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.

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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

1/22/08

1/30/08 HJR 6/aHVEC/aHTRC

SHORT TITLE Veteran’s Organization Property Tax

SB

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

NFI – See Narrative

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Department of Finance and Administration (DFA) FIR from 2007

Response Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of HTRC Amendment

The House Taxation and Revenue Committee amended Senate Joint Resolution 9 as amended

striking the HVEC amendment and expanding the definition of “veterans’ organizations" to

require that the property be primarily used by veterans and their families."

Synopsis of HVEC Amendment

The House Voters and Elections Committee amended House Joint Resolution 6 expanding the

definition of “veterans’ organizations." The property no longer needs to be used by local, state,

or federal government entities or nonprofits.

Synopsis of Original Bill

House Joint Resolution 6 proposes to amend the NM Constitution to exempt veterans’

organizations chartered by the United States from property tax if the property is used by local,

state or federal government entities or by nonprofit community organizations or other veterans’

organizations. If passed the question will go to the voters at the next general election.

House Joint Resolution 6/aHVEC/aHTRC – Page

2

In 2007, House bill 719 was enacted (Laws 2007, Chapter 167) which changes the tax code

contingent on a joint resolution in that session being passed. It is unclear whether this joint

resolution will serve to allow the change to the tax code or if a new bill must be considered.

FISCAL IMPLICATIONS

Assuming each property is valued at $250,000, the 500 veteran’s organizations that would

qualify would own $125 million in property. The taxable value is $41.7 million and the liability

would be approximately $1.1 million statewide. If more of the organizations are in Bernalillo

County, the impact could be much higher as Bernalillo County has a higher property tax rate.

Since most counties adjust the property tax rate according to their funding needs, any property

tax exemption for one group of taxpayers has the effect of raising property tax rates for all other

taxpayers.

SIGNIFICANT ISSUES

The Department of Veterans’ Services believes that many veterans’ organizations need this

exemption from property tax to forestall the closing of many facilities that provide services to

veterans particularly in rural areas.

Department of Finance and Administration (DFA), from analysis of HB719 in 2007 session:

Current assessments for these organizations would be excluded from the tax roles and

property tax collection and distribution would be diminished. Fiscal impact would likely

be spread throughout the state. NM counties, cities and schools will take the big hits on

operating revenues. With voter-approved bond issues, the total debt service is divided by

the current taxable value to get a debt rate. Thus, the effect of this bill on capital would be

to shift burden from the veteran’s organizations to the general public. The county that

would probably take the hardest hit would be Bernalillo County, due to the fact that the

county has the largest number of veterans’ organizations headquarters.

This legislation exempts from property taxation the VFW, DAV, American Legion and

AMVETS along with many smaller organizations chartered by the US Congress. In NM

there are between 500 and 600 active chartered veterans’ organizations. Out of the

approximately 600 organizations, probably the majority rent out space to governments for

events or to other community organizations. Since the bill does not quantity how much

community or government use is necessary to qualify for the exemption, we must assume

that every active chartered veteran’s organization that owns property will qualify for this

exemption.

TRD:

1) Provisions of the proposed measure would require the legislature to exempt veterans’

organization facilities from property taxation rather than allowing the legislature to

consider the issue and subsequently enact enabling legislation. 2) Participants in similar

organizations that do not benefit from property tax exemptions, for example Elks, may

view the exemption provided to veterans’ club attendees as unfair. 3) Similar proposals

sometimes contain provisions allowing individual communities to vote on the status of

property tax exemptions for fraternal organizations. This type of provision is not in the

proposed legislation.

NF/bb:nt