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F I S C A L I M P A C T R E P O R T
SPONSOR McSorley
DATE TYPED 2/14/05
HB
SHORT TITLE Family Medical Leave Employer Tax Credit
SB 448
ANALYST Taylor
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($1,900.0) ($3,800.0)
Recurring
General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department
SUMMARY
Senate Bill 448 provides an income tax credit for employers for a portion of the cost of providing
family medical leave. The credit can be claimed against either personal income taxes or corpo-
rate income taxes. The credit is equal to 25 percent of the amount paid in the taxable year for
salary or wage costs incurred in providing paid family medical leave to an employee. The bill
defines family medical leave to mean leave taken by an employee in connection with: (1) the
birth or adoption of a child; (2) the care of a child, spouse or parent of the employee who has a
health condition necessitating inpatient care or requiring continuous treatment or supervision by
a health care provider.
The provisions of the bill are applicable to taxable years beginning on January 1, 2005.
FISCAL IMPLICATIONS
TRD estimates that this legislation would reduce general fund revenues by $3.8 million in FY06.
The estimate, based on NM department of labor reports, assumes that about 3 percent of New
Mexico employees are provided family leave benefit. This amounts to approximately 18 thou-
sand employees. TRD estimates, based on the state-wide average wage and the assumption that
on average over a career those receiving the benefit use it 60 hours, that paid wages and salaries
eligible for the benefit would be about $15.1 million (multiply 18 thousand times $14/hour times
60 hours). The tax credit provided in the bill is equal to one quarter of wages and salaries, thus
the full-year fiscal impact is estimated to be $3.8 million: the FY06 estimate. The FY05 estimate
is simply half the FY06 estimate.