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SPONSOR: |
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DATE TYPED: |
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HB |
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SHORT TITLE: |
Property Tax Exemption for NM Veterans, CA |
SJR |
15 |
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ANALYST: |
Neel |
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REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
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See
Narrative |
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(Parenthesis ( ) Indicate Revenue Decreases)
LFC files
Responses
Received From
Taxation
and Revenue Department (TRD)
Veteran’s
Service Commission (VSC)
SUMMARY
Synopsis
of Bill
Senate
Joint Resolution 15 would allow honorably discharged veterans to claim the exemption
if they were
FISCAL IMPLICATIONS
TRD notes the
following assumptions:
Approximately 80,000
Allowing all veterans to
claim the exemption would expand the number of claimants from 80,000 to
approximately 100,000. According to census figures, roughly 177,000 veterans currently
live in
Hence, after increasing the
exemption from $2,000 to $4,000 and simultaneously allowing 100,000 veterans to
claim it, the resulting reduction in base would be approximately 100,000 x
$4,000 = $400 million. This is an
increase over the baseline taxable value — assuming the adoption of the
increase to $4,000 -- of $80 million.
With the proposed exemption, veterans would have total tax relief of
approximately $10.4 million ($4,000 x $26/$1,000 x 100,000) -- an increase of
roughly $2 million over present law plus the effects of 2002 Constitutional
Amendment #1.
Tax Rate Adjustments:
The relief provided to
veterans would be largely offset by rate increases for all residential taxpayers
due to the loss in base. This would occur as the yield control mechanism
increased operating rates due to loss in base referred to as "valuation
maintenance", and as debt rates increased to offset base reductions.
Since
the base reduction under this proposal would total $80 million or about .5
percent of the current $17.1 billion residential portion of the base, rates
would, on average, increase by roughly
.5 percent or less. There may be a few cases where rates would not be able to
adjust, but they would be minor because 1) the base grows at about 2 to 3 percent
annually, and 2) the exemption would increase gradually over a period of five
years. Hence revenue losses to property tax recipients -- school districts,
counties and municipalities -- would be insignificant.
Finally,
it should be noted that, according to the Veterans Service Commission, approximately
8,000 disabled veterans will qualify for the total property tax exemption
likely to emerge from this year’s legislative session due to the recently
approved constitutional amendment. As a result, effects of the proposed measure
would be slightly less because some portion of the disabled veterans would
qualify for the partial exemption that is the subject of the proposed
legislation.
ADMINISTRATIVE IMPLICATIONS
TRD notes minimal
administrative impact.
OTHER SUBSTANTIVE ISSUES
Senate Joint Resolution 1, enacted in the 2001 legislative session, allowed voters to consider an amendment to the New Mexico Constitution increasing the current $2,000 veteran exemption to $2,500 in tax year 2003, $3,000 in 2004, $3,500 in 2005 and $4,000 in 2006, where it would remain. The amendment was approved by the voters in the fall of 2002.
SN/njw