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

SPONSOR Steinborn

ORIGINAL DATE

LAST UPDATED

2/26/07

HB HJR 16

SHORT TITLE Veteran Organization Property Taxes CA

SB

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

Indeterminate

Recurring

Local

Governments

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to HB719

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA) (response to HB719)

Department of Veterans Services (DVS)

SUMMARY

Synopsis of Bill

House Joint Resolution 16 proposes a constitutional amendment to exempt veterans’

organization property from property tax liability. The organization must be chartered by the US

Congress and the property is that property used for events or by nonprofit community

organizations or other veterans’ organizations.

FISCAL IMPACT

Assuming each property is valued at $250,000, the 175 veteran’s organizations reported by the

Department of Veterans Services that would qualify would own $44 million in property. The

taxable value is $14.6 million and the liability would be approximately $400 thousand statewide.

If more of the organizations are in Bernalillo County, the impact could be much higher as

Bernalillo County has a higher property tax rate.

House Joint Resolution 16 – Page

2

Since most counties adjust the property tax rate according to their funding needs, any property

tax exemption for one group of taxpayers has the effect of raising property tax rates for all other

taxpayers.

SIGNIFICANT ISSUES

Department of Veterans Service:

Veteran Service Organizations exist to serve the local veteran community. These local

posts are many times the only place that veterans can go to for information on local, state,

and federal veterans’ benefits. With the increase of young men and women returning

from Operation Iraqi Freedom, the mission of these local posts are changing from a place

to congregate and have a drink with fellow veterans, to an local outreach center for these

veterans.

Department of Finance and Administration (DFA) – in response to HB 719:

Current assessments for these organizations would be excluded from the tax roles and

property tax collection and distribution would be diminished. Fiscal impact would likely

be spread throughout the state. NM counties, cities and schools will take the big hits on

operating revenues. With voter-approved bond issues, the total debt service is divided by

the current taxable value to get a debt rate. Thus, the effect of this bill on capital would be

to shift burden from the veteran’s organizations to the general public. The county that

would probably take the hardest hit would be Bernalillo County, due to the fact that the

county has the largest number of veterans’ organizations headquarters.

This legislation exempts from property taxation the VFW, DAV, American Legion and

AMVETS along with many smaller organizations chartered by the US Congress. In NM

there are between 500 and 600 active chartered veterans’ organizations. Out of the ap-

proximately 600 organizations, probably the majority rent out space to governments for

events or to other community organizations. Since the bill does not quantity how much

community or government use is necessary to qualify for the exemption, we must as-

sume that every active chartered veteran’s organization that owns property will qualify

for this exemption.

OTHER SUBSTANTIVE ISSUES

DFA has questioned whether the exemption should apply to all veterans’ organizations rather

than just those chartered by Congress.

DFA reports that NM already is a low property tax state in comparison with other states and so

the state needs to be careful in allowing exemptions from property tax.

NF/nt