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 Chávez
LAST UPDATED 1/27/25
ORIGINAL DATE 1/24/25
SHORT TITLE
Real Property From Health- Related
Equipment
BILL
NUMBER House Bill 46
ANALYST Graeser
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
Property Tax
$0 $0 $250.0 $500.0 $750.0 Recurring Local Governments
$20.0 $20,0 $20.0 Recurring GOBs
Medicaid & Health
Care Quality
Reimbursements
$0 $0
At least
$1,000.0
At least
$1,000.0
At least
$1,000.0
Recurring
Medicaid & Health Care
Quality Reimbursement
State GRT $0 $0
At least
$400.0
At least
$400.0
At least
$400.0
Recurring General Fund
Local GRT $0 $
At least
$400.0
At least
$400.0
At least
$400.0
Recurring Local Governments
Parentheses ( ) indicate revenue decreases.
*Amounts reflect the 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
HCA No fiscal impact No fiscal impact No fiscal impact
No fiscal
impact
Recurring General Fund
TRD/PTD No fiscal impact No fiscal impact No fiscal impact
No fiscal
impact
Recurring General Fund
NMHELC No fiscal impact Up to $1,000 Up to $1,000 Up to $2,000 Recurring Program Funds
Total No fiscal impact Up to $1,000 Up to $1,000 Up to $1,000
Parentheses ( ) indicate expenditure decreases.
Sources of Information
LFC Files
Agency Analysis Received From
Health Care Authority (HCA)
New Mexico Attorney General (NMAG)
Taxation and Revenue Department (TRD)
Agency Analysis was Solicited but No t Received From
Department of Finance and Administration (DFA)
SUMMARY
House Bill 46 – Page 2
Synopsis of House Bill 46
House Bill 46 (HB46) amends two sections of the Hospital Equipment Loan Act (HELA) (58-
23-1 through 58-23- 32 NMSA 1978). The first removes real property from the definition of
“health-related equipment,” preventing the New Mexico Hospital Equipment Loan Council
(NMHELC) from issuing bonds under the HELA “for the financing or refinancing of all or any
part of the cost of” real property. The second section prospectively removes the property tax
exemption for real property purchased, acquired, leased, financed, or refinanced with bonds
issued under HELA before the effective date of July 1, 2025.
The effect of these provisions is that any new real property purchased with HELA bonds will be
taxable. Real property previously purchased prior to July 1, 2025, will retain the tax exemption
unless sold, leased or refinanced. This repeal of tax exemption applies to property tax and gross
receipts and compensating taxes.
The effective date of this bill is July 1, 2025.
FISCAL IMPLICATIONS
The fiscal impacts of the provisions of this bill are two-fold: (1) the impact on current real
property constructed with HELA bond; and (2) prospective denial of property tax exemption for
real property purchased with HELA bonds. Determining the fiscal impact of HB46 is
complicated by questions about the legal soundness of the proposal (see “Significant Issues.”) If
the bill were to pass as is, actual costs might be related to litigation.
Since 1985, NMHELC has issued over $2.9 billion in revenue bonds. This has recently averaged
about $100 million per year. Pursuant to information generated by TRD, the fiscal impact
assumes 25 percent of HELA bonds were spent for real property construction.
Past HELOC Financing 1989-2024
Haverland Carter Series 2022 $30,540,000
San Juan Regional Medical Center Series 2022 $20,000,000
San Juan Regional Medical Center, Series 2020 $36,175,000
Presbyterian Healthcare Services, Series 2019 $304,245,000
Haverland Carter Lifestyle Group, Series 2019 $112,590,000
Presbyterian Healthcare Services, Series 2017 $304,780,000
San Juan Regional Medical Center, Series 2017 $30,115,000
Presbyterian Healthcare Services, Series 2015 $237,160,000
Haverland Carter Lifestyle Group, Series 2012 $42,525,000
Roswell Regional Medical Center, Series 2012 $30,000,000
Gerald Champion Regional Medical Center, Series 2012 $71,745,000
Presbyterian Healthcare Services, Series 2012 $75,000,000
Lovelace Heart Hospital, Series 2011 $50,000,000
San Juan Regional Medical Center, Series 2010 $34,609,000
LaVida Llena, Series 2010 $63,885,000
Presbyterian Healthcare Services, Series 2009 $135,000,000
Lovelace Respiratory Research Institute, Series 2009 $11,000,000
Presbyterian Healthcare Services, Series 2008 $388,000,000
Lovelace Women's Hospital, Series 2007 $15,000,000
Rehoboth McKinley Christian Health Care Services, Series 2007 $7,600,000
St. Vincent Regional Medical Center, Series 2005 $23,540,000
Presbyterian Healthcare Services, Series 2005 $204,960,000
Lovelace Respiratory Research Institute, Series 2004 $5,000,000
Presbyterian Healthcare Services, Series 2004 $147,485,000 House Bill 46 – Page 3
St. Vincent Hospital, Series 2003 $14,500,000
Rehoboth McKinley Christian Health Care Services Loan, Series 2002 $4,900,000
Covenant Health System Helicopter Lease, Series 2002 $4,615,445
Presbyterian Healthcare Services, 2001 Series A $195,675,000
Memorial Medical Center, Lease Purchase Agreement, 2001 $2,745,000
St. Vincent Hospital, Master Financing Agreement, 2001 $5,000,000
Presbyterian Healthcare Services, 2000 Series A $37,000,000
Dialysis Clinics, Inc., Series 2000 $5,000,000
Variable Rate Demand Revenue Bonds (Pooled Loan Program), 2000 Series A $85,000,000
Rehoboth McKinley Christian Health Care Services $4,900,000
Rehoboth McKinley Christian Health Care Services, Lease Purchase Agreement, Series 1999 $3,967,595
Memorial Medical Center, Series 1998 $44,995,000
Catholic Health Initiatives, Series 1997 A $44,410,000
San Juan Regional Medical Center, Series 1996 $7,550,000
Memorial General Hospital, Series 1996 $18,010,000
Rehoboth McKinley Christian Hospital, Series 1996 $5,690,000
San Juan Regional Medical Center, Series 1991 $7,504,946
NMHELC Variable Rate Weekly Demand Hospital Equipment & Improvement Revenue Bonds,
Series 1989
$35,000,000
Memorial General Hospital $929,377
Rehoboth McKinley Christian Hospital $1,850,000
St. Vincent Hospital $3,097,925
Memorial General Hospital $3,100,000
San Juan Regional Medical Center $4,055,000
Memorial General Hospital $2,199,928
Northeastern Regional Hospital $152,432
NMHELC Variable Rate Weekly Demand Hospital Equipment & Improvement Revenue Bonds,
Series 1985
$18,850,000
Presbyterian Medical Services $700,000
St. Vincent Hospital $1,091,986
Northeastern Regional Hospital $156,345
St. Vincent Hospital $1,102,393
Valencia $637,000
SCHS Psychiatric $460,000
St. Mary's Hospital $977,564
Memorial General Hospital $4,232,586
SCHS Clovis $2,284,000
Northeastern Regional Hospital $350,000
Total 1989-2024 $2,953,643,522
Beneficiaries of property tax revenue would gain an average of $8.3 million annually in the base
taxable value, and the property tax amount would cascade. New real property construction would
be subject to the gross receipts tax. The constitutional exemption mentioned below does not
apply to gross receipts tax.
The provisions of this bill suggest NMHELC, which owns the real property and leases it to
eligible hospitals, would begin paying property taxes and gross receipts taxes on new real
property. If NMHELC increases its costs because of this new property tax, then the lease fees
imposed on eligible entities (hospitals) would increase. HCA points out:
If hospitals would need to pay property taxes on these assets, there would be an
increase in their costs, which would be reported on the hospital cost report. These are
generally allowable costs, and hospitals would be reimbursed for costs if the hospitals
are cost settled, or if the cost report is used in a hospital re-base.
Beginning with the 2026 property tax year, real property funded by NMHELC bonds would
become taxable; if 25 percent of the bond proceeds were used to build real property using an
approximate mill levy of $30 per $1,000 taxable value on 1/3 of the total value, assessed House Bill 46 – Page 4
property taxes on NMHELC bond- funded property would be about $250 thousand annually and
would cascade. Existing real property subject to the property tax exemption would probably not
be refinanced. The first property tax payments would be due in October 2027. According to
HCA, these costs would be passed on to the eligible hospitals and become eligible costs for
Medicaid and Medicare and likely eligible costs for insured and uninsured patients, increasing
private insurance rates. The cost increases would also be reflected in gross receipts taxes and
Health Quality Improvement Act (HQIA) reimbursements. To estimate these impacts, LFC
applied the state and local GRT rates, as well as the HQIA reimbursement rates, to the estimated
increased costs.
For the purpose of yield control (7-37-7 NMSA 1978), the new value in each jurisdiction was
considered net new value and there will not be any change in yield- controlled rates.
SIGNIFICANT ISSUES
The principal intent of this bill may be to conform this program to the constitutional premise that
the Legislature may enact property tax exemptions if the proposal is approved by ¾ of both
houses. However, the L egislature may not create property tax exemptions for real property
unless a constitutional amendment has been passed by the voters allowing such exemption.
HB46 leaves intact a provision in state law (58- 23-5 NMSA 1978) that calls for NMHELC to be
treated as a state agency under a section of the state constitution that exempts state entities from
property taxes: “… the council is a state agency and instrumentality for the purposes of Article
VIII, Section 3, of the constitution of New Mexico.” As a result, it is not clear a property tax
could be imposed. However, real property construction is not exempt from the gross receipts tax
for government entities.
In addition, the New Mexico Attorney General (NMAG) notes HB46 may conflict with the
provisions of Section 7 -36-3 NMSA 1978, which was amended through the same legislation that
added real property to HELA’s definition of “health- related equipment.”
Property interests of a participating health facility in health-related equipment
purchased, acquired, leased, financed or refinanced with the proceeds of bonds
issued under [HELA] are exempt from property taxation for as long as the
participating health facility remains liable for any amount under any lease, loan or
other agreement securing the bonds, but not to exceed thirty years from the date the
bonds were issued for the health- related equipment.
HB46 also leaves this section of law intact.
OTHER SIGNIFICANT ISSUES
NMAG notes HB46’s provisions are prospective: The bill would likely be construed as a
prospective—not retroactive—tax. The bill’s language limits the removal of the property tax
exemption to the period after its effective date. Thus, the bill merely “imposes a present tax
which is measured by an antecedent fact.” See Hansman v. Bernalillo Cty. Assessor , 1980-
NMCA- 088, 20- 21, 95 N.M. 697. Accordingly, the bill would not impair vested rights and need
not be analyzed for any due process implications that a retroactive tax scheme may involve.
House Bill 46 – Page 5
TECHNICAL ISSUES
NMAG and TRD recommend the sponsor consider amending Section 7- 36-3(C) NMSA 1978 to
reflect the amendments proposed to Section 58- 23-29(B) NMSA 1978 to ensure consistency and
address potential conflicts within state law.
LG/rl/sl2/hg/sgs