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

SPONSOR Smith

ORIGINAL DATE

LAST UPDATED

1-27-2006

2/7/06 HB

SHORT TITLE Weight Distance Tax Penalties & Enforcement

SB 333/aSJC

ANALYST Dearing

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$0.1

Recurring

State Road Fund (weight distance

tax compliance)

$0.1

Recurring

General Fund (Penalty Assess-

ments)

(Parenthesis ( ) Indicate Expenditure Decreases)

* State Road Fund: The bill would be expected to have a significant eventual positive impact on

weight distance tax compliance. However, since the degree of current noncompliance is not

known it is difficult to forecast the weight distance tax impact. Also, other recent changes in law

are expected to enhance revenue. It is difficult to attribute a particular revenue impact to a spe-

cific proposal, since this bill and other initiatives would be at work concurrently.

* State General Fund: The Motor Transportation Division has not supplied historical informa-

tion to DOT on the number of Penalty Assessment citations issued for the various offenses in-

cluded in the bill. MTD has suggested in the past that about 770 citations are issued per year for

overweight vehicles. DOT is unable to estimate the positive fiscal impact on the State General

Fund from the proposed increases in certain Penalty Assessment fees.

Companion to HB 317

Conflicts with HB 419, SB 446 & SB 447

Relates to HB 535

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Department of Transportation (NMDOT)

Department of Public Safety (DPS)

Senate Bill 333/aSJC – Page

2

SUMMARY

Synopsis of SJC Amendment

Senate Judiciary Committee has amended Senate Bill 333 such that:

1. On page 1, line 18, after the semicolon insert "PERMITTING

THE DEPARTMENT OF PUBLIC SAFETY TO ISSUE RULES THAT DETERMINE

LENGTH AND WEIGHT LIMITATIONS;".

2. On page 6, line 21, after "LOADS" insert "--EXCEPTION FOR

RULES ISSUED BY THE DEPARTMENT OF PUBLIC SAFETY".

3. On page 9, line 22, strike the quotation mark and between

lines 22 and 23 insert the following new subsection to read:

"H. Notwithstanding the provisions of this section, the

department of public safety may issue rules that determine length

and weight limitations for specialized equipment, saddle-mount

vehicles and other commercial motor vehicles."".

4. On page 15, line 8, strike "100.00" and insert "300.00".

5. On page 16, line 20, after "second" insert "acceptance of a

penalty assessment or a second".

6. On page 16, line 23, after "subsequent" insert "acceptance

of a penalty assessment or a third or subsequent".

7. On page 23, line 16, after "second" insert "acceptance of a

penalty assessment or a second".

8. On page 23, line 19, after "subsequent" insert "acceptance

of a penalty assessment or a third or subsequent".

Generally, with the exception of an increase in the penalty for failure to secure a load to $300

from $100, the above amendments do not constitute substantial changes in this bill. Specifically,

the changes are linguistic in nature and are necessary to clarify the meaning of this legislative

enactment.

Regarding the increase in penalties for the failure to secure loads, an increase to revenues would

be incurred from the increased fine net of subsequent enforcement costs. The significance of this

revenue increase would vary directly with the level of enforcement of that component of this leg-

islative enactment.

Synopsis of Original Bill

Senate Bill 333 relating to motor vehicles; allowing detention of vehicles for failure to pay

weight distance tax; providing increased penalties for violations of weight limitations and for

Senate Bill 333/aSJC – Page

3

failure to stop at every port of entry and to carry a tax identification permit or a permit for exces-

sive size or weight; increasing the length limitation for buses operating on national network

highways and combination vehicles or saddle-mount vehicles that are specialized equipment;

restricting application of maximum driving and on-duty time violation penalties to a passenger

carrier transportation; providing additional maximum driving and on-duty time penalties.

FISCAL IMPLICATIONS

If enacted, this bill raises the penalties associated with violating the weight limitations and raises

the penalties associated with failing to register a motor carrier. In essence, the proposed legisla-

tion would double the graduated penalty amounts related to violating the weight limitations.

This bill would also allow commercial motor carrier vehicles that are not in compliance with the

weight distance requirements of the Weight Distance Tax Act to be detained until the tax is paid.

The fine for failure to register a motor carrier is increased from $100 to $300. The fine for fail-

ure to stop at ports-of-entry is $100 and is increased to $250 for a second offense and $500 for a

third or subsequent offense. Fines for operating without an oversize-overweight permit are to

remain at $50 for a first offense and are to increase to $250 for a second offense and to $500 for

a third or subsequent offense. The fine for failure to carry a weight distance tax identification

permit is increased from $50 to $300. New penalty assessment categories are added to correlate

with recent changes in federal rules and requirements related to the number of hours a commer-

cial driver may be on duty and related to driver log books.

An exception to current vehicle length limits is proposed for a bus operating on the national net-

work of highways. A clause related to saddle-mount vehicles is added wherein they are de-

scribed as specialized equipment and are limited to not exceed 97 feet.

Numerous technical changes are made to change references to the tax identification “card” to be

the tax identification “permit” and to update the statutes for past recompilation revisions.

Generally, there will be an increase in revenue from fines. The amount is not determined, how-

ever, as this will be based on the total level of citations issued for the applicable offenses.

Disregarding any positive fiscal impact to the general fund associated with increased penalty as-

sessment fees, enactment of this legislation would increase compliance of weight distance, and

overweight permit usage, a high priority for the Department of Transportation.

The effective date of the provisions of this act are effective July 1, 2006.

SIGNIFICANT ISSUES

A majority of firms operating heavy transport trucks are conscientious taxpayers operating in a

very competitive, highly regulated, cost-conscious environment. Tax evasion by a limited mi-

nority of the industry creates a “free-rider” problem for the conscientious segment of the indus-

try. Every effort the state can make to improve compliance with tax laws and obligations serves

to keep the playing field more level in this competitive industry. This bill provides many of the

tools that are needed to promote tax and regulatory compliance.

Recent advances in the technological tools available to the Motor Transportation Division now

allow the identification of delinquent or noncompliant taxpayers. The Taxation and Revenue

Senate Bill 333/aSJC – Page

4

Department is charged with administration of the tax, but MTD who has the only significant con-

tact with the industry has no current authority to take action for noncompliance with tax obliga-

tions. This bill provides MTD with tools needed to assist it with and to promote tax compliance.

PERFORMANCE IMPLICATIONS

From DOT’s point of view, the performance criteria for MTD should involve not only regulation

of heavy vehicle safety issues, but also the collection of revenue for the State Road Fund. If the

penalties for tax evasion and regulatory noncompliance are not sufficiently motivating to the

taxpayer, it makes MTD’s job that much harder. Increasing penalties associated with avoiding

ports-of-entry or traveling without an appropriate oversize-overweight permit, should improve

MTD’s effectiveness to complete its mission. Overall, the provision in Section 1 allowing a ve-

hicle to be detained until the tax is paid is expected to be an extremely effective compliance tool.

ADMINISTRATIVE IMPLICATIONS

If the proposed legislation becomes law, then MTD will need training related to tax issues, pro-

cedural changes, and perhaps some new situations that may require making a “judgment call.”

TECHNICAL ISSUES

According to the Department of Public Safety, there are technical issues associated requested

amendments prior to enactment of this bill

.

The following requested changes were submitted on this bill to LCS on 1-24-06

Amended to Insert:

Page 9:

H.

Notwithstanding any provision of this section or any other provision of Chapter 66

the New Mexico Department of Public Safety may promulgate regulations designat-

ing size and weight limitations for specialized equipment, saddle-mount vehicles or

any other commercial motor vehicle; which shall supercede legislative provisions

governing size and weight in Chapter 66.

Page 16:

E. Upon a second acceptance of a penalty assessment or conviction for operation without

a permit for excessive size or weight pursuant to Section 66-7-413 NMSA 1978, the pen-

alty assessment shall be two hundred fifty dollars ($250). Upon a third or subsequent ac-

ceptance of a penalty assessment or conviction, the penalty assessment shall be five hun-

dred dollars ($500)."

Page 23:

E. Upon a second acceptance of a penalty assessment or conviction for failure to stop at

a port of entry or inspection station pursuant to Section 65-5-1 NMSA 1978, the pen-

alty assessment shall be two hundred fifty dollars ($250). Upon a third or subsequent

acceptance of a penalty assessment or conviction, the penalty assessment shall be five

hundred dollars ($500)."

Senate Bill 333/aSJC – Page

5

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

In the absence of provisions similar to those proposed in this bill, continued and increasing prob-

lems with weight distance tax and overweight permit fee compliance by a segment of the tax-

payer population can be expected. In addition, there will be an undetermined amount of revenue

that is not realized.

The Department will be compliant with Title 23 and 49 of the federal regulations.

PD/mt