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

SPONSOR Fox-Young

DATE TYPED 1/31/05

HB 291

SHORT TITLE Decrease Motor Vehicle Registration Fees

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 50,HB 81, SB 142 & HB 269

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

(Significant)

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Finance Authority (NMFA)

Department of Transportation (DOT)

Attorney General’s Office (AGO)

Corrections Department (CD)

Department of Public Safety (DPS)

Public Education Department (PED)

Environment Department (ED)

House Bill 291 -- Page 2

SUMMARY

Synopsis of Bill

House Bill 291 decreases the dollar amounts of a number of motor vehicle registration fees that

are dedicated to the State Road Fund. This Bill also increases certain truck registration fee per-

centages dedicated to the Tire Recycling Fund. Finally, this Bill decreases the overall fee distri-

bution percentage to the State Road Fund by 8.11% and increases proportionally fee distributions

to counties, county road funds, and incorporated municipalities within the various counties.

Significant Issues

The registration fees discussed in House Bill 291 are fees that were implemented by Governor

Richardson’s Investment Partnership (GRIP) legislation passed during the 2003 Special Session.

Thus the current fee levels were part of the GRIP package presented to the major bond rating

agencies. The bond rating of the GRIP issue is contingent upon the current fee levels. Any

statutory decrease of the fees in question would send a wrong message to the rating agencies and

probably would result in a down grade of the GRIP bond ratings. Also the overall decrease in

revenues to the State Road Fund would impair debt service payments to GRIP bond holders.

FISCAL IMPLICATIONS

Article IX, Section 16 of the Constitution of the State of New Mexico states in part that “The

legislature shall not enact any law which will decrease the amount of annual revenues pledged

for the payment of state highway debentures or which will divert any of such revenues to any

other purpose so long as any of said debentures issued to anticipate the collection thereof re-

main unpaid.”

Similarly, Section 22 of the bill provides that “If any provision of this act or any lower tax or fee

provided for in this act would have the effect of impairing any revenue bonds outstanding on the

effective date of this act, then the provision, lower tax or lower fee shall not take effect until the

affected outstanding bonds are defeased.”

Virtually all of the State Road Fund tax and fee sources are pledged toward bonds through the

year 2024. The pledge of these revenue sources is part of the state’s contract with bond holders

that allowed the state to obtain an exceptionally low interest rate on the bonds. Since bond cov-

erage ratios and bond interest rates are integral parts of the overall bond contract, any legislated

tax rate decrease would be considered an impairment to the bonds. It is the opinion of the NMFA

that the registration fee decreases proposed in the bill could not go into effect until the year 2025

when the bonds are fully defeased. Informal discussions between staff from NMFA and DOT

indicate DOT would also interpret any roll-back of pledged revenue to be an impairment to the

bonds.

Below is a table prepared by the NMFA summarizing the fee and tax distribution changes pro-

posed in House Bill 291.

House Bill 291 -- Page 3

FEE TYPE

Current Fee Proposed Fee

Increase

(Decrease)

Motor Cycle - Two Wheeled

$ 15.00 $ 11.00 $ (4.00)

Motor Cycle - Three Wheeled

$ 15.00 $ 11.00 $ (4.00)

Vehicles <= 2000lbs

$ 39.00 $ 29.00 $ (10.00)

after 5yrs

$ 31.00 $ 23.00 $ (8.00)

Vehicles > 3000lbs

$ 56.00 $ 42.00 $ (14.00)

after 5yrs

$ 45.00 $ 34.00 $ (11.00)

Freight Trailers - Perm Reg

$ 13.00 $ 10.00 $ (3.00)

Utility Trailers - Non Perm Reg

$ 7.00 $ 5.00 $ (2.00)

Utility Trailers Non Comm - Perm

Reg

$ 33.00 $ 25.00 $ (8.00)

wt < 6001lbs

$ 7.00 $ 5.00 $ (2.00)

Trucks, Tractors, Road Tractors,

Buses

Declared Gross Weight

001 - 4,000

$ 40.00 $ 30.00 $ (10.00)

4,001 - 6,000

$ 55.00 $ 41.00 $ (14.00)

6,001 - 8,000

$ 69.00 $ 52.00 $ (17.00)

8,001 - 10,000

$ 84.00 $ 63.00 $ (21.00)

10,001 - 12,000

$ 99.00 $ 74.00 $ (25.00)

12,001 - 14,000

$ 113.00 $ 85.00 $ (28.00)

14,001 - 16,000

$ 128.00 $ 96.00 $ (32.00)

16,001 - 18,000

$ 143.00 $ 107.00 $ (36.00)

18,001 - 20,000

$ 157.00 $ 118.00 $ (39.00)

20,001 - 22,000

$ 172.00 $ 129.00 $ (43.00)

22,001 - 24,000

$ 187.00 $ 140.00 $ (47.00)

24,001 - 26,000

$ 201.00 $ 151.00 $ (50.00)

26,001 - 48,000

$ 118.00 $ 88.50 $ (29.50)

> 48,001

$ 172.00 $ 129.50 $ (42.50)

Buses

$ 7.00 $ 5.00 $ (2.00)

Buses - Agricultural

$ 33.00 $ 25.00 $ (8.00)

Fertilizer Trailers

$ 7.00 $ 5.00 $ (2.00)

Manfac Homes, Travel Trailers

$ 7.00 $ 5.00 $ (2.00)

School Buses

$ 7.00 $ 5.00 $ (2.00)

Tire Recycling Fund Percentages

Trucks 26,001 - 48,000

3.00%

4.00%

1.00%

Trucks > 48,001

3.75%

5.00%

1.25%

Formulaic Distributions

State Road Fund

74.65%

66.541%

(8.11%)

To Counties

7.60%

10.032%

2.43%

To County Road Funds

7.60%

10.032%

2.43%

To Incorporated Municipalities

4.06%

5.358%

1.30%

To Jurisdictions

6.09%

8.037%

1.95%

House Bill 291 -- Page 4

ADMINISTRATIVE IMPLICATIONS

The registration fee decreases proposed in the bill would become effective on the first day of the

month following certification by the New Mexico Finance Authority that “the bonds can be full

paid and that the outstanding bonds will not otherwise be impaired”. Such a provision allows

little or no time for the Motor Vehicle Division (MVD) to implement the fee decrease, particu-

larly to revise its computer program code.

The bill’s requirement that NMFA conduct a quarterly review of DOT’s financial position would

place a considerable burden on NMFA. Since the registration fee roll-back must inevitably be

considered to impair the bonds, any quarterly review by NMFA would be ultimately pointless.

RELATIONSHIP

Relates to SB 50, Emergency Taxpayer Relief Initiative and HB 81, Emergency Taxpayer Relief

Initiative which have similar revenue decreases.

Relates to SB 142, Recycling & Illegal Dumping Act and HB 269, Recycling & Illegal Dumping

Act which repeal the Tire Recycling Act and replace it with the Recycling and Illegal Dumping

Act. These bills broaden the scope of the current tire recycling program to include additional re-

cycling and other illegal dumpsite abatement programs for New Mexico. SB 142 and HB 269

change the name of the fund in which these funds are to be deposited to the “recycling and illegal

dumping fund” from the “tire recycling fund”.

OTHER SUBSTANTIVE ISSUES

DOT states that one of the principal reasons vehicle registration fees were revised recently is that

these unit-based fee levels had not been increased in over 20 years, and New Mexico’s registra-

tion fee levels were extremely low in relation to other states’ fees. Even after the recent increase,

New Mexico vehicle registration fees continue to be quite low in relation to other states.

The DOT-related revenues discussed in this bill s are used to support Governor Richardson’s In-

vestment Partnership (GRIP) transportation infrastructure initiative.

DW/yr:lg