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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are 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 Silva

DATE TYPED 02/19/2005 HB 806/aHTC

SHORT TITLE

Motor Vehicle Tax & Fee Adjustments

SB

ANALYST Moser

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

NFI

$1,412.0

similar

Recurring

State Road Fund

(Trip Tax and

fees)

NFI

(**)

similar

Recurring

State Road Fund

(Overweight Per-

mits)

NFI

positive

similar

Recurring

Net to State

Road Fund

NFI

$38.0

similar

Recurring

Local Govern-

ments (66-6-23.1)

(Parenthesis ( ) Indicate Revenue Decreases)

The (**) negative fiscal impact on the Road Fund is associated with expanded use of the annual overweight permit.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Transportation (DOT)

House Bill 806/aHTC -- Page 2

SUMMARY

Synopsis of Amendment

The House Transportation Committee Amendment adds an effective date of July 1, 2005 for the

tax and fee rate provisions of Sections 1, 2, and 3, and removes some obsolete language in cur-

rent law relating to “warrants” issued by the PRC to escort vehicles that accompany oversize ve-

hicles. The Motor Transportation Division reports that the PRC no longer requires or issues

“warrants” for escort vehicles.

Effective Date: July 1, 2005 for tax and fee rate provisions (HTC Amendment).

Overweight permit provisions effective immediately under Emergency

Clause.

Synopsis of Original Bill

House Bill 806 introduced on behalf of the Revenue Stabilization and Tax Policy Committee

proposes four specific changes related primarily to heavy commercial trucks.

1.

The bill increases the “Trip Tax” that is due from heavy trucks that are not registered in

the state of New Mexico for tax purposes. The “Trip Tax” is imposed in lieu of Weight-Distance

Tax and Vehicle Registration Fees and is imposed on the basis of gross vehicle weight class and

the number of miles driven in the state. The fee increase is approximately 35%, but varies from

33% to 40% for different weight classes due to rounding of the per mile fee.

2.

The bill increases the “Caravan Fee” that is imposed on the commercial transport of

unregistered vehicles. For vehicles transported under their own power, the fee is increased from

$7.50 to $10. For vehicles that are towed or carried, the fee is increased from $5 to $7. The

“Caravan Fee” does not apply when the transport vehicle is registered for purposes of the

Weight-Distance Tax.

3.

The bill increases the two-day “Drive-out Permit” fee that allows nonresidents drive a

(newly-purchased) unlicensed vehicle out of the state. The fee is increased from $5 to $7.

4.

The bill removes the limitation that an annual overweight permit for trucks weighing

more that 86,400 lbs is only valid for trips within 125 miles of the origin of the trip. The annual

overweight permits would be valid for travel throughout the state, providing the weight of the

vehicle does not exceed 140,000 lbs. Certain other restrictions do apply to annual overweight

permits, such as specifying the routes that will be used.

House Bill 806 contains an Emerg

ency Clause (see Technical Issues).

Significant Issues

The Trip Tax is paid exclusively by out-of-state commercial truckers who are not registered to

pay New Mexico Weight-Distance Tax or apportioned Vehicle Registration Fees. This tax was

not increased during the 2003 Special Session legislation that funded the GRIP transportation

infrastructure improvement package (Chapter 3, 2003 SS – HB-15), and the tax is now relatively

lower than it had been in comparison to the Weight-Distance Tax and Vehicle Registration Fees.

“Trip Tax” is imposed on the occasional trip by out-of-state trucks taxed at the ports-of-entry

(not New Mexico truckers).

House Bill 806/aHTC -- Page 3

The “Caravan Fee” and the two-day “Drive-out Permit” are two registration fees that were not

increased during the 2003 Special Session legislation that funded the GRIP transportation infra-

structure improvement package (Chapter 3, 2003 SS – HB-15), and those fees are now relatively

lower than they had been in comparison to other Vehicle Registration Fees. These fee amounts

have not changed since the 1978 recompilation of statute (27 years ago), and are probably older

than that.

The bill proposes elimination of the “125 mile radius” provision that has proven difficult to ad-

minister and to be a hindrance to New Mexico’s trucking industry, particularly in the movement

of construction cranes and oil and gas drilling equipment. Elimination of the “125 mile radius”

limitation should reduce paperwork and transaction costs for both the industry and government.

FISCAL IMPLICATIONS

The fiscal impact estimate assumes the Emergency Clause in Section 5 of the bill will be re-

placed with an EFFECTIVE DATE of July 1, 2005 (see Technical Issues).

The DOT estimates the positive State Road Fund fiscal impact is comprised of $ +1,300 thou-

sand attributable to the Trip Tax, and $ +112 thousand attributable to the Caravan Fee and two-

day Drive-out Permit fee.

The DOT indicates that there are two components that have a negative impact, and neither one is

quantifiable.

1.

Currently, holders of annual overweight permits may indeed be paying single trip permit fees

for trips outside the 125 mile area. Those single trip permit fees would be lost under this

bill’s provisions. On the other hand, since the 125 mile provision is largely unenforceable,

permit holders may not be paying those single trip fees.

2.

Trucks weighing close to 140,000 lbs may realize that the fees for a single overweight trip

across the state costs about the same amount as the annual permit fee. A number of trucks

that would otherwise purchase only single trip permits may opt for the annual overweight

permit. In effect, the relatively new “ton-mile” tax of 2.5 cents per ton-mile may become ap-

plicable only to trucks weighing more than 140,000 lbs.

The fiscal impact to local governments results from the Caravan Fee and two-day Drive-out

Permit fee, and would be distributed to various funds under the Section 66-6-23.1 Formulaic Dis-

tribution.

ADMINISTRATIVE IMPLICATIONS

The DOT indicates the elimination of the “125 mile radius” provision in Section 4 of the bill

should have a positive impact on administration of provisions related to annual overweight per-

mits by the Motor Transportation Division.

The increased tax and fee rates in Sections 1, 2, and 3 of the bill will require changes to certain

forms and computer code for the Motor Transportation Division of DPS and the Motor Vehicle

Division of TRD, but those changes are assumed to be relatively minor.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Both this bill and HB-277 amend Section 66-7-413 NMSA 1978.

House Bill 806/aHTC -- Page 4

TECHNICAL ISSUES

The DOT indicates that the tax and fee changes in Sections 1, 2, and 3 of the bill should have a

specified EFFECTIVE DATE. An effective date of July 1, 2005 would probably be suitable.

The bill’s Emergency Clause is probably unnecessary since the tax and fee changes in Sections

1, 2 and 3 should be associated with an EFFECTIVE DATE of July 1, 2005. The addition of the

Emergency Clause may have been directed to the overweight permit provisions of Section 4, but

since the eliminated provision (125 mile radius) is largely unenforceable, the Emergency Clause

may not be necessary.

OTHER SUBSTANTIVE ISSUES

The primary distinction between the “Caravan Fee” and the two-day “Drive-out Permit” is that

the “Caravan Fee” is imposed on the transport of vehicles by a person “engaged in the business

of transporting vehicles” or if the vehicle is being delivered to a purchaser subsequent to its sale.

The “Drive-out” permit allows a nonresident purchaser to drive the vehicle to the nonresident’s

home state.

For most automobiles and light trucks sold to individuals, the 30-day temporary (paper) plate

issued by a vehicle dealer would make the “Drive-out” permit unnecessary. For transactions be-

tween individuals, the “Drive-out Permit” is probably a technical requirement that few people

comply with.

The “Drive-out Permit” may be particularly important for nonresident purchasers of heavy trucks

who are required to register in their (home) base state for purposes of interstate commerce, and

who may be required to pass through ports-of-entry while returning to their home state

.

GM/njw:lg:yr