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

SPONSOR Sandoval

DATE TYPED 3-01-2005 HB 886

SHORT TITLE Psychologist Gross Receipts

SB

ANALYST Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($17)

Similar Recurring State General Fund

($10)

Similar Recurring Local Governments

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

SUMMARY

House Bill 886 adds psychologists to the list of professional health care providers eligible for a

gross receipts tax deduction for services provided to medicare beneficiaries. The deduction is

currently provided for services provided by medical doctors, osteopathic physicians and podia-

trists.

The bill also provides a deduction for receipts from payments by the U.S. government for medi-

cal services provided by a clinical laboratory to medicare beneficiaries.

FISCAL IMPLICATIONS

TRD reports that the fiscal impact of the bill only applies to services provided by psychologists.

The provision related to receipts provided by a clinical laboratory addresses a technical issue,

and TRD is currently allowing this deduction. Their discussion of this is included in the Other

Substantive Issues section of this report.

TRD estimates that the deduction provided to psychologists would reduce general fund revenues

by $17 thousand and local government revenues by $10 thousand. The department reports that

the estimate is based on receipts from receipts from psychologists were extracted from the de-

House Bill 886 -- Page 2

partment’s “Analysis of Gross Receipts by North American Classification System (NAICS). As-

suming an average state-wide gross receipts rate of 6.6 percent, the implied tax base—the newly

deductible psychologists’ gross receipts—would be a little over $400 thousand.

ADMINISTRATIVE IMPLICATIONS

TRD reports that the administrative implications are minimal and could be absorbed with exist-

ing resources.

OTHER SUBSTANTIVE ISSUES

TRD provided this discussion of deduction provided for clinical laboratories.

Laws 2003, Chapter 350, Section 1 amended the deduction under Section 7-9-77.1

NMSA 1978 to include Medicare receipts of home health agencies and clinical laborato-

ries. However, because Laws 2003, Chapter 351, Section 1, which also amended Section

7-9-77.1, was signed last by Governor, it was codified, while Laws 2003, Chapter 350,

Section 1 (deduction for clinical labs and home agencies) appears in the annotations to

that section. The Tax Department interprets the annotations of the statute to be binding

as law until and unless they are omitted in a subsequent amendment of the statute. The

Department’s position is based on the argument that rules of statutory construction are

only aids when interpreting true legislative intent (Quintana v. New Mexico Dep’t of

Cors., 100 N.M. 224, P2d 1101 [1983]).

BT/yr