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 Smith

DATE TYPED 02/07/05 HB

SHORT TITLE Sales to Inmates Gross Receipts

SB 428

ANALYST Padilla-Jackson

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$48.8

$48.8

Similar Recurring

Public Project Re-

volving Fund

(NMFA)

$9.0

$9.0

Similar Recurring State Park & Rec.

Capital Improve-

ment (EMNRD)

$6.5

$6.5

Similar Recurring Youth Conservation

Corps (EMNRD)

$0.7

$0.7

Similar Recurring Department of Cul-

tural Affairs

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Energy, Minerals & Natural Resources (EMNRD)

Department of the Public Defender (DPD)

Corrections Department (CD)

SUMMARY

Synopsis of Bill

Senate Bill 428 expands the definition of governmental gross receipts in the Gross Receipts and

Compensating Tax Act to include the sale of tangible personal property to inmates of the correc-

tions department.

Senate Bill 428 -- Page 2

The effective date is July 1, 2005.

Significant Issues

The Public Defender notes that this bill would require prison inmates to be taxed on their com-

missary purchases. They note that an approximately seven percent sales tax would be a fairly

onerous addition to their costs for toiletries, snack food, craft supplies and house ware, since the

inmates are presently paid at a maximum rate of approximately fifty cents per hour.

FISCAL IMPLICATIONS

The analysis provided by TRD suggests that the total annual fiscal impact would be $65 thou-

sand. Approximately seventy-five percent, or $49 thousand, of government gross receipts is dis-

tributed to the New Mexico Finance Authority for the Public Project Revolving Fund; Approxi-

mately fourteen percent ($9 thousand) of the total would be distributed to the Minerals and Natu-

ral Resources Department (EMNRD) for State Parks Division for capital improvements; Ap-

proximately ten percent ($6.5 thousand) to EMNRD’s youth conservation corps programs, and

one percent ($650.00) is distributed to the Department of Cultural Affairs for capital improve-

ments at state museums and monuments.

TRD’s analysis assumes that receipts from sales to inmates from the New Mexico Corrections

Department totals about $1.3 million per year. The five percent governmental gross receipts tax

rate applied to this amount would generate $65 thousand in tax collections.

ADMINISTRATIVE IMPLICATIONS

TRD anticipates this bill will have a minimal administrative impact, as these changes can be im-

plemented with existing resources.

The Corrections Department notes that the bill could result in a substantial increase in the admin-

istrative burden on prison business office managers and on the Corrections Department financial

personnel who will be required to account for and transfer the new gross receipts taxes, though

they believe that the department should be able to absorb this burden.

OTHER SUBSTANTIVE ISSUES

TRD notes that the governmental gross receipts tax is not imposed on Correction Department’s

receipts because the current definition of governmental gross receipts only includes enterprise

revenue from facilities “open to the general public.” The Corrections Department restricts who

can purchase items and what can be purchased.

OPJ/yr