Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Barreras

ORIGINAL DATE

LAST UPDATED

1/26/08

HB 476

SHORT TITLE New Town of Peralta in Valencia County

SB

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$1,000.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 476, Making an Appropriation for Planning and Initial Administrative and other

Operational Costs needed by the New Town of Peralta in Valencia County, appropriates

$1,000.0 million from the general fund to DFA for the purpose of planning and operational costs

for Peralta.

FISCAL IMPLICATIONS

The appropriation of $1,000.0 million contained in this bill is a non-recurring expense to the

general fund. Any unexpended or unencumbered balance remaining at the end of FY09 shall

revert to the general fund.

DFA notes that the Town of Peralta was incorporated March 2007. Due to a technical error with

the ballots of the January 2007 election, the district court considered that election invalid and a

new election was held in March 2007.

This two month delay has adversely affected the finances of Peralta in several ways:

•

The gross receipts tax that would have been enacted in either January 2007 or July 2007

was not enacted until January 2008. Because no businesses have yet reported gross

House Bill 476 – Page

2

receipts tax, there is no way to estimate what the loss of revenue has been for FY08.

•

The property tax operational rate that could have been imposed in September 2007,

which would have been billed in November 2007 with Peralta receiving some revenue in

January 2008, was not imposed. The earliest that Peralta could impose an operational

property tax rate is September 2008, which means that revenues wouldn't come in until

January 2009. Section 7-37-7B(3) NMSA 1978, authorizes a rate of seven dollars sixty-

five cents ($7.65) for each one thousand dollars ($1,000) of net taxable value of both

residential and nonresidential property allocated to the municipality. Based on the

maximum rate authorization of $7.65 (note: via a Resolution, Peralta may choose to

impose a lower rate), the 2007 final valuations reported by Valencia County and certified

by the Taxation and Revenue Department/Property Tax Division, and the property tax

collection rate for Valencia County, the estimated loss in property tax revenue for FY08

is $286.3 thousand ($251.3 thousand from residential properties and $35.0 thousand from

non-residential properties).

•

Peralta didn't meet the timeline to be considered for an estimated $40.0 thousand

distribution from the Small Cities Assistance Fund for FY08.

•

Peralta had to secure a loan with the State Board of Finance for $100.0 thousand to help

cover minimal operating costs for FY08, such as contract personnel, lease of office space,

office equipment, and a $40.0 thousand Joint Powers Agreement with Bosque Farms for

law enforcement services.

SIGNIFICANT ISSUES

DFA notes that before incorporation, there was a feasibility study that determined that a

population base of 4,890 would be enough to sustain a small municipality. However, due to an

inadvertent error with the voting ballots for the January 2007 election, that election was deemed

invalid by the district court. Even though the March 2007 election was successful and the Town

of Peralta became an incorporated municipality, the two month delay caused several key taxation

deadlines to be missed. Because a municipality primarily depends on revenue generated by

gross receipts taxes and property taxes, the Town of Peralta has very little revenue to use for

fiscal year 2008 operating costs. The delay in property tax revenue also impacts fiscal year

2009.

The approved FY08 operating budget for Peralta is $172.2 thousand in revenue (although $40.0

thousand of that revenue won't be realized due to the missed deadline for the Small Cities

Assistance distribution) and $157.9 thousand in expenditures. If it wasn't for the $100.0

thousand loan from the State Board of Finance, along with the first year insurance costs that are

being covered by the New Mexico Municipal League, Peralta would not be able to operate for

FY08.

Although the $1.0 million appropriation in HB 476 is for FY09 start-up costs that include some

recurring expenditures, the appropriation itself is non-recurring.

WEP/bb