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

SPONSOR Komadina

ORIGINAL DATE

LAST UPDATED

2/1/07

2/22/07 HB

SHORT TITLE Municipal Higher Education Gross Receipts

SB 733/aSEC

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

*See Narrative

*See Narrative Recurring Rio Rancho

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 374

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of SEC Amendment

The Senate Education Committee amendment to Senate Bill 733 changes the definition of a

municipality that may impose a municipal higher education facilities gross receipts tax. As

amended, the municipality will need to be located in a class B county and have population over

50 thousand and greater than $2 billion in taxable property value in property tax year 2006 or

any future years. The amended bill will still apply only to the municipality of Rio Rancho, but

will delay by about one year the ability of that municipality to impose the tax.

The amendment makes Senate Bill 733 a duplicate bill of House Bill 374, as amended by the

House Taxation and Revenue Committee.

Synopsis of Original Bill

Senate Bill 733 creates the municipal higher education facilities gross receipts tax and allows a

municipality in a Class B county that has a municipal population over 50 thousand to impose it.

The new tax may be imposed in 1/16 percent increments up to ¼ percent. Revenues collected

due to the tax may be used only for acquisition, construction, renovation or improvement of

Senate Bill 733/aSEC – Page

2

facilities of a four-year post secondary public education facility located in the municipality or to

repay municipal higher education facilities gross receipts tax revenue bonds.

The bill will require voters of a municipality to approve imposition of any municipal higher

education gross receipts tax at the first regular election following passage of an ordinance to

impose the tax by the municipal governing body.

The bill also allows a municipality that imposes a municipal higher education gross receipts tax

to issue municipal higher education gross receipts tax revenue bonds for which the tax is pledged

as repayment of principal and interest.

The effective date of these provisions is July 1, 2007.

FISCAL IMPLICATIONS

In FY08, Rio Rancho’s taxable gross receipts base is expected to total $1.8 billion. Imposing an

additional ¼ percent tax would increase that municipality’s revenue by about $4,388.7 thousand.

However, the true fiscal impact to Rio Rancho will depend on if it imposes the tax, when it

imposes the tax, and at what increment the tax is imposed.

SIGNIFICANT ISSUES

Currently, the only municipality that will qualify to impose this new tax is Rio Rancho, which is

located in Sandoval County and had a population of 51.8 thousand in the 2000 census. New

Mexico Highlands University operates a branch campus in Rio Rancho that could benefit from

imposition of the tax.

Roswell’s 2000 population was about 45 thousand and could grow over 50 thousand by 2010. If

Roswell’s population exceeds 50 thousand any four-year post secondary institutions with main or

branch campuses there would qualify to impose this tax in the future.

ADMINISTRATIVE IMPLICATIONS

TRD can implement the bill with existing resources.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 733 as amended by the Senate Education Committee duplicates House Bill 374 as

amended by the House Taxation and Revenue Committee.

SS/mt:nt