All cities and counties in New Mexico could impose a tax of up to one-quarter percent for capital projects under legislation approved Wednesday by the House.

The measure removes restrictions on which local governments can impose a local option capital outlay gross receipts tax. Revenues from the tax can pay for a wide range of capital improvements, including construction of buildings, water systems, roads and firefighting equipment.

About $179 million would be generated next year if all municipalities and counties imposed the maximum tax rate, according to the Taxation and Revenue Department.

Currently, local governments can levy the capital outlay tax — with voter approval — only if they have imposed the maximum rates for two other local option gross receipts taxes. The legislation would eliminate those eligibility restrictions, meaning all local governments would have the authority to impose the tax.

"This basically just helps all municipalities and counties," said Rep. Roberto "Bobby" Gonzales, D-Taos.

The tax can be imposed in increments of one-sixteenth percent.

Only 16 municipalities, including Santa Fe, Alamogordo, Bloomfield, Clovis and Las Vegas, currently impose a capital outlay gross receipts tax. Six counties impose such a tax: Guadalupe, Luna, McKinley, San Miguel, Santa Fe and Taos, according to a Legislative Finance Committee analysis of the legislation.

The bill passed the House 56-1 and was sent to the Senate. House Republican Whip Daniel Foley of Roswell voted against the measure.

Counties and municipalities have the authority to impose several local option gross receipts taxes. The state has a 5 percent tax rate and the statewide average for local option taxes is 1.9 percent. Actual combined rates vary from place to place, depending on the levies imposed by a municipality and county.

The capital outlay gross receipt tax bill is House Bill 24.