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

SPONSOR Rawson

ORIGINAL DATE

LAST UPDATED

1/24/07

HB

SHORT TITLE College Event Admission Gross Receipts

SB 204

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

(46.9)

Recurring Public Project

Revolving Fund

(6.3)

Recurring

Youth

Conservation

Corps

(8.8)

Recurring State Parks

(0.6)

Recurring Cultural Affairs

Department

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates House Bill 143

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (NMHED)

New Mexico Finance Authority (NMFA)

Department of Finance and Administration (DFA)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 204 creates a new deduction from the gross receipts tax for receipts from admissions

to non-athletic special events such as concerts and plays held at post-secondary institution

venues within 50 miles of the New Mexico border that can accommodate at least 10 thousand

people. This deduction will be applicable in FY08 through FY12, when the deduction will

sunset.

Senate Bill 204 – Page

2

FISCAL IMPLICATIONS

Data from the Pan American Center suggests that about $1.25 million in receipts from

admissions to non-athletic events will be eligible for the new gross receipts tax deduction. These

receipts are currently taxed at 5 percent under the governmental gross receipts tax because the

events are sponsored by a post-secondary. The new deduction will cause the eligible venue to

change contract arrangements to make these receipts taxable under gross receipts tax instead of

governmental gross receipts tax, resulting in a loss of $62.5 thousand from governmental gross

receipts tax revenue.

Governmental gross receipts tax collections are distributed as follows: 75 percent go to NMFA’s

public project revolving fund, 10 percent go to the youth conservation corps program, 14 percent

go to state park and recreation area capital improvements, and 1 percent goes to the cultural

affairs department for capital improvements to state monuments.

SIGNIFICANT ISSUES

Currently, the only venue eligible for the new gross receipts tax deduction created in this bill is

New Mexico State University’s (NMSU) Pan American Center, which seats 13,000 people and is

located in Las Cruces, NM. However, if NMSU rents the Pan American Center to an event

promoter, receipts from the rental will still be subject to the governmental gross receipts tax

created in Section 7-9-3.2 NMSA 1978.

NMHED notes that the Pan American Center competes with facilities at the University of Texas

El Paso (UTEP) for special events. Since Texas does not charge a tax on tickets to these events,

the bill may help draw events to NMSU.

While individual credits, deductions and exemptions from the gross receipts tax may have small

fiscal impacts, their cumulative effect significantly narrows the gross receipts tax base.

Narrowing the gross receipts tax base increases revenue volatility and requires a higher tax rate

to generate the same amount of revenue.

Gross receipts tax deductions such as the one created by this bill do not guarantee whether the

tax reduction will result in larger profits for businesses or lower prices for consumers.

ADMINISTRATIVE IMPLICATIONS

TRD reports that the bill will cause minimal administrative impacts. CRS forms, instructions,

and publications will be revised.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 204 duplicates House Bill 143.

Senate Bill 204 – Page

3

TECHNICAL ISSUES

The bill might be clearer if “non-athletic special event" were defined.

The title of the bill indicates that the deduction applies to athletic events, but the bill applies only

to non-athletic events.

OTHER SUBSTANTIVE ISSUES

Due to the small fiscal impact this bill will have on governmental gross receipts tax collections,

NMFA believes the bill does not violate the non-impairment clause in Section 7-1-6.38(D)

NMSA 1978, which specifically states that the state legislature may not limit, reduce or alter the

distribution of net receipts from the governmental gross receipts tax while bonds payable from

that revenue are outstanding.

NMSU’s Pan American Center was ranked the sixth busiest university event facility by

Amusement Business Magazine in 2000.

SS/csd