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

SPONSOR Snyder

ORIGINAL DATE

LAST UPDATED

8/17/08 HB

SHORT TITLE Personal Income Tax Credit for Gas and Electric Bills SB 8

ANALYST Gutierrez

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY09

FY10

FY11

($185,726.0)

($197,993.0)

($211,235.0) Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

Responses Received From

Taxation and Revenue Department (TRD)

SUMMARY

Synopsis of Bill

The bill creates the “Middle Income Home Energy Tax Credit.” This is a credit for middle-

income taxpayers to be taken against the taxpayer’s personal income tax in the amount of fifty

percent of the taxpayer’s gas and electric bills. A taxpayer who is a resident of New Mexico, is

not a trust, estate, or dependent of another taxpayer, and is not an inmate of a public institution

for more than six months during the taxable year, and is a customer of a utility company would

be eligible for the credit.

FISCAL IMPLICATIONS

Estimated Revenue Impact*

FY2009 FY2010 FY2011 FY2012 FY2013 FY 09-13

R or

NR**

Fund Affected

(185,726) (197,993) (211,235) (225,539) (241,001) (1,061,494) Recurring General Fund

Parentheses ( ) indicate a revenue loss.

* In thousands of dollars. ** Recurring (R) or Non-Recurring (NR).

Source: Taxation and Revenue Department

Senate Bill 8 – Page

2

SIGNIFICANT ISSUES

The Taxation and Revenue Department used New Mexico residential natural gas and electricity

expenditures data for 2007 and 2006, expenditures for 2009 and subsequent years are estimated

by assuming annual natural gas and electricity expenditure increases of 10% and 4%,

respectively.

1

To exclude utility charges paid by taxpayers who do not meet the requirements

(such as renters and non-residents) etc., 70% of utility charges are assumed to be eligible for the

tax credit. Since the credit is non-refundable, the claimed amounts are estimated at a 50% rate.

ADMINISTRATIVE IMPLICATIONS

Provisions of this proposal would add moderate administrative impacts on the Taxation and

Revenue Department, for example forms changes, audit procedures development, and computer

programming.

TECHNICAL ISSUES

TRD:

This credit is assumed to be non-refundable since, page 2, subsection E, line 24 states that the

credit may not be carried forward but does not address if the excess would be refunded.

The bill is effective January 1, 2008. Unless a taxpayer has retained utility bills from the

beginning of the year, it may be difficult for them to claim the full credit due to them or may

place a burden on utilities to provide the information if requested by a lot of taxpayers.

BLG/mt

1

The 4 and 15 percent growth rates are average values of recent historical growth in New Mexico residential sector

energy expenditures for electricity and natural gas.