NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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

 

 

 

SPONSOR:

Campos

 

DATE TYPED:

2/26/03

 

HB

 

 

SHORT TITLE:

Increase Gas Tax to Finance Highway Projects

 

SB

807

 

 

ANALYST:

Reynolds-Forte

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

$557,660.0

 

 

Non-Rec

Bond Sale Revenues

 

 

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

$25,433.0

See Fiscal Implications

Recurring

State Road Fund

 

$809.0

See Fiscal Implications

Recurring

Counties & Municipalities

 

$441.0

See Fiscal Implications

Recurring

County Road Fund

 

$441.0

See Fiscal Implications

Recurring

Municipal Road Fund

 

$114.0

See Fiscal Implications

Recurring

Municipal Arterial Fund

 

$16.0

See Fiscal Implications

Recurring

Aviation Fund

 

$15.0

See Fiscal Implications

Recurring

Motor Boat Fund

 

$4.0

See Fiscal Implications

Recurring

Local Government Road Fund

 

$27,273.0

See Fiscal Implications

Recurring

Total

(Parenthesis ( ) Indicate Revenue Decreases)

 

 

Conflicts with HB975

 

SOURCES OF INFORMATION

 

Responses Received From

Taxation and Revenue Department

State Highway and Transportation Department

 

SUMMARY

 

     Synopsis of Bill

 

SB 807 proposes increases the gasoline tax by $0.05 per gallon--from $0.17 to $0.22--over a period of 4 fiscal years.  The special fuel excise tax would be increased by $0.04 per gallon--from $0.18 to $0.22--over four fiscal years.  The distributions of the gasoline tax and the special fuel tax are modified in such a way that most of the increase in revenue associated with the tax increases accrues to the State Road Fund. 

 

The aggregate limit on the amount of outstanding principal of bonds issued for other state highway projects is increased from $400 million to $915.7 million.  The aggregate limit of $1.1 billion on the amount of highway bonds for various purposes is repealed.  A new section of statute is proposed that would authorize the State Transportation Commission to issue bonds and to use the proceeds for 5 projects around the state totaling $557.7million. 

 

The section of present law that would return the gasoline tax rate to $0.16 per gallon is repealed.  Thus, the increase to $0.22 per gallon is effectively a $0.06 per gallon increase after July 1, 2003.

 

The distribution changes are effective August 1, 2003. 

 

     Significant Issues

 

The five highway improvement projects listed in the bill are:

 

1)      $129,300.0 for improvement and widening of US Highway 666 to a four-lane highway from Tohatchi to Shiprock($45,000.0 of the $126,300.0 is taken from the authorization in Subsection G of Section 1 of Chapter 85 of Laws  1998)

2)      $180,000.0 for improvement of US Highway 54 from Tularosa to Santa Rosa

3)      $50,000.0 for reconstruction of the Interstate 40 and Coors Boulevard interchange in Albuquerque

4)      $76,360.0 for improvement and widening of US Highway 62 and 180 to a four-lane highway from Carlsbad to the Texas state line

5)      $125,000.0 for improvement and widening US Highway 64 and 87 from two to four lanes between Raton and Clayton

 

FISCAL IMPLICATIONS

 

SB807 increases the gasoline tax by five cents per gallon and the state special fuel tax by four cents per gallon over four fiscal years.  The State Road Fund will have increased revenues, which can be used to pay bonds for projects listed above.  Counties, municipalities and other fuel tax recipients will have small impacts to revenues; they are impacted as a result of the bill repealing the one-cent gasoline tax decrease scheduled for July 1, 2003. The following schedule prepared by the New Mexico Taxation and Revenue Department shows the four fiscal year impact of the gasoline and special fuel tax increase:

 

FISCAL IMPACT (Thousands of dollars):                          Note:the( )indicate a revenue loss:

 

 

FY 2004

FY 2005

FY 2006

FY 2007

Funds Affected

25,433.0

39,750.0

53,019.0

66,486.0

State Road Fund

 

809.0

875.0

876.0

881.0

Counties & Municipalities

 

441.0

494.0

485.0

488.0

County Road Fund

 

441.0

494.0

485.0

488.0

Municipal Road Fund

 

114.0

116.0

129.0

118.0

Municipal Arterial Fund

 

16.0

20.0

21.0

21.0

Aviation Board

 

15.0

11.0

19.0

11.0

Motor Boat Fund

 

4.0

1.0

(2.0)

0.0

Local Governments Road Fund

 

27,273.0

41,761.0

55,031.0

68,492.0

Total

 

 

All impacts are recurring.  Impacts would increase by about 2% in FY 2008 and beyond due to a full 12 months at the $0.22 tax rates. 

 

SB807 also increases the bonding authority for highway debentures by $515,660.0 and appropriates $557,660.0 to the Highway and Transportation Department for the five projects listed above.  

 

ADMINISTRATIVE IMPLICATIONS

 

The proposed changes would be a significant challenge for a tax system that is currently based on manual processes.  Forms, instructions, collections, audit and distribution processes will require increased staff time.  Inventory tax modifications will require annual attention.

 

CONFLICT AND RELATIONSHIP

 

SB807 conflicts with HB975 which increases the gas tax differently and uses the revenues for different projects, HB644 which eliminates the one-cent tax decrease but gives the revenues to State Highway and Transportation Department to use and HB987 which increases the gas tax and uses it to fund the motor vehicle insurance for indigents.

 

OTHER SUBSTANTIVE ISSUES

 

According to data developed by the State Highway and Transportation Department, New Mexico’s seventeen cents per gallon gasoline tax rate is the 10th lowest in the country.  The highest rates identified were twenty-eight cents per gallon in Rhode Island and twenty-seven cents per gallon in Minnesota.  The median tax rate is twenty cents per gallon.  Half the states have rates above this level and half below.

 

PRF/njw:yr