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

SPONSOR Komadina

DATE TYPED 3/2/05

HB

SHORT TITLE School and Vocational District Elections

SB 981

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

Impact depend-

ent on outcome

of election; see

text

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Impact dependent on out-

come of election; see text

Recurring Other State Funds

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to Senate Bill 308 and House Bill 693

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Public Education Department (PED)

Albuquerque Technical Vocational Institute (TVI)

No Response Received From

Commission on Higher Education (CHE)

SUMMARY

Synopsis of Bill

Senate Bill 981 authorizes procedures for removing school districts, or portions thereof, from

existing technical and vocational institute districts if the matter has not previously been placed on

the ballot. The bill expands language to specify qualified voters in a school district or a portion

of a school district might petition to be excluded from a vocational institute district; the petition

Senate Bill 981 -- Page 2

must be signed by a number of voters residing within a school district equal to ten percent or

more of votes cast for governor in each school district in the last general election. Upon ap-

proval of a petition, a subsequent election on the question would be held according to the rules of

the School Election law and administered by the Secretary of Education.

If the measure is approved by the voters, the PED would notify the institute board and declare an

extension of the boundaries of the institute district to include the entire school district effective

July 1. All property within the district would then be subject to any special levies. If the meas-

ure fails, then the school district would withdraw from the institute district.

In the event that a school district is withdrawn from the institute district, then Section H of the

bill provides for a continuation of special levy on taxable property for “maintenance of facilities

and services and for support of bond issues” approved when the school district portion was part

of the institute district.

The bill also includes technical cleanup language.

Significant Issues

Albuquerque Technical Vocational Institute (TVI) is the only public, post-secondary institute

organized under 21-16-14 NMSA 1978. As well, TVI is the only two-year post-secondary insti-

tute which currently contains a portion of a school district.

In effect, this bill would authorize voters in the Rio Rancho school district to petition and subse-

quently vote for the proposed change.

FISCAL IMPLICATIONS

The bill does not include an appropriation; however, the two possible outcomes of the potential

election would have significantly different fiscal impacts.

Albuquerque TVI currently receives monies from application of special mill levies on property

in Sandoval County: 1) On the operating side, 3 mills on nonresidential property and 2.461 mills

on residential property and 2) From the capital outlay perspective, 0.55 mills on all property.

If the ballot measure passes, then these mill levies would be expanded to all school district prop-

erty in Sandoval County. As such, the fiscal impacts would be similar to House Bill 693 and

Senate Bill 308. Specifically, successful passage would result in an increase of local property

tax levies of about $770.0 thousand, with an associated reduction in general fund support for Al-

buquerque TVI of approximately $500.0 thousand because of the mill levy revenue credit in the

higher education funding formula.

Ballot Measure

Passes – Fiscal Im-

pacts

Estimated Additional

Impact

Recurring or Non-

Rec

Fund Affected

Appropriation Impact ($500.0)

Recurring

General Fund in FY07

Revenue Impact

$770.0

Recurring

Other State Funds –

Property Tax Reve-

nues

Senate Bill 981 -- Page 3

If the ballot measure fails, then the property tax base supporting Albuquerque TVI is effectively

reduced.

In the event that a school district is withdrawn from the institute district, Section H of the bill

provides for a continuation of special levy on taxable property for “maintenance of facilities and

services and for support of bond issues” approved when the school district portion was part of

the institute district. Thus, Section H of the bill appears to hold both operating and capital levies

harmless.

Albuquerque TVI interprets the bill as a reduction in revenues from the operating component of

the mill levy, which would trigger an increase in general fund appropriation under the higher

education funding formula.

Ballot Measure Fails

– Fiscal Impacts

Estimated Additional

Impact

Recurring or Non-

Rec

Fund Affected

Scenario with no im-

pact on operating

portion of property

tax mill levy:

Appropriation Impact 0

Recurring

General Fund in FY07

Revenue Impact

0

Recurring

Other State Funds

Scenario with elimi-

nation of operating

portion of property

tax mill levy:

Appropriation Impact $1,300.0

Recurring

General Fund in FY07

Revenue Impact

($2,000.0)

Recurring

Other State Funds –

Property Tax Reve-

nues

ADMINISTRATIVE IMPLICATIONS

The PED notes “the County Clerk’s office for Bernalillo County indicated that Chapter 1, Article

22 of the School Election Law (Sections 1-22-1 through 1-22-19) specifies that the cost

of conducting such election to expand an educational institution’s boundary would be

paid by the school district. Furthermore, the Clerk’s office indicated that the vocational

technical institute would bear the majority of costs associated with such an election, and

the area proposed to be included in the boundary would bear a lesser amount. The

Clerk’s office estimated that a total cost of $185,000 to $200,000 would be imposed to

conduct such an election.”

TECHNICAL ISSUES

If the intent is to eliminate the special mill levy for operating purposes in the event of the school

district withdrawing from the institute district, then the legislature may wish to remove the lan-

guage in Section H of the bill which provides for a continuation of special levy on taxable prop-

erty for “maintenance of facilities and services and”.

Senate Bill 981 -- Page 4

OTHER SUBSTANTIVE ISSUES

Currently, Albuquerque TVI’s northern boundary bisects the City of Rio Rancho—the result of

TVI’s boundaries being designated in 1963 by the State Legislature and approved by voters in

1964 to mirror those of the then-existing Albuquerque Public Schools District. In 1993, Rio

Rancho established its own school district, which changed the APS boundaries but not those of

TVI. Rio Rancho property owners who live inside the TVI District pay TVI taxes while Rio

Rancho property owners living outside the TVI District do not.

Albuquerque TVI notes its commitment to establish a permanent campus in the City of Rio Ran-

cho if voters approve inclusion of the entire Rio Rancho Public Schools District in the TVI Dis-

trict.

PED notes “Intricate involvement in elections is not a typical duty of the PED or the Secretary of

Education and it raises serious questions whether there is sufficient expertise or any ex-

pertise within the PED to manage such elections.” Further on page 4, line 12 and page 4,

line 24, notification by PED of the election results and declaration of next steps reflects

new duties for PED.

The legislature may establish a precedent of removing the property tax base of a post-secondary

institution based upon action by a school district. As such, post-secondary institutions would be

faced with greater unpredictability of their revenue stream. Further, to the extent that institu-

tional revenues from property taxes are reduced, the general fund will bear an increased funding

responsibility due to the role of the mill levy revenue credit in the higher education funding for-

mula.

QUESTIONS

1.

In the event a school district withdraws property from the tax base of a two-year post-

secondary institution, is the intent of the legislature to reduce property tax levies of the

two-year institution which are utilized for operating purposes.

AW/yr