Governor signs track bill

by Jim Kalvelage - Ruidoso News

March 9, 2010 - Legislation that would allow the imposition of a new gross receipts tax in Lincoln County has been signed into law by Governor Bill Richardson.

The County Business Retention Gross Receipts Tax bill had been unanimously approved by the New Mexico House and Senate last month. Revenues from the potential tax would finance a gaming tax credit for the Ruidoso Downs Race Track and Casino. Under terms of the legislation, the Lincoln County Commission can vote whether to set an election date and a gross receipts tax rate. The question could go to voters as soon as September.

"In order to impose the gross receipts tax on January 1, you have to get the results of the election before the end of September," said Lincoln County manager Tom Stewart. "There are some big rubs that have to do with timing."

In a letter to New Mexico's Taxation and Revenue Department Secretary Rick Homans, Stewart said time will be extremely short to comply with the new act's requirements.

"I assume that like other GRT impositions the results of the required special election and approved ordinance will need to be forwarded to taxation and revenue by the end of September 2010," Stewart wrote. "This being the case, and understanding that the ordinance and resolution calling for the election must be completed 75 days prior to the election (potentially end of June 2010), could you please advise as to when the tax and revenue model ordinance, that must be adopted verbatim, will be complete?"

Stewart said he needs both the language for the required ordinance and resolution setting the election date and the ballot question's language.
A special election would cost the county $25,000, according to Stewart. Including the question in the Nov. 2, 2010, general election would make July 1, 2011 the soonest the tax could go into effect.

The maximum allowed rate would be one-fourth of one percent, in increments of one-sixteenth of a percent.

The gaming tax credit through the new gross receipts tax was the regular legislative session's second effort at reducing the gaming tax rate for the track and casino owned by RD Hubbard. A first attempt, that would have had state coffers provide a tax break, failed.

The business retention act allows the credit to be sought by racetracks in New Mexico that have a net win (wagering minus winnings) of less than $15 million. Currently only the Ruidoso Downs racino would fit that that requirement, according to a fiscal impact report prepared by the Legislative Finance Committee.

Officials with the Ruidoso Downs Race Track and Casino have threatened to move to the Las Cruces area without "tax parity" with nearby tribal casinos.

The gaming tax credit would be limited to $750,000 a year. If the new gross receipts tax revenues fail to produce $750,000, the credit would accordingly be reduced. If the tax produced more than $750,000 in a year, the excess revenues could be used by the county for a public post-secondary educational institution in the county, promotion or administration of the county, or economic development planning. The tax would end in five years, or earlier if county commission so votes.

A cosponsor of the measure, Representative Zach Cook (R-Ruidoso), had said imposing the tax would be decided locally.

"They (the voters) would say if they want to."

The successful legislation had seen a lot of lobbying during the second half of the 30-day legislative session that wrapped up Feb. 18.

The measure's fiscal impact report estimated that imposing the minimum tax rates of one-sixteenth or one-eighth of one percent would not generate enough revenue for the Ruidoso Downs Race Track and Casino to take full advantage of the credit. The other two options would be a three-sixteenth or one-quarter of one percent gross receipts tax.

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