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

SPONSOR Varela

ORIGINAL DATE

LAST UPDATED

1/30/06

HB 595

SHORT TITLE Transit Fund and Motor Vehicle Excise Tax

SB

ANALYST Francis/Moser

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

4,585

Recurring

Transit Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

($4,585)

($4,840)

Recurring General Fund

$4,585

$4,840

Recurring Transit Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

NM Department of Transportation (NMDOT)

Responses Received From

NM Department of Transportation (NMDOT)

SUMMARY

Synopsis of Bill

HB-595, “Relating to Taxation; Creating the Transit Fund; Providing for Distribution of a Per-

centage of the Motor Vehicle Excise Tax to the Transit Fund; Making an Appropriation:

•

Appropriates 3.5% of the total net receipts attributable to the motor vehicle excise tax and

associated penalties and interest ($4,585,000 in FY 2007) to a new transit fund in the

House Bill 595 – Page

2

state treasury, with revenue in the fund appropriated to the Department of Transportation,

to:

o

Pay for the costs for the safe, economical commuting alternative program and for

the park and ride program

o

Distribute money to regional transit districts for costs incurred by those districts

o

Provide an equal match for transit programs that receive federal funding pursuant

to the federal Safe, Accountable, Flexible, Efficient Transportation Equity Act: A

Legacy for Users; provided that local matches required for those programs pursu-

ant to that federal act are met.

•

Reduces the amount of the total net receipts attributable to the motor vehicle excise tax

and associated penalties and interest that is appropriated to the General Fund to 96.5 per-

cent from the current 100 percent.

•

Effective Date is July 1, 2006

House Bill 595 establishes a new fund called the “Transit Fund”. Money in the transit fund will

pay for (1) the safe, economical commuting alternative program and the park and ride program,

(2) cost reimbursement to regional transit districts, and (3) matching funds for the federal Safe,

Accountable, Flexible, Efficient Transportation Act, provide the local match is met. The fund

shall not revert and shall be appropriated to the Department of Transportation.

The effective date is July 1, 2006.

FISCAL IMPLICATIONS

The appropriation of $4.5 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of each fiscal year shall not re-

vert to the general fund.

This fund is financed by diverting 3.5 percent of the motor vehicle excise tax, all of which cur-

rently go to the general fund. In FY07, that diversion is $4.5 million increasing to $4.8 million

in FY08.

FY07

FY08

Current Law

General Fund

$ 129.50 $ 136.50

HB595

General Fund

$ 124.97 $ 131.72

Motor Vehicle Suspense Fund $ 4.53 $ 4.78

Source: Consensus Group Forecast, January 2006

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

The NMDOT indicates that the proposed legislation would re-direct 3.5% of the revenues result-

ing from the Motor Vehicle Excise Tax and currently distributed to the General Fund to a new

House Bill 595 – Page

3

Transit Fund. This change would result in reductions to the General Fund amounting to

$4,585,000 in FY 2007, $4,840,000 in FY 2008 and $5,075,000 in FY 2009. The new Transit

Fund would receive revenues of $4,585,000 in FY 2007, $4,840,000 in FY 2008 and $5,075,000

in FY 2009.

HB-595 indicates that the revenue in the newly created transit fund shall be appropriated by the

New Mexico Department of Transportation to four separate programs. The Bill does not stipu-

late the amounts to be provided to each of these programs. The NMDOT provides the following

table illustrating the estimated Fiscal Year 2007 program costs for these programs to the extent

that they are known at this time. FY 2007 program costs for the Safe, Economical Commuting

Alternative vanpool program (SECA) and the two existing Regional Transit Districts (RTDs) are

not known at this time. Estimated costs for FY 2008 and beyond are not available for any of the

four programs.

PROGRAM TO BE FUNDED ESTIMATED FY 2007

TOTAL PROGRAM COST

SECA vanpool program

unknown

Park and Ride Program

$2.4 million

Regional Transit Districts

unknown

Transit Grant local matching funds $5, 482,947

TOTAL

$7,882,947 + unknown amounts

NMDOT makes the following assumptions regarding the table above:

•

Estimated State FY 2007 Park and Ride program net cost is based on the current

NMDOT contract for Park and Ride service with All Aboard America.

•

Estimated State FY 2007 Transit Grant local matching funds were computed from U.S.

Department of Transportation Federal Transit Administration (FTA), Apportionments

and Allocations, based on the 2006 USDOT Appropriations Act, with reductions to the

appropriations resulting from the “U.S. Department of Defense, Emergency Supplemen-

tal Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza

Act of 2006”. Local matching fund requirements were computed based on provisions of

the federal Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy

for Users (SAFETEA-LU).

•

For grant programs with optional local matching opportunities, the recent experience of

New Mexico FTA sub grantees was used in setting the expected rate of required local

matching funds.

SIGNIFICANT ISSUES

•

Under SAFETEA-LU reauthorization NM received $116.2 million, a 103 percent in-

crease in funding, for public transportation. This will take approximately $25 million of

matching monies through FY09. The “transit fund” creates a sufficient pool for matching

monies to be available for local governments to use each year for federal matching re-

quirements.

•

The NMDOT indicates that the revenues proposed to be transferred to the Transit Fund

are insufficient to completely fund the programs stipulated in the bill. These revenues,

however, could assist local governments without appropriate funds for federal match.

House Bill 595 – Page

4

•

Public transit service is currently provided by the NMDOT’s Park and Ride Program and

individual public and private non-profit transit operators who receive FTA transit grant

funding through the NMDOT. Vanpool service is currently provided by SECA. The two

existing RTDs do not currently provide transit service, but may be eligible recipients of

certain FTA federal transit grant funds. To the extent that specific funding is provided

for the RTDs in the RTD program area, the NMDOT feels that it may be duplicative of

local matching funds provided to the RTDs as recipients of Transit Grant funds.

•

According to the NM Passenger Transportation Association (NMPTA), NM remains one

of seven states without a permanent source of funding for public transportation. This fund

will allow the state to apply for the total $116.2 million in federal funds by having a

revenue stream the assures the appropriate matching funds in each year of SAFETEA-

LU.

NF:EM/yr