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

SPONSOR Rawson

ORIGINAL DATE

LAST UPDATED 8/16/08 HB

SHORT TITLE Medical-Record Equipment Tax Credit

SB 13

ANALYST White

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY09

FY10

FY11

($1.00) ($1,000.0-$19,000.0) ($1,000.0-$19,000.0) Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Relates to House Bill 5

SOURCES OF INFORMATION

LFC Files

No Response Received From

Taxation and Revenue Department (TRD)

Human Services Department (HSD)

SUMMARY

Synopsis of Bill

Senate Bill 13 creates a credit against personal income tax liability for the purchase of equipment

necessary for the processing, storage and transmittal of patient medical records in electronic

format in an amount equal to the cost of that equipment. The credit may be deducted from the

taxpayer’s income tax liability for the taxable year in which the equipment was purchased and

the four succeeding taxable years. The credit for a single taxable year shall not exceed twenty

percent of the total cost of the equipment. Any individual who claims this credit for equipment

owned by a business association can only claim a credit in proportion to the individual’s interest

in the business association.

Senate Bill 13 – Page

2

FISCAL IMPLICATIONS

There are currently over 7,200 licensed physicians in New Mexico, however, of those 7,200 only

3,858 who currently provide patient care. Preliminary studies have estimated the cost of

implementing appropriate medical records technology in a single office at approximately

$25,000. This number however relies heavily on the size of the office and the number of patients

who are provided service, and therefore may fluctuate significantly. If this $25,000 equipment

cost were deducted by a single taxpayer, they could potentially receive a $5,000 credit annually

for up to five years. In a worst case scenario, if all 3,858 practicing physicians received a $5,000

credit the state would suffer a loss of over $19,000,000 in personal income tax revenues. It is

difficult to estimate an exact revenue impact however because the average cost of medical

records equipment can fluctuate. It is also difficult to estimate how many physicians will

implement new systems due to this legislation given that a number of them already have records

systems in place.

SIGNIFICANT ISSUES

The maintenance of proper medical records is an important part of providing proper medical

care. A recent report by the New Mexico Health Policy Commission (HPC) noted that one of the

major barriers to the implantation of proper medical record technology systems by physicians is

the significant capital costs associated with them. This bill would lessen those costs by

providing a tax credit equal to the cost of implementation, processing, storage, and physical

equipment associated with these systems.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

This bill relates to and in some cases duplicates parts of House Bill 5.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

If this bill is not enacted New Mexico physicians will not have as much incentive to implement

newer and more efficient medical records systems which could result in patients receiving less

efficient medical care.

DW/mt