SENATE BILL 170

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

George K. Munoz

AN ACT

RELATING TO TAXATION; PROVIDING AN EXCEPTION TO THE REDUCTION IN HOLD HARMLESS DISTRIBUTIONS FOR CERTAIN MUNICIPALITIES.

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

     SECTION 1. 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. For a municipality that [has not elected to impose] does not have in effect a municipal hold harmless gross receipts tax through an ordinance and that has a population of less than ten thousand according to the most recent federal decennial census, 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) 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

                (2) 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] applicable maximum distribution for the municipality. 

          B. For a municipality not described in Subsection A or C of this section, a distribution pursuant to Section

7-1-6.1 NMSA 1978 shall be made to the 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) 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 in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                (2) 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 in] applicable maximum distribution for the municipality multiplied by the following percentages:

                [(a)] (1) prior to July 1, 2015, one hundred percent;

                [(b)] (2) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                [(c)] (3) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                [(d)] (4) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                [(e)] (5) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                [(f)] (6) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                [(g)] (7) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                [(h)] (8) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                [(i)] (9) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                [(j)] (10) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                [(k)] (11) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                [(l)] (12) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                [(m)] (13) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                [(n)] (14) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and

                [(o)] (15) on or after July 1, 2028 and prior to July 1, 2029, seven percent.

          C. For a municipality that has a population of ten thousand or more according to the most recent federal decennial census and does not have in effect a municipal hold harmless gross receipts tax, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the municipality in an amount, subject to any increase or decrease pursuant to Section 7-1-6.15 NMSA 1978, equal to the applicable maximum distribution for the municipality if:

                (1) the total state and local option gross receipts tax rates in effect in the municipality on January 1, 2015 equaled or exceeded eight and one-fourth percent; and

                (2) the tax revenue from a municipal hold harmless gross receipts tax, were it in effect, at the rate of three-eighths percent in the municipality would be less than the maximum distribution for the municipality.

           [C. The] D. A distribution pursuant to [Subsections A and B of] this section is in lieu of revenue that would have been 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. [A distribution pursuant to this section to a municipality not described in Subsection A of this section or to a municipality that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.

          D.] E. If the reductions made by this [2013] 2014 act to the distributions made pursuant to [Subsections A and B of] this section impair the ability of a municipality to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, 2013 and that are secured by the pledge of all or part of the municipality's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that municipality pursuant to this section does not exceed the amount that would have been due that municipality pursuant to this section as it was in effect on June 30, [2013] 2015.

          [E.] F. For the purposes of this section:

                (1) "business locations attributable to the municipality" means business locations:

[(1)] (a) within the municipality;

                     [(2)] (b) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;

                     [(3)] (c) outside the boundaries of the municipality on land owned by the municipality; and

                     [(4)] (d) 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)] 1) 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 [(b)] 2) the governing body of the municipality has submitted a copy of the contract to the secretary;

                (2) "maximum distribution" means:

                     (a) for a municipality that has a population of less than ten thousand according to the most recent federal decennial census, the total deductions claimed pursuant to Sections 7-9-92 and 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; and

                     (b) for a municipality that has a population of ten thousand or more according to the most recent federal decennial census, the total deductions claimed pursuant to Sections 7-9-92 and 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; and

                (3) "tax revenue" means the net receipts attributable to a municipal hold harmless gross receipts tax.

          [F.] G. 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 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2015.

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