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 Scott/Townsend/Ezzell
LAST UPDATED
ORIGINAL DATE 2
/11/25
SHORT TITLE Create All Cities & Counties Fund
BILL
NUMBER Senate Bill 243
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 House Bill 292
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) New Mexico Municipal League (NMML) Agency Analysis was Solicited but Not Received From
New Mexico Counties (NMC) State Treasurer’s Office (STO)
Department of Justice (DOJ)
Senate Bill 243 – Page 2
SUMMARY
Synopsis of Senate Bill 243
Senate Bill 243 (SB243) 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 SB243. “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 Senate Bill 243 – 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 Senate Bill 243 – 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. Senate Bill 243 – 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 House Bill 292.
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.
Public analysis ? Senate Bill 243 – Page 6
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
Attachments:
1. Distribution by Locality.
LG/hj
Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution Jurisdiction CODE Population Distribution
Bernalillo
0200
2
674,357
Eddy
0300
3
61,114
McKinley
1301
3
71,172
Santa Fe
01001 155,175
Albuquerque 0210
0
562,488 $90,568,712
Carlsbad 0310
6
31,813 $11,915,902
Gallup 1311
4
21,333 $3,008,108
Santa Fe
01123 88,224 $14,519,952
Los Ranchos de
Albuquerque
0220
0
5,869 $944,994
Artesia 0320
5
12,555 $4,702,611
McKinley (rmdr)
49,839 $7,027,661
Edgewood
01320 5,795 $953,744
Edgewood 0233
4
290 $46,694
Hope 0330
4
99 $37,082
Mora
3003
0
4,176
Espanola
(part)
01226 1,006 $165,568
Village of Tijeras 0231
8
548 $88,236
Loving 0340
3
1,317 $493,297
Wagon Mound 3011
5
587 $91,676
S
anta Fe (rmdr)
60,150 $9,899,518
Rio Rancho
(Bernalillo)
0264
7
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
0800
8
27,856
Otero
1501
5
68,235
T or C
21124 6,026 $905,819 Catron
2802
8
3,685
Silver City 0810
7
9,574 $1,450,283
Alamogordo 1511
6
31,063 $4,353,612
Williamsb
urg
21220 599 $90,041
Reserve 2813
0
323 $47,681
Bayard 0820
6
2,370 $359,011
Cloudcroft 1521
3
1,275 $178,697
Elephant
Butte
21319 1,586 $238,405
Catron (rmdr)
3,362 $496,297
Santa Clara 0830
5
1,751 $265,244
Tularosa 1530
8
2,584 $362,159
Sierra (rmdr)
3,300 $496,051
Chaves
0400
4
64,446
Hurley 0840
4
1,137 $172,234
O
tero (rmdr)
33,313 $4,668,959
Socorro
25025 16,308
Roswell 0410
1
47,823 $7,071,828
Grant (rmdr)
13,024 $1,972,893
Quay
1001
0
8,616
Socorro
25125 8,540 $1,197,003
Dexter 0420
1
1,144 $169,169
Guadalupe
2402
4
4,379
Tucumcari 1011
7
5,197 $757,794
Magdalen
a
25221 764 $107,085
Hagerman 0430
0
599 $88,577
Santa Rosa 2410
8
2,447 $415,910
San Jon 1021
4
136 $19,831
Socorro (rmdr)
7,004 $981,710
Lake Arthur 0440
0
438 $64,769
Vaughn 2420
7
548 $93,142
Logan 1030
9
858 $125,108
Taos
20020 34,516
Chaves (rmdr)
14,442 $2,135,611
G
uadalupe
(rmdr)
1,384 $235,235
House 1040
7
47 $6,853
Taos
20126 17,085 $2,639,329
Cibola
3303
3
27,059
Harding
3103
1
748
Quay (rmdr)
2,378 $346,745
Questa
20222 2,112 $326,267
Milan 3313
1
2,473 $336,784
Roy 3110
9
321 $59,536
Rio Arriba
1701
7
40,165
Red River
20317 456 $70,444
Grants 3322
7
9,106 $1,240,096
Mosquero 3120
8
38 $7,048
Chama 1711
8
748 $103,090
Taos Ski
Valley
20430 39 $6,025
Cibola (rmdr)
15,480 $2,108,136
Harding (rmdr)
389 $72,148
Española 1721
5
8,338 $1,149,147
Taos (rmdr)
14,824 $2,290,045
Colfax
0900
9
12,336
Hidalgo
2302
3
4,097
Rio Arriba (rmdr)
31,079 $4,283,320
Torrance
22022 15,290
Raton 0910
2
6,013 $961,790
Lordsburg 2311
0
2,139 $328,242
Roosevelt
1101
1
19,002
Mountain
air
22127 1,308 $199,177
Maxwell 0920 370 $59,182 Virden 2320 192 $29,463 Portales 1111 12,023 $1,688,055 Moriarty 22223 2,074 $315,820 Senate Bill 243 – Page
2
2 9 9
Springer 0930
1
1,098 $175,627
Hidalgo (rmdr)
1,766 $271,003
Elida 1121
6
151 $21,201
Willard
22314 246 $37,460
Cimarron 0940
1
717 $114,685
Lea
0600
6
73,154
Dora 1131
0
54 $7,582
Encino
22410 37 $5,634
Eagle Nest 0950
9
270 $43,187
Hobbs 0611
1
39,887 $13,345,551
Causey 1140
8
183 $25,694
Estancia
22503 1,399 $213,034
Angel Fire 0960
0
1,089 $174,188
Eunice 0621
0
2,989 $1,000,072
Floyd 1150
2
131 $18,393
Torrance (rmdr)
10,226 $1,557,174
Colfax (rmdr)
2,779 $444,506
Jal 0630
6
2,069 $692,254
Roosevelt (rmdr)
6,460 $906,998
Union
18018 4,039
Curry
0500
5
47,932
Lovington 0640
5
11,444 $3,828,979
San Juan
1601
6
121,178
Clayton
18128 2,680 $416,054
Clovis 0510
3
38,153 $5,805,452
Tatum 0650
0
736 $246,254
Farmington 1612
1
46,339 $7,069,256
Des
Moines
18224 92 $14,282
Grady 0520
3
106 $16,129
Lea (rmdr)
16,029 $5,363,047
Aztec 1621
8
6,177 $942,334
Grenville
18315 40 $6,210
Texico 0530
2
858 $130,555
Lincoln
2602
6
20,227
Bloomfield 1631
2
7,391 $1,127,536
Folsom
18411 56 $8,694
Melrose 0540
2
536 $81,559
Ruidoso 2611
2
321 $54,911
Kirtland 1632
3
575 $87,719
Union (rmdr)
1,171 $181,791
Curry (rmdr)
8,279 $1,259,753
Capitan 2621
1
1,262 $215,882
San Juan (rmdr)
60,696 $9,259,491
Valencia
14014 77,382
De Baca
2702
7
1,580
Carrizozo
2630
7
959 $164,050
San Miguel
1201
2
27,036
Rio
Communitie
s
14037 4,924 $713,360
Fort Sumner 2710
4
958 $149,394
Corona 2640
6
167 $28,568
Las Vegas 1212
2
13,120 $1,847,620
Belen
14129 7,427 $1,075,979
De Baca (rmdr)
622 $96,997
Ruidoso
Downs
2650
1
2,629 $449,726
Pecos 1231
3
1,145 $161,244
Los Lunas
14316 17,932 $2,597,881
Doña Ana
0700
7
221,665
Lincoln (rmdr)
14,889 $2,546,962
Mosquero
(part)
1241
8
-
Peralta
14412 3,385 $490,399
Las Cruces 0710
5
112,612 $16,502,559
Los Alamos
3203
2
19,374 $5,632,345
San Miguel (rmdr)
12,771 $1,798,472
Bosque
Farms
14505 4,042 $585,581
Hatch 0720
4
1,663 $243,702
Luna
1901
9
25,420
Sandoval
2902
9
151,538
Valencia (rmdr)
39,672 $5,747,442
Mesilla 0730
3
1,850 $271,106
Deming 1911
3
14,735 $2,112,664
Bernalillo 2912
0
9,068 $1,321,420
Sunland Park 0741
6
17,085 $2,503,696
Columbus 1921
2
1,147 $164,454
Jemez Springs 2921
7
318 $46,340
Anthony 0750
7
8,701 $1,275,075
Luna (rmdr)
9,538 $1,367,532
Edgewood
(part)
2933
5
290 $42,260
Doña Ana (rmdr)
79,754 $11,687,432
Cuba 2931
1
476 $69,364
San Ysidro 2940
9
190 $27,687
Senate Bill 243 – Page
3
Corrales 2950
4
8,557 $1,246,956
Rio Rancho 2952
4
102,272 $14,903,383
Sandoval (rmdr) 30,367 $4,425,231