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

SPONSOR Silva

ORIGINAL DATE

LAST UPDATED

2/4/08

HB 623

SHORT TITLE County Health Care Gross Receipts Time Limit

SB

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

10,291.2 Recurring Bernalillo

County

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates SB428

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department (TRD)

Health Policy Commission (HPC)

SUMMARY

Synopsis of Bill

House Bill 623 amends Section 7-20E-18 NMSA 1978 so that counties with populations above

500 thousand (Bernalillo) will retain the option of imposing a second 1/16 percent increment of

the county health care gross receipts tax indefinitely. Currently, that county may only impose the

second 1/16 percent increment until June 30, 2009.

Because the bill has no effective date, it would become effective 90 days after the 2008

legislature adjourns on May 14, 2008.

FISCAL IMPLICATIONS

Bernalillo County is the only county in New Mexico authorized to impose a second 1/16 percent

increment of the county health care gross receipts tax. Bernalillo county’s taxable gross receipts

base will be about $18.1 billion in FY10, the first year that the increment would sunset under

current law. An additional 1/16 percent increment will increase Bernalillo county gross receipts

tax collections by about $11,291.2 thousand in FY10.

House Bill 623 – Page

2

SIGNIFICANT ISSUES

The 2006 legislature amended the county health care gross receipts tax statute to allow counties

with populations over 500 thousand to impose an additional 1/16 percent gross receipts tax

increment. The Senate Finance Committee amendment to the 2006 bill (HB 274) inserted a

sunset clause so that the additional 1/16 percent increment could only be imposed until June 30,

2009.

Revenues collected from the first 1/16 percent increment of the county health care gross receipts

tax are restricted for deposit in the county-supported Medicaid fund, a non-reverting fund that is

appropriated to the human services department to support the Medicaid program. If a county

chooses not to impose a 1/16 percent county health care gross receipts tax, that county must

dedicate an amount equal to 1/16 percent of gross receipts to the county-supported Medicaid

fund.

Revenues collected due to Bernalillo County’s second 1/16 percent increment of the county

health care gross receipts tax must be used to support the health care costs of indigent patients.

The second increment is intended to support the Bernalillo County hospital, which is located at

UNM.

New Mexico’s municipalities and counties are authorized to impose over 4 percent of local

option gross receipts taxes (that figure excludes several additional local option taxes that have

been authorized for selected local governments). Due to increasing imposition of local option

taxes, the statewide gross receipts tax rate is increasing steadily. On average, a local option gross

receipts tax of about 1.9 percent will be imposed by local governments statewide by FY09.

Combined with the state gross receipts tax of 5 percent, the statewide tax rate is therefore 6.9

percent.

ADMINISTRATIVE IMPLICATIONS

The bill will create minimal administrative impacts on TRD.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 623 duplicates Senate Bill 428.

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