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

SPONSOR Rodella

DATE TYPED 3/01/05

HB 880/aHTC

SHORT TITLE Cumbres & Toltec License Plates

SB

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Transportation (DOT)

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of HTC Amendment

The amendment makes technical changes to the bill.

Synopsis of Original Bill

House Bill 880 would require the Motor Vehicle Division (MVD) of the Taxation and Revenue

Department to issue special license plates featuring artwork related to the Cumbres and Toltec

House Bill 880/aHTC -- Page 2

Scenic Railroad (C&T). The C&T would determine the color and design of the plates. Persons

desiring C&T license plates would pay a fee of $40.00, of which $25.00 would go to the C&T.

The remaining $15.00 would be used the first year to manufacture and issue the plates. In ensu-

ing years, the $15.00 would be allocated according to Section 66-6-23 NMSA 1978 designation

distribution of funds in the Motor Vehicle Suspense Fund.

Significant Issues

In the past, the C&T required minimal operating subsidies as long as ridership remained at or

above 50,000 passengers per year. From 1995 through 2001, ridership fluctuated between

50,000 and 70,000 passengers per year. To achieve this level of ridership, C&T needs to operate

a minimum of three locomotives. Four factors drove ridership down in FY02, FY03, and FY04:

1.

In the aftermath of the 9/11 terrorist attacks, tourism declined nationwide. Because of the

attacks, C&T's 2001 season finished below projections.

2.

In May 2002, the Federal Railroad Administration issued work orders for track shoulder

enhancements that delayed opening of the railroad by two weeks.

3.

On the day the railroad was to open in 2002, the U.S. Forest Service closed the forest to

all operations due to extreme fire danger, causing the C&T to lose more than 35 days of

revenue.

4.

During the 2003 season (FY03 and FY04) C&T operated with only one locomotive, con-

straining ridership and revenues accordingly.

Prior to FY04, C&T received little funding (about $10 thousand per year) for operating costs

from each state, whereas most state support (more than $400 thousand from each state per year)

supported capital costs. Until FY04, Colorado and New Mexico generally provided equal ap-

propriations to C&T. The decline in railroad ridership and revenues coincided with budget

shortfalls in Colorado. New Mexico assumed a greater share of the cost of supporting C&T op-

erations in FY04 and FY05. New Mexico’s support for operating costs climbed from $10 thou-

sand per year to $710 thousand in FY04 and to $800 thousand in FY05. In FY06, C&T expects

ridership will again reach 50,000 passengers. The C&T budget has two major sources of uncer-

tainty about operating revenues. First, as history indicates, actual ridership, and thereby enter-

prise revenues, is affected by a host of factors beyond the control of C&T. If ridership does not

increase to the projected level or if unanticipated costs are incurred, C&T's need for state support

may change during FY06. Also, Colorado might not match the New Mexico appropriation for

FY06.

More pressing than funding for operating costs, C&T is confronting a need for about $6 million

per year for capital improvements, primarily to maintain and upgrade tracks and right-of-way

and to refurbish locomotives and cars.

HB880 would provide a revenue stream that would help stabilize C&T’s finances.

FISCAL IMPLICATIONS

HB880 would generate an indeterminate amount of revenue to C&T, depending on the number

of special license plates purchased or renewed each year. It is unlikely the revenues would have

a significant impact in FY06, depending on how long it takes to design and produce the license

plates.

House Bill 880/aHTC -- Page 3

TECHNICAL ISSUES

The Department of Transportation identified the following technical issues:

•

The bill provides that the Cumbres & Toltec Scenic Railroad Commission “shall determine

the color and design” of the special plate. This could conflict with Section 66-3-424 NMSA

1978 which provides for “Standardized Special Registration Plates with Logos”. Section 1,

Subsection B of the bill should be rewritten to specify the Cumbres & Toltec Scenic Railroad

Commission that will consult with (or participate with) the Motor Vehicle Division in the de-

sign of the plate in accordance with Section 66-3-424 NMSA 1978.

Section 66-3-424 NMSA 1978 includes provisions regarding the dimensions and placement

of the logo, specifies that any special plate must “display the colors of state flag, red lettering

on a yellow background”, and display the phrases “New Mexico USA” and “Land of En-

chantment”.

•

Section 1, Subsection C (on page 2, line 9) provides that “The owner of a motor vehicle shall

apply and pay a fee each year that the owner wishes to retain and renew” the special plates.

There appears to be no reason to “apply” for the special plate every year.

•

Section 1, Subsection D, Paragraph (1), on page 2, line 16, states that the $15 portion of the

fee directed to the Motor Vehicle Division applies to any “fee collected the first year a spe-

cial Cumbres and Toltec scenic railroad registration plate is issued”. This could be inter-

preted two ways: 1) MVD keeps $15 for issuing each new plate; or, 2) MVD keeps $15 for

each plate issued during the first year the plate (program) is available. Presumably, MVD

should keep $15 for each plate issued in subsequent years of the program. It might be more

clear to predicate MVD’s fee on “issuance of each new plate”, and qualify the 66-6-23 distri-

bution as applicable to “renewal” of the special plate.

•

This bill, and probably all existing special plate legislation, generally does not address the

two-year registration option. Presumably, MVD has figured-out how to assess appropriate

fees for issuing a new special plate in conjunction with a two-year registration option.

DH/yr