44th legislature - STATE OF NEW MEXICO - second session, 2000

RELATING TO TAXATION; ENACTING A METHOD FOR DETERMINING THE VALUE OF RESIDENTIAL PROPERTY FOR PROPERTY TAXATION PURPOSES; LIMITING VALUATION INCREASES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-36-16 NMSA 1978 (being Laws 1973, Chapter 258, Section 18) is amended to read:

"7-36-16. RESPONSIBILITY OF COUNTY ASSESSORS TO DETERMINE AND MAINTAIN CURRENT AND CORRECT VALUES OF PROPERTY.--

A. County assessors shall determine values of property for property taxation purposes in accordance with the Property Tax Code and the regulations, orders, rulings and instructions of the department. Except as provided in Sections 7-36-21.2 and 7-36-21.3 NMSA 1978, they shall also implement a program of updating property values so that current and correct values of property are maintained and shall have sole responsibility and authority at the county level for property valuation maintenance, subject only to the general supervisory powers of the director.

B. The director shall implement a program of regular evaluation of county assessors' valuation activities with particular emphasis on the maintenance of current and correct values.

C. Upon request of the county assessor, the director may contract with a board of county commissioners for the department to assume all or part of the responsibilities, functions and authority of a county assessor to establish or operate a property valuation maintenance program in the county. The contract shall be in writing and shall include provisions for the sharing of the program costs between the county and the department. The contract must include specific descriptions of the objectives to be reached and the tasks to be performed by the contracting parties. The initial term of any contract authorized under this subsection shall not extend beyond the end of the fiscal year following the fiscal year in which it is executed, but contracts may be renewed for additional one-year periods for succeeding years.

D. The department of finance and administration shall not approve the operating budget of any county in which there is not an adequate allocation of funds to the county assessor for the purpose of fulfilling his responsibilities for property valuation maintenance under this section. If the department of finance and administration questions the adequacy of any allocation of funds for this purpose, it shall consult with the department, the board of county commissioners and the county assessor in making its determination of adequacy.

E. To aid the board of county commissioners in determining whether a county assessor is operating an efficient program of property valuation maintenance and in determining the amount to be allocated to him for this function, the county assessor [must] shall present with his annual budget request a written report setting forth improvements of property added to valuation records during the year, additions of new property to valuation records during the year, increases and decreases of valuation during the year, the relationship of sales prices of property sold to values of the property for property taxation purposes and the current status of the overall property valuation maintenance program in the county. The county assessor shall send a copy of this report to the department."

Section 2. A new section of the Property Tax Code, Section 7-36-21.2 NMSA 1978, is enacted to read:

"7-36-21.2. [NEW MATERIAL] SPECIAL METHOD OF VALUATION FOR RESIDENTIAL PROPERTY.--

A. As used in this section:

(1) "change of ownership" means a transfer to a transferee by a transferor of all or any part of the transferor's legal or equitable ownership interest in residential property except for a transfer:

(a) to a trustee for the beneficial use of the spouse of the transferor or the surviving spouse of a deceased transferor;

(b) to the spouse of the transferor that takes effect upon the death of the transferor, if the property is the spouse's principal place of residence;

(c) that creates, transfers or terminates, solely between spouses, any co-owner's interest;

(d) to a child of the transferor, if the property is the child's principal place of residence;

(e) that confirms or corrects a previous transfer made by a document that was recorded in the real estate records of the county in which the real property is located;

(f) for the purpose of quieting the title to real property or resolving a disputed location of a real property boundary;

(g) to a revocable trust by the transferor with the transferor, the transferor's spouse or a child of the transferor as beneficiary; or

(h) from a revocable trust described in Subparagraph (g) of this paragraph back to the settlor or trustor or to the beneficiaries of the trust; and

(2) "percent change P" means the annual percentage change, not to exceed five percent and not less than zero, in one of the following indexes or measures approved for use by the secretary pursuant to Subsection C of this section:

(a) the repeat sales house price index for New Mexico published annually by the office of federal housing enterprise oversight;

(b) the consumer price index for all urban consumers for all items, as published by the bureau of labor statistics of the United States department of labor;

(c) the annual implicit price deflator index for state and local government purchases of goods and services, as published in the United States department of commerce monthly publication entitled "Survey of Current Business" or any successor publication;

(d) the average annual weekly earnings for private sector employees in the county as reported in "Covered Employment and Wages" or any successor document published by the New Mexico labor department; or

(e) any other measure developed or proposed by a county that appears to reflect the average rate of change in housing values in the county more accurately than any of the indexes in Subparagraphs (a) through (d) of this paragraph.

B. Except as provided in Subsection C of this section, the value of residential property for property taxation purposes is:

(1) if no change of ownership of the property occurred in the year immediately prior to the year for which the value of the property for property taxation purposes is being determined, the value determined in the immediately prior year multiplied by percent change P, plus the value of any physical improvements made to the property during the immediately preceding tax year and minus the decrease in value of the property from the immediately preceding tax year determined pursuant to Section 7-38-13 NMSA 1978;

(2) if a change of ownership of the property occurred in the year immediately prior to the year for which the value of the property for property taxation purposes is being determined, the value of the property for property taxation purposes as determined pursuant to the general valuation provisions applicable to residential property in the Property Tax Code; or

(3) the value determined pursuant to Paragraph (1) of this subsection, adjusted pursuant to Section 7-36-21.3 NMSA 1978, if that provision is applicable.

C. If a county has a sales-ratio determined pursuant to Sections 7-36-16 and 7-36-18 NMSA 1978, of less than eighty-five hundredths, the assessor shall value residential property for the 2001 property tax year pursuant to Section 7-36-15 NMSA 1978. For subsequent years the assessor shall value residential property pursuant to Subsection B of this section unless the county's sales ratio remains below eighty-five hundredths. In the first property tax year after a county's sales-ratio has reached or exceeded eighty-five hundredths and for all property tax years subsequent to that year, the county assessor shall value residential property pursuant to Subsection B of this section.

D. If the method of valuation specified in this section is applied to an owner's residential property, the owner may protest the valuation on the basis that the value determined exceeds fair market value of the property based on evidence presented by the owner. The procedures specified in Sections 7-38-21 through 7-38-29 NMSA 1978 shall apply to protests filed pursuant to this subsection.

E. The county assessor shall enter on the valuation records the valuations determined in accordance with Subsection B of this section.

F. No later than August 1, 2000, the county assessor, with the approval of the board of county commissioners, shall determine the index or measure pursuant to Paragraph (2) of Subsection A of this section that would appear to most accurately reflect the average rate of change in housing values in the county for tax years 2001 through 2005 and make application to the secretary of taxation and revenue in the form and manner required by the secretary for approval to use that index or measure. No later than October 1, 2000, the secretary shall approve or disapprove in writing the index or measure proposed for use in the county. If disapproved, the county assessor shall work with the secretary to determine, no later than December 1, 2000, the appropriate index or measure to be used. For each succeeding five-year period, the same procedures and monthly deadlines shall apply, beginning August 1, 2005."

Section 3. A new section of the Property Tax Code, Section 7-36-21.3 NMSA 1978, is enacted to read:

"7-36-21.3. [NEW MATERIAL] ADJUSTMENT OF VALUATION OF RESIDENTIAL PROPERTY UNDER CERTAIN CIRCUMSTANCES.--

A. Except as provided in Subsection C of Section 7-36-21.2 NMSA 1978, if a county assessor determines that the total valuation of residential property for property taxation purposes in the county exceeds the valuation that would have resulted in the absence of the application of Section 7-36-21.2 NMSA 1978, he shall apply to the secretary for an order authorizing the assessor to reassess all residential property in the county or to apply a percentage adjustment of valuation to all residential property in the county. This percentage shall be calculated to reduce the valuation of residential property to the value that would have resulted in the absence of the application of Section 7-36-21.2 NMSA 1978.

B. Except as provided in Subsection C of Section 7-36-21.2 NMSA 1978, if a county assessor determines that special and unusual circumstances have occurred that have caused residential property values for property taxation purposes in the county to increase or decrease to an average level markedly above or below the average level in the immediately preceding tax year, he shall apply to the secretary for an order authorizing the assessor to reassess all residential property in the county or to apply a percentage adjustment of valuation to all residential property in the county. This percentage shall be calculated to reduce or increase the valuation of residential property in the county to the value that would have resulted in the absence of the application of Section 7-36-21.2 NMSA 1978."

Section 4. APPLICABILITY.--The provisions of this act apply to the 2001 and subsequent property tax years.