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F I S C A L I M P A C T R E P O R T
SPONSOR SFC
ORIGINAL DATE
LAST UPDATED
2/6/06
2/7/06 HB
SHORT TITLE Public Peace, Health, Safety & Welfare
SB 790/SFCS/aSFL#1
ANALYST Francis
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
FY08
(32.0)
(32.0)
(32.0) Recurring General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of SFI#1 Amendment
Senate Floor Amendment #1 amended the substitute for Senate Bill 790 to clarify the affected
tax year. The amendment makes the substitute effective for tax year 2005 rather than 2006. The
amendment also declares an emergency making the bill effective upon signing into chapter.
Synopsis of Original Bill
The Senate Finance Committee substitute for Senate Bill 790 amends the Income Tax Act to ex-
empt New Mexico National Guard premiums paid for group life insurance from personal income
tax by the service member’s life insurance reimbursement fund.
FISCAL IMPLICATIONS
TRD estimates that this exemption will reduce personal income tax revenues by $32 thousand
per tax year. The premiums paid out of the service member’s life insurance reimbursement fund
pg_0002
Senate Bill 790/SFCS/aSFL#1– Page
2
is estimated to be $800 thousand per year and at an effective personal income tax rate of 4 per-
cent, the fiscal impact is $32 thousand.
SIGNIFICANT ISSUES
This bill addresses an unintended consequence of the passage of the NM National Guard life in-
surance bill last year that provided reimbursements for life insurance premiums for service
members. The original law did not include an exemption from personal income taxes for those
reimbursements and so this year service members began receiving notice that taxes were due on
those amounts.
NF/nt:yr