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

RELATING TO PUBLIC SCHOOLS; PROVIDING FOR A LOCAL OPTION PROPERTY TAX FOR SCHOOL DISTRICT OPERATIONAL PURPOSES; CREATING A FUND; PROVIDING FOR DISTRIBUTION; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978; MAKING AN APPROPRIATION.

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

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 7 of this act may be cited as the "Local Operational School Levy Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Local Operational School Levy Act:

A. "department" means the state department of public education;

B. "forty-day program costs" means program costs, as defined in the Public School Finance Act, for any school district as calculated using membership, as defined in the Public School Finance Act, on the fortieth day of the applicable school year in that school district;

C. "local school board" means the governing body of a school district;

D. "operational purposes" means those expenditure categories for the general operation of a school district that are defined in state board of education rules for uniform financial accounting and budgeting for school districts;

E. "superintendent" means the superintendent of public instruction; and

F. "taxable value of property" means the sum of the following:

(1) the "net taxable value", as that term is defined in the Property Tax Code, of property subject to taxation under the Property Tax Code;

(2) the "assessed value" of "products" as those terms are defined in the Oil and Gas Ad Valorem Production Tax Act;

(3) the "assessed value" of "equipment" as those terms are defined in the Oil and Gas Production Equipment Ad Valorem Tax Act; and

(4) the "taxable value" of "copper mineral property" as those terms are defined in the Copper Production Ad Valorem Tax Act.

Section 3. [NEW MATERIAL] LOCAL SCHOOL BOARD--AUTHORIZATION TO IMPOSE A TAX FOR SCHOOL DISTRICT OPERATIONAL PURPOSES--RESOLUTION--ELECTION REQUIRED.--

A. A local school board may adopt a resolution authorizing, for school district operational purposes, the imposition of a property tax upon the taxable value of property in the school district. The total tax imposition that may be authorized under the Local Operational School Levy Act shall not exceed a rate of four dollars ($4.00) on each one thousand dollars ($1,000) of taxable value of property in the school district.

B. The tax authorized pursuant to Subsection A of this section shall not be imposed unless the question of authorizing the imposition of the tax is submitted to the voters of the district. The local school board shall not submit to the voters at any one election a question authorizing the imposition of a tax under the Local Operational School Levy Act at a rate greater than two dollars ($2.00) on each one thousand dollars ($1,000) of taxable value of property in the school district or for a period of more than ten years. However, if a tax is imposed pursuant to approval at a special school district election prior to the 2005 regular school district election, the period for which the tax is imposed shall be for a period ending no later than December 31, 2013.

C. During the three years prior to the expiration of any period during which a tax has been authorized to be imposed pursuant to the Local Operational School Levy Act, the local school board may adopt a resolution under Subsection A of this section and submit to the voters of the district the question of authorizing the imposition of a tax under that act for an additional period not to exceed ten years with the tax to be certified and first imposed for the period immediately succeeding the last year of the period the tax was previously authorized to be imposed.

D. Any resolution adopted pursuant to Subsection A of this section shall specify:

(1) the rate of the proposed tax;

(2) the date a referendum will be held to submit the question of imposition of the tax to the voters of the school district;

(3) the period of time the tax is authorized to be imposed; and

(4) the proposed use of the revenues from the proposed tax.

E. The local school board shall mail the superintendent a copy of the resolution authorizing a tax pursuant to Subsection A of this section within two weeks following its adoption by the local school board.

F. Any amounts received by the school district under the provisions of the Local Operational School Levy Act shall be expended only for operational purposes of the school district.

Section 4. [NEW MATERIAL] CONDUCT OF ELECTION--BALLOT.--

A. The question of authorizing the imposition of a tax under the Local Operational School Levy Act shall be submitted to the voters at the first regular school district election following the adoption of a resolution pursuant to Section 3 of the Local Operational School Levy Act. However, if a local school board deems it necessary, it may call a special school district election to submit to the voters the initial question of the authorization of a tax under the Local Operational School Levy Act. Thereafter, the question of authorizing the imposition of any additional tax under the Local Operational School Levy Act shall be submitted to the voters only at regular school district elections.

B. The proclamation calling the election shall be filed and published as required under the School Election Law and shall specify:

(1) the date on which the election will be held;

(2) the question of whether the imposition of a property tax for school district operational purposes shall be authorized pursuant to the Local Operational School Levy Act at a rate not to exceed the rate specified in the authorizing resolution and for the period specified in that resolution;

(3) the precincts in each county in which the election is to be held and the location of each polling place;

(4) the hours each polling place will be open; and

(5) the date and time of the closing of the registration books by the county clerk as required by law.

C. The ballot shall include the information specified in Paragraph (2) of Subsection B of this section and shall present the voter the choice of voting "for the local operational school levy" or "against the local operational school levy".

D. The election shall be held, conducted and canvassed pursuant to the School Election Law.

E. The local school board shall notify the superintendent of the results of the election immediately upon completion of the canvass.

F. Any resolution authorizing a tax pursuant to the Local Operational School Levy Act shall be adopted by a date necessary to ensure that the results of the election on the question of imposing the tax shall be certified no later than June 15 of the property tax year for which the tax rates will first be certified.

Section 5. [NEW MATERIAL] IMPOSITION OF TAX--CERTIFICATION BY DEPARTMENT OF FINANCE AND ADMINISTRATION--DISCONTINUANCE OF TAX.--

A. If a majority of the voters voting on the question votes for a local operational school levy pursuant to a resolution adopted under the Local Operational School Levy Act, the tax shall be imposed for the earliest period for which the tax rate may be certified, except as otherwise provided in that act. The tax rate shall be certified by the department of finance and administration and imposed, administered and collected in accordance with the provisions of the Oil and Gas Ad Valorem Production Tax Act, the Oil and Gas Production Equipment Ad Valorem Tax Act, the Copper Production Ad Valorem Tax Act and the Property Tax Code.

B. If a majority of the voters voting on the question votes against a local operational school levy, the tax shall not be imposed. The local school board shall not again adopt a resolution authorizing the imposition of a tax under the Local Operational School Levy Act for at least two years after the date of the resolution that the voters rejected.

C. The department of finance and administration shall not certify the tax rates for taxes authorized pursuant to the Local Operational School Levy Act in any year in which the superintendent certifies by July 1 of that year that money in the local operational school fund for the next school year is not sufficient to meet the demands on the fund. The tax rates authorized but not certified shall be certified in the first succeeding year for which the necessary appropriation to the local operational school fund for the next school year has been made.

D. The department of finance and administration shall not certify the tax rate for a tax authorized pursuant to the Local Operational School Levy Act for any school district in the state in any year in which the state department of public education notifies the department of finance and administration by August 1 that the imposition of the taxes or the use of revenues from the taxes would result in:

(1) the failure to qualify for certification by the secretary of the United States department of education as having in effect for the tax year in which the tax would otherwise be imposed, administered and collected a program of state aid that equalizes expenditures for free public education among local educational agencies in the state; or

(2) when computed according to 20 U.S.C. 7709(d)(1), a proportion of less than eighty percent in any school district.

E. The local school board may discontinue by resolution the imposition of any tax authorized pursuant to the Local Operational School Levy Act. The discontinuance resolution shall be mailed to the department of finance and administration and the superintendent no later than June 15 of the year in which a tax rate pursuant to that act is not to be certified.

Section 6. [NEW MATERIAL] LOCAL OPERATIONAL SCHOOL FUND CREATED--APPROPRIATION.--There is created in the state treasury the "local operational school fund". The fund shall be invested as other state funds are invested. Earnings on balances in the local operational school fund shall be credited to the fund, and amounts in the fund are appropriated for the purposes of the Local Operational School Levy Act.

Section 7. [NEW MATERIAL] STATE GUARANTEE--STATE DISTRIBUTION--REMITTANCE OF EXCESS AMOUNTS.--

A. The state guarantee for a school district that has imposed a tax pursuant to the Local Operational School Levy Act shall be an amount equal to the product obtained by multiplying two and one-half percent by the tax rate certified pursuant to that act and multiplying that product by the forty-day program cost for the school year beginning in any year a tax rate under that act is certified for that district.

B. The state distribution for a district for a school year is an amount that shall not exceed the state guarantee for that district and that is equal to the amount by which the guarantee exceeds the revenue from the tax imposed in that district pursuant to the Local Operational School Levy Act received during the period beginning June 1 of the year during which a tax rate under that act is certified for the district and ending May 31 of the next year. If a school district is entitled to a state distribution, the superintendent shall distribute the calculated amount from the local operational school fund to the school district not later than June 30 of the calendar year following the year during which the tax rate was certified.

C. If the revenue received during the period June 1 to May 31 from the imposition of the tax authorized by the Local Operational School Levy Act exceeds the state guarantee for the school year during which the revenue was received, the local school board shall remit to the local operational school fund by June 30 of the school year an amount equal to the sum of the amounts derived from the following three calculations:

(1) one-fourth of the amount of revenue that exceeds one hundred twenty-five percent of the state guarantee but is less than one hundred fifty percent of the state guarantee;

(2) one-half of the amount of revenue that is one hundred fifty percent or more of the state guarantee but less than one hundred seventy-five percent of the state guarantee; and

(3) three-fourths of the amount of revenue that is one hundred seventy-five percent or more of the state guarantee.

D. If the balance in the local operational school fund in any fiscal year is insufficient to pay the sum of the distribution amounts determined to be due to all the school districts entitled to a distribution, the amount necessary to pay all distribution amounts in full shall be transferred from the state-support reserve fund to the local operational school fund for distribution to school districts as required pursuant to this section. However, if there is not a sufficient balance in the state-support reserve fund to pay both the full state equalization guarantee distribution and the state distributions under this section, the state equalization guarantee distribution shall be made in full and, based on the amount available in the local operational school fund, each state distribution amount due pursuant to this section shall be reduced proportionately.

E. Distributions to school districts made pursuant to the Local Operational School Levy Act shall be supplemental to state equalization guarantee distributions made pursuant to the Public School Finance Act. In no fiscal year shall the amount of state funding pursuant to the Public School Finance Act be reduced because of the imposition in one or more school districts of a tax under the Local Operational School Levy Act. The absence of a distribution to a school district under the Local Operational School Levy Act shall not affect the amount of any state equalization guarantee distributions to that district pursuant to the Public School Finance Act.

Section 8. Section 7-37-7.1 NMSA 1978 (being Laws 1979, Chapter 268, Section 1, as amended) is amended to read:

"7-37-7.1. ADDITIONAL LIMITATIONS ON PROPERTY TAX RATES.--

A. Except as provided in Subsections D and E of this section, in setting the general property tax rates for residential and nonresidential property authorized in Subsection B of Section 7-37-7 NMSA 1978, the other rates and impositions authorized in Paragraphs (2) and (3) of Subsection C of Section 7-37-7 NMSA 1978, except the portion of the rate authorized in Paragraph (1) of Subsection A of Section 4-48B-12 NMSA 1978 used to meet the requirements of Section 27-10-4 NMSA 1978 and except rates authorized pursuant to the Local Operational School Levy Act, and benefit assessments authorized by law to be levied upon net taxable value of property, assessed value or a similar term, neither the department of finance and administration nor any other entity authorized to set or impose a rate or assessment shall set a rate or impose a tax or assessment that will produce revenue from either residential or nonresidential property in a particular governmental unit in excess of the sum of a dollar amount derived by multiplying the appropriate growth control factor by the revenue due from the imposition on residential or nonresidential property, as appropriate, for the prior property tax year in the governmental unit of the rate, imposition or assessment for the specified purpose plus, for the calculation for the rate authorized for county operating purposes by Subsection B of Section 7-37-7 NMSA 1978 with respect to residential property, any applicable tax rebate adjustment. The calculation described in this subsection shall be separately made for residential and nonresidential property. Except as provided in Subsections D and E of this section, no tax rate or benefit assessment that will produce revenue from either class of property in a particular governmental unit in excess of the dollar amount allowed by the calculation shall be set or imposed. The rates imposed pursuant to Sections 7-32-4 and 7-34-4 NMSA 1978 shall be the rates for nonresidential property that would have been imposed but for the limitations in this section. As used in this section, "growth control factor" is a percentage equal to the sum of "percent change I" plus V where:

(1) V = (base year value + net new value), base year value

expressed as a percentage, but if the percentage calculated is less than one hundred percent, then V shall be set and used as one hundred percent;

(2) "base year value" means the value for property taxation purposes of all residential or nonresidential property, as appropriate, subject to valuation under the Property Tax Code in the governmental unit for the specified purpose in the prior property tax year;

(3) "net new value" means the additional value of residential or nonresidential property, as appropriate, for property taxation purposes placed on the property tax schedule in the current year resulting from the elements in Subparagraphs (a) through (d) of this paragraph reduced by the value of residential or nonresidential property, as appropriate, removed from the property tax schedule in the current year and, if applicable, the reductions described in Subparagraph (e) of this paragraph:

(a) residential or nonresidential property, as appropriate, valued in the current year that was not valued at all in the prior year;

(b) improvements to existing residential or nonresidential property, as appropriate;

(c) additions to residential or nonresidential property, as appropriate, or values that were omitted from previous years' property tax schedules even if part or all of the property was included on the schedule, but no additions of values attributable to valuation maintenance programs or reappraisal programs shall be included;

(d) additions to nonresidential property due to increases in annual net production values of mineral property valued in accordance with Section 7-36-23 or 7-36-25 NMSA 1978 or due to increases in market value of mineral property valued in accordance with Section 7-36-24 NMSA 1978; and

(e) reductions to nonresidential property due to decreases in annual net production values of mineral property valued in accordance with Section 7-36-23 or 7-36-25 NMSA 1978 or due to decreases in market value of mineral property valued in accordance with Section 7-36-24 NMSA 1978; and

(4) "percent change I" means a percent not in excess of five percent that is derived by dividing 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, for the calendar year next preceding the prior calendar year into the difference between the prior year's comparable annual index and that next preceding year's annual index if that difference is an increase, and if the difference is a decrease, the "percent change I" is zero. In the event that the annual implicit price deflator index for state and local government purchases of goods and services is no longer prepared or published by the United States department of commerce, the department shall adopt by regulation the use of any comparable index prepared by any agency of the United States.

B. If, as a result of the application of the limitation imposed under Subsection A of this section, a property tax rate for residential or nonresidential property, as appropriate, authorized in Subsection B of Section 7-37-7 NMSA 1978 is reduced below the maximum rate authorized in that subsection, no governmental unit or entity authorized to impose a tax rate under Paragraph (2) of Subsection C of Section 7-37-7 NMSA 1978 shall impose any portion of the rate representing the difference between a maximum rate authorized under Subsection B of Section 7-37-7 NMSA 1978 and the reduced rate resulting from the application of the limitation imposed under Subsection A of this section.

C. If the net new values necessary to make the computation required under Subsection A of this section are not available for any governmental unit at the time the calculation must be made, the department of finance and administration shall use a zero amount for net new values when making the computation for the governmental unit.

D. Any part of the maximum tax rate authorized for each governmental unit for residential and nonresidential property by Subsection B of Section 7-37-7 NMSA 1978 that is not imposed for a governmental unit for any property tax year for reasons other than the limitation required under Subsection A of this section may be authorized by the department of finance and administration to be imposed for that governmental unit for residential and nonresidential property for the following tax year subject to the restriction of Subsection D of Section 7-38-33 NMSA 1978.

E. If the base year value necessary to make the computation required under Subsection A of this section is not available for any governmental unit at the time the calculation must be made, the department of finance and administration shall set a rate for residential and nonresidential property that will produce in that governmental unit a dollar amount that is not in excess of the property tax revenue due for all property for the prior property tax year for the specified purpose of that rate in that governmental unit.

F. For the purposes of this section:

(1) "nonresidential property" does not include any property upon which taxes are imposed pursuant to the Oil and Gas Ad Valorem Production Tax Act, the Oil and Gas Production Equipment Ad Valorem Tax Act or the Copper Production Ad Valorem Tax Act; and

(2) "tax rebate adjustment" means, for those counties that have an ordinance in effect providing the property tax rebate pursuant to the Income Tax Act for the property tax year and that have not imposed for the property tax year either a property tax, the revenue from which is pledged for payment of the income tax revenue reduction resulting from the provision of the property tax rebate, or a property transfer tax, the estimated amount of the property tax rebate to be allowed with respect to the property tax year, and for any other governmental unit or purpose, zero; provided that any estimate of property tax rebate to be allowed is subject to review for appropriateness and approval by the department of finance and administration."

Section 9. Section 22-8-25 NMSA 1978 (being Laws 1981, Chapter 176, Section 5, as amended) is amended to read:

"22-8-25. STATE EQUALIZATION GUARANTEE DISTRIBUTION--

DEFINITIONS--DETERMINATION OF AMOUNT.--

A. The state equalization guarantee distribution is that amount of money distributed to each school district to ensure that the school district's operating revenue, including its local and federal revenues as defined in this section, is at least equal to the school district's program cost.

B. "Local revenue", as used in this section, means seventy-five percent of receipts to the school district derived from that amount produced by a school district property tax applied at the rate of fifty cents ($.50) to each one thousand dollars ($1,000) of net taxable value of property allocated to the school district and to the assessed value of products severed and sold in the school district as determined under the Oil and Gas Ad Valorem Production Tax Act and upon the assessed value of equipment in the school district as determined under the Oil and Gas Production Equipment Ad Valorem Tax Act. The school district shall budget and expend twenty percent of the total revenue receipts for capital outlay.

C. "Federal revenue", as used in this section, excludes amounts that if taken into consideration in the computation of the state equalization guarantee distribution will result, pursuant to federal law or regulations, in the reduction or elimination of federal school funding otherwise receivable by the district, and means:

(1) receipts to the school district [excluding amounts that, if taken into account in the computation of the state equalization guarantee distribution, result, under federal law or regulations, in a reduction in or elimination of federal school funding otherwise receivable by the school district] derived from the following:

[(1)] (a) seventy-five percent of the school district's share of forest reserve funds distributed in accordance with Section 22-8-33 NMSA 1978. The school district shall budget and expend twenty percent of the total forest reserve receipts for capital outlay; and

[(2)] (b) seventy-five percent of grants from the federal government as assistance to those areas affected by federal activity authorized in accordance with Title 20 of the United States Code, commonly known as "PL 874 funds" or "impact aid". The school district shall budget and expend twenty percent of the grant receipts for capital outlay; or

(2) with respect to a school district that received PL 874 funds and for which a proportion of less than seventy-five percent is calculated for the purpose of taking PL 874 funds into consideration in determining the state equalization guarantee distribution, that lesser proportion of receipts to the school district derived from grants from the federal government as assistance to those areas affected by federal activity authorized in accordance with Title 20 of the United States Code.

D. To determine the amount of the state equalization guarantee distribution, the state superintendent shall:

(1) calculate the number of program units to which each school district is entitled using an average of the MEM on the fortieth, eightieth and one hundred twentieth days of the prior year; or

(2) calculate the number of program units to which a school district operating under an approved year-round school calendar is entitled using an average of the MEM on appropriate dates established by the state board; or

(3) calculate the number of program units to which a school district with a MEM of two hundred or less is entitled by using an average of the MEM on the fortieth, eightieth and one hundred twentieth days of the prior year or the fortieth day of the current year, whichever is greater; and

(4) using the results of the calculations in Paragraph (1), (2) or (3) of this subsection and the instructional staff training and experience index from the October report of the prior school year, establish a total program cost of the school district;

(5) calculate the local and federal revenues as defined in this section;

(6) deduct the sum of the calculations made in Paragraph (5) of this subsection from the program cost established in Paragraph (4) of this subsection; and

(7) deduct the total amount of guaranteed energy savings contract payments that the state superintendent determines will be made to the school district from the public school utility conservation fund during the fiscal year for which the state equalization guarantee distribution is being computed.

E. The amount of the state equalization guarantee distribution to which a school district is entitled is the balance remaining after the deductions made in Paragraphs (6) and (7) of Subsection D of this section.

F. The state equalization guarantee distribution shall be distributed prior to June 30 of each fiscal year. The calculation shall be based on the local and federal revenues specified in this section received from June 1 of the previous fiscal year through May 31 of the fiscal year for which the state equalization guarantee distribution is being computed. In the event that a school district has received more state equalization guarantee funds than its entitlement, a refund shall be made by the school district to the state general fund."

Section 10. Section 22-8-31 NMSA 1978 (being Laws 1967, Chapter 16, Section 84, as amended) is amended to read:

"22-8-31. STATE-SUPPORT RESERVE FUND.--

A. The "state-support reserve fund" is created.

B. The state-support reserve fund shall be used only to augment the appropriations for the state equalization guarantee distribution and the distributions pursuant to the Local Operational School Levy Act in order to [insure] ensure, to the extent of the amount undistributed in the fund, that the maximum figures for such [distribution] distributions established by law shall not be reduced.

C. The undistributed money in the state-support reserve fund shall be invested by the state treasurer in interest-bearing securities of the United States government or in certificates of deposit in qualified banks and in savings and [loans] loan associations whose deposits are insured with an agency of the United States. The state treasurer may deposit money from the state-support reserve fund or any other fund in one or more accounts with any such bank or federally insured savings and loan association, but the state treasurer, in any official capacity, shall not deposit money from [said] that fund or any other fund in any one [such] federally insured savings and loan association the aggregate of which would exceed the amount of federal savings and loan insurance corporation insurance for a single public account. Income from these investments shall be periodically credited to the general fund.

D. At least forty-five days before the money is needed, the [chief] state superintendent shall notify the state treasurer in writing of the amount that will be needed for the state equalization guarantee distribution. At least twenty-five days before the money is needed, the state superintendent shall notify the state treasurer in writing of the amount that will be needed for transfer to the local operational school fund for distribution pursuant to the Local Operational School Levy Act. The state treasurer shall transfer to the local operational school fund the amount requested or the remaining unencumbered balance in the state-support reserve fund after the state equalization guarantee distribution amount has been subtracted, whichever is less.

E. In the event that local or federal revenues as defined in Section [77-6-19 NMSA 1953] 22-8-25 NMSA 1978 are received after May 31 of the fiscal year for which the state equalization guarantee distribution is being computed and it is therefore necessary to use money from the state-support reserve fund to augment the appropriation for the state equalization guarantee distribution, the [chief] state superintendent, upon receipt by the school district of the delayed local or federal revenues, shall deduct the appropriate amount from the current state equalization guarantee distribution to that school district and reimburse the state-support reserve fund in the amount of the deduction.

F. It is the intent of the legislature that the state-support reserve fund be reimbursed in the amount of the yearly [distribution] distributions by appropriation in the year following the distribution so that the fund at the beginning of each fiscal year shall have a credit balance of at least ten million dollars ($10,000,000).

G. Distribution from [this] the state-support reserve fund shall be made in the same manner and on the same basis as the state equalization guarantee distribution."