SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 101

52nd legislature - STATE OF NEW MEXICO - first session, 2015

AN ACT

RELATING TO TAXATION; DECREASING THE GROSS RECEIPTS TAX; REPEALING THE MUNICIPAL AND COUNTY HOLD HARMLESS GROSS RECEIPTS TAXES; ALLOWING A PREVIOUSLY IMPOSED HOLD HARMLESS GROSS RECEIPTS TAX TO REMAIN IN EFFECT; AUTHORIZING A MUNICIPALITY OR COUNTY TO IMPOSE A NEW HOLD HARMLESS GROSS RECEIPTS TAX; REPEALING THE HOLD HARMLESS DISTRIBUTIONS.

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

     SECTION 1. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:

     "7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--

          A. For the privilege of engaging in business, an excise tax equal to [five and one-eighth] four and seven-eighths percent of gross receipts is imposed on any person engaging in business in New Mexico.

          B. The tax imposed by this section shall be referred to as the "gross receipts tax"."

     SECTION 2. A new section of the Municipal Local Option Gross Receipts Taxes Act is enacted to read:

     "[NEW MATERIAL] MUNICIPAL NEW HOLD HARMLESS GROSS RECEIPTS TAX.--

          A. Except as provided in Subsection B of this section, 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-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 or the hold harmless rate, whichever is less. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of gross receipts tax rate increments of one-sixteenth percent.

          B. The majority of the members of the governing body of any municipality that imposed a municipal hold harmless gross receipts tax pursuant to Section 7-19D-18 NMSA 1978, as that section was in effect prior to July 1, 2015, prior to January 1, 2016 that is still in effect may impose by ordinance an excise tax not to exceed a rate of one-fourth percent of the gross receipts of any person engaging in business in the municipality for the privilege of engaging in business in the municipality or the hold harmless rate, whichever is less. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of gross receipts tax rate increments of one-sixteenth percent.

          C. The tax imposed pursuant to Subsections A and B of this section may be referred to as the "municipal new hold harmless gross receipts tax". The imposition of a municipal new hold harmless gross receipts tax is not subject to referendum.

          D. The governing body of a municipality may, at the time of enacting an ordinance imposing the tax authorized in Subsection A or B of this section, dedicate the revenue for a specific purpose or area of municipal government services, including police protection, fire protection, public transportation or street repair and maintenance. If the governing body proposes to dedicate such revenue, the ordinance 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 the revenue is dedicated or to place the revenue in the general fund of the municipality.

          E. Any law that imposes or authorizes the imposition of a municipal new hold harmless gross receipts tax or that affects the municipal new hold harmless 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 new hold harmless gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor.

          F. As used in this section, "hold harmless rate" means the rate, rounded to the nearest one-sixteenth percent increment, of a municipal new hold harmless gross receipts tax that, if imposed, would result in an amount of revenue equal to:

                (1) for a municipality that has a population of less than ten thousand according to the most recent federal decennial census, the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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 July 1, 2015 plus one and two hundred twenty-five thousandths percent; and

                (2) for a municipality that has a population of ten thousand or more according to the most recent federal decennial census, the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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."

     SECTION 3. A new section of the County Local Option Gross Receipts Taxes Act is enacted to read:

     "[NEW MATERIAL] COUNTY NEW HOLD HARMLESS GROSS RECEIPTS TAX.--

          A. Except as provided in Subsection B of this section, the majority of the members of the governing body of any county may impose by ordinance an excise tax not to exceed a rate of one-half percent of the gross receipts of any person engaging in business in the county for the privilege of engaging in business in the county or the hold harmless rate, whichever is less. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of gross receipts tax rate increments of one-sixteenth percent.

          B. The majority of the members of the governing body of any county that imposed a county hold harmless gross receipts tax pursuant to Section 7-20E-28 NMSA 1978, as that section was in effect prior to July 1, 2015, prior to January 1, 2016 that is in effect may impose by ordinance an excise tax not to exceed a rate of one-fourth percent of the gross receipts of any person engaging in business in the county for the privilege of engaging in business in the county or the hold harmless rate, whichever is less. A tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of gross receipts tax rate increments of one-sixteenth percent.

          C. The tax imposed pursuant to Subsections A and B of this section may be referred to as the "county new hold harmless gross receipts tax". The imposition of a county new hold harmless gross receipts tax is not subject to referendum.

          D. The governing body of a county may, at the time of enacting an ordinance imposing the tax authorized in Subsection A or B of this section, dedicate the revenue for a specific purpose or area of county government services, including police protection, fire protection, public transportation or street repair and maintenance. If the governing body proposes to dedicate such revenue, the ordinance and any revenue so dedicated shall be used by the county for that purpose unless a subsequent ordinance is adopted to change the purpose to which the revenue is dedicated or to place the revenue in the general fund of the county.

          E. Any law that imposes or authorizes the imposition of a county new hold harmless gross receipts tax or that affects the county new hold harmless 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 county new hold harmless gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor.

          F. As used in this section, "hold harmless rate" means the rate, rounded to the nearest one-sixteenth percent increment, of a county new hold harmless gross receipts tax that, if imposed, would result in an amount of revenue equal to:

                (1) for counties that have a population of less than forty-eight thousand according to the most recent federal decennial census, the sum of:

                     (a) the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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 July 1, 2015 that are imposed throughout the county; and

                     (b) the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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 July 1, 2015 that are imposed in the county area not within a municipality; and

                (2) for counties that have a population of forty-eight thousand or more according to the most recent federal decennial census, the sum of:

                     (a) the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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

                     (b) the monthly average of the total deductions claimed pursuant to Sections 7-9-92 and 7-9-93 NMSA 1978 for the previous calendar year 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."

     SECTION 4. TEMPORARY PROVISION--MUNICIPAL OR COUNTY HOLD HARMLESS GROSS RECEIPTS TAX IMPOSED PRIOR TO THE EFFECTIVE DATE OF THIS ACT.--If, prior to January 1, 2016, a municipality or county has in effect a municipal hold harmless gross receipts tax or county hold harmless gross receipts tax pursuant to Sections 7-19D-18 and 7-20E-28 NMSA 1978, as those sections were in effect prior to July 1, 2015, the ordinance imposing the municipal hold harmless gross receipts tax or county hold harmless gross receipts tax shall remain in effect until the ordinance expires.

     SECTION 5. TEMPORARY PROVISION--PUBLICATION OF HOLD HARMLESS RATE.--On or before December 1, 2015, the taxation and revenue department shall calculate the hold harmless rate for each municipality pursuant to Subsection F of Section 2 of this act and for each county pursuant to Subsection F of Section 3 of this act and publish the calculated rates on the department's web site.

     SECTION 6. REPEAL.--

          A. Sections 7-19D-18 and 7-20E-28 NMSA 1978 (being Laws 2013, Chapter 160, Sections 11 and 12) are repealed effective July 1, 2015.

          B. Sections 7-1-6.46 and 7-1-6.47 NMSA 1978 (being Laws 2004, Chapter 116, Sections 1 and 2, as amended) are repealed effective January 1, 2016.

     SECTION 7. EFFECTIVE DATE.--

          A. The effective date of the provisions of Sections 5 and 6 of this act is July 1, 2015.

          B. The effective date of the provisions of Sections 1 through 4 of this act is January 1, 2016.

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