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AN ACT

RELATING TO TAXATION; INCREASING THE MAXIMUM AGGREGATE TAX

RATE ALLOWABLE FOR THE MUNICIPAL GROSS RECEIPTS TAX; ADJUSTING

DISTRIBUTIONS TO MUNICIPALITIES AND COUNTIES TO OFFSET THE

FOOD AND HEALTH CARE PRACTITIONER SERVICES DEDUCTIONS IN THE

GROSS RECEIPTS TAX; PROVIDING FOR A DISTRIBUTION EQUIVALENT TO

A PORTION OF COMPENSATING TAX TO MUNICIPALITIES; MAKING AN

APPROPRIATION.

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

Section 1. 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

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

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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 of

compensating taxes pursuant to Section 7-1-6.55 NMSA 1978.

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

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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

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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

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meet other local revenue bond, loan or other debt obligations

of the municipality or county to the New Mexico finance

authority."

Section 2. Section 7-1-6.46 NMSA 1978 (being Laws 2004,

Chapter 116, Section 1, as amended) is amended to read:

"7-1-6.46. DISTRIBUTION TO MUNICIPALITIES--OFFSET FOR

FOOD DEDUCTION AND HEALTH CARE PRACTITIONER SERVICES

DEDUCTION.--

A. A distribution pursuant to Section 7-1-6.1 NMSA

1978 shall be made to a municipality in an amount, subject to

any increase or decrease made pursuant to Section 7-1-6.15

NMSA 1978, equal to the sum of:

(1) for a municipality having a population

of less than ten thousand according to the most recent federal

decennial census and having per capita taxable gross receipts

for the previous calendar year that are less than the average

per capita taxable gross receipts for all municipalities for

that same calendar year:

(a) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations attributable to the

municipality multiplied by the sum of the combined rate of all

municipal local option gross receipts taxes in effect in the

municipality for the month plus one and two hundred twenty-

five thousandths percent; and

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(b) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations attributable to the

municipality multiplied by the sum of the combined rate of all

municipal local option gross receipts taxes in effect in the

municipality for the month plus one and two hundred twenty-

five thousandths percent; or

(2) for a municipality not described in

Paragraph (1) of this subsection:

(a) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations attributable to the

municipality multiplied by the sum of the combined rate of all

municipal local option gross receipts taxes in effect in the

municipality on January 1, 2007 plus one and two hundred

twenty-five thousandths percent; and

(b) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations attributable to the

municipality multiplied by the sum of the combined rate of all

municipal local option gross receipts taxes in effect in the

municipality on January 1, 2007 plus one and two hundred

twenty-five thousandths percent.

B. The distribution pursuant to Subsection A of

this section is in lieu of revenue that would have been

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received by the municipality but for the deductions provided

by Sections 7-9-92 and 7-9-93 NMSA 1978. The distribution

shall be considered gross receipts tax revenue and shall be

used by the municipality in the same manner as gross receipts

tax revenue, including payment of gross receipts tax revenue

bonds.

C. For the purposes of this section, "business

locations attributable to the municipality" means business

locations:

(1) within the municipality;

(2) on land owned by the state, commonly

known as the "state fairgrounds", within the exterior

boundaries of the municipality;

(3) outside the boundaries of the

municipality on land owned by the municipality; and

(4) on an Indian reservation or pueblo grant

in an area that is contiguous to the municipality and in which

the municipality performs services pursuant to a contract

between the municipality and the Indian tribe or Indian pueblo

if:

(a) the contract describes an area in

which the municipality is required to perform services and

requires the municipality to perform services that are

substantially the same as the services the municipality

performs for itself; and

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(b) the governing body of the

municipality has submitted a copy of the contract to the

secretary.

D. A distribution pursuant to this section may be

adjusted for a distribution made to a tax increment

development district with respect to a portion of a gross

receipts tax increment dedicated by a municipality pursuant to

the Tax Increment for Development Act."

Section 3. Section 7-1-6.47 NMSA 1978 (being Laws 2004,

Chapter 116, Section 2, as amended) is amended to read:

"7-1-6.47. DISTRIBUTION TO COUNTIES--OFFSET FOR FOOD

DEDUCTION AND HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--

A. A distribution pursuant to Section 7-1-6.1 NMSA

1978 shall be made to a county in an amount, subject to any

increase or decrease made pursuant to Section 7-1-6.15 NMSA

1978, equal to the sum of:

(1) for a county having a population of less

than forty-eight thousand according to the most recent federal

decennial census:

(a) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations within a municipality in the

county multiplied by the combined rate of all county local

option gross receipts taxes in effect for the month that are

imposed throughout the county;

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(b) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations in the county but not within

a municipality multiplied by the combined rate of all county

local option gross receipts taxes in effect for the month that

are imposed in the county area not within a municipality;

(c) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations within a municipality in the

county multiplied by the combined rate of all county local

option gross receipts taxes in effect for the month that are

imposed throughout the county; and

(d) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations in the county but not within

a municipality multiplied by the combined rate of all county

local option gross receipts taxes in effect for the month that

are imposed in the county area not within a municipality; or

(2) for a county not described in Paragraph

(1) of this subsection:

(a) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations within a municipality in the

county multiplied by the combined rate of all county local

option gross receipts taxes in effect on January 1, 2007 that

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are imposed throughout the county;

(b) the total deductions claimed

pursuant to Section 7-9-92 NMSA 1978 for the month by

taxpayers from business locations in the county but not within

a municipality multiplied by the combined rate of all county

local option gross receipts taxes in effect on January 1, 2007

that are imposed in the county area not within a municipality;

(c) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations within a municipality in the

county multiplied by the combined rate of all county local

option gross receipts taxes in effect on January 1, 2007 that

are imposed throughout the county; and

(d) the total deductions claimed

pursuant to Section 7-9-93 NMSA 1978 for the month by

taxpayers from business locations in the county but not within

a municipality multiplied by the combined rate of all county

local option gross receipts taxes in effect on January 1, 2007

that are imposed in the county area not within a municipality.

B. The distribution pursuant to Subsection A of

this section is in lieu of revenue that would have been

received by the county but for the deductions provided by

Sections 7-9-92 and 7-9-93 NMSA 1978. The distribution shall

be considered gross receipts tax revenue and shall be used by

the county in the same manner as gross receipts tax revenue,

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including payment of gross receipts tax revenue bonds.

C. A distribution pursuant to this section may be

adjusted for a distribution made to a tax increment

development district with respect to a portion of a gross

receipts tax increment dedicated by a county pursuant to the

Tax Increment for Development Act."

Section 4. A new section of the Tax Administration Act,

Section 7-1-6.55 NMSA 1978, is enacted to read:

"7-1-6.55. DISTRIBUTION TO MUNICIPALITY EQUIVALENT TO A

PORTION OF COMPENSATING TAX.--

A. A distribution pursuant to Section 7-1-6.1 NMSA

1978 shall be made to each municipality in an amount

calculated pursuant to Subsection B of this section, subject

to any increase or decrease made pursuant to Section 7-1-6.15

NMSA 1978; provided that the distribution shall be phased in

according to the following schedule:

(1) from July 1, 2008 until June 30, 2009,

the distribution shall be equal to ten percent of the amount

calculated according to Subsection B of this section; and

(2) on or after July 1, 2009, the

distribution shall be equal to thirty percent of the amount

calculated according to Subsection B of this section.

B. The amount of the distribution provided for in

this section shall be calculated for each month in the six-

month period beginning on each July 1 and January 1 and shall

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be equal to the reported taxable gross receipts for all

business locations in the municipality for the month

multiplied by:

(1) the ratio of net compensating tax

receipts for the entire six-month period beginning the

previous November 1 or May 1, respectively, to the reported

taxable gross receipts for all business locations for the

entire six-month period beginning the previous November 1 or

May 1, respectively; and further multiplied by:

(2) the ratio of one and two hundred twenty-

five thousandths percent to the average tax rate imposed by

Section 7-9-7 NMSA 1978 in effect for the six-month period

beginning on January 1 or July 1, respectively."

Section 5. Section 7-19D-9 NMSA 1978 (being Laws 1978,

Chapter 151, Section 1, as amended) is amended to read:

"7-19D-9. MUNICIPAL GROSS RECEIPTS TAX--AUTHORITY TO

IMPOSE RATE.--

A. The majority of the members of the governing

body of any municipality may impose by ordinance an excise tax

not to exceed a rate of one and one-half percent of the gross

receipts of any person engaging in business in the

municipality for the privilege of engaging in business in the

municipality. A tax imposed pursuant to this section shall be

imposed by the enactment of one or more ordinances, each

imposing any number of municipal gross receipts tax rate

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increments, but the total municipal gross receipts tax rate

imposed by all ordinances shall not exceed an aggregate rate

of one and one-half percent of the gross receipts of a person

engaging in business. Municipalities may impose increments of

one-eighth of one percent.

B. The tax imposed pursuant to Subsection A of

this section may be referred to as the "municipal gross

receipts tax".

C. The governing body of a municipality may, at

the time of enacting an ordinance imposing the tax authorized

in Subsection A of this section, dedicate the revenue for a

specific purpose or area of municipal government services,

including but not limited to police protection, fire

protection, public transportation or street repair and

maintenance. If the governing body proposes to dedicate such

revenue, the ordinance and, if any election is held, the

ballot shall clearly state the purpose to which the revenue

will be dedicated, and any revenue so dedicated shall be used

by the municipality for that purpose unless a subsequent

ordinance is adopted to change the purpose to which dedicated

or to place the revenue in the general fund of the

municipality.

D. An election shall be called on the questions of

disapproval or approval of any ordinance enacted pursuant to

Subsection A of this section or any ordinance amending such

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ordinance:

(1) if the governing body chooses to provide

in the ordinance that it shall not be effective until the

ordinance is approved by the majority of the registered voters

voting on the question at an election to be held pursuant to

the provisions of a home-rule charter or on a date set by the

governing body and pursuant to the provisions of the Municipal

Election Code governing special elections; or

(2) if the ordinance does not contain a

mandatory election provision as provided in Paragraph (1) of

this subsection, upon the filing of a petition requesting such

an election if the petition is filed:

(a) pursuant to the requirements of a

referendum provision contained in a municipal home-rule

charter and signed by the number of registered voters in the

municipality equal to the number of registered voters required

in its charter to seek a referendum; or

(b) in all other municipalities, with

the municipal clerk within thirty days after the adoption of

such ordinance and the petition has been signed by a number of

registered voters in the municipality equal to at least five

percent of the number of the voters in the municipality who

were registered to vote in the most recent regular municipal

election.

E. The signatures on the petition filed in

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accordance with Subsection D of this section shall be verified

by the municipal clerk. If the petition is verified by the

municipal clerk as containing the required number of

signatures of registered voters, the governing body shall

adopt an election resolution calling for the holding of a

special election on the question of approving or disapproving

the ordinance unless the ordinance is repealed before the

adoption of the election resolution. An election held

pursuant to Subparagraph (a) or (b) of Paragraph (2) of

Subsection D of this section shall be called, conducted and

canvassed as provided in the Municipal Election Code for

special elections, and the election shall be held within

seventy-five days after the date the petition is verified by

the municipal clerk or it may be held in conjunction with a

regular municipal election if such election occurs within

seventy-five days after the date of verification by the

municipal clerk.

F. If at an election called pursuant to Subsection

D of this section a majority of the registered voters voting

on the question approves the ordinance imposing the tax, the

ordinance shall become effective in accordance with the

provisions of the Municipal Local Option Gross Receipts Taxes

Act. If at such an election a majority of the registered

voters voting on the question disapproves the ordinance, the

ordinance imposing the tax shall be deemed repealed and the

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question of imposing any increment of the municipal gross

receipts tax authorized in this section shall not be

considered again by the governing body for a period of one

year from the date of the election.

G. Any municipality that has lawfully imposed by

the requirements of the Special Municipal Gross Receipts Tax

Act a rate of at least one-fourth of one percent shall be

deemed to have imposed one-fourth of one percent municipal

gross receipts tax pursuant to this section. Any rate of tax

deemed to be imposed pursuant to this subsection shall

continue to be dedicated to the payment of outstanding bonds

issued by the municipality that pledged the tax revenues by

ordinance until such time as the bonds are fully paid. A

municipality may by ordinance change the purpose for any rate

of tax deemed to be imposed at any time the revenues are not

committed to payment of bonds.

H. Any law that imposes or authorizes the

imposition of a municipal gross receipts tax or that affects

the municipal gross receipts tax, or any law supplemental

thereto or otherwise appertaining thereto, shall not be

repealed or amended or otherwise directly or indirectly

modified in such a manner as to impair adversely any

outstanding revenue bonds that may be secured by a pledge of

such municipal gross receipts tax unless such outstanding

revenue bonds have been discharged in full or provision has

been fully made therefor."

Section 6. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.

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