            1,471,649

          2,943,298

 DeBaca

                             20,991,500

                   13,120

                 26,239

                 52,479

             104,958

 Dona Ana

                        2,102,413,484

              1,314,008

            2,628,017

            5,256,034

        10,512,067

 Eddy

                        1,217,598,284

                 760,999

            1,521,998

            3,043,996

          6,087,991

 Grant

                           385,885,480

                 241,178

               482,357

               964,714

          1,929,427

 Guadalupe

                             78,761,427

                   49,226

                 98,452

               196,904

             393,807

 Harding

                               7,397,897

                     4,624

                   9,247

                 18,495

               36,989

 Hidalgo

                             62,039,844

                   38,775

                 77,550

               155,100

             310,199

 Lea

                        1,368,738,250

                 855,461

            1,710,923

            3,421,846

          6,843,691

 Lincoln

                           378,089,126

                 236,306

               472,611

               945,223

          1,890,446

 Los Alamos

                           628,346,203

                 392,716

               785,433

            1,570,866

          3,141,731

 Luna

                           281,067,506

                 175,667

               351,334

               702,669

          1,405,338

 McKinley

                           818,831,088

                 511,769

            1,023,539

            2,047,078

          4,094,155

 Mora

                             25,048,075

                   15,655

                 31,310

                 62,620

             125,240

 Otero

                           640,446,670

                 400,279

               800,558

            1,601,117

          3,202,233

 Quay

                           120,962,160

                   75,601

               151,203

               302,405

             604,811

 Rio Arriba

                           428,457,206

                 267,786

               535,572

            1,071,143

          2,142,286

 Roosevelt

                           182,679,844

                 114,175

               228,350

               456,700

             913,399

 Sandoval

                        1,156,214,584

                 722,634

            1,445,268

            2,890,536

          5,781,073

 San Juan

                        2,704,180,486

              1,690,113

            3,380,226

            6,760,451

        13,520,902

 San Miguel

                           295,588,941

                 184,743

               369,486

               738,972

          1,477,945

 Santa Fe

                        3,141,025,569

              1,963,141

            3,926,282

            7,852,564

        15,705,128

 Sierra

                           112,053,084

                   70,033

               140,066

               280,133

             560,265

 Socorro

                           132,397,092

                   82,748

               165,496

               330,993

             661,985

 Taos

                           491,731,397

                 307,332

               614,664

            1,229,328

          2,458,657

 Torrance

                           131,803,684

                   82,377

               164,755

               329,509

             659,018

 Union

                             64,499,001

                   40,312

                 80,624

               161,248

             322,495

 Valencia

                           501,253,547

                 313,283

               626,567

            1,253,134

          2,506,268

 

 

 

 

 

 

 All Counties

                      32,627,713,769

            20,392,321

          40,784,642

          81,569,284

      163,138,569