SENATE FINANCE COMMITTEE SUBSTITUTE FOR

SENATE BILL 47

50th legislature - STATE OF NEW MEXICO - first session, 2011

AN ACT

RELATING TO TAXATION; REQUIRING THE SECRETARY OF TAXATION AND REVENUE TO DEVELOP A TAX EXPENDITURE BUDGET AND A DEDICATED REVENUE BUDGET; REQUIRING REPORTING.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] TAX EXPENDITURE BUDGET--MANDATORY REPORT--DEADLINE.--

          A. No later than October 15 of each year, the

secretary, in cooperation with the secretary of economic development, shall compile a tax expenditure budget for the

upcoming fiscal year and present the tax expenditure budget,

including an analysis of tax expenditures, to the governor, the legislative interim revenue stabilization and tax policy committee and the legislative finance committee. The tax expenditure budget shall report on tax expenditures with revenue impacts of more than five hundred thousand dollars ($500,000) in the aggregate for a specific tax expenditure.

          B. A tax expenditure budget shall detail the

approximate costs in foregone revenue from tax expenditures.

A tax expenditure budget shall:

                (1) include a projection of the costs of tax

expenditures for all significant general fund revenue sources;

                (2) identify each tax expenditure and its

statutory basis, purpose, year of enactment and date of repeal, if any;

                (3) quantify the revenue expended by the state

from each tax expenditure;

                (4) identify the aggregate amount of each tax expenditure and the number of businesses that used the tax expenditure;

                (5) identify unexpected effects of the tax expenditure that were not within the original expected outcomes of the tax expenditure that have come to the attention of the department;

                (6) provide a total of all of the costs in

each fiscal year for all tax expenditures; and

                (7) include an estimate of jobs created and the number of businesses that potentially qualified for but failed to apply for a tax expenditure from reports provided by the economic development department.

          C. The economic development department shall estimate the jobs created and the number of businesses that potentially qualified for but failed to apply for a tax expenditure and shall report those projections to the taxation and revenue department. Unless specifically prohibited by another section of law:

                (1) the taxation and revenue department shall provide the economic development department with the aggregate information of taxpayers who benefit from a tax expenditure;

                (2) taxpayers who are allowed tax expenditures by state law shall provide information as requested by the taxation and revenue department or the economic development department for purposes of analyzing tax expenditures and reporting to the legislature on the value, benefit and use of those tax expenditures, as required by this section or Section 9-15-56 NMSA 1978; and

                (3) the taxation and revenue department and the economic development department are authorized to request from a state agency or a local government agency official information necessary to complete the tax expenditure budget required by this section, and an agency or official shall comply with a request made pursuant to this section by either department.

          D. As used in this section:

                (1) "jobs created" means the net increase of full-time jobs that exceeds the full-time equivalent of jobs that existed at the beginning of the reporting period, provided that the additional jobs can specifically be attributed to use of a tax expenditure, including:

                     (a) the net increase if jobs are changed from part time to full time;

                     (b) the full-time equivalent of jobs created that were previously filled by employees on contract; and

                     (c) new jobs created;

                (2) "significant general fund revenue

sources" means state taxes, including but not limited to the gross receipts tax, compensating tax, corporate income tax, personal income tax, tobacco excise tax, liquor excise tax, taxes levied on natural resource production and sale, motor vehicle excise tax, gaming excise tax and other sources of revenue such as rents and royalties, tribal revenue sharing, fire protection fund reversions, premium taxes and the leased vehicle surcharge;

             (3) "tax expenditure" means a deduction, credit, exemption, exclusion, rebate, offset, preferential tax rate, subtraction or allowance or related tax structure that reduces tax liability when compared with a normal tax system as determined by the secretary; and

                (4) "tax expenditure budget" means a

compilation of information about New Mexico's tax expenditures

that includes data from the three years preceding the current

fiscal year, the current fiscal year and the upcoming fiscal

year."

     SECTION 2. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] DEDICATED REVENUE BUDGET--MANDATORY REPORT--DEADLINE.--

          A. No later than October 15 of each year, the

secretary shall compile a dedicated revenue budget for the

upcoming fiscal year and present the dedicated revenue budget,

including an analysis of tax expenditures, to the governor, the legislative interim revenue stabilization and tax policy committee and the legislative finance committee. The dedicated revenue budget shall report on dedicated annual revenues of more than five hundred thousand dollars ($500,000) in the aggregate for a specific dedicated revenue beneficiary.

          B. A dedicated revenue budget shall detail the

approximate projected dedicated revenue for the following fiscal year that will be unavailable to the general fund.

A dedicated revenue budget shall:

                (1) identify each dedicated revenue item and its statutory basis, purpose, year of enactment and date of repeal, if any;

                (2) identify the beneficiaries of each dedicated revenue item, including the uses of the dedicated revenue;

                (3) identify the outcomes resulting from the expenditure of dedicated revenue, if any are quantifiable;

                (4) identify significant unintended effects of the dedicated revenue that have come to the attention of the department; and

                (5) provide a total of all of the collections and appropriations in each fiscal year for all dedicated revenue.

          C. The department may request from a state agency or a local government agency official information necessary to complete the dedicated revenue budget required by this section. An agency or official shall comply with a request made pursuant to this section unless a specific statutory confidentiality provision prohibits doing so.

          D. As used in this section, "dedicated revenue" means an expenditure of a tax or fee that is dedicated to a specific program or purpose, as defined by constitution or statute."

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