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

SPONSOR Robinson

ORIGINAL DATE

LAST UPDATED

2/9/07

HB

SHORT TITLE Space Program Gross Receipts

SB 809

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

(19.8) Recurring General Fund

(13.2) Recurring Local Govern-

ment

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 838

Related to SB 785 and HB 839

SOURCES OF INFORMATION

LFC Files

Response Received From

Economic Development Department (EDD)

No Response Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

Senate Bill 809 will allow receipts from the provision of research, development, testing and

evaluation services for the U.S. Air Force operationally responsive space program to be deducted

from gross receipts. That program is authorized pursuant to 10 U.S.C. 2273a.

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

FISCAL IMPLICATIONS

According to EDD the operationally responsive space program currently consists of three part-

time contractors who earn about $500 thousand per year in salaries and benefits. Assuming the

Senate Bill 809 – Page

2

program does not expand, taxed at the statewide rate of 6.6 percent, the bill would reduce gross

receipts tax collections by about $33 thousand. About 60 percent of this revenue loss will accrue

to the general fund and the other 40 percent will accrue to the local government in which the op-

erationally responsive space program is located.

The amount and timing of this fiscal impact depends on if and when the operationally responsive

space program locates in New Mexico. EDD believes that FY09 is the earliest time operations

could begin. EDD reports that the fiscal impacts of this deduction will grow larger over time but

cannot predict how much.

SIGNIFICANT ISSUES

The operationally responsive space program, which is part of the U.S. Department of Defense,

will provide space launch and space reconnaissance capability within days to meet national secu-

rity requirements. The program will consist of on-call space launch capability and satellites that

can be configured quickly.

According to EDD, Kirtland Air Force Base is currently being considered as a location for the

operationally responsive space program. EDD contends that if Kirtland AFB is chosen as the lo-

cation of this program, state gross receipts tax revenues could rise by several million dollars.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 809 duplicates House Bill 838.

Senate Bill 809 is related to Senate Bill 785 and House Bill 839. These bills create a gross re-

ceipts tax deduction for receipts from military construction services to implement special opera-

tions mission transition projects pursuant to contracts with the U.S. Department of Defense.

These bills are intended to aid Cannon AFB.

SS/mt