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

SPONSOR Lopez

ORIGINAL DATE

LAST UPDATED

2/2/07

2/14/07 HB

SHORT TITLE County Correctional Facility Gross Receipts

SB 742

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

*See Narrative

*See Narrative Recurring

County

Governments

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 597

Conflicts with SB 144, HB 265

Relates to HB 316

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 742 increases from 0.125 to 0.5 percent the maximum rate at which a county

correctional facility gross receipts tax may be imposed. Counties will still be able to impose the

tax in any increment of one-sixteenth percent.

The effective date of these provisions will be July 1, 2007.

FISCAL IMPLICATIONS

The fiscal impact of this bill depends on if and when county governments choose to impose

county correctional gross receipts tax rates above the current limit of 0.125 percent. TRD

provided the table below to indicate the potential revenue increase to each county if an additional

Senate Bill 742 – Page

2

0.375 percent tax were imposed in FY08.

FY 2008

Taxable Gross

Receipts

Revenue from

Additional

3/8% Tax

Bernalillo County

$18,007,800,533 $67,529,252

Carton County

$45,398,509

$170,244

Chaves County

$1,288,243,597 $4,830,913

Cibola County

$221,462,045

$830,483

Colfax County

$320,643,295 $1,202,412

Curry County

$893,731,953 $3,351,495

DeBaca County

$45,206,628

$169,525

Dona Ana County

$3,583,835,026 $13,439,381

Eddy County

$2,695,714,130 $10,108,928

Grant County

$535,737,390 $2,009,015

Guadalupe County

$284,455,853 $1,066,709

Harding County

$6,171,312

$23,142

Hidalgo County

$94,012,098

$352,545

Lea County

$3,133,096,430 $11,749,112

Lincoln County

$555,456,255 $2,082,961

Los Alamos County

$914,176,908 $3,428,163

Luna County

$498,746,830 $1,870,301

McKinley County

$1,103,313,383 $4,137,425

Mora County

$22,916,717

$85,938

Otero County

$868,728,115 $3,257,730

Quay County

$107,209,748

$402,037

Rio Arriba County

$691,702,965 $2,593,886

Roosevelt County

$348,126,854 $1,305,476

San Juan County

$4,310,992,010 $16,166,220

San Miquel County

$336,084,200 $1,260,316

Sandoval County

$2,396,433,606 $8,986,626

Santa Fe County

$4,189,459,380 $15,710,473

Sierra County

$174,862,825

$655,736

Socorro County

$268,437,579 $1,006,641

Taos County

$710,489,941 $2,664,337

Torrance County

$164,692,727

$617,598

Union County

$83,209,858

$312,037

Valencia County

$898,587,912

$3,369,705

TOTAL

$49,799,136,612 $186,746,762

Source: Taxation and Revenue Department

Senate Bill 742 – Page

3

SIGNIFICANT ISSUES

Any county in New Mexico may impose the county correctional facility gross receipts tax.

Imposition of this tax does not require approval by a majority of county voters, although voters

may petition an election to approve or disapprove the tax.

County revenue collected due to a county correctional facility gross receipts tax is restricted for

use in operating, maintaining, constructing, purchasing, furnishing, equipping, rehabilitating,

expanding, or improving a judicial-correctional or county correctional facility. Revenue may also

be used to transport or extradite prisoners or to pay principal and interest on county correctional

facility gross receipts tax bonds.

Currently, counties are experiencing escalating costs to extradite and transport prisoners. For

example, Bernalillo County reports that the county jail’s operating budget grew by an average of

9.5 percent per year from 1995 to 2007.

Under current law, New Mexico’s local governments are authorized to impose up to 4.6875

percent of local option gross receipts taxes (that figure excludes several additional local option

taxes that have been authorized for selected local governments). On average, a local option gross

receipts tax of about 1.6 percent is actually imposed by local governments statewide. Combined

with the state gross receipts tax of 5 percent, the statewide tax rate is therefore 6.6 percent.

ADMINISTRATIVE IMPLICATIONS

The administrative impact on TRD will be minimal.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 742 duplicates House Bill 597.

Senate Bill 742 relates to House Bill 316, which creates a recurring appropriation of $5 million

per fiscal year to assist counties with expenses incurred to incarcerate certain felony offenders.

This bill addresses the problem of growing county correction expenses through appropriating $5

million per year rather than giving each county the option to pay the costs through a tax increase.

Senate Bill 742 conflicts with Senate Bill 144 and House Bill 265. These bills, which would

impose local option compensating taxes, also amend Section 7-20F-3 NMSA 1978.

SS/nt