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

SPONSOR Fox-Young

ORIGINAL DATE

LAST UPDATED

01/25/08

HB 307

SHORT TITLE Revenue to Cities Imposing Civil Motor Fines

SB

ANALYST Escudero

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

Fund

FY08

FY09

FY10

or Non-Rec

Affected

$20,700.0 $15,000.0 Recurring General Fund

($20,700.0) ($15,000.0) Recurring City Government

(Parenthesis ( ) Indicate Revenue Decreases) For further reference to this table refer to DFA Analysis, page 1.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Tax and Revenue Department (TRD)

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 307 reduces gross receipts distributions on a dollar-for-dollar basis to communities

with red light programs using civil rather than criminal penalties for violation of the motor

vehicle code. Albuquerque is currently the only city in the State of New Mexico with a red light

camera program. The money not sent to Albuquerque is distributed to the General Fund. The

overall withheld amount would be about equal to the total penalties collected in Albuquerque

•

Albuquerque has adopted a municipal ordinance that recognizes certain traffic offenses as

nuisance’s subject only to civil municipal fines and not required to be filed in court as

traffic citations.

•

HB 307 requires that under this scheme, and any similar scheme adopted by any

municipality, the amount of gross receipts tax revenue otherwise due to the municipality

under NMSA 1978, Section 7-1-6.4 will be reduced by the amount of revenues collected

by the municipality under the civil/nuisance traffic scheme.

House Bill 307 – Page

2

FISCAL IMPLICATIONS

As stated by AOC, the net result is that the amount of revenues collected by the municipality

under its civil/nuisance traffic program will be placed into the general fund by diverting to the

general fund that amount from the gross receipts tax revenue that would otherwise have been due

to the municipality

Upon annual determination by the Secretary of the Department of Finance and Administration of

the amount of revenue collected by a municipality from its civil/nuisance traffic program, the

general fund will be increased by that amount by transfer to the general fund of that amount from

the gross receipts revenues that would otherwise have been due to the municipality.

The fines and penalties collected by Albuquerque would remain with Albuquerque but under HB

307, gross receipts distributions to Albuquerque would be reduced by the same amount. The

reduction to Albuquerque would be redistributed to the General Fund and would be available for

appropriation.

According to DFA, this is a table of revenue estimates for the automated enforcement program

from the 2008 Mayor's report which provides a basis for fine collections estimates with an

assumption of current fees, that the remainder of FY08 matches the first half and growth

consistent with that from FY07 to FY08.

fine collection est. | growth rate | Pre bond/TIDD adj impact

FY07 9,050.4

FY08 11,648.6 28.7%

FY09 14,992.7 28.7% 20,699.0 prior two years

FY10 19,296.8 28.7% 14,992.7 prior year

FY11 24,836.6 28.7% 19,296.8 prior year

FY12 31,966.7 28.7% 24,836.6 prior year

•

This analysis assumes that the Speed and Speed Van related collections are included in

civil penalties from the STOP automated enforcement program. If fees are reduced to

$69, as proposed, and the change went into effect for FY09, the overall impact from

FY10 forward would be reduced about half.

•

Analysis of potential adjustments to impacts from pre-2/1/08 GRT pledged revenue bond

payment requirements and a TIDD municipal dedication is ongoing.

•

From the City of Albuquerque FY08 budget, the city received 341,597.0 in gross receipts

tax, with 88.5 totals in state share gross receipts tax bonds with maturities from 2001 to

2022 and 26.0 in repayments, and an overall surplus of 6.0 according to LGD.

•

The bill proposes a temporary provision for the first year determination to be based on

the prior two years, with subsequent year's determination based on one prior year. The

bill would take effect with a July 1, 2008 determination affecting FY09 municipal

distributions.

According to TRD, this bill provides for a reduced distribution of gross receipts tax revenue to

certain

municipalities that impose civil, rather than criminal, penalties of violation of the Motor

Vehicle Code or the municipality’s traffic code.

•

On July 1 of each year, the Secretary of Finance and Administration must determine the

House Bill 307 – Page

3

amount in civil penalties, fines or other assessment collected during the previous fiscal

year by the municipality for violations of the Motor Vehicle Code or the municipality’s

traffic code. The Secretary must notify the secretary of taxation and revenue of that

determination. Unless the municipality has issued revenue bonds prior to February 1,

2008, that are secured by the pledge of all or part of the municipality’s revenue from the

distribution made under this section, subsequent distributions in the current fiscal year to

the municipality shall be withheld until the total amount of withheld distributions equals

the amount determined by the secretary of finance and administration.

•

If the municipality has issued revenue bonds as noted above, until the total amount of

withheld distributions equals the amount determined by the secretary of finance and

administration, the amount distributed to the municipality in the current fiscal year shall

be equal to the lesser of:

•

the amount sufficient to meet any required payment due on the revenue bonds; or

•

the amount that would otherwise be distributed to the municipality except for the

provisions described above.

A distribution shall be made to the state general fund in an amount equal to the amount of

distributions withheld pursuant to the above formula.

Effective Date: Not specified; 90 days following adjournment (May 14, 2008).

Estimated Revenue Impact*

FY2008 FY2009 FY2010 FY2011 FY2012 FY 08-12

R or

NR**

Fund(s) Affected

None (20,000) (10,000) (10,000) (10,000) (50,000) R City of Albuquerque

None 20,000 10,000 10,000 10,000 50,000 R State General Fund

0

0

0

0

0

0

R

Total Taxes

* In thousands of dollars. Parentheses ( ) indicate a revenue loss. ** Recurring (R) or Non-Recurring (NR).

The City of Albuquerque has received roughly $10 million per year in fines associated with civil

penalties imposed on “red light" and speeding traffic violations. Of that amount, approximately

$5 million per year is spent on administration of the street intersection camera program.

The 1.225% portion of state gross receipts tax shared with the City is pledged toward revenue

bonds, but the Department has no information regarding debt service payment schedules on those

bonds. Presumably the $170+ million per year of 1.225% shared revenue distributed to

Albuquerque would be sufficient to cover both the debt service payments and the fiscal impact

shown above.

SIGNIFICANT ISSUES

THIS BILL ANALYSIS IS SUBMITTED BY THE AOC AND SHALL NOT BE CONSTRUED AS

A SUBMISSION BY THE SUPREME COURT OR ANY OTHER COURT.

It should be noted that HB 307 makes no provision for deducting the costs of running a

civil/nuisance traffic program from the gross receipts reduction. The reduction in a

municipality’s gross receipts revenue is set at the amount “collected" under by the civil/nuisance

traffic program.

House Bill 307 – Page

4

As stated by DFA, HB 307 will give the State additional revenues to distribute to other areas of

the state. HB 307 makes the State of New Mexico vulnerable to a huge lawsuit on the grounds

that it compromises the effectiveness of Albuquerque's home rule charter. If the state is charged

with effectively penalizing and compromising a home rule charter initiative, the effectiveness of

the home rule option is questioned for other municipalities with home rule or considering

adapting home rule.

PERFORMANCE IMPLICATIONS

As stated by DFA, HB 307 presents the potential to lessen or eliminate the surplus Albuquerque

currently enjoys in its general fund budget. The mayor of Albuquerque may see HB 307 as a

threat to the financial viability of the red light program even though it appears to be reducing

accidents in Albuquerque. The result may be for Albuquerque to kill the red light program

completely in order to boost GRT distributions.

ADMINISTRATIVE IMPLICATIONS

A small adverse administrative burden on the Department would result from intercepting

variable monthly revenue amounts from Albuquerque and redirecting them to the General Fund.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

The consequences of not enacting HB 307 will be to allow Albuquerque to exercise its options

unfettered under its home rule charter.

PME/nt