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F I S C A L I M P A C T R E P O R T
SPONSOR Adair
DATE TYPED 01/25/05 HB
SHORT TITLE Emergency Taxpayer Relief Initiative
SB 50
ANALYST Padilla-Jackson
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($1,600.0 to
$2,000.0)
Similar Recurring Taxation & Reve-
nue Dept (W-D Tax
Id Permit)
1
($1,100.0) ($1,900.0)
Approx ($2,900) Recurring Hazardous Waste
Fund
2
(*) ($147,000.0)
Recurring
General Fund
3
(*) ($19,500.0)
Recurring
General Fund
4
(*) ($2,000.0)
Recurring
General Fund
4
($33,500.0)
Recurring
General Fund
5
($13,500.0)
Recurring Other State Funds
5
($51,500.0)
Recurring
General Fund
6
(Parenthesis ( ) Indicate Revenue Decreases)
(*) FY 2005 impacts are uncertain because the bill does not contain an effective date and because
of the difficulty of implementing so many changes in a short period of time. (See discussion un-
der TECHNICAL ISSUES and ADMINISTRATIVE IMPACTS).
1.
Applies to Sections 3, 4, 5, 6, 9 through 17, and 23 (Estimates provided by DOT)
2.
Applies to Section 18 (Estimates provided by NMED)
3.
Applies to Section 1, reinstatement of municipal tax credit (Estimates provided by TRD)
4.
Applies to Section 21, repeal of daily bed surcharge and weight-distance ID card (TRD)
5.
Applies to Section 2, cigarette tax (LFC estimates)
6.
Applies to Section 7, premium tax (LFC estimates)
Duplicates: House Bill 81
pg_0002
Senate Bill 50 -- Page 2
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Transportation (DOT)
New Mexico Environment Department (NMED)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
Senate Bill 50 repeals or reduces various tax and fee increases that raised FY05 state revenues by
more than $1 million. The bill only applies to tax or fee increases passed and signed during 2003
and 2004. The following table provides a brief summary of each of the proposed changes.
Section Tax Description
Prior Tax Rate New Tax Rate Total Revenue Fund Impact Notes
1 Gross Receipts Tax Credit
0.5%
Reinstate tax credit where muni has imposed
grt of at least 0.5%
0.25% -$147,000.00 General Fund
Reinstate tax credit where muni has imposed
grt of at least 0.25%
2 Cigarette Tax
$0.0455 $0.0105 -$33,500.00 General Fund Per cigarette or from $0.91 to $0.21 per pack
-$13,500.00 Other State Funds
3 Gasoline Tax
$0.17
16.0%
Per gallon
4 Motor Vehicle Weight Distance Tax See page 3
Reverse weight distance tax increase adopted
in 2003
5 Bus Tax Rate
See page 5
Mills per mile
6 Special Fuel Excise Tax
$0.21
$0.18
Per gallon
7 Premium Tax
1%
0% -$51,500.00 General Fund
On gross health insurance premiums and
membership and policy fees rec eived on
health insurance and or contracts
8 Pharmacy Licensure Fee Revocation
Repeals fee for issuance or annual renewal for
wholesale drug distributor, drug manufacturer,
or drug warehouse
9 Motorcycle Registration Fees
15
11
Motorc ycle with less than two wheels
15
11
Motorc ycle with three wheels
10 Passenger Vehicle Registration Fees
27
20
< 2,000 pounds
21
16
< 2,000 pounds -- after 5-years of registration
39
29
< 2,000 pounds
31
23
> 2,000 pounds -- after 5 years of registration
56
42
> 3,000 pounds
45
34
> 3,000 pounds -- after 5 years of registration
11 Trailer Registration Fees
13
10
Permanent registration of freight trailers
7 + 1
5 + 1
Annual registration of each utility trailer
32 + 7 25 + 5
Permament registration of utility trailers not
used in commerc e, < 6001 pounds
12 Registration Fees--Trucks , etc. See page 18
13 Bus Registration Fees
7
5
Annual
14 Bus Registration - Agricultural Labor Fees
33
25
15 Fertilizer Trailer Fee
7
5
Trailers used by commercial fertilizer company
to deliver liquid fertilizer to a farmer (less than
3,500 pounds )
16 Registration Fees -- Manufactured Homes
7
5
17 School Bus Fees
7
5
18
Repeals language to allow Environmental
Improvement Board to adopt rules setting
fees for businesses conducting permitted
hazardous waste activities
-$1,900.00
Hazardous Waste
Fund
Repeals language allowing EIB to s et fees
for a hazardous waste permit management
fee
19 Livestock Code Fees
<=$100 <=$50
Fee for recording a transfer of a brand
<=$100 <=$50
Fee for recording or researching a brand
<=$10
<=$5
Fee for additional certified copies of brands
<=$100 <=$50
Fee for recording of brands
<=$100 <=$50
Fee for issuing a certificate of brand
20 Butcher Fees
<=$100 <=$25
Annual license fee
<=$100 <=$10
Annual lic ense fee - Butcher Manufacturer
21
Repeal Sections 1 and 2 of Laws 2004,
Chapter 4, Section 5, which previously were
delayed repeal effective June 30, 2007
-$21,500.00 State Road Fund
Repeal daily bed surcharge and weight-
distance tax identification card requirements
passed in 2003
22 Temporary Provision -- No bond impairment
23 Declare Emergency
Note: Fiscal impact may be conservative as good information on certain smaller taxes and fees was not readily available
Significant Issues
pg_0003
Senate Bill 50 -- Page 3
According the New Mexico Environment Department, Senate Bill 50 limits the Environmental
Improvement Board’s (EIB) authority under the Hazardous Waste Act (HWA) established in the
late 1980’s, when the operation of facilities that treat, store, or dispose of hazardous waste
(TSDFs) was beginning to be regulated. Since then, cleanup of legacy contamination, especially
at federal facilities, has become an equal priority of the hazardous waste regulatory program.
This issue is particularly important in New Mexico, where nearly half of all TSDF’s are federal
facilities, most of which have significant clean up requirements. Federal TSDF’s comprise
nearly 85 per cent of the Environment Department’s Hazardous Waste Bureau’s permitting and
corrective action workload. Senate Bill 50 would eliminate the opportunity for facilities with
significant clean-up requirements to pay the Department’s costs of overseeing cleanup.
FISCAL IMPLICATIONS
Total fiscal impact, summing each of the various estimates provided by TRD, DOT, NMED, and
LFC for FY06 is approximately $270 million. Though, the LFC cautions that this estimate may
be conservative as information on certain smaller taxes and fees was not readily available.
No impacts were provided for the following revenues collected by TRD because – according to
information provided to the Tax Department – the revenues affected by the bill have been
pledged to debt service on bonds that will not be defeased for a number of years: Cigarette Tax,
Gasoline tax, Weight-Distance Tax, Special Fuels Tax, Motor Vehicle Registration Fees and
Hazardous Waste Permit Fees. See other substantive issues below.
Environment
Demands on the EIB to provide more regulatory oversight have increased at a time when sources
of revenue (i.e., the general fund and federal funds) have declined or remained flat. According
NMED, EIB has turned to permit fees to augment the revenue stream. Senate Bill 50 eliminates
the primary mechanism to fund oversight of permits. If Senate Bill 50 passed, NMED believes
that revenues would stay at current or lower levels, inhibiting EIB from effectively overseeing
corrective action and permitted activities at TSDFs.
Transportation
According to the DOT, beneficiaries of Sections 3, 4, 5, 6, 9 through 17, and 23 of the bill’s tax
relief accrues almost entirely to out-of-state trucking companies transporting goods in interstate
commerce.
ADMINISTRATIVE IMPLICATIONS
It was reported that TRD would face a significant short-term impact to make all of the system
and processing changes required in the bill. According to TRD, the required changes could not
possibly be made in time for the emergency clause effective date of the bill.
TECHNICAL ISSUES
Senate Bill 50 does not provide an effective date for the various tax rate changes, but instead
employs an emergency clause. According to the TRD and DOT, changes to tax rates or fees or
distribution changes should come with an effective date (generally the first day of the month) to
allow for fair and predictable administration (the changes could occur in the middle of a tax
payment period, generating confusion over how to assess tax within the period).
pg_0004
Senate Bill 50 -- Page 4
According to the DOT, Senate Bill 50 ignores the revenue distribution provisions that were asso-
ciated with certain of the past tax increases proposed to be rolled-back. The bill should “roll-
back” those revenue distribution provisions in conjunction with the roll-back of the tax rates.
OTHER SUBSTANTIVE ISSUES
The Department of Transportation expressed concerns regarding taxes and fees that have been
previously pledged toward bonds and make up a part of the state’s contract with bondholders.
DOT cites both the New Mexico Constitution, Article IX, Section 16, which states in part that
“The legislature shall not enact any law which will decrease the amount of annual revenues
pledged for the payment of state highway debentures or which will divert any of such revenues
to any other purpose so long as any of said debentures issued to anticipate the collection thereof
remain unpaid.” Similarly, DOT noted that Section 22 of Senate Bill 50 provides that “If any
provision of this act or any lower tax or fee provided for in this act would have the effect of im-
pairing any revenue bonds outstanding on the effective date of this act, then the provision, lower
tax or lower fee shall not take effect until the affected outstanding bonds are defeased.”
According to the Department of Transportation, “virtually all of the State Road Fund tax and fee
sources are pledged toward bonds through the year 2024…any legislated tax rate decrease would
be considered an impairment to the bonds.” DOT asserts that the tax rate changes proposed in
Sections 3, 4, 5, 6, and 9 through 17 could not go into effect until the year 2025 when the bonds
are fully defeased”.
Lastly, DOT cautioned that Section 23 of the bill repeals prior law that was recently revised in
connection with Weight Distance Tax Identification Permits. According to DOT, most of the
repealed language is necessary for tax administration and pre-dated the recent change to that Tax
Identification Permit Fee.
APPROPRIATION IMPACTS
According to information provided by HSD, approximately 90 percent of the facilities affected
by the bed surcharge, accounting for about $17.6 million of the total revenue, are reimbursed
through the Medicaid program. Elimination of the surcharge would reduce these reimburse-
ments. New Mexico Medicaid is funded 75 percent by the federal government and 25 percent by
the state.
OPJ/lg