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

SPONSOR Stapleton

ORIGINAL DATE

LAST UPDATED

2/9/07

2/11/07 HB HJR 7

SHORT TITLE PROPERTY TAX EXEMPTIONS, CA

SB

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

See Narrative Recurring

Local

Government

See Narrative.

Recurring

(every two

years)

General

Obligation Bond

Capacity

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to SB 695

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department

US Census

Responses Received From

Higher Education Department

Taxation and Revenue Department

SUMMARY

Synopsis of Bill

House Joint Resolution 7 amends the constitution to provide an exemption from property taxes

for homeowners 67 and older. To be eligible, the property must be assessed at less than

$250,000. The homeowner must have resided their 25 years or longer and have taxable income

of less than $50,000.

FISCAL IMPLICATIONS

The fiscal implications of HJR 7 are significant. As table one shows, the property value subject

to the exemption is estimated to be $4.5 billion and the taxable value is $1.5 billion or 3.5

percent of total taxable value in NM. The amount of tax is $40 million but this amount would be

House Joint Resolution 7 – Page

2

shifted to other taxpayers via higher rates due to the property tax mechanism. There would also

be an impact on general obligation bond capacity though the magnitude is uncertain. General

obligation bonds are issued every odd year upon approval of the citizens.

Table 1: Summary of Calculations and Assumptions

Tax Returns (2005 NM PIT Returns – TRD)

799,741

Share > 65 (2005 US Census)

12.2%

Elderly Pop (Tax returns * Share >65)

97,568

Share < 50 k TI (205 NM PIT Returns – TRD)

87%

Eligible Pop (Elderly Pop * Share < 50 k)

84,885

Homeowners (American Home Survey, 2005)

80%

Tenure (American Home Survey, 2005)

53%

Median Value (Census 2005)

125,500

PROP VALUE

4,518,072,492

Tax Value (Prop value / 3)

1,506,024,164

Tax Rate (NM TRD)

$26.62 / $1000

Tax Liability

$ 40,090,363

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 695 caps the growth in property valuation to no more than 3 percent.

TECHNICAL ISSUES

The proposed amendment uses taxable income rather than adjusted gross income. A $50,000 cap

on taxable income includes most New Mexicans (87 percent) and implies an adjusted gross

income of approximately $70,000. If the intent was to target low income taxpayers, adjusted

gross income is a better measure to use.

NF/nt