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F I S C A L I M P A C T R E P O R T
SPONSOR Fidel
DATE TYPED 10/10/05 HB
SHORT TITLE 2005 Tax Rebates
SB 17/aHTRC
ANALYST Francis
APPROPRIATIONS
Estimated Appropriations
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($500)
Non-Recurring General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($101,260)
Non-Recurring General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to HB19
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department (TRD)
SUMMARY
Summary of HTRC Amendment
Senate Bill 17 was amended by the House Taxation and Revenue Committee. The amendment
removes the reduction of the income tax rates and the gross receipts tax holiday. The result is
that SB17 as amended is identical to HB19 as amended (HB 19 was amended to exempt the re-
bate from state and local taxes).
pg_0002
Senate Bill 17/aHTRC -- Page 2
Synopsis of Original Bill
Senate Bill 17 combined a tax rebate similar to that provided by House Bill 19, a provision to
make the rebate exempt from state income taxes, which was included in House Bill 19 as
amended, a reduction in income tax rates and a gross receipts tax holiday.
Synopsis of HB19/aHTRC
House Bill 19 sets up a rebate on the personal income tax to be mailed out immediately to all
taxpayers by the secretary of the Taxation and Revenue Department (TRD). The intent of the
rebate is to mitigate the recent high costs of gasoline and the expected increases in the cost of
heating this winter. The rebate decreases as income rises and increases as family size increases.
The rebate is paid to any resident who files an individual NM income tax return and is not a de-
pendent of another individual, who was not an inmate of a public institution for more than six
months during tax year 2004 and was a resident on the last day of 2004. Additionally, residents
who do not receive rebates can claim it on their 2005 tax return provided they were not an inmate
of a public institution for more than six months in 2005 and were residents as of the last day of
tax year 2005.
FISCAL IMPLICATIONS
TRD estimates that the cost of the rebates is $99.8 million in direct payments administered by
the secretary of the Taxation and Revenue Department and $500 thousand in appropriation for
the administration of the payments. Though the bill does not state it explicitly the assumption is
that the appropriation for the rebate is out of the general fund. The cost of the exemption from
state income taxes is $1.415 million.
The rebate is designed to provide all taxpayers with some relief. It is weighted towards larger,
low income families. The minimum rebate is $55 while the maximum is $280. The rebate is
based on adjusted gross income and exemptions declared on the 2004 returns.
The rebate decreases as income goes up and increases as exemptions go up. For one exemption,
like a single tax filer, the maximum is $130 while the minimum is $55 (see table).
Proposed Rebate Schedule
Adjusted Gross In-
come is:
And the total number of exemptions is:
Over But Not
Over
1
2
3
4
5
6
0
10,000
$130 $170
$205
$235
$260 $280
10,000 20,000
115
150
180
205
225
240
20,000 35,000
100
130
155
175
190
200
35,000 45,000
85
110
130
145
155
160
45,000 60,000
70
95
115
130
140
145
60,000
55
75
90
100
105
110
pg_0003
Senate Bill 17/aHTRC -- Page 3
Using TRD estimates, the bulk of the rebates, over 70%, will go to taxpayers who have less than
$35,000 in adjusted gross income (see chart).
Distribution of Rebates
0%
5%
10%
15%
20%
25%
30%
< 10k 10-20k 20-35k 35-45k 45-60k >60k
Fiscal impacts were estimated using information from personal income tax returns. The follow-
ing adjustments were made to reflect various provisions of the proposal:
• Non-resident taxpayers were excluded;
• Inmates of public institutions were excluded; and
• An estimate of the number of new taxpayers moving into the state during 2005 was added to
the population of resident taxpayers from the previous year.
ADMINISTRATIVE IMPLICATIONS
To process the rebates, TRD has estimated that this will cost $500 thousand to process and dis-
tribute the rebates to taxpayers. TRD expects they can complete the job and have all of the re-
bates mailed out by December 15
th
, 2005. While this estimate was provided for HB10, which
has lower rebate amounts, the processing should not be affected by the amount of the rebate.
NF/sb