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F I S C A L I M P A C T R E P O R T

SPONSOR Neville

DATE TYPED 2/23/05

HB

SHORT TITLE Expand Use of County Fire Protection Tax

SB 942

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Minimal

Relates to HB 992

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Department of Finance & Administration (DFA)

SUMMARY

Synopsis of Bill

Senate Bill 942 amends NMSA Section 7-20E-16 to allow a county commission to adopt an or-

dinance compensating volunteer firefighters from funds collected from the county fire protection

excise tax. The compensation must be based upon “objective performance standards” and may

not exceed 20% of the annual revenue collected for any individual firefighter, up to $4 hundred a

month. The commission may also include in the ordinance provisions for disbursements to vol-

unteer firefighters to replace equipment and clothing lost or damaged while fighting fires or in

training, and for personal vehicle expenses incurred in firefighting.

Significant Issues

The AGO provided the following:

Pursuant to NMSA Section 7-20E-16, before a county may impose the fire protection ex-

cise tax, it must hold an election and a majority of qualified electors in the county must

vote to impose the tax. If the question passes, the tax is imposed on people engaging in

business in the county. The tax rate is one-fourth percent or one-eighth percent of the

gross receipts of the person engaging in business. Depending upon the language pre-

Senate Bill 942-- Page 2

sented to the voters describing the purposes for which the tax will be imposed, a county

may or may not be able to “expand” the use of the excise tax as contemplated by this bill.

This bill will effectively allow a county commission to adopt an ordinance converting

“volunteer” firefighters into county employees who will be working for compensation.

This bill raises issues regarding benefit entitlement, payment schedules, parity with other

county employees, equal pay for equal work, and whether the county is authorized or ob-

ligated to use other funds to pay its new firefighter employees if the county fire protec-

tion excise tax is insufficient. This new status as employees is supported by language in

the bill which will enact an exception to the current prohibition against paying compensa-

tion to “any employee”.

Presumably firefighters receiving the compensation authorized by this bill will no longer

be eligible to accrue service credit under the Volunteer Firefighters Retirement Act, since

they will no longer be “nonsalaried” members, as defined by current law.

Reimbursement for vehicle expenses must conform to Internal Revenue Service guide-

lines. If not, they could be considered taxable “compensation”.

The New Mexico Association of Counties is in support of this legislation as it allows each

county to determine if it is feasible for their county.

FISCAL IMPLICATIONS

Once a county begins compensating an individual for services based upon objective performance

standards, they will most likely be deemed an “employee”. If the county fire protection excise

tax funds are insufficient to pay all of the new firefighters on an equal basis, the county may

have to pay them from its general funds.

ADMINISTRATIVE IMPLICATIONS

County fiscal staff will have to process disbursements per requirements. Minimal resources are

required for this task.

RELATIONSHIP

This bill is substantially similar to HB 992. They both enact the same amendments to NMSA

Section 7-20E-16. However, HB 992 contains legislative findings and this bill does not.

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