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 Ryan

ORIGINAL DATE

LAST UPDATED

1/28/08

2/12/08 HB

SHORT TITLE Raise Property Tax Limitation Income Limit

SB 355/aSPAC/aSFl#1

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

*See Narrative

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to SB116 and HB295

SOURCES OF INFORMATION

LFC Files

Responses Received From

Aging and Long Term Services (ALTS)

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of SFl#1

Senate Bill 355 as amended was amended on the Senate floor to add another section allowing for

the freeze of property value for homeowners who are disabled and whose modified adjusted

gross income does not exceed 235 percent of federal poverty level. The provision is for property

tax years 2009 and later. The valuation is frozen at the 2009 level or the tax year following the

year the owner is determined to be disabled or first owns the residence.

2007 Federal Poverty Level (FPL)

Fam ily Size 200% 235%

1 20,424 24,000

2 27,384

32,184

3 34,344

40,356

4 41,304

48,540

5 48,264

56,712

6 55,224

64,896

7 62,184

73,068

8 69,144

81,252

Senate Bill 355/aSPAC/aSFl#1 – Page

2

Synopsis of SPAC Amendment

The Senate Public Affairs Committee amended Senate Bill 355 to change the effective year for

the new limit to 2009 rather than 2008. This addresses the timing concern that TRD had with

respect to the limit being in place in 2008.

Synopsis of Original Bill

Senate Bill 355 changes the property tax valuation limit for low income homeowners who are 65

years and older. Current law freezes valuation on property if the homeowner is 65 years or older

and has a modified gross income of less than $18,000. SB355 would change the income

threshold to 200 percent of the federal poverty level (FPL). The valuation freezes on 2008 if the

taxpayer is over 65; freezes on the year the taxpayer turns 65; or freezes on the tax year after the

tax year a home is first occupied if the owner is over 65.

The effective date is May 14, 2008.

FISCAL IMPLICATIONS

TRD reports that 7,500 currently benefit from the limitation and that with this change about

5,000 additional taxpayers will benefit. Since these taxpayers also benefit from the 3 percent

maximum valuation increase, the impact both individually and collectively is likely to be very

small. Any impact will be absorbed by other taxpayers as rates adjust to maintain the funding

level required for debt service.

SIGNIFICANT ISSUES

Aging and Long Term Services:

The need for accessible, affordable housing in New Mexico is a serious issue for those

over the age of 65. Health and housing concerns are often interrelated. Increases in

property taxes may prevent a senior from being able to maintain community living. This

issue is frequently cited as a major concern among seniors on fixed incomes whose

disposable income is greatly reduced by increased housing costs. The Aging and Long-

term services department is committed to promoting lifelong independence and healthy

aging, and to supporting services being provided in home and community-based settings.

This bill would assist some seniors to remain in their own homes, in the community, and

to "age in place" instead of moving to unfamiliar surroundings, or being cared for in an

alternative setting such as a nursing home or assisted living facility.

Accessible and affordable housing is an equally significant issue for people living with a

disability. The Section of law that is being amended could extend this limitation on

increase in home value to the disabled population, but it does not. The Aging and Long-

Term Services Department serves the needs of all persons in need of long-term care

services and support, including those with disabilities. We would recommend amending

the bill to extend this important provision to people living with disabilities, as well as to

individuals over the age of 65.

Senate Bill 355/aSPAC/aSFl#1 – Page

3

ADMINISTRATIVE ISSUES

TRD reports administrative impacts on the Taxation and Revenue Department from the proposed

measure would be relatively minor. The stipulation that eligibility would be based on federal

poverty guidelines would be problematic, however, because county representatives would be

required to verify the number of dependants in households of taxpayers claiming the exemption.

This would probably not be substantially more difficult than the current practice of determining

modified gross income, however. A solution would consist of simply specifying that FPL

guidelines based on a family size of two for all taxpayers would be the single criteria on which

eligibility is based. As indicated above, this would place the eligibility threshold at $27,380 in

2008.

OTHER ISSUES

TRD:

The Santa Fe County Assessor’s office reports 56 taxpayers qualified for the limitation in

tax year 2007. The individuals that qualified were mostly from older neighborhoods

where property values are relatively low. Bernalillo County reports that 2,464 taxpayers

are subject to the limitation. Dona Ana County representatives state that 457 taxpayers

are subject to it, while the total in San Juan County is currently 100 taxpayers. In Sierra

County, which has a relatively high concentration of retirees, only 53 taxpayers took

advantage of this exemption. Estimates made by the Property Tax Division in the

Taxation and Revenue Department indicate that approximately $200,000 in tax benefits

are provided statewide by the current limitation.

Taxpayers are probably not claiming the exemption because 1) the benefit is, in most

cases, minor, and 2) they are not aware of it. A low-income taxpayer whose tax bill is

$500 would receive a tax benefit totaling only approximately $15 the first year the

taxpayer receives the bill. The benefit from the limitation to any particular taxpayer

grows over time. The limitation does not insulate taxpayers from tax increases caused by

rate increases, however.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

There are several other property tax bills being considered.

Senate Bill 355/aSPAC/aSFl#1 – Page

4

Bill Number

Title

Description

H229

END YIELD CONTROL ON SCHOOL MILL

LEVY

Allow school districts to levy posted tax rate

H264

RESIDENTIAL PRO PERTY TRANSFER

AFFIDAVITS

Allow affidavits about property value to be used for

count

y

p

rotests

H276/SB398

SUNCAL TAX INCREMENT PROJECT

BONDS

10 percent diversion of Bernalillo County property

taxes to tax increment distric

t

H295/SB116

RAISE PROPERTY TAX LIMITATION

INCOME LIMIT

Raise the income threshold for taxpayers over age 65

SB355cs

RAISE PROPERTY TAX LIMITATION

INCOME LIMIT

Raise the income threshold for taxpayers over age 65

and establish a threshold for disabled owners.

H324

CHARITABLE CARE PROPERTY TAX

VALUATION

Exempt certain nursing homes from valuation

H388

REQUIRE DISCLOSURE OF REAL

PROPERTY TAXES

Disclosure of estimated property tax to home buyers

H617

PROPERTY TAX ON COMMUNICATIONS

SYSTEM LAND

Expand the definition of communication system land

in exem

p

tion

HJR1

NATIONAL GUARD VETERAN PROPERTY

TAXES

,

CA

Include national guard veterans in military veteran

exem

p

tion

HJR4

SENIOR CITIZEN PROP ERTY TAX

EXEMPTION

,

CA

Phase out property tax for seniors

HJR6

VETERANS' ORGANIZATION PROPERTY

TAXES

,

CA

Exempt certain property from valuation

HJR10

STATEWIDE MILLAGE RATE FOR

SCHOOL FUNDS

,

CA

Add additional 5 mills for education on statewide

p

ro

p

ert

y

tax

S449

LOW-INCOME PROPERTY TAX REBATE

ELIGIBILITY

Expand income threshold for local governmetn low

income

p

ro

p

ert

y

tax rebate

S450

PROPERTY TAX VALUATION &

REASSESSMENT

Revalue property that transferred in 2005/2006 to

2004 levels

S483

PROPERTY TAX ADMINISTRATIVE FEE

THRESHOLD

Raise minimum amount of tax admin fee plus tax to

$15

S516

PROPERTY TAX DELINQUENCY NOTICES

& TIMING

Extends the time limit property tax can be delinquent

b

efore sold.

SJR11

HEAD OF FAMILY PROPERTY TAX

EXEMPTION

,

CA

Increases head of family exemption to $20,000 from

$2

,

000.

SJR14

PROPERTY TAX LIMITATIONS, CA

Imposes maximum total tax levy of no more than 1

p

ercent of current and correct tax value.

NF/mt:bb