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 Sanchez

DATE TYPED 01/27/05 HB

SHORT TITLE Counselor & Social Worker Gross Receipts

SB 59

ANALYST Padilla-Jackson

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

($298.0)

($319.0)

($342.0) Recurring

General Fund

($186.0)

($199.0)

($213.0) Recurring General Fund (Lo-

cal Gov. hold harm-

less distribution)

1

($484.0)

($518.0)

($555.0) Recurring Total Impact to

General Fund

2

(Parenthesis ( ) Indicate Revenue Decreases)

1.

TRD analysis assumes that the proposed deductions would be eligible for the local gov-

ernment “hold harmless” provisions that were adopted as part of the 2004 legislation.

2.

Total impact to the general fund includes the estimated distribution amount given to local

governments in lieu of revenues that should have been received before the deduction.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Department of Health (DOH)

SUMMARY

Synopsis of Bill

Senate Bill 59 expands the list of eligible health care practitioners eligible to receive tax deduc-

tions on gross receipts to include certain licensed counselors, therapists, and social workers.

Current law allows these healthcare practitioners to deduct payments by a managed health care

provider or health care insurer for commercial contract services or Medicare part C services from

gross receipts. Licensed counselors, therapists, and social workers include professional clinical

mental health counselors, marriage and family therapists, professional art therapists, baccalaure-

ate social workers, master social workers or independent social workers.

Senate Bill 59 -- Page 2

In the current law, “commercial contract services” are defined as health care services performed

by a health care practitioner pursuant to a contract with a managed health care provider or health

care insurer other than those health care services provided for Medicare patients.

“Health care insurer” is a person that: (a) has a valid certificate of authority in good standing

pursuant to the New Mexico Insurance Code to act as an insurer, health maintenance organiza-

tion or nonprofit health care plan or prepaid dental plan; and (b) contracts to reimburse licensed

health care practitioners for providing basic health services to enrollees at negotiated fee rates.

The effective date of the provisions in this bill is January 1, 2006.

PERFORMANCE IMPLICATIONS

According to DOH, New Mexico is continuing to experience a reduction in the number of avail-

able health care practitioners. Governor Bill Richardson has signed an Executive Order directing

the implementation of specific activities to enhance New Mexico’s behavioral health workforce

for the purpose of increasing the professional presence in the State. A concerted effort is now

underway to recruit and retain behavioral health professionals, particularly in the rural areas of

the state. Gross receipt deduction could function as a recruitment and retention incentive.

FISCAL IMPLICATIONS

TRD estimates the negative fiscal impact to the general fund at $484 thousand in FY06, $518

thousand in FY07 and $555 thousand in FY08. TRD calculated this impact based on aggregate

industry trends, which suggest that approximately half of these providers’ receipts are assumed

to come from managed care insurers, and thus to be eligible for the new tax deduction. Occupa-

tional and industry data for the counselors and social workers covered in this bill was gathered

from the Regulation and Licensing Department, Counseling and Therapy Practice Board and the

Board of Social Workers; the National Association of Social Workers; the 1997 Economic Cen-

sus; and the New Mexico Health Policy Commission. Gross receipts data came from the De-

partment’s “Analysis of Gross Receipts by North American Industry Classification System

(NAICS)”.

ADMINISTRATIVE IMPLICATIONS

According to TRD, if Senate Bill 59 passes, system coding and troubleshooting must be per-

formed; forms and instructions must be revised; taxpayer education and seminar materials and

instruction publications must be prepared; and department personnel must be trained on the new

provisions. These changes can be implemented with existing resources. The department will not

receive an administrative fee on the hold harmless distribution.

OTHER SUBSTANTIVE ISSUES

An important point raised by TRD is that receipts of health practitioners have historically grown

more quickly than general revenue. Deducting these services reduces the rate of growth of reve-

nue collections relative to the rate of economic growth. Deducting services from high-growth

sectors from the existing tax base makes it harder for tax revenues to keep up with inflation.

OPJ/yr