SENATE BILL 585

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

John Arthur Smith and Stuart Ingle

AN ACT

RELATING TO TAXATION; CREATING A GROSS RECEIPTS TAX CREDIT FOR THE SALE OF FOOD; AMENDING THE HOLD HARMLESS DISTRIBUTIONS THAT OFFSET THE GROSS RECEIPTS DEDUCTION FOR THE SALE OF FOOD; REPEALING THE GROSS RECEIPTS DEDUCTION FOR THE SALE OF FOOD.

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 does not have in effect and has not [elected to impose] had 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] 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 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].

           B. For a municipality [not described in Subsection A of this section] that does not have and has not had in effect a municipal hold harmless gross receipts tax and that has a population of ten thousand or more according to the most recent federal decennial census, 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 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)] (1) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                [(g)] (2) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                [(h)] (3) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                [(i)] (4) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                [(j)] (5) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                [(k)] (6) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                [(l)] (7) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                [(m)] (8) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                [(n)] (9) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and

                (o)] (10) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                (11) on or after July 1, 2029, zero percent.

           C. The 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] deduction provided by [Sections 7-9-92 and] Section 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. If the reductions made by this [2013] 2019 act to the distributions made pursuant to [Subsections A and] Subsection 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] 2019.

          E. With respect to an H class county, the provisions of this section apply only to the local option gross receipts taxes authorized and imposed by the H class county pursuant to the Municipal Local Option Gross Receipts Taxes Act.

          [E.] F. 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

                     (b) the governing body of the municipality has submitted a copy of the contract to the secretary.

          [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. 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. For a county that does not have in effect and has not [elected to impose] had in effect a county hold harmless gross receipts tax through an ordinance and that has a population of less than forty-eight 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 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) 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;

                (2) 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;

                (3)] (1) 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

                [(4)] (2) 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.

          B. For a county [not described in Subsection A of this section] that does not have and has not had in effect a county hold harmless gross receipts tax and that has a population of forty-eight thousand or more according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the 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) 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 are imposed throughout the county 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;

                (2) 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 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;

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

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

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

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

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

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

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

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

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

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

                     (k) on or after July 1, 2029, zero percent; and

                [(4)] (2) 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 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)] (a) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

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

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

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

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

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

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

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

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

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

                     (k) on or after July 1, 2029, zero percent.

          C. The distribution pursuant to [Subsections A and] Subsection B of this section is in lieu of revenue that would have been received by the county but for the [deductions] deduction provided by [Sections 7-9-92 and] Section 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, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a county not described in Subsection A of this section or to a county 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. If the reductions made by this [2013] 2019 act to the distributions made pursuant to [Subsections A and] Subsection B of this section impair the ability of a county 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 county's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that county shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that county pursuant to this section does not exceed the amount that would have been due that county pursuant to this section as it was in effect on June 30, [2013] 2019.

          E. 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.

          F. With respect to an H class county, the provisions of this section apply only to local option gross receipts taxes authorized and imposed pursuant to the County Local Option Gross Receipts Taxes Act."

     SECTION 3. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] CREDIT--GROSS RECEIPTS TAX--SALE OF FOOD AT RETAIL FOOD STORE.--

          A. A credit may be claimed with respect to receipts from the sale of food at a retail food store that are not exempt from gross receipts taxation and are not deductible pursuant to another provision of the Gross Receipts and Compensating Tax Act. Receipts subject to the credit provided by this section shall be reported separately. For receipts reported from business locations:

                (1) within a municipality, the amount of the credit equals the receipts multiplied by the difference between the rate pursuant to Section 7-9-4 NMSA 1978 imposed on those receipts and one and two hundred twenty-five thousandths percent; and

                (2) in the county area outside municipalities, the amount of the credit equals the receipts multiplied by the rate pursuant to Section 7-9-4 NMSA 1978.

          B. For the purposes of this section:

                (1) "food" means any food or food product for home consumption that meets the definition of food in 7 USCA 2012(k)(1) for purposes of the federal supplemental nutrition assistance program; and

                (2) "retail food store" means an establishment that sells food for home preparation and consumption and that meets the definition of retail food store in 7 USCA 2012(o)(1) for purposes of the federal supplemental nutrition assistance program, whether or not the establishment participates in the supplemental nutrition assistance program."

     SECTION 4. REPEAL.--Section 7-9-92 NMSA 1978 (being Laws 2004, Chapter 116, Section 5) is repealed.

     SECTION 5. APPLICABILITY.--The provisions of Section 3 of this act apply to receipts from the sale of food at a retail food store received on or after July 1, 2019.

     SECTION 6. EFFECTIVE DATE.--

          A. The effective date of the provisions of Sections 3 and 4 of this act is July 1, 2019.

          B. The effective date of the provisions of Sections 1 and 2 of this act is August 1, 2019.

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