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

SPONSOR Boitano

ORIGINAL DATE

LAST UPDATED

1/24/06

HB

SHORT TITLE Public School Volunteer Income Tax Credit

SB 32

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

(94.0)

(188.0)

(188.0) Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Public Education Department (PED)

Taxation and Revenue Department (TRD)

Albuquerque Public Schools (APS)

Responses Received From

Public Education Department (PED)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 32 provides a $200 credit against the personal income tax (PIT) for tax filers who are

55 years or older and cannot be claimed as a dependent by another tax filer and who have volun-

teered at least 120 hours at a public school during the tax year. The taxation and revenue de-

partment (TRD) will create a certification to be completed by the public school.

FISCAL IMPLICATIONS

SB32 creates an additional tax credit against the personal income tax for volunteer service at lo-

cal public schools. Current estimates of the over 55 population are 428,356 (US Census Current

Population Estimate 2004). According to the Bureau of Labor Statistics, 27.5 percent of Ameri-

cans over 55 years old volunteered at some point during a 12 month period from September 2004

Senate Bill 32 – Page

2

to September 2005. Twenty-six percent of Americans volunteered for educational programs and

38 percent volunteered for more than 100 hours. Accordingly, there is a maximum of 11,638

volunteers over the age of 55 who volunteer for more than 100 hours for an educational or youth

service activity in New Mexico.

According to the Albuquerque Public Schools district, they have 660 volunteers for a community

of 480,000. Extrapolating this number to the whole state yields a likely 2,475 volunteers. If 38

percent volunteer more than 100 hours, this means 940 volunteers are eligible for the credit

which would cost $188 thousand per taxable year. In FY06, this would mean reduction in in-

come tax revenues by $94 thousand and $188 thousand for FY07 and each subsequent year.

SIGNIFICANT ISSUES

This bill adds a new credit to the personal income tax structure and will require TRD or PED to

develop a certification process to validate claims. With such a large commitment, it is uncertain

that this credit will act as an inducement to volunteering with the public schools if that is the in-

tent. If the credit is meant to reward people who are already volunteering, there may be better

ways than through the tax system. Since the number of volunteers is likely to be small, the cost

of administering the program through TRD may outweigh any benefits.

PED:

The bill limits the income tax credit to taxpayers 55 years of age or older.

o This provision may preclude parents who commit to volunteering in schools from

realizing the benefit of the tax credit.

o Equal protection challenges with regard to the age limitation may be raised.

o The bill will place administrative requirements on schools in providing the necessary

certifications.

o Inasmuch as the bill provides that the required 120 hours of volunteer service must be

performed during the taxable year, schools will be required to maintain verifiable documen-

tation and provide certifications across school years.

o The bill does not establish accountability parameters for the certifications.

ADMINISTRATIVE ISSUES

The Public Education Department (PED) reports that the bill will cause administrative burdens

due to providing the certifications and establishing guidelines and procedures for certifying vol-

unteer time.

NF/yr