Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR	Taylor, JP		DATE TYPED	2-17-04		HJM	41/aHEC/aHTRC/aHFl#1
SHORT TITLE		School Construction Project Gross Receipts				SB
					ANALYST		Neel

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY04	FY05
	NFI

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Public Education Department (PED)

Commission on Higher Education (CHE)

Public School Facility Authority (PSFA)

SUMMARY

Synopsis of HFl #1

The House Floor Amendment strikes the House Taxation and Revenue Committee amendment.

Synopsis of HTRC Amendment

The House Taxation and Revenue Committee amendment again adds the Legislative Education Study Committee as required to study relevant statutes to determine if school districts should be relieved of paying gross receipts taxes on construction projects.

Synopsis of HEC Amendment

The House Education Committee amendment requires the Legislative Education Study Committee, along with TRD, to study relevant statutes to determine if state school districts be should exempt from gross receipts tax on all public school critical capital outlay and school bond construction projects.

Synopsis of Original Bill

House Joint Memorial 41 proposes the New Mexico legislature to relieve school districts from paying the gross receipts tax (GRT) on school construction projects.

Significant Issues

FISCAL IMPLICATIONS

TRD notes the following assumptions:

The U.S. Census bureau reports that $200 million was spent on public school construction projects in 2001. For the construction industry, about 65% of total gross receipts are taxable. Therefore, if statute were amended to exempt school construction projects from the GRT, it would cost the state general fund and local governments approximately $5 million and $3 million, respectively.

CHE provide the following figures:

The PED reports that school districts spent $346,770,000 on capital projects in the 2001 – 2002 school year. While it is difficult to anticipate how current statutes might be amended, it is clear that the savings to districts and the impact on state and local revenues would be substantial. All elements of the 2001 – 2002 expenditures may not be subject to gross receipts taxes, but 5.0% of that total exceeds $17.3 million.

SN/dm:yr