Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Reps. Cortez, Henry, Murphy, and
Block
/Sen. Block
LAST UPDATED
ORIGINAL DATE 2/11/25
SHORT TITLE All Cities & Counties Fund
BILL
NUMBER House Bill 292
ANALYST Graeser
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
GRT
$0 $0 $241,300.0 $249,50 0.0 $256,600.0 Recurring
All Cities and Counties Fund
– to Municipalities
$0 $0 $112,100.0 $115,90 0.0 $119,200.0 Recurring
All Cities and Counties Fund
– to Counties
$0 $0 ($353,400.0) ($365,400).0 ( $375,800.0) Recurring General Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
TRD
$69.0 $6.3
No fiscal
impact
$75.3 Nonrecurring General Fund
No fiscal
impact
No fiscal
impact
$2.1 $2.1 Recurring General Fund
Total $69.0 $6.3 $2.1 $77.4 General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Duplicate of Senate Bill 243.
Sources of Information
LFC Files
2024 House Bill 54 FIR
2023 House Bill 440 FIR
Agency Analysis Received From
Taxation & Revenue Department (TRD) Department of Finance (DFA) on Senate Bill 243
New Mexico Municipal League (NMML) on Senate Bill 243
Agency Analysis was Solicited but Not Received From
New Mexico Counties (NMC) State Treasurer’s Office (STO)
Department of Justice (DOJ)
House Bill 292 – Page 2
SUMMARY
Synopsis of House Bill 292
House Bill 292 (HB292) establishes the all cities and counties fund and distributes 8 percent of
the general fund share of gross receipts tax collections to the fund monthly. By October 1 of each
year, the Taxation and Revenue Department (TRD) will calculate distributions from the fund to
each county and municipality in the state based on a formula provided in HB292. “EGRTR” is
the equalized gross receipts tax revenue calculated as the amount of taxable gross receipts
attributed to a county-wide local option gross receipts tax rate of ¼ percent.
The formula for each municipal distribution is:
Municipality population * (0.7 * (fund balance/state population) + 0.3 *
(((county EGRTR/all county EGRTR) *fund balance)/county population)).
And for the county distribution:
County area population * (0.7 * (fund balance/state population) + 0.3 *
(((county EGRTR/all county EGRTR) *fund balance)/county population)).
The effective date of this bill is July 1, 2025. The first distribution from the fund would occur by
October 1, 2026.
FISCAL IMPLICATIONS
The bill does not include a recurring appropriation but diverts or “earmarks” revenue,
representing a recurring loss from the general fund. LFC has concerns with including continuing
distribution language in the statutory provisions for funds because earmarking reduces the ability
of the Legislature to establish spending priorities.
TRD details the methodology for calculating these distributions:
This bill redirects 8 percent of the state share of gross receipts tax (GRT) revenue to the
newly-created all cities and counties fund and then provides for distribution of that
amount to municipalities and counties. The analysis assumes the bill redirects 8 percent
of the state GRT distributed to the general fund after making all other statutory
distributions, including the .05 percent share for land grants-mercedes. TRD applied the
proposed formulas to determine the revenue transfer for municipalities and counties from
the new distribution. The analysis assumes no revenue impacts to tribal governments (see
Policy Issues). The estimated revenue impact is based on the annual estimates of the
resident population for incorporated places in New Mexico for 2023 from the United
States Census Bureau Population Estimates Program,
1
the December 2024 consensus
revenue estimating group (CREG) forecasting for net GRT to the general fund, and local
government GRT distribution reports from TRD’s report, RP- 500.
LFC confirmed that the formulae distribute all of the money in the fund and has attached to
this review an estimate of the amount each county and municipality will receive from this
distribution.
1
https://www.census.gov/data/tables/time-series/demo/popest/2020s-total-cities-and-towns.html House Bill 292 – Page 3
TRD will need to update reports including the RP-500 and make information system changes to
distribute this new distribution of GRT revenue. Implementing this bill will have an impact on
TRD’s Information Technology Division (ITD) of approximately 300 hours, or about two
months and $69 thousand in contractual cost.
Additionally, TRD’s Administration Services Division (ASD) will require two existing FTEs and
100 hours split between pay-band 70 and 80 positions to test the new distribution and certify the
transfers. The GenTax system’s general ledger and reporting will need to be updated for the new
distribution. Both ASD staff and the economists in the Office of the Secretary (OOS) will
annually need to calculate and certify the transfers to the state treasurer. For each county, the
economists will need to calculate the “equalized gross receipts tax revenue” used in the formula,
pull the most recent population estimates and then calculate the distributions amounts for each
county and municipality. This will be a recurring staff workload impact for ASD and the OOS.
SIGNIFICANT ISSUES
Oil and natural gas contributions to the general fund and other diversionary funds have increased
from $1.34 billion in FY13 to $6.4 billion in FY24 and are expected to grow to $7.2 billion in
FY29. The purpose of this proposed distribution is to share this increase in general fund revenues
with cities and counties both within and outside the oil patch.
The distributions formulae distribute 70 percent of the revenue based on the jurisdiction’s
population share and 30 percent based on the equalized gross receipts in that jurisdiction.
TRD makes several policy observations regarding this proposal:
State revenue sharing with local governments will strengthen local governments by providing
additional revenue. However, the diversity of special funds and distributions across the Tax
Administration Act is becoming intricate, leading to a more complex tax management
process. The proliferation of new funds and distributions implies a fragmentation of the
existing boundaries that determine service obligations and the parameters for
intergovernmental relationships between the State and local governments.
The state General Fund currently makes several significant transfers to local governments.
Under Section 7-1-6.4 NMSA 1978, state gross receipts tax revenues are already shared with House Bill 292 – Page 4
all municipalities, in an amount equal to 1.225 percent of the 4.875 percent state gross
receipts tax rate, (i.e., with respect to the overall 4.875 percent rate, 1.255 percent is
transferred to the municipalities, and 3.620 percent is retained by the state.) Section 7- 1-6.2
NMSA 1978 provides for a distribution to the Small Cities Assistance Fund, and Section 7-1-
6.5 NMSA 1978 provides a distribution to the Small Counties Assistance Fund; Section 7-1-
6.16 provides for a county equalization distribution; and pursuant to Sections 7-1-6.46 and 7-
1-6.47 NMSA 1978, distributions are made to certain municipalities and counties,
respectively, to offset the cost of food and health care practitioner deductions. In addition,
local governments have their own taxing authority to impose general and special increments
of local option gross receipts and compensating taxes. Additional distributions may be made,
as authorized by local governments and the State Board of Finance, to other special taxing
districts and for local economic development purposes.
Simplicity and fairness are important considerations in making tax policy, and the
proliferation of general and special distributions to local governments goes against those
principles. Allowing greatly varying local government tax rates decreases simplicity and
makes compliance harder for taxpayers; allowing for a centralized system of revenue
distribution, as this bill does, results in greater simplicity, but only if it replaces the
competing, and less simple, tax system, and not when it is added on to it. TRD recommends
that a bill of this nature be accompanied by a repeal of other statutes distributing general fund
revenues to local governments.
Furthermore, administering multiple distributions on this scale comes with challenges,
including:
1) A high number of distributions and funds that are burdensome and conflicting,
requiring TRD to expend resources inefficiently. Streamlining the number of funds
and distributions helps reduce the administrative costs and the burden for local
governments.
2) Duplication and overlap of different funds and distributions aimed at attaining the
same purpose deplete the general fund’s resources and reduce effectiveness of these
distributions.
3) Increasing the number of distributions to multiple funds reduces TRD’s capacity for
oversight and accountability.
The bill proposes distributing funds to municipalities and counties but does not specify
whether tribal governments benefit from this new distribution. The formulas proposed in the
bill use data on state population and county populations, so tribal residents, representing
nearly 10.9% of the state’s entire population, are used to compute the distributions,
benefiting county finances without any corresponding benefit to tribal governments, who also
provide services to their residents. Furthermore, tribal governments that share borders with
some local governments are not accounted for in the distributions.
TRD has two recommendations to ease administration of this proposal:
TRD suggests a more precise definition for the source for the current population, such as the
decennial census released every 10 years. This will provide clarity in the application of this
distribution. Annual estimates are released at various times of the year and given the bill’s
timeline for the distribution, calculations could lead to using different sources for the
population estimates every year. House Bill 292 – Page 5
The annual October 1 deadline for TRD to certify to the state treasurer the transfer amounts
would most likely occur before the annual general gund audit will be complete. The all cities
and counties fund could potentially be adjusted with audit release. TRD suggests an annual
deadline of February 1 for TRD to certify, with the deadline for the state treasurer to
distribute by March 1.
PERFORMANCE IMPLICATIONS
The LFC tax policy of accountability is met with publication in the RP500 of both the 8 percent
monthly diversion to the fund and the annual distribution from the fund to each county and
municipality.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicate of Senate Bill 243.
OTHER SUBSTANT IVE ISSUES
In assessing all tax legislation, LFC staff considers whether the proposal is aligned with
committee-adopted tax policy principles. Those five principles:
Adequacy: Revenue should be adequate to fund needed government services.
Efficiency: Tax base should be as broad as possible and avoid excess reliance on one tax.
Equity: Different taxpayers should be treated fairly.
Simplicity: Collection should be simple and easily understood.
Accountability: Preferences should be easy to monitor and evaluate
In addition, staff reviews whether the bill meets principles specific to tax expenditures. Those
policies and how this bill addresses those issues:
Tax Expenditure Policy Principle Met? Comments
Vetted: The proposed new or expanded tax expenditure was vetted
through interim legislative committees, such as LFC and the Revenue
Stabilization and Tax Policy Committee, to review fiscal, legal, and
general policy parameters.
Proposed and
debated in 2024
session
Targeted: The tax expenditure has a clearly stated purpose, long-term
goals, and measurable annual targets designed to mark progress toward
the goals.
The implicit goal is
to allow counties
and municipalities to
share in the
extraordinary
increase in general
fund revenues.
Clearly stated purpose ?
Long-term goals ?
Measurable targets ?
Transparent: The tax expenditure requires at least annual reporting by
the recipients, the Taxation and Revenue Department, and other relevant
agencies
Amounts of revenue
diverted published
monthly in RP500
Accountable: The required reporting allows for analysis by members of
the public to determine progress toward annual targets and determination
of effectiveness and efficiency. The tax expenditure is set to expire unless
legislative action is taken to review the tax expenditure and extend the
expiration date.
House Bill 292 – Page 6
Public anal
ysis ?
Expiration date X
Effective: The tax expenditure fulfills the stated purpose. If the tax
expenditure is designed to alter behavior – for example, economic
development incentives intended to increase economic growth – there are
indicators the recipients would not have performed the desired actions
“but for” the existence of the tax expenditure.
TRD asserts
proliferation of funds
creates
administrative
inefficiency
Fulfills stated purpose
Passes “but for” test
Efficient: The tax expenditure is the most cost-effective way to achieve
the desired results.
?
Key: Met Not Met ? Unclear
LG/hj
Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution
Bernalillo 02002 674,357 Eddy 03003 61,114 McKinley 13013 71,172 Santa Fe 01001 155,175
Albuquerque
02100 562,488 $90,568,712
Carlsbad
03106 31,813 $11,915,902
Gallup
13114 21,333 $3,008,108
Santa Fe
01123 88,224
$14,519,95
2
Los Ranchos de
Albuquerque
02200 5,869 $944,994
Artesia
03205 12,555 $4,702,611
McKinley (rmdr)
49,839 $7,027,661
Edgewood
01320 5,795 $953,744
Edgewood 02334 290 $46,694 Hope 03304 99 $37,082 Mora 30030 4,176 Espanola (part) 01226 1,006 $165,568 Village of Tijeras 02318 548 $88,236 Loving 03403 1,317 $493,297 Wagon Mound 30115 587 $91,676
S
anta Fe (rmdr) 60,150 $9,899,518
Rio Rancho (Bernalillo) 02647 4,261 $686,134
Eddy (rmdr) 15,330 $5,742,017
Mora (rmdr) 3,589 $560,520 Sierra 21021 11,511
Bernalillo (rmdr) 100,901 $16,246,470 Grant 08008 27,856 Otero 15015 68,235 T or C 21124 6,026 $905,819 Catron 28028 3,685 Silver City 08107 9,574 $1,450,283 Alamogordo 15116 31,063 $4,353,612 Williamsburg 21220 599 $90,041
Reserve 28130 323 $47,681 Bayard 08206 2,370 $359,011 Cloudcroft 15213 1,275 $178,697 Elephant Butte 21319 1,586 $238,405
Catron (rmdr) 3,362 $496,297 Santa Clara 08305 1,751 $265,244 Tularosa 15308 2,584 $362,159
Sierra (rmdr) 3,300 $496,051
Chaves 04004 64,446 Hurley 08404 1,137 $172,234
O
tero (rmdr) 33,313 $4,668,959 Socorro 25025 16,308
Roswell 04101 47,823 $7,071,828
Grant (rmdr) 13,024 $1,972,893 Quay 10010 8,616 Socorro 25125 8,540 $1,197,003
Dexter 04201 1,144 $169,169 Guadalupe 24024 4,379 Tucumcari 10117 5,197 $757,794 Magdalena 25221 764 $107,085 Hagerman 04300 599 $88,577 Santa Rosa 24108 2,447 $415,910 San Jon 10214 136 $19,831
Socorro (rmdr) 7,004 $981,710
Lake Arthur 04400 438 $64,769 Vaughn 24207 548 $93,142 Logan 10309 858 $125,108 Taos 20020 34,516
Chaves (rmdr) 14,442 $2,135,611
G
uadalupe (rmdr) 1,384 $235,235 House 10407 47 $6,853 Taos 20126 17,085 $2,639,329
Cibola 33033 27,059 Harding 31031 748
Quay (rmdr) 2,378 $346,745 Questa 20222 2,112 $326,267
Milan 33131 2,473 $336,784 Roy 31109 321 $59,536 Rio Arriba 17017 40,165 Red River 20317 456 $70,444 Grants 33227 9,106 $1,240,096 Mosquero 31208 38 $7,048 Chama 17118 748 $103,090 Taos Ski Valley 20430 39 $6,025
Cibola (rmdr) 15,480 $2,108,136
Harding (rmdr) 389 $72,148 Española 17215 8,338 $1,149,147
Taos (rmdr) 14,824 $2,290,045
Colfax 09009 12,336 Hidalgo 23023 4,097
Rio Arriba (rmdr) 31,079 $4,283,320 Torrance 22022 15,290
Raton 09102 6,013 $961,790 Lordsburg 23110 2,139 $328,242 Roosevelt 11011 19,002 Mountainair 22127 1,308 $199,177 Maxwell 09202 370 $59,182 Virden 23209 192 $29,463 Portales 11119 12,023 $1,688,055 Moriarty 22223 2,074 $315,820 Springer 09301 1,098 $175,627
Hidalgo (rmdr) 1,766 $271,003 Elida 11216 151 $21,201 Willard 22314 246 $37,460
Cimarron 09401 717 $114,685 Lea 06006 73,154 Dora 11310 54 $7,582 Encino 22410 37 $5,634 Eagle Nest 09509 270 $43,187 Hobbs 06111 39,887 $13,345,551 Causey 11408 183 $25,694 Estancia 22503 1,399 $213,034 Angel Fire 09600 1,089 $174,188 Eunice 06210 2,989 $1,000,072 Floyd 11502 131 $18,393
Torrance (rmdr) 10,226 $1,557,174
Colfax (rmdr) 2,779 $444,506 Jal 06306 2,069 $692,254
Roosevelt (rmdr) 6,460 $906,998 Union 18018 4,039
Curry 05005 47,932 Lovington 06405 11,444 $3,828,979 San Juan 16016 121,178 Clayton 18128 2,680 $416,054
Clovis 05103 38,153 $5,805,452 Tatum 06500 736 $246,254 Farmington 16121 46,339 $7,069,256 Des Moines 18224 92 $14,282 Grady 05203 106 $16,129
Lea (rmdr) 16,029 $5,363,047 Aztec 16218 6,177 $942,334 Grenville 18315 40 $6,210
Texico 05302 858 $130,555 Lincoln 26026 20,227 Bloomfield 16312 7,391 $1,127,536 Folsom 18411 56 $8,694 Melrose 05402 536 $81,559 Ruidoso 26112 321 $54,911 Kirtland 16323 575 $87,719
Union (rmdr) 1,171 $181,791
Curry (rmdr) 8,279 $1,259,753 Capitan 26211 1,262 $215,882
San Juan (rmdr) 60,696 $9,259,491 Valencia 14014 77,382
De Baca 27027 1,580 Carrizozo 26307 959 $164,050 San Miguel 12012 27,036 Rio Communities 14037 4,924 $713,360
Fort Sumner 27104 958 $149,394 Corona 26406 167 $28,568 Las Vegas 12122 13,120 $1,847,620 Belen 14129 7,427 $1,075,979
De Baca (rmdr) 622 $96,997 Ruidoso Downs 26501 2,629 $449,726 Pecos 12313 1,145 $161,244 Los Lunas 14316 17,932 $2,597,881 Doña Ana 07007 221,665
Lincoln (rmdr) 14,889 $2,546,962 Mosquero (part) 12418 - Pera lta 14412 3,385 $490,399
Las Cruces 07105 112,612 $16,502,559 Los Alamos 32032 19,374 $5,632,345
San Miguel (rmdr) 12,771 $1,798,472 Bosque Farms 14505 4,042 $585,581
Hatch 07204 1,663 $243,702 Luna 19019 25,420 Sandoval 29029 151,538
Valencia (rmdr) 39,672 $5,747,442
Mesilla 07303 1,850 $271,106 Deming 19113 14,735 $2,112,664 Bernalillo 29120 9,068 $1,321,420 Sunland Park 07416 17,085 $2,503,696 Columbus 19212 1,147 $164,454 Jemez Springs 29217 318 $46,340 Anthony 07507 8,701 $1,275,075
Luna (rmdr) 9,538 $1,367,532 Edgewood (part) 29335 290 $42,260
Doña Ana (rmdr) 79,754 $11,687,432 Cuba 29311 476 $69,364 San Ysidro 29409 190 $27,687 Corrales 29504 8,557 $1,246,956 Rio Rancho 29524 102,272 $14,903,383
Sandoval (rmdr) 30,367 $4,425,231