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. Vincent, Gallegos, Block, and
Armstrong
/Sen. Paul
LAST UPDATED
ORIGINAL DATE
SHORT TITLE Gaming Tax Exemption In Disaster Area
BILL
NUMBER House Bill 447
ANALYST Graeser
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Gaming Tax ($393.0) ($1,570.0) ($1,570.0) ($1,570.0) $0 Recurring General Fund
Purses &
Jockey Fees
$0 $0 $0 $0 $0 Recurring
Ruidoso
Downs and
Casino
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
CGB
No fiscal
impact
No fiscal
impact
No fiscal
impact
Recurring General Fund
TRD
No fiscal
impact
Indeterminate
but minimal
Indeterminate
but minimal
Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Duplicates Senate Bill 393
Sources of Information
LFC Files
Agency Analysis Received From
Gaming Control Board (GCB) Agency Analysis was Solicited but Not Received From
Taxation & Revenue Department (TRD) State Racing Commission (SRC)
SUMMARY
Synopsis of House Bill 447
House Bill 447 (HB447) would temporarily exempt a gaming licensee located in an area
declared in June 2024 as disaster area due to a wildfire from the gaming tax through July 1, House Bill 447 – Page 2
2029. This area includes Lincoln and Otero Counties and Mescalero Apache Nation. However,
because the two casinos located on the Mescalero Apache Nation are liable for the Indian
gaming tax, not the gaming tax, these two entities would not benefit from the provisions of this
bill.
The Taxation and Revenue Department (TRD) is required to include the costs of this exemption
in the annual Tax Expenditure Report. The bill considers an eligible licensees claiming this
exemption to have waived its privacy right, allowing TRD to report relevant information in the
Tax Expenditure report.
This bill contains an emergency clause and would become effective immediately on signature by
the governor. The provisions sunset as of July 1, 2028.
FISCAL IMPLICATIONS
LFC staff analysis indicates that, due to the provisions of the bill, only the Ruidoso Downs and
Casino would be eligible for the exemption. According to the Gaming Control Board (GCB),
Ruidoso Downs and Casino paid $1.6 million in gaming tax in the most recent fiscal year before
the fire and flood.
GCB also notes that pursuant to Section 60-2E-47(E) NMSA 1978, Racetrack Casinos pay:
1. Twenty percent of net take solely to purses in accordance with rules adopted by the state
racing commission; and
2. One and two-tenths percent of net take solely to offset the costs of jockey and exercise
rider insurance and to comply with federal and state laws affecting horse racing.
LFC notes, however, that “net take” is not reduced by the gaming tax or increase by the gaming
tax exemption and the purse and jockey insurance deductions would not be reduced or increased
by the gaming tax exemption.
This bill creates or expands a tax expenditure with a cost that is significant. LFC has serious
concerns about the substantial risk to state revenues from tax expenditures and the increase in
revenue volatility from erosion of the revenue base. In addition, LFC is concerned about the
fairness of exempting one taxpayer from a significant tax liability and not creating similar
deductions or exemptions for other businesses or individuals with uncompensated damage from
the fire and subsequent floods.
TRD collects the gaming tax. Although the exemption will be instructed, only a single taxpayer
benefits so administrative implications should be minimal.
GCB is not involved in the administration of the tax.
SIGNIFICANT ISSUES
GCB notes that pursuant to Section 60-2E-47(B) NMSA 1978, the gaming tax is “twenty-four
and eight-tenths percent of the net take of every other gaming operator licensee.” Pursuant to
Section 60-2E-3(FF) NMSA 1978, “net take” means the total of the following, less the total of
all cash paid out as loses to winning patrons and those amounts paid to purchase annuities to House Bill 447 – Page 3
fund losses paid to winning patrons over several years by independent administrators: (1) cash
received from patrons for playing a game; (2) cash received in payment for credit extended by a
licensee to a patron for playing a game; and (3) compensation received for conducting a game in
which the licensee is not a party to a wager.
LFC is somewhat concerned that this is a tax exemption for a single taxpayer. The restrictions in
the provisions of the bill restrict the exemption to a single taxpayer. This bill would create a
significant disparity between the Ruidoso Racetrack and Casino and the Apache Casino and the
Inn of the Mountain Gods Casino – both located on the Mescalero Indian Nation territory. The
gaming tax exemption for Ruidoso Racetrack and Casino significantly alters the competitive
positions between the casinos. Additionally, many businesses and residents were damaged by the
fires and floods. The provisions of this bill identify a single entity for tax benefit and extends that
benefit for over four years.
PERFORMANCE IMPLICATIONS
The LFC tax policy of accountability is met with the bill’s requirement to include this exemption
in the annual Tax Expenditure Report required by 7-1-84 NMSA 1978. The purpose of this
exemption is not clear.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicates Senate Bill 393.
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.
X
Targeted: The tax expenditure has a clearly stated purpose, long-term
goals, and measurable annual targets designed to mark progress toward
the goals.
The purpose is not
stated.
Clearly stated purpose X
Long-term goals X
Measurable targets X
Transparent: The tax expenditure requires at least annual reporting by
the recipients, the Taxation and Revenue Department, and other relevant
:
Required b 7-1-84
NMSA 1978. House Bill 447 – Page 4
agencies Includes waiver of
confidentiality.
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.
No targets
Public analysis X
Expiration date :
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.
Fulfills stated purpose X
Passes “but for” test X
Efficient: The tax expenditure is the most cost-effective way to achieve
the desired results.
?
Key: Met Not Met ? Unclear
POSSIBLE QUESTIONS
Is a tax exemption granted to one taxpayer fair and constitutional?
LG/rl/SL2