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| SPONSOR: | Aragon | DATE TYPED: | 02/08/99 | HB | |||
| SHORT TITLE: | Local Option Food Gross Receipts Tax Act | SB | 283 | ||||
| ANALYST: | Eaton | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY99 | FY2000 | |||
| $ (24,200.0) | $ (58,200.0) | Recurring | General Fund | |
| $ (8,200.0) | $ (19,700.0) | Recurring | Municipalities | |
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
This bill would exempt the tax on food while allowing Counties and Municipalities to continue to receive revenues through a local tax option (see Local Option Gross Receipts Tax Act). In the event that the reduction in revenues impairs the payment of bonds, substitute payments from the general fund may be made. The amount distributed will be sufficient to meet the required bond payments. The effective date of this legislation is January 1, 2000.
FISCAL IMPLICATIONS
According to the Taxation and Revenue Department (TRD), the total fiscal impact of this bill to the state general fund would be $24.2 million in FY2000 and $58 million in FY2001. It would cost municipalities $8.2 million in FY2000 and $19.7 million in FY2001 from state-shared gross receipts tax revenues. The negative impacts for municipalities (beyond the loss of state-shared revenues) and counties is uncertain because it is not known how many will implement the local gross receipts tax options provided in the bill.
ADMINISTRATIVE IMPLICATIONS
The Taxation and Revenue Department (TRD) anticipates the need for an additional $1 million dollars in FY2000 for contractual services that will be necessary to execute the changes by January 1, 2000.
TRD also anticipates increases in processing costs associated with this bill if it is enacted.
TECHNICAL ISSUES
The Taxation and Revenue Department (TRD) suggests that making the tax rate on food exactly the same as the local option rate would simplify the matter for them (TRD) and presumably lower the administrative costs and contractual services costs associated with enacting this legislation.
Taxation and Revenue Department fears that provisions of the New Mexico Constitution concerning breach of the "full faith and credit" related to bond issuances and obligations may be compromised if the local bond ratings are negatively affected by passage of this legislation. Diminished bond ratings could potentially increase the total cost of bonding in the future. The Attorney General's Office may wish to address this possibility. Additional research of similar legislation in other states may also help address the effect on bond ratings.
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