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Bill would divert 8% of state gross-receipts revenue to cities and counties; committee heard briefing and tabled bill
Summary
House Bill 292 would create an “all cities and counties” fund to return a portion (8%) of gross receipts tax (GRT) revenue to local governments. Sponsors and local officials said the measure would partly reverse revenue losses that followed the 2019 shift to destination-based sourcing; the committee received testimony and voted to table the bill.
House Bill 292 would create a fund that intercepts 8% of the state share of gross receipts tax revenue and distributes it to municipalities and counties under a formula intended to give a modest advantage to counties that originally exported revenue to the state.
The measure’s sponsors and local officials presented the bill as a partial remedy for revenue losses they say followed the 2019 change to destination-based sourcing in HB 6. “This bill will have significant impact on municipalities like Hobbs by ensuring a portion of GRT revenues return to cities and counties across the state,” Todd Randall, assistant city manager for the City of Hobbs, told the committee. Randall said the city experienced a 30% revenue reduction after the sourcing change and that Hobbs cut 88 positions, “which is about 15% of [our] workforce.”
The bill’s authors described a two-step distribution method: the 8% would first be divided among the state’s 33 counties using a formula that weights county contribution (30%) and population (70%), and then county shares would be distributed to municipalities on a per-capita basis. A presenter described the pool as “a little over $300,000,000” of GRT currently coming directly to the state; committee members later referenced a total fiscal impact “roughly $375,000,000 on the high end” when discussing the proposal.
Supporters from industry and local government framed the bill as an effort to stabilize local budgets during an oil-and-gas boom. Ashley Wagner, vice president of government affairs for the New Mexico Oil and Gas Association, said the industry “supports the fair and equitable distributions of funds to cities and counties” and cited the sector’s tax contributions. Matt Thompson, representing Eddy County and the Independent Petroleum Association in New Mexico, said cities in southeastern New Mexico had lost “upwards of $2,000,000 in GRT per year” and that the bill would allow more communities to share in oil-and-gas revenues.
Committee members asked for details on the formula and on how the reallocations would affect larger population centers. Staff from the Legislative Finance Committee (Brandon Gray) confirmed the example numbers shown on the fiscal information report: for example, the chart excerpted in the FIR listed roughly $90,000,000 going to Albuquerque under the formula and about $11,000,915 to Carlsbad.
After questions, Vice Chair Cardenas moved to table House Bill 292; Representative Duncan seconded the motion. The committee chair announced the motion carried and the bill was tabled for now.
Why it matters: Sponsors and municipal officials said the sourcing change that began in 2019 moved GRT associated with oil-and-gas activity away from producing towns and toward state coffers, creating budgetary shortfalls in some communities that provide public safety, water, and other services to workers who commute from those towns.
What’s next: The sponsor noted the bill was being heard as information because tax package timing had passed, and the committee’s tabled disposition leaves the initiative available for future consideration.
