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 a vailable 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 Lujan

DATE TYPED 03/14/05 HB 867/aSFC

SHORT TITLE Clarify Property Tax On Agricultural Lands

SB

ANALYST Padilla-Jackson/Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

NFI*

Similar Recurring State & Local Gov-

ernments

(Parenthesis ( ) Indicate Revenue Decreases)

*Insignificant

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Senate Finance Committee Amendments

The Senate Finance Committee amendments make the following changes to the bill:

1.

The language expanding the definition of “agricultural use” to include the use of land for

the lawful taking of game pursuant to licenses or permits issued by the director of the

game and fish department is struck.

2.

The rules for determining whether land is used primarily for agricultural purposes are

amended: the use of land for the lawful taking of game cannot be considered in determin-

ing whether land is used primarily for agricultural purposes.

3.

The initially proposed rule for determining the value of agricultural land based on the

production of captive deer or elk is changed. Initially, both animals were to be valued

and taxed as cattle. The new provision values captive deer as sheep; captive elk are val-

ued as cattle.

House Bill 867/aSFC -- Page 2

Synopsis of Original Bill

House Bill 867 clarifies portions of the property tax code that relate to the valuation of agricul-

tural lands. The bill modifies the definition of the term “agricultural use” to include the use of

land for captive deer or elk and for the lawful taking of game pursuant to licenses or permits is-

sued by the director of the Department of Game and Fish. In the rules for determining the value

of land, the Department of Game and Fish shall provide that land classified as agricultural, based

on the production of captive deer or elk or the lawful taking of game, shall be valued as grazing

land, and that captive deer and elk shall be taxed as cattle.

The bill invokes an emergency clause, so that the provisions would take effect immediately.

FISCAL IMPLICATIONS

According to TRD’s analysis on the amended bill, the provisions of the proposed legislation

would impose no significant fiscal impacts on state or local revenues. They note, however, that

the measure would shift the burden of paying several hundred thousand dollars in property taxes

from taxpayers that would benefit from the reclassification to individuals who do not benefit.

The cost to any particular taxpayer, according to TRD, would likely be less than 1 percent of a

typical tax bill.

ADMINISTRATIVE IMPLICATIONS

Minimal.

OTHER SUBSTANTIVE ISSUES

TRD notes that the PTD should promulgate rules defining “captive dear”, “captive elk”, and fur-

ther expand on the definition of “bona fide and primary use”.

OJP/lg