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 Woods
LAST UPDATED
ORIGINAL DATE 3/3/2025
SHORT TITLE Expand Rural Health Care Tax Credit
BILL
NUMBER Senate Bill 424
ANALYST Gray
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
PIT $0
Up to
($1,500)
Up to
($1,500)
Up to
($1,500)
Up to
($1,500)
Recurring General Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Conflicts with House Bills 52 and 226
Sources of Information
LFC Files
Agency Analysis Received From
Department of Health (DOH) Agency Analysis was Solicited but Not Received From
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Senate Bill 424
Senate Bill 424 (SB424) makes respiratory care practitioners and polysomnographic
technologists eligible for the $3,000 annual rural healthcare practitioner tax credit.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns, or June 20, 2025, if enacted.
FISCAL IMPLICATIONS
This bill expands a tax expenditure that is estimated to decrease recurring general fund revenue
by $1.5 million in FY26. Estimating the cost of tax expenditures is difficult. Confidentiality
requirements surrounding certain taxpayer information create uncertainty, and analysts must
frequently interpret third-party data sources. The statutory criteria for a tax expenditure may be
ambiguous, further complicating the initial cost estimate of the fiscal impact. Once a tax Senate Bill 424 – Page 2
expenditure has been approved, information constraints continue to create challenges in tracking
the real costs (and benefits) of tax expenditures.
The estimate provided in this analysis estimates the general fund revenue using information
provided by the New Mexico Department of Workforce Solutions’ (DWS) Occupational
Employment and Wages and the 2023 New Mexico Health Care Workforce Committee (HCWC)
annual reports. Those resources provide that there are 650 respiratory practitioners with a median
annual wage of $78 thousand and about 100 polysomnographic technologists with a median
annual wage of $80 thousand. The estimated tax liability of these taxpayers is between $2,500
and $2,600 per year for single filers. This analysis used data from the Taxation and Revenue
Department (TRD) provided for similar legislation to estimate the share of full-time and part-
time claims to have a ratio of 60:40.
SIGNIFICANT ISSUES
Analysis from the Department of Health (DOH) notes that there is a significant demand for
medical care specialists like respiratory practitioners and polysomnographic technicians in rural
areas. The agency writes:
The proposed addition of Respiratory Care Practitioners and Polysomnographic
Technologists in SB424 could encourage health care practitioners to live and stay in rural
and medically underserved areas to provide needed health care services
The 2023 New Mexico Health Care Workforce Committee annual report estimates that there are
over 57 thousand licensed health professionals in New Mexico, with about 33 thousand of them
practicing as of 2021. Between 20 percent and 30 percent—between 7 thousand and 10
thousand—of those are likely in rural areas. In 2021, 2,049 taxpayers claimed the rural
healthcare practitioner tax credit. The 2024 amendment to the rural healthcare practitioner tax
credit added an estimated 5,372 additional healthcare professionals. That amendment, coupled
with the proposed change under SB424, indicates this bill likely covers a large share of rural
healthcare practitioners practicing in a field that requires state licensing.
However, this is only a portion of the total rural health care workforce. According to BLS, there
were about 90 thousand people employed in health-related industries in 2024. About 30 percent
are likely located in rural areas, amounting to a total rural health care workforce of about 27
thousand workers. This implies about 19 thousand people work in a rural healthcare role that
does not require a license and, accordingly, will not benefit from the current credit or the bill’s
expansion of the credit.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
This bill conflicts with House Bill 52, which adds the following professions to the rural health
care practitioner credit:
Licensed practical nurses,
Emergency medical technicians,
Paramedics,
Speech-language pathologists,
Occupational therapists, and, Senate Bill 424 – Page 3
Chiropractic physicians.
This bill conflicts with House Bill 226, which triples the value of the Rural Health Care
Practitioner tax credit, increasing the credit from $5 thousand to $15 thousand for physicians,
dentists, psychologists, podiatric physicians, and optometrists and from $3 thousand to $9
thousand for many other types of medical practitioners practicing in rural areas.
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.
This bill has not
been vetted by an
interim tax
committee.
Targeted: The tax expenditure has a clearly stated purpose, long-term
goals, and measurable annual targets designed to mark progress toward
the goals.
This bill does not
have a clearly
stated purpose,
long-term goals, or
measurable annual
targets. 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
This bill requires
annual reporting,
which was already
required under the
RHCPTC.
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.
This bill does not
have an expiration
date.
Public analysis
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.
?
It is unclear whether
this bill is effective
and efficient, in part
because the bill
lacks measurable
targets or
objectives.
Fulfills stated purpose
Passes “but for” test
Efficient: The tax expenditure is the most cost-effective way to achieve
the desired results.
? Senate Bill 424 – Page 4
Key: Met Not Met ? Unclear
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