46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TAXATION; ENACTING THE WATER TECHNOLOGY ASSISTANCE TAX CREDIT ACT; PROVIDING FOR TECHNICAL ASSISTANCE BY NATIONAL LABORATORIES TO RESOLVE WATER ISSUES IN NEW MEXICO.

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

Section 1. SHORT TITLE.--This act may be cited as the "Water Technology Assistance Tax Credit Act".

Section 2. PURPOSE.--The purpose of the Water Technology Assistance Tax Credit Act is to:

A. assist residents, communities, governments and businesses in New Mexico to resolve water issues by using the technology and expertise of the national laboratories;

B. encourage a national laboratory to form strategic partnerships with New Mexico entities to apply national laboratory technologies and expertise to support its partners in resolving water issues;

C. leverage water programs at the national laboratories for the direct benefit of New Mexico's residents;

D. sustain economic development and the quality of life in New Mexico; and

E. assist water providers, managers and users in New Mexico in developing and implementing new technologies that will create new water sources through treating impaired water, increasing water-use efficiency and improving water management.

Section 3. DEFINITIONS.--As used in the Water Technology Assistance Tax Credit Act:

A. "contractor" means an entity that may enter into a contract with a national laboratory to support the national laboratory in providing assistance in resolving water issues in New Mexico and that is:

(1) an individual or legal entity, including a gas, water or electric utility owned or operated by a county, municipality or other subdivision of the state; or

(2) a national, federal, state or tribal governmental unit, subdivision or agency;

B. "council" means the water assistance advisory council;

C. "department" means the taxation and revenue department;

D. "national laboratory" means a prime contractor designated as a national laboratory by act of congress that is operating a taxable entity in New Mexico;

E. "partner" means an individual or a legal entity; or a unit, a subdivision or an agency of the state or of a tribal government:

(1) that is located in New Mexico;

(2) that uses, provides, administers or impacts water resources in the state; and

(3) that has entered into an agreement with a national laboratory to receive water-related assistance;

F. "qualified expenditure" means money expended to provide water-related assistance to a partner by a national laboratory or one of its contractors involved in the water assistance program;

G. "tribal" means of or pertaining to an Indian nation, tribe or pueblo located wholly or partially in New Mexico; and

H. "water assistance program" means all activities entered into to provide water-related assistance to develop new water sources to partners by a national laboratory or its contractors.

Section 4. WATER ASSISTANCE PROGRAM.--To receive a tax credit pursuant to the Water Technology Assistance Tax Credit Act, a national laboratory shall:

A. establish a water assistance program, identify partners and provide water-related assistance;

B. create funding and financial reporting mechanisms for the water assistance program;

C. create a separate account for each partner involved in the water assistance program with the national laboratory or its contractors;

D. consult with the council to seek advice on improvements in the operation of the national laboratory's water assistance program for the benefit of the state or of local or tribal governments or communities;

E. establish a methodology to use contractors as necessary to provide water-related assistance to partners;

F. produce a report within thirty days of any calendar quarter, to be provided to the department, containing:

(1) the name and address, including the county, of each partner assisted during the calendar quarter;

(2) certification from the partner that the partner could not receive the same service for a reasonable cost from private industry;

(3) documentation by the national laboratory that it exerted due diligence to determine that the technology assistance is not otherwise available to the partner at a reasonable cost from private industry; and

(4) the qualified expenditures attributed to each partner;

(5) a description of the water-related assistance provided or received; and

(6) the name of the provider of the water-related assistance to the partner; and

G. produce by June of each year an annual report on the activities of the preceding calendar year for an appropriate legislative interim committee that:

(1) identifies the partners involved in the water assistance program, including:

(a) the water-related assistance provided to those partners;

(b) the projects initiated, continuing and completed; and

(c) an assessment of the benefits derived by the state or by local or tribal governments or communities due to the water-related assistance provided; and

(2) includes the expenditures of the water assistance program by the qualified taxpayer or its contractors and the amount of tax credit claimed by the qualified taxpayer for the calendar year covered in the report.

Section 5. WATER-RELATED ASSISTANCE--PROVISION--PURPOSES.--Water-related assistance shall be provided to create new sources of water through treating impaired water, increasing water-use efficiency or improving water management and shall be either:

A. technical assistance, including information sharing, analysis, laboratory testing and educational outreach, provided to a partner that is implementing or planning to implement technologies to create new sources of water; or

B. technology development and demonstration assistance provided to a partner, including field testing and computer-generated evaluation, model development, engineering analysis and design, that facilitate maturation and demonstration of emerging technologies that have high potential for creation of new sources of water within New Mexico.

Section 6. TAX CREDIT AGAINST GROSS RECEIPTS TAXES-- RATE--AGGREGATE LIMIT.--

A. A tax credit to be known as the "water technology tax credit", in an amount equal to the qualified expenditures made to provide water-related assistance by a qualified taxpayer, may be claimed against the amounts owed pursuant to the Gross Receipts and Compensating Tax Act by the qualified taxpayer; provided that:

(1) the water-related assistance is rendered to a partner responsible for water located in New Mexico;

(2) the qualified expenditures have been made prior to the application for the tax credit;

(3) the qualified expenditures do not exceed the aggregate limit set forth in Subsection B of this section for the calendar year;

(4) the tax credit for the qualified expenditure is taken:

(a) against gross receipts and compensating taxes paid in the calendar year in which the water-related assistance is provided; and

(b) on each month's gross receipts and compensating tax return filed by the national laboratory against gross receipts or compensating taxes due to the state and shall not impact a local government tax distribution;

(5) the partner certifies to the taxpayer that the water-related assistance provided is not otherwise available at a reasonable cost through private industry;

(6) the qualified expenditures for the water-related assistance described in Subsection A of Section 5 of the Water Technology Assistance Tax Credit Act are limited to one hundred thousand dollars ($100,000) per partner for a calendar year; and

(7) the qualified expenditures for the water-related assistance described in Subsection B of Section 5 of the Water Technology Assistance Tax Credit Act are limited to four hundred thousand dollars ($400,000) per partner for a calendar year.

B. The total aggregate amount of tax credits claimed in a calendar year by a qualified taxpayer pursuant to the Water Technology Assistance Tax Credit Act shall not exceed seven million dollars ($7,000,000).

Section 7. QUALIFIED EXPENDITURES.--A qualified expenditure is:

A. money expended to provide water-related assistance to a partner by a national laboratory or one of its contractors involved in a water assistance program; and

B. limited to:

(1) employee salaries and wages, fringe benefits and employer payroll taxes;

(2) administrative costs related to the provision of water-related assistance totaling no more than seventy-five percent of the qualified expenditures made pursuant to Paragraph (1) of this subsection;

(3) in-state travel expenses, including per diem and mileage at the internal revenue service standard rates;

(4) supplies and services of contractors related to the provision of water-related assistance; and

(5) expenses related to operation of the council.

Section 8. COUNCIL--CREATION--MEMBERSHIP--ADMINISTRATIVE SUPPORT--CHAIR.--

A. The "water assistance advisory council" is created.

B. The council shall provide advice to assist national laboratories in:

(1) identification of water needs of the state or local or tribal governments or communities;

(2) identification of partners within the state that would benefit from receiving water-related assistance;

(3) review of the annual water assistance program status report prior to its presentation to an appropriate legislative interim committee; and

(4) development for the water assistance program of a five-year plan, to be updated annually, that provides long-term guidance for the water assistance program and ensures water-related assistance that is beneficial to the state or to local or tribal governments or communities.

C. Membership of the council shall consist of one representative appointed by each of the following:

(1) the secretary of energy, minerals and natural resources;

(2) the state engineer;

(3) the secretary of environment;

(4) the secretary of economic development;

(5) the director of the New Mexico department of agriculture;

(6) the director of the New Mexico rural water users association;

(7) the executive director of the New Mexico municipal league;

(8) the executive director of the New Mexico farm and livestock bureau;

(9) the executive director of the New Mexico oil and gas association;

(10) the director of the New Mexico water resources research institute;

(11) the president of the university of New Mexico;

(12) the president of the New Mexico institute of mining and technology; and

(13) the president of New Mexico state university.

D. In addition to the council members identified in Subsection C of this section, the governor shall appoint four council members who are selected from a list submitted by the leadership of the Indian nations, tribes and pueblos located in New Mexico.

E. In addition to the council members appointed pursuant to Subsections C and D of this section, by majority vote of the council, two additional council members may be added representing water-related entities not otherwise represented.

F. Administrative support shall be provided for the council by personnel of the national laboratory initiating the water assistance program.

G. The chair of the council shall be the director of the New Mexico water resources research institute. The council shall meet at the call of the chair but not less than two times per calendar year.

Section 9. ADMINISTRATION OF ACT.--The department shall administer the Water Technology Assistance Tax Credit Act pursuant to the Tax Administration Act.

Section 10. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2003.