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 Gonzales
LAST UPDATED
ORIGINAL DATE 2/11/2025
SHORT TITLE Motor Vehicle Excise Tax Distributions
BILL
NUMBER Senate Bill 289
ANALYST Faubion
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
MVX $0 $0 ($151,000.0) ($153,400.0) ($157,100.0) Recurring General Fund
MVX $0 $0 $131,900.0 $134,000.0 $137,200.0 Recurring
State Road
Fund
MVX $0 $0 $19,100.0 $19,400.0 $19,900.0 Recurring
Transportation
Project 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
No fiscal
impact
$17.3
No fiscal
impact
$17.3 Recurring General Fund
Total
No fiscal
impact
$17.3
No fiscal
impact
$17.3 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Conflicts with House Bill 19 and Senate Bill 27.
Sources of Information
LFC Files
Agency Analysis Received From
Taxation and Revenue Department (TRD) Agency Analysis Solicited but Not Received From
Department of Finance and Administration (DFA)
Department of Transportation (NMDOT)
SUMMARY
Synopsis of Senate Bill 289
Senate Bill 289 changes the distribution of the motor vehicle excise tax as follows:
Senate Bill 289 – Page 2
Current
Law
Proposed FY27
and Beyond
General Fund 59.39% 10.00%
State Road Fund 21.86% 65.00%
Transportation Project Fund 18.75% 25.00%
The effective date of this bill is July 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. LFC and the Taxation and Revenue
Department (TRD) applied the proposed distribution rates of the motor vehicle excise tax
(MVX) to the current consensus revenue estimating group’s December 2024 MVX forecast.
This bill is expected to have a low impact on TRD’s Administrative Services Division (ASD).
TRD will update the Tapestry System’s general ledger and reporting. It is anticipated this work
will take approximately 20 hours split between 2 FTE of a pay band 70 and a pay band 80 at a
cost of approximately $1,300. Collaboration and input from the Department of Finance and
Administration (DFA) is required as this will decrease general fund revenue distributions.
Implementing this bill will have a low impact on TRD’s Information Technology Division
(ITD), approximately 240 hours or 1½ months for an estimated $16,000 of staff workload costs.
SIGNIFICANT ISSUES
The bill seeks to address the need for infrastructure investment identified by the Department of
Transportation (NMDOT). NMDOT’s operating budget comes primarily from two sources:
formula funding from the U.S. Department of Transportation and revenue from gasoline and
diesel taxes, fees on commercial trucking, and vehicle registration fees deposited into the state
road fund. For several years, these revenues grew at a slow pace, with any additional revenue
largely offset by increasing costs. Between FY14 and FY21, annual revenue into the state road
fund grew by an average of 2.3 percent. Recent passage of the federal Infrastructure Investment
and Jobs Act and state legislation dedicating a portion of the motor vehicle excise tax to the state
road fund led to increased resources for state roads between FY21 and FY24, but NMDOT is
projecting slower growth in the future, primarily due to a slowdown of gasoline taxes.
Additionally, since 2019, the Legislature has invested significant nonrecurring general fund
revenue in state road projects, including funds for road maintenance, new road construction,
bridge replacement, and other projects.
TRD notes directing all MVX revenue to the state road fund and local government road funds is
a supportable earmark since the cost of maintaining roads is directly tied to vehicle sales, which
contributes to road deterioration. This would enable direct planning of budget use with
forecasted MVX revenue. TRD also notes this proposal would eliminate a recurring general fund
revenue source, reducing the Legislature’s budgetary flexibility with respect to the broad
appropriation needs of the state in future years. In FY24, MVX contributed $167.3 million to the
general fund, or approximately 1.3 percent of recurring general fund revenue.
Senate Bill 289 – Page 3
PERFORMANCE IMPLICATIONS
The conditions of state roads are key performance measures for NMDOT’s performance-based
budget. NMDOT assesses all New Mexico roads each calendar year using a pavement condition
rating (PCR) score to measure roadway conditions. For calendar year 2023, road condition data
shows improvement from 2020, although slightly lower than in 2021. A PCR score of 45 or less
indicates a road in poor condition. In 2023, the average PCR score for the state was 65, down
from 65.9 in 2022 and 72.1 in 2021 but up from the 2020 score of 54.9.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
This bill conflicts with House Bill 19 and Senate Bill 27 which propose conflicting distributions
of the motor vehicle excise tax.
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