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

SPONSOR HTRC

DATE TYPED 3/18/05 HB CS/159/aHTRC/aHFl#1

SHORT TITLE Racetrack Gaming Revenue Distribution

SB

ANALYST Baca

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($273.0)

($284.0)

Recurring

General Fund

$240.0

$250.0

Recurring

City of Sunland Park

$33.0

$34.0*

Recurring

City of Ruidoso Downs

*

*

Recurring

City of Albuquerque

**

**

Recurring

City of Hobbs

**

**

Recurring

City of Farmington

(Parenthesis ( ) Indicate Expenditure Decreases)

*See narrative. **Information not available.

Relates to the General Appropriations Act

SOURCES OF INFORMATION

LFC Files

New Mexico Taxation & Revenue Department (NMTRD)

New Mexico Gaming Control Board (NMGCB)

SUMMARY

Synopsis of House Floor Amendment 1

House Floor Amendment 1 to House Taxation and Revenue Committee substitute for House Bill

159, as amended, effects the following actions:

CS/House Bill 159/aHTRC/aHFl#1 -- Page 2

•

House Taxation and Revenue Committee amendment to House Taxation and Revenue

Committee substitute for House Bill 159 is stricken from the bill.

•

On page 1, line 25: the language “one-half” is stricken and the language “one” is inserted

in lieu thereof. The net effect of this amendment is to distribute one percent of the net

receipts attributable to the gaming tax paid by racetrack operators pursuant to the provi-

sions of this act.

Synopsis of HAFC Amendment

House Taxation and Revenue amendment to House Taxation and Revenue Committee substitute

for House Bill 159 amends the legislation as follows:

•

On page 1, line 25 and on page 2, line 1: removing the language “four percent” and

inserting in lieu thereof the language “one percent.” (This amendment tracks with

the original version of HB 159.)

Fiscal Impact

The TRD reports the estimated impact on revenue is based on the department’s Monthly

Gaming Collection Report (NM_FR005). The estimated impact on revenues reflects a

one percent distribution to the city of Sunland Park and the City of Ruidoso Downs. It is

unclear if the one percent distribution would be made to the City of Albuquerque for the

Albuquerque Downs. If so, then an additional forty thousand a year would be taken out

of the General Fund to distribute to the City of Albuquerque.

Original Synopsis of Bill

House Taxation and Revenue Committee substitute for House Bill 159 – Relating to Gaming

Taxation; Distributing a Percentage of the Gaming Tax Revenues Generated by Racetrack Gam-

ing Operator Licensees to Municipalities that Surround the Racetracks or to Municipalities in

which the Racetracks are Located to Provide Funds for Local Infrastructure and Services – seeks

to create a new distribution equal to one-half of one percent of the net gaming tax receipts from a

racetrack operator.

These distributions would be made to municipalities that surround the racetracks or to munici-

palities in which the racetracks are located. A municipality receiving a percentage of gaming tax

revenues generated by a racetrack gaming operator licensee from a distribution pursuant to Sec-

tion 1 of this 2005 Act shall use those revenues for acquisition, construction or improvement of

local government infrastructure or for providing police and fire protection services

Significant Issues

HB159

HTRS

creates a new distribution equal to one-half of one percent of the net gaming tax

receipts from a racetrack operator. These distributions would be made to municipalities that sur-

round the racetracks or to municipalities in which the racetracks are located. A municipality re-

ceiving a percentage of gaming tax revenues generated by a racetrack gaming operator licensee

from a distribution pursuant to Section 1 of this 2005 Act shall use those revenues for acquisi-

tion, construction or improvement of local government infrastructure or for providing police and

CS/House Bill 159/aHTRC/aHFl#1 -- Page 3

fire protection services.

The provisions of the bill would apply to all of the state’s five racetracks. The Gaming Control

Board’s staff analysis notes that licensed racetrack gaming operators pay the gaming tax directly

to the Taxation and Revenue Department. The amount of gaming taxes paid by the individual

racetracks is considered confidential tax information. The provisions of the Tax Administration

Act apply to the collection and administration of the tax. The Taxation and Revenue Department

would have to develop procedures for the distribution of the revenue and resolve any potential

confidentiality conflicts.

FISCAL IMPLICATIONS

Using the department’s Monthly Gaming Report (Nm_FR005), NMTRD projects recurring gen-

eral fund losses as follows: $846 thousand in FY06, $879 thousand in FY07, $915 in FY08 and

further reductions in future years. The city of Sunland Park, on the other hand, receives revenue

enhancements in these amounts during each of the fiscal years

ADMINISTRATIVE IMPLICATIONS

The administrative impact on the NMTRD and the NMGCB would be minimal.

LB/lg:yr