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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
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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
1/28/08
1/28/08 HB 273
SHORT TITLE Border Region Health Services Gross Receipts
SB
ANALYST Schardin
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY08
FY09
FY10
(1,808.8)
(1,881.6) Recurring General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates HB273.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY08
FY09
FY10 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
.8
60.0
60.0
120.8 Recurring General
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
Health Policy Commission (HPC)
Department of Health (DOH)
New Mexico Border Authority (NMBA)
SUMMARY
Synopsis of Bill
House Bill 273 creates a gross receipts tax credit against the state share of gross receipts tax for
receipts from the provision of health care services by a physician, physician assistant or
registered nurse in the area of New Mexico located within 55 miles of the Mexico border.
These provisions would become effective on July 1, 2008 and would sunset on July 1, 2015.
pg_0002
House Bill 273 – Page
2
FISCAL IMPLICATIONS
Based on historic population and inflation growth rates for the effected areas, TRD estimates that
a tax base of $47.9 million will be eligible for the proposed credit in FY09. Almost all of that tax
base occurs in municipalities, where the state share of gross receipts tax is 3.775 percent. The
proposed credit would therefore reduce general fund gross receipts tax revenue by about $1808.8
thousand in FY09. The revenue loss associated with the credit is expected to grow by about 4
percent per year.
SIGNIFICANT ISSUES
The map below was provided by TRD to illustrate the area within 55 miles of New Mexico’s
border with Mexico that will be affected by the proposed gross receipts tax credit. About 95
percent of receipts affected by the proposal are in Las Cruces and Deming.
pg_0003
House Bill 273 – Page
3
Source: TRD
TRD reports that under current law, receipts of the health care providers affected by this bill are
deductible from gross receipts tax when paid by Medicare, a managed care provider or a health
care insurer for commercial contract services.
LFC notes that 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.
pg_0004
House Bill 273 – Page
4
LFC notes that receipts of health practitioners have historically grown faster than receipts of
other industries. Removing receipts from high-growth sectors from the gross receipts tax base
makes it more difficult for tax revenue to keep pace with inflation.
NMBA, HPC and DOH note that border area population is increasing rapidly and the area is
already underserved by health providers. It is difficult to recruit health providers to the area due
to the large number of poor and uninsured patients.
ADMINISTRATIVE IMPLICATIONS
The bill would require TRD to create a new form to be submitted with the CRS-1 Form. TRD
would require an additional FTE for manual review of credits and an additional processing FTE,
each costing $30 thousand per year. TRD would need to revise publications and instructions.
Gentax and CRS online programs would require changes to process the proposed credit.
Taxpayer education will be required to prevent misreporting.
Since taxpayers can only claim the proposed credit after taking all other deductions, taxpayers
would be required to implement further tracking of receipts in an already complex system.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
House Bill 273 duplicates Senate Bill 306.
TECHNICAL ISSUES
DOH suggests amending the definition of the border area to match the definition established in
U.S. Public Law 103-400, which defines the border area as within 100 kilometers, or 62.5 miles,
from the border.
SS/mt