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Sen. Kernan, Rep. Brown Advance Legislation to Address "Destination Sourcing"

Senator Gay Kernan, Representative Cathrynn Brown Advance Legislation to Address “Destination Sourcing” Revenue Loss for the City of Carlsbad

SANTA FE – Today, Senate Bill 292, sponsored by Senator Gay Kernan (R-Hobbs) and Representative Cathrynn Brown (R-Carlsbad), cleared the Senate Finance Committee with unanimous, bipartisan support. The bill appropriates $25 million for the City of Carlsbad to offset revenue loss resulting from the state’s recent transition to destination-based sourcing of the gross receipts tax (GRT). The appropriation is a one-time, nonrecurring expense to the general fund.

“I want to thank my colleagues for their support as we seek to address the unintended consequences of our recent transition to destination-based sourcing,” said Senator Kernan. “My community contributes billions of dollars annually to the state’s coffers through oil and gas taxes. Unfortunately, the oil and gas GRT receipts that were previously sourced to Carlsbad under the state’s origin-based sourcing rules are now being sourced to area counties. This one-time influx of revenue will allow the city to continue serving its citizens until the Legislature comes up with a solution to this pressing matter.”


“Until such a time as a permanent fix is found, this appropriation will help the city cope with significant revenue losses,” said Representative Cathrynn Brown. “I have introduced another bill, House Bill 439, that proposes to amend the statute that caused the difficulty in the first place. HB 439 has been referred to two House committees.”


According to the bill analysis, the tax on services from companies based in Carlsbad but delivered to other locations has exceeded the gain from the sale of goods purchased remotely and delivered to Carlsbad purchasers. This has resulted in a significant net loss in tax revenue for the city.

Senate Bill 292 will now be placed on the Senate Calendar for consideration by the full Senate.

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