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).

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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 Carraro

DATE TYPED 1/27/2005 HB

SHORT TITLE NMMI Scholarship Fund Income Tax Credit

SB 33

ANALYST Taylor

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NA

NA

$500.0

Recurring

NMMI Scholar-

ship Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($250.0)

($250.0) Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

SUMMARY

SB 33 creates the New Mexico Military Institute (NMMI) Scholarship Fund and provides an in-

come tax credit for donations to the new fund.

The income tax credit is equal to 50 percent of the donation to the fund. To claim the credit, the

taxpayer must submit a certificate of eligibility issued by NMMI to the Taxation and Revenue

Department. Total credits are capped at $250 thousand dollars annually by limiting the claim

that would result in the total annual amount to exceed the $250 thousand cap to be equal to the

difference between $250 thousand and the total value of certificates already issued. Certificates

are issued in the order received.

The NMMI Scholarship Fund is created in the state treasury and consists of appropriations, gifts,

grants and bequests. Money in the fund is appropriated to the NMMI Board of Regents to pro-

Senate Bill 33 -- Page 2

vide scholarships to students under the age of 18 with preference given to students who have a

parent or legal guardian in a New Mexico correctional facility.

FISCAL IMPLICATIONS

The fiscal impact of this bill is uncertain because it is not known how much money will actually

be claimed against the credit. The NMMI foundation currently receives about $150 thousand

annually from New Mexicans. It seems reasonable to assume that some of this would be trans-

ferred to the scholarship fund, given the availability of a credit. In addition, it is assumed that

NMMI would successfully increase donations to the maximum allowed in the bill. Thus, the fis-

cal impact to the general fund is assumed to be a negative $250 thousand.

The newly created fund should benefit by raising $500 thousand in donations or more. $500

thousand is the amount consistent with the assumption that donations would be sufficient to

maximize tax credits. This probably would not be all new money to the school as some of it may

come from donors who are donating currently without receiving the benefit of a credit.

Continuing Appropriations

This bill creates a new fund and provides for continuing appropriations. The LFC objects to in-

cluding continuing appropriation language in the statutory provisions for newly created funds.

Earmarking reduces the ability of the legislature to establish spending priorities.

ADMINISTRATIVE IMPLICATIONS

TRD reports a modest administrative impact, which could be absorbed with current resources.

The bill would also have an administrative impact on NMMI administration, which would be

required to issue and account for certificates.

BT/yr