HOUSE JOINT MEMORIAL 47
49th legislature - STATE OF NEW MEXICO - second session, 2010
INTRODUCED BY
Edward C. Sandoval
A JOINT MEMORIAL
REQUESTING THE NEW MEXICO LEGISLATIVE COUNCIL TO CREATE A PROPERTY TAX LIMITATION TASK FORCE TO DEVELOP SOLUTIONS TO RESOLVE THE CONSTITUTIONAL AND STATUTORY ISSUES CAUSING SHIFTING INEQUITIES IN PROPERTY TAXATION, CONFUSION AND DIFFICULTY IN ADMINISTRATION OF PROPERTY TAX LAWS, INEFFICIENCIES THAT POTENTIALLY COULD DISTORT THE REAL ESTATE MARKET AND FURTHER SUPPRESS SALES OF RESIDENTIAL PROPERTY AND INADEQUATE LOCAL GOVERNMENT FUNDING.
WHEREAS, in 1998, an amendment to Article 8, Section 1 of the constitution of New Mexico requiring that a limitation on residential properties be implemented was approved by the people of New Mexico; and
WHEREAS, in 2000, Section 7-36-21.2 NMSA 1978 was enacted to comply with the amended requirements of the constitution of New Mexico, and Section 7-36-21.3 NMSA 1978 provides another limitation on property values for owner-occupied residential properties for elderly, low-income or disabled home owners; and
WHEREAS, the limitation pursuant to Section 7-36-21.2 NMSA 1978 placed on the value of residential property that did not have a change in ownership in the last year may not exceed an increase of three percent per year; and
WHEREAS, pursuant to Section 7-36-21.2 NMSA 1978, upon a change in ownership, the value of the property is increased to the current and correct or market value of the property, and in some counties in which market values of property have increased more than three percent per year, the values of properties that have changed ownership since 2002 have increased substantially when valued at the current and correct values; and
WHEREAS, when the value of the property increases substantially, the property taxes also increase; and
WHEREAS, approximately one-third of the residential housing in New Mexico has changed ownership since 2001, and serious inequities have developed in the tax system, with similarly situated taxpayers having substantially different tax burdens on very similar properties; and
WHEREAS, newly constructed homes are valued much differently than older homes that come under the value limitation; and
WHEREAS, two New Mexico district court cases decided in Bernalillo county have determined that Section 7-36-21.2 NMSA 1978 is unconstitutional, resulting in extreme increases in the number of taxpayer protests regarding valuations and tax bills seen in some counties, and a case is pending before the New Mexico court of appeals to determine if, indeed, Section 7-36-21.2 NMSA 1978 is unconstitutional; and
WHEREAS, the rate-determining process lacks transparency that results in uninformed taxpayers voting on bond issues that promise not to raise their taxes but many times raise their taxes anyway; and
WHEREAS, more and more taxpayers grow frustrated with inexplicable annual increases in their property tax burden and many are stunned by changes in their taxes, regardless of the requirement adopted in 2009 that an estimate of property taxes be provided to residential property purchasers; the taxes seem to always increase, never decrease; and
WHEREAS, although the property tax division of the taxation and revenue department has general supervision over county assessors, the property tax division lacks the necessary electronic connectivity with county assessors to share information quickly, and many county assessors lack the information and technical resources needed to create uniform assessments across the state; and
WHEREAS, property taxes are the product of valuation multiplied by the tax rates, and a correction of the limitation problem must address both of these factors; and
WHEREAS, property tax rates are also controlled by a formula referred to as "yield control", but not all tax levies are subject to control by the yield control formula; and
WHEREAS, limitations on valuation increases and decreases inhibit the correct application of the yield control formula, which was designed to reduce property tax rates as property values increased; and
WHEREAS, local governments, especially counties, rely on property taxes to provide essential services to their communities and already find it difficult to fund the services demanded by the taxpayers; and
WHEREAS, while counties have the greatest reliance on property tax revenue, property taxes also provide essential funds to municipalities, school districts, soil and water conservation districts, conservancy districts, hospital districts and other special districts for operations and capital needs; and
WHEREAS, a solution to the property tax problems must include the promise of adequate funds for local governments to continue to provide services to the people;
NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF NEW MEXICO that the New Mexico legislative council create a property tax limitation task force to address the many issues arising from the administration of the property tax and the statutory and constitutional language now creating the framework for the property tax; and
BE IT FURTHER RESOLVED that the New Mexico legislative council charge the legislative council service with contracting to convene the property tax limitation task force; and
BE IT FURTHER RESOLVED that the New Mexico legislative council authorize the legislative council service and the legislative finance committee to convene and staff the task force and authorize the legislative council service to contract with the arrowhead center at New Mexico state university to assist with the task force; and
BE IT FURTHER RESOLVED that the New Mexico legislative council appoint four members from each house of the legislature with the appropriate ratio of majority and minority members and a representative from the New Mexico tax research institute, the taxation and revenue department, the department of finance and administration, the New Mexico association of counties and its assessors affiliate, the New Mexico municipal league, the realtors association of New Mexico, members of the public with knowledge of property tax law, the higher education department, the public education department and others who have working knowledge of the issues arising from the value limitation on residential property and the Property Tax Code; and
BE IT FURTHER RESOLVED that the property tax limitation task force report its progress and present its findings and proposed legislation to the revenue stabilization and tax policy committee on or before October 31, 2010; and
BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the co-chairs of the New Mexico legislative council; the directors of the legislative council service and the legislative finance committee; the secretaries of taxation and revenue, finance and administration, higher education and public education; the directors of the arrowhead center at New Mexico state university and the county assessors group; the executive directors of the New Mexico tax research institute, the New Mexico association of counties and the New Mexico municipal league; and the executive vice president of the realtors association of New Mexico.
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