45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO TAXATION; ENACTING THE SCHOOL DISTRICT LOCAL OPTION GROSS RECEIPTS TAX ACT; AUTHORIZING CERTAIN SCHOOL DISTRICTS TO IMPOSE A SCHOOL DISTRICT GROSS RECEIPTS TAX DISTRICT WIDE FOR CONSTRUCTION AND RENOVATION OF PUBLIC SCHOOLS AND OTHER EDUCATIONAL FACILITIES; AUTHORIZING THE ISSUANCE OF SCHOOL DISTRICT GROSS RECEIPTS TAX REVENUE BONDS; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978; DECLARING AN EMERGENCY.

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

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 16 of this act may be cited as the "School District Local Option Gross Receipts Tax Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the School District Local Option Gross Receipts Tax Act:

A. "board" means the school board of a school district;

B. "capital project" means planning, designing, constructing, equipping, furnishing or landscaping new buildings; remodeling, renovation or expansion of existing buildings; replacement or upgrading of equipment or furnishings in an existing building; or improving or equipping the grounds surrounding buildings;

C. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

D. "district" means a school district that is located in two counties and that has final property valuation in fiscal year 2001 as determined by the state department of public education that was greater than three hundred sixty million dollars ($360,000,000) but less than three hundred sixty-five million dollars ($365,000,000);

E. "off-campus instruction program" means a program established by a school district pursuant to the Off-Campus Instruction Act;

F. "resolution" means a formal written statement adopted by a board that states that a district has imposed a tax or taken other action pursuant to the School District Local Option Gross Receipts Tax Act; and

G. "state gross receipts tax" means the gross receipts tax imposed pursuant to the Gross Receipts and Compensating Tax Act.

Section 3. [NEW MATERIAL] SCHOOL DISTRICT GROSS RECEIPTS TAX--AUTHORITY TO IMPOSE--RATE.--

A. The board of a district may impose a "school district gross receipts tax" by enacting a resolution imposing an excise tax at a rate of no less than one-half of one percent and no more than one percent on any person engaging in business in the district for the privilege of engaging in business in the district.

B. The board, at the time of enacting a resolution imposing a school district gross receipts tax pursuant to Subsection A of this section, shall dedicate the revenue only for the payment of school district gross receipts tax revenue bonds for public school capital projects and off-campus instruction program capital projects, if any, in the district. The tax shall be imposed for the period necessary for payment of the principal and interest on the school district gross receipts tax revenue bonds issued to accomplish the purpose for which the revenue is dedicated, but the period shall not exceed ten years from the effective date of the resolution imposing the tax.

C. The proceeds from school district gross receipts tax revenue bonds shall be administered by the board and disbursed by the board treasurer in the amounts and for the purposes authorized in this section and as set out in a resolution of the board.

Section 4. [NEW MATERIAL] EFFECTIVE DATE OF RESOLUTION.--A resolution imposing, amending or repealing a tax or an increment of tax authorized by the School District Local Option Gross Receipts Tax Act shall be effective on July 1 or January 1, whichever date occurs first after the expiration of at least three months from the date the adopted resolution is mailed or delivered to the department. The resolution shall include that effective date.

Section 5. [NEW MATERIAL] RESOLUTION SHALL CONFORM TO CERTAIN PROVISIONS OF THE GROSS RECEIPTS AND COMPENSATING TAX ACT AND REQUIREMENTS OF THE DEPARTMENT.--

A. A resolution imposing a tax pursuant to the provisions of the School District Local Option Gross Receipts Tax Act shall adopt by reference the same definitions and the same provisions relating to exemptions and deductions as are contained in the Gross Receipts and Compensating Tax Act then in effect and as it may be amended from time to time.

B. The board of a district imposing a tax authorized by the School District Local Option Gross Receipts Tax Act shall impose the tax by adopting the model resolution with respect to the tax furnished to the district by the department. A resolution that does not conform substantially to the model resolution of the department is not valid.

Section 6. [NEW MATERIAL] SPECIFIC EXEMPTIONS.--No tax authorized pursuant to the provisions of the School District Local Option Gross Receipts Tax Act shall be imposed on the gross receipts arising from transporting persons or property for hire by railroad, motor vehicle, air transportation or any other means from one point within the district to another point outside the district.

Section 7. [NEW MATERIAL] COPY OF RESOLUTION TO BE SUBMITTED TO DEPARTMENT.--A certified copy of a resolution imposing or repealing a tax or an increment of a tax authorized by the School District Local Option Gross Receipts Tax Act or changing the tax rate imposed shall be mailed or delivered to the department within five days after the date the resolution is adopted.

Section 8. [NEW MATERIAL] COLLECTION BY DEPARTMENT--TRANSFER OF PROCEEDS--DEDUCTIONS.--

A. The department shall collect the tax imposed pursuant to the provisions of the School District Local Option Gross Receipts Tax Act in the same manner and at the same time it collects the state gross receipts tax.

B. The department shall withhold an administrative fee pursuant to Section 7-1-6.41 NMSA 1978. The department shall transfer to each district for which it is collecting a tax pursuant to the provisions of the School District Local Option Gross Receipts Tax Act the amount of the tax collected for that district, less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the tax. The transfer to the district shall be made within the month following the month in which the tax is collected.

Section 9. [NEW MATERIAL] INTERPRETATION OF ACT--ADMINISTRATION AND ENFORCEMENT OF ACT.--

A. The department shall interpret the provisions of the School District Local Option Gross Receipts Tax Act.

B. The department shall administer and enforce the collection of the school district gross receipts tax authorized by the provisions of the School District Local Option Gross Receipts Tax Act, and the Tax Administration Act applies to the administration and enforcement of the tax.

Section 10. [NEW MATERIAL] DISTRICT MAY ISSUE SCHOOL DISTRICT REVENUE BONDS.--

A. A district is authorized to issue and sell revenue bonds, known as "school district gross receipts tax revenue bonds", payable solely from the school district gross receipts tax revenue, in compliance with the School District Local Option Gross Receipts Tax Act for the purpose of funding capital projects of the district when the board certifies by resolution the need for the issuance of the bonds.

B. No issue of bonds shall be valid or binding on a district unless prior to the issuance of the bonds the attorney general approves the bond issue as to form and legality. The written approval of the attorney general shall be made a part of the transcript of the proceedings in connection with each bond issue. The district shall provide the attorney general with all information required by the attorney general to determine the form and legality of the bond issue.

C. The district shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible upon a finding by the board that the projects can proceed within a reasonable time. The board shall further take the appropriate steps necessary to comply with the Internal Revenue Code of 1986, as amended. Proceeds from the sale of the bonds shall be deposited in the treasury of the district and expended for the capital projects for which the bonds were issued.

D. The board shall determine at its discretion the terms, covenants and conditions of the school district gross receipts tax revenue bonds, including the date of issuance, denomination, maturity, coupon rates, premium, registration, refundability and other matters covering the general and technical aspects of their issuance. The bonds shall not be considered to be general obligations of the district issuing them and are payable solely from the revenue accruing from the school district local option gross receipts tax. The resolution authorizing the tax shall not be subject to repeal until the bonds are fully paid.

E. School district gross receipts tax revenue bonds shall be signed and attested by the secretary of the board and shall be executed with the facsimile signature of the president of the board, except for bonds issued in book entry or similar form without the delivery of physical securities. Any interest coupons attached to the bonds shall bear the facsimile signature of the secretary of the board, who shall adopt, by the execution of the bonds, as his own signature the facsimile appearing on the coupons. Except for bonds issued in book entry or similar form without the delivery of physical securities, the Uniform Facsimile Signature of Public Officials Act shall apply, and the board shall determine the manual signature to be affixed on the bonds.

Section 11. [NEW MATERIAL] AUTHORITY TO REFUND BONDS.--A district may issue and sell at public or private sale school district gross receipts tax refunding revenue bonds to refund outstanding school district gross receipts tax revenue bonds by exchange, immediate or prospective redemption, cancellation or escrow, including the escrow of debt service funds accumulated for payment of outstanding bonds, or any combination thereof when, in its opinion, such action will be beneficial to the district.

Section 12. [NEW MATERIAL] PROCEDURE FOR SALE OF BONDS.--

A. School district gross receipts tax revenue bonds shall be sold by a district at the time and in the manner determined by the board, either at private sale for a negotiated price or to the highest bidder at public sale for cash at not less than par and accrued interest.

B. In connection with any public sale of school district gross receipts tax revenue bonds, the district shall publish a notice of the time and place of sale in a newspaper of general circulation in the state and also in a recognized financial journal outside the state. Publication shall be made once each week for two consecutive weeks prior to the date fixed for the sale, the last publication to be two business days prior to the date of sale. The notice shall specify the amount, denomination, maturity and description of the bonds to be offered for sale and the place, day and hour at which sealed bids therefor shall be received. All bids, except that of the state, shall be accompanied by a deposit of two percent of the principal amount of the bonds. Deposits of unsuccessful bidders shall be returned upon rejection of the bid. At the time and place specified in the notice, the district shall open the bids in public and shall award the bonds, or any part thereof, to the bidder or bidders offering the best price. The district may reject any or all bids and resubmit the advertisement.

C. A district may sell a school district gross receipts tax revenue bond issue, or any part thereof, to the state or to one or more investment bankers or institutional investors at private sale.

Section 13. [NEW MATERIAL] SCHOOL DISTRICT LOCAL OPTION GROSS RECEIPTS TAX ACT IS FULL AUTHORITY FOR ISSUANCE OF BONDS--BONDS ARE LEGAL INVESTMENTS.--

A. The School District Local Option Gross Receipts Tax Act shall, without reference to any other act of the legislature, be full authority for the issuance and sale of school district gross receipts tax revenue bonds. The school district gross receipts tax revenue bonds shall have all the qualities of investment securities under the Uniform Commercial Code and shall not be invalid for any irregularity of defect or be contestable in the hands of bona fide purchasers or holders thereof for value.

B. School district gross receipts tax revenue bonds are legal investments for any person or board charged with the investment of any public funds and are acceptable as security for any deposit of public money.

Section 14. [NEW MATERIAL] SUIT MAY BE BROUGHT TO COMPEL PERFORMANCE.--Any holder of school district gross receipts tax revenue bonds or any person or officer being a party in interest may sue to enforce and compel the performance of the provisions of the School District Local Option Gross Receipts Tax Act.

Section 15. [NEW MATERIAL] BONDS TAX EXEMPT.--All school district gross receipts tax revenue bonds shall be exempt from taxation by the state or any of its political subdivisions.

Section 16. [NEW MATERIAL] DISTRICT BUDGET PROVISIONS--PAYMENT OF PRINCIPAL AND INTEREST.--A board shall establish adequate budgetary provisions, approved by the department, to promptly pay, as it becomes due, all principal and interest on school district gross receipts tax revenue bonds issued by the district.

Section 17. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] TRANSFER--REVENUES FROM SCHOOL DISTRICT GROSS RECEIPTS TAX.--A transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a school district for which the department is collecting a school district gross receipts tax imposed by that school district in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the net receipts attributable to the school district gross receipts tax imposed by that school district, less any deduction for administrative cost determined and made by the department pursuant to the provisions of Section 7-1-6.41 NMSA 1978."

Section 18. Section 7-1-6.15 NMSA 1978 (being Laws 1983, Chapter 211, Section 20, as amended) is amended to read:

"7-1-6.15. ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO SCHOOL DISTRICTS, MUNICIPALITIES OR COUNTIES.--

A. The provisions of this section apply to:

(1) any distribution to a municipality of gross receipts taxes pursuant to Section 7-1-6.4 NMSA 1978 or of interstate telecommunications gross receipts tax pursuant to Section 7-1-6.36 NMSA 1978;

(2) any transfer to a municipality with respect to any local option gross receipts tax imposed by that municipality;

(3) any transfer to a county with respect to any local option gross receipts tax imposed by that county;

(4) any distribution to a county pursuant to Section 7-1-6.16 NMSA 1978;

(5) any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;

(6) any transfer to a county with respect to any tax imposed in accordance with the Local Liquor Excise Tax Act;

(7) any distribution to a municipality or a county of cigarette taxes pursuant to Sections 7-1-6.11, 7-12-15 and 7-12-16 NMSA 1978;

(8) any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;

(9) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978; [and]

(10) any distribution to a municipality, county, school district or special district of oil and gas ad valorem production tax reduced as a result of a refund requested in December 1998 with respect to production of carbon dioxide; and

(11) any distribution to a school district of school district gross receipts taxes imposed in accordance with the School District Local Option Gross Receipts Tax Act.

B. If the secretary determines that any prior distribution or transfer to a political subdivision was erroneous, the secretary shall increase or decrease the next distribution or transfer amount for that political subdivision after the determination, except as provided in Subsection C, D or E of this section, by the amount necessary to correct the error. Subject to the provisions of Subsection E of this section, the secretary shall notify the political subdivision of the amount of each increase or decrease.

C. No decrease shall be made to current or future distributions or transfers to a political subdivision for any excess distribution or transfer made to that political subdivision more than one year prior to the calendar year in which the determination of the secretary was made.

D. The secretary, in lieu of recovery from the next distribution or transfer amount, may recover an excess distribution or transfer of one hundred dollars ($100) or more to the political subdivision in installments from current and future distributions or transfers to that political subdivision pursuant to an agreement with the officials of the political subdivision whenever the amount of the distribution or transfer decrease for the political subdivision exceeds ten percent of the average distribution or transfer amount for that political subdivision for the twelve months preceding the month in which the secretary's determination is made; provided that for the purposes of this subsection, the "average distribution or transfer amount" shall be the arithmetic mean of the distribution or transfer amounts within the twelve months immediately preceding the month in which the determination is made.

E. Except for the provisions of this section, if the amount by which a distribution or transfer would be adjusted pursuant to Subsection B of this section is one hundred dollars ($100) or less, no adjustment or notice need be made.

F. The secretary is authorized to decrease a distribution to a municipality or county upon being directed to do so by the secretary of finance and administration pursuant to the State Aid Intercept Act or to redirect a distribution to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement of the municipality or county and the New Mexico finance authority. Upon direction to decrease a distribution or notice to redirect a distribution to a municipality or county, the secretary shall decrease or redirect the next designated distribution, and succeeding distributions as necessary, by the amount of the state distributions intercept authorized by the secretary of finance and administration pursuant to the State Aid Intercept Act or by the amount of the state distribution intercept authorized pursuant to an ordinance or a resolution passed by the county or municipality and a written agreement with the New Mexico finance authority. The secretary shall transfer the state distributions intercept amount to the municipal or county treasurer or other person designated by the secretary of finance and administration or to the New Mexico finance authority pursuant to written agreement to pay the debt service to avoid default on qualified local revenue bonds or meet other local revenue bond, loan or other debt obligations of the municipality or county to the New Mexico finance authority."

Section 19. Section 7-1-6.41 NMSA 1978 (being Laws 1997, Chapter 125, Section 1) is amended to read:

"7-1-6.41. ADMINISTRATIVE FEE IMPOSED-- APPROPRIATION.--

A. The [taxation and revenue] department is directed to withhold an administrative fee of three percent of the net amount to be distributed under the provisions of:

(1) Section 7-1-6.32 NMSA 1978;

(2) Section 66-12-20 NMSA 1978; and

(3) Section 74-1-13 NMSA 1978.

B. The administrative fee to be withheld pursuant to Subsection A of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the [taxation and revenue] department that all obligations for bonds issued pursuant to [Section 12 of this 1997 act] Laws 1997, Chapter 125, Section 12 have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.

C. The [taxation and revenue] department is directed to withhold an additional administrative fee at the following percentage of the net amount to be distributed pursuant to the following provisions of law:

(1) two percent of the net amount to be distributed pursuant to Section 7-1-6.12 NMSA 1978; and

(2) six-tenths of one percent of the net amount to be distributed pursuant to Section 7-1-6.13 NMSA 1978.

D. The administrative fee to be withheld under Subsection C of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of July 1, 2000 or the date on which the New Mexico finance authority certifies to the [taxation and revenue] department that all obligations for bonds issued pursuant to [Section 12 of this 1997 act] Laws 1997, Chapter 125, Section 12 have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.

E. The administrative fee to be withheld by the [taxation and revenue] department under [Section] Sections 7-1-6.12 and 7-1-6.13 NMSA 1978 shall be set at three percent of the net amount to be distributed pursuant to the provisions of those sections.

F. The administrative fee to be withheld under Subsection E of this section shall be withheld on distributions made on or after July 1, 2000 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the [taxation and revenue] department that all obligations for bonds issued pursuant to [Section 12 of this 1997 act] Laws 1997, Chapter 125, Section 12 have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section. After the department has been directed by the authority to cease distributing money to the authority pursuant to this section, the administrative fee shall be remitted to the state treasurer for deposit in the state general fund each month.

G. The administrative fee shall be distributed monthly to the New Mexico finance authority to be pledged irrevocably for the payment of principal, interest and any expenses or obligations related to the bonds issued by the authority to finance the taxation and revenue information management systems project.

H. The administrative fee to be withheld by the department pursuant to the School District Local Option Gross Receipts Tax Act shall be set at three percent of the net amount to be distributed pursuant to the provisions of the Tax Administration Act. The administrative fee withheld pursuant to this subsection shall be distributed monthly to the general fund."

Section 20. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.