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 Taylor

DATE TYPED 02/24/05 HB

SHORT TITLE Business Fingerprinting Requirements

SB 666

ANALYST McSherry

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

NFI

($29.0)

($29.0) Recurring

General Fund

NFI

($24.8)

($24.8) Recurring Department of Pub-

lic Safety

SOURCES OF INFORMATION

LFC Files

Department of Public Safety

Attorney General’s Office

Regulations and Licensing Department

Economic Development Department

SUMMARY

Synopsis of Bill

Senate Bill 666 proposes to amend sections of the Liquor Control Act to change the fingerprint-

ing requirements for persons who apply for liquor licenses in the State Of New Mexico.

Enactment of the proposed bill would:

Require that all corporate applicants, and corporations owning more than 10% “interest”

in those applications, be qualified to do business in New Mexico.

Eliminate an exception in current law for corporations listed on national securities ex-

changes to the requirement of being qualified to do business in New Mexico;

Change the prohibition against a corporation holding a liquor license if a holder of more

than 10% of the stock is ineligible, to prohibit a corporation from holding a license if a

holder of a more than a 10% interest in the corporate applicant is ineligible.

Prohibit the issuance of a liquor license to a limited partnership if a holder of a 10% or

Senate Bill 666 -- Page 2

greater interest in the limited partnership would not be eligible for a license. Current law

applies the restriction to partners.

Enact application requirements for limited liability companies and trusts applying for liq-

uor licenses. Current law does not have application requirements for limited liability

companies.

Allow qualified individuals to take fingerprints for liquor licenses. Current law limits fin-

gerprinting to law enforcement personnel;

Specify the officers, directors, partners, beneficiaries etc. of different corporate entities

who are required to submit fingerprints when their entity is applying for a liquor license.

Significant Issues

According to the Regulations and Licensing Department (RLD), once a person, whether they are

officers, directors, shareholders, members or partners of entities that file regular reports with the

United States securities and exchange commission and for individuals who have been finger-

printed for another New Mexico license, they will not be required to ever submit reprints. The

Department asserts that currently, when any activity such as a transfer of ownership, lease,

change of officers or other application is submitted, each person, officer, director, shareholders

who owns 10% or more interest, members or partners are required to submit fingerprint updates

if they have not submitted updates for the last three years.

RLD reports that not having the ability to request updated fingerprint cards may conflict with the

fact that a convicted felon is prohibited from holding a liquor license. If, for example, cites

RLD, the Alcohol and Gaming Division receives information that a person may have been

charged with a felony and if the said person is convicted of a felony. A convicted felon may end

up holding a liquor license or interest in a liquor license.

RLD predicts that the bill, if enacted, may in some cases result in only one or few persons being

fingerprinted in complex organizational structures if several parent entities are held 100% by

other entities.

According to the Economic Development Department (EDD), businesses would be required to

file two complete sets of fingerprints of any owner, director or partner holding 10% or more of a

business for a new or transfer of a liquor license.

PERFORMANCE IMPLICATIONS

The Alcohol and Gaming Division of the Regulation and Licensing Department will have to ad-

minister and interpret the new provisions with respect to business entities applying for liquor li-

censes.

According to the Department of Public Safety (DPS), enactment of this bill would enhance full

disclosure of the persons involved in a limited liability company’s structure and their financial

responsibility thereby facilitating financial investigations of licensed liquor establishments and

assisting in enforcement.

Senate Bill 666 -- Page 3

FISCAL IMPLICATIONS

RLD reports that repealing the resident agent requirement in the Liquor Control Act would re-

duce general fund revenue. Currently there is a $50 application fee for each resident agent that is

appointed and there were 580 applications submitted in FY04. 580 applications x $50.00=$29.0

thousand

The bill would also cause a reduction in the amount of dollars collected by New Mexico, De-

partment of Public Safety. RLD asserts that each person who submits fingerprints to the Alcohol

and Gaming Division is required to submit certified funds in the amount of $31 per person fin-

gerprinted and that the number of fingerprints submitted to the Alcohol and Gaming Division for

the FY04 fiscal year was approximately 800. 800 submissions x $31.00=$24.8 thousand.

TECHNICAL ISSUES

RLD suggests that the meaning of “regular reports with the United States securities and ex-

change commission” is unclear.

The percentage of ownership or other interest in business entities applying for a license should

be amended to be consistent throughout the act. The bill includes both “greater than ten per-

cent,” and “ten percent or greater.”

RLD predicts that not having the ability to request updated fingerprint cards, may conflict with

the fact that a convicted felon is prohibited from holding a liquor license and may result in a

convicted felon holding a liquor license or interest in a liquor license.

RLD suggests that the bill be amended to give the Director of Alcohol and Gaming Division dis-

cretion to request fingerprint updates when it is in the best interest of the State Of New Mexico,

or, when the Director has received information that would warrant requesting fingerprints for

certain individuals.

OTHER SUBSTANTIVE ISSUES

Currently, according to RLD, the Liquor Control Act provides that before a new license is issued

or transferred to a location, the Director is required to post notice of the application on the pro-

posed licensed premises. The currently required posting provides persons who have an objection

to a liquor license being issued or transferred to this location an opportunity to submit their writ-

ten objection to the Director. Preliminary approval cannot be granted until such time that the

twenty-day posting period expires. The bill would amend the language to provide that the post-

ing period would expire at least ten days prior to the final approval of the license.

RLD predicts the Alcohol and Gaming Division would receive written protests after the license

has already been granted final approval.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The proposed application, eligibility, and fingerprint requirements and restrictions will not be

enacted and the Liquor Control Act would remain as currently stands.

EM/lg