SENATE TAX, BUSINESS AND TRANSPORTATION
COMMITTEE SUBSTITUTE FOR
SENATE BILL 372
55th legislature - STATE OF NEW MEXICO - first session, 2021
AN ACT
RELATING TO REGIONAL TRANSIT DISTRICTS; PROVIDING THAT REVENUE FROM A REGIONAL TRANSIT GROSS RECEIPTS TAX IMPOSED BY A COUNTY BE DISTRIBUTED DIRECTLY TO THE DISTRICT RATHER THAN TRANSFERRED FROM THE COUNTY TO THE DISTRICT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] DISTRIBUTION--REGIONAL TRANSIT DISTRICT.--A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each regional transit district created pursuant to the Regional Transit District Act in a county for which the department is collecting a regional transit gross receipts tax imposed by that county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the net receipts attributable to the county regional transit gross receipts tax by that county, less any deduction for administrative cost pursuant to Section 7-1-6.41 NMSA 1978."
SECTION 2. Section 7-1-6.13 NMSA 1978 (being Laws 1983, Chapter 211, Section 18, as amended) is amended to read:
"7-1-6.13. TRANSFER--REVENUES FROM COUNTY LOCAL OPTION GROSS RECEIPTS AND COMPENSATING TAXES.--
A. Except as provided in Subsection B of this section and Section 1 of this 2021 act, a transfer pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each county for which the department is collecting a local option gross receipts tax and county compensating tax imposed by that county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the net receipts attributable to the local option gross receipts tax and county compensating tax imposed by that county, less any deduction for administrative cost determined and made by the department pursuant to the provisions of the act authorizing imposition by that county of the local option gross receipts tax and county compensating tax and any additional administrative fee withheld pursuant to Section 7-1-6.41 NMSA 1978.
B. A transfer 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 3. Section 7-1-6.15 NMSA 1978 (being Laws 1983, Chapter 211, Section 20, as amended by Laws 2015, Chapter 89, Section 1 and by Laws 2015, Chapter 100, Section 1) is amended to read:
"7-1-6.15. ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO MUNICIPALITIES, [OR] COUNTIES OR REGIONAL TRANSIT DISTRICTS.--
A. The provisions of this section apply to:
(1) any distribution to a municipality pursuant to Section 7-1-6.4, 7-1-6.36 or 7-1-6.46 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 Section 7-1-6.16 or 7-1-6.47 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 county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;
(8) any distribution to a municipality of gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978; [and]
(9) any distribution to a municipality of compensating taxes pursuant to Section 7-1-6.55 NMSA 1978; and
(10) any distribution to a regional transit district pursuant to Section 1 of this 2021 act.
B. Before making a distribution or transfer specified in Subsection A of this section to a municipality, [or] county or regional transit district for the month, amounts comprising the net receipts shall be segregated into two mutually exclusive categories. One category shall be for amounts relating to the current month, and the other category shall be for amounts relating to prior periods. The total of each category for a municipality, [or] county or regional transit district shall be reported each month to that municipality, [or] county or regional transit district. If the total of the amounts relating to prior periods is less than zero and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality, [or] county or regional transit district, then the following procedures shall be carried out:
(1) all negative amounts relating to any period prior to the three calendar years preceding the year of the current month, net of any positive amounts in that same time period for the same taxpayers to which the negative amounts pertain, shall be excluded from the total relating to prior periods. Except as provided in Paragraph (2) of this subsection, the net receipts to be distributed or transferred to the municipality, [or] county or regional transit district shall be adjusted to equal the amount for the current month plus the revised total for prior periods; and
(2) if the revised total for prior periods determined pursuant to Paragraph (1) of this subsection is negative and its absolute value exceeds the greater of one hundred dollars ($100) or an amount equal to twenty percent of the average distribution or transfer amount for that municipality, [or] county or regional transit district, the revised total for prior periods shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the municipality, [or] county or regional transit district shall be equal to the amount for the current month.
C. The department shall recover from a municipality, [or] county or regional transit district the amount excluded by Paragraph (2) of Subsection B of this section. This amount may be referred to as the "recoverable amount".
D. Prior to or concurrently with the distribution or transfer to the municipality, [or] county or regional transit district of the adjusted net receipts, the department shall notify the municipality, [or] county or regional transit district whose distribution or transfer has been adjusted pursuant to Paragraph (2) of Subsection B of this section:
(1) that the department has made such an adjustment, that the department has determined that a specified amount is recoverable from the municipality, [or] county or regional transit district and that the department intends to recover that amount from future distributions or transfers to the municipality, [or] county or regional transit district;
(2) that the municipality, [or] county or regional transit district has ninety days from the date notice is made to enter into a mutually agreeable repayment agreement with the department;
(3) that if the municipality, [or] county or regional transit district takes no action within the ninety-day period, the department will recover the amount from the next six distributions or transfers following the expiration of the ninety days; and
(4) that the municipality or county may inspect pursuant to Section 7-1-8.9 NMSA 1978, and that the regional transit district may inspect pursuant to Section 7-1-8.11 NMSA 1978, an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application.
E. No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall begin recovering the recoverable amount from a municipality, [or] county or regional transit district as follows:
(1) the department may collect the recoverable amount by:
(a) decreasing distributions or transfers to the municipality, [or] county or regional transit district in accordance with a repayment agreement entered into with the municipality, [or] county or regional transit district; or
(b) except as provided in Paragraphs (2) and (3) of this subsection, if the municipality, [or] county or regional transit district fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the municipality, [or] county or regional transit district following expiration of the ninety-day period in increments as nearly equal as practicable and sufficient to recover the amount;
(2) if, pursuant to Subsection B of this section, the secretary determines that the recoverable amount is more than fifty percent of the average distribution or transfer of net receipts for that municipality, [or] county or regional transit district, the secretary:
(a) shall recover only up to fifty percent of the average distribution or transfer of net receipts for that municipality, [or] county or regional transit district; and
(b) may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance; and
(3) if, after application of a refund claim, audit adjustment, correction of a mistake by the department or other adjustment of a prior period, but prior to any recovery of the department pursuant to this section, the total net receipts of a municipality, [or] county or regional transit district for the twelve-month period beginning with the current month are reduced or are projected to be reduced to less than fifty percent of the average distribution or transfer of net receipts, the secretary may waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance.
F. No later than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall provide the municipality, [or] county or regional transit district adequate opportunity to review an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application, pursuant to Section 7-1-8.9 NMSA 1978.
G. On or before September 1 of each year [beginning in 2016], the secretary shall report to the state board of finance and the legislative finance committee the total recoverable amount waived pursuant to Subparagraph (b) of Paragraph (2) and Paragraph (3) of Subsection E of this section for each municipality, [and] county and regional transit district in the prior fiscal year.
H. The secretary is authorized to decrease a distribution or transfer to a municipality, [or] county or regional transit district 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 or transfer to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the county, [or] municipality or regional transit district and a written agreement of the municipality, [or] county or regional transit district and the New Mexico finance authority. Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a municipality, [or] county or regional transit district, the secretary shall decrease or redirect the next designated distribution or transfer, and succeeding distributions or transfers 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 or regional transit district 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 meet other local revenue bond, loan or other debt obligations of the municipality, [or] county or regional transit district to the New Mexico finance authority. A decrease to or redirection of a distribution or transfer pursuant to this subsection that arose:
(1) prior to an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department takes precedence over any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, which may be made only from the net amount of the distribution or transfer remaining after application of the decrease or redirection pursuant to this subsection; and
(2) after an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department shall be subordinate to any collection of any recoverable amount pursuant to Paragraph (2) of Subsection B of this section.
I. Upon the direction of the secretary of finance and administration pursuant to Section 9-6-5.2 NMSA 1978, the secretary shall temporarily withhold the balance of a distribution to a municipality, [or] county or regional transit district, net of any decrease or redirected amount pursuant to Subsection H of this section and any recoverable amount pursuant to Paragraph (2) of Subsection B of this section, that has failed to submit an audit report required by the Audit Act or a financial report required by Subsection F of Section 6-6-2 NMSA 1978. The amount to be withheld, the source of the withheld distribution and the number of months that the distribution is to be withheld shall be as directed by the secretary of finance and administration. A distribution withheld pursuant to this subsection shall remain in the tax administration suspense fund until distributed to the municipality, [or] county or regional transit district and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the municipality, [or] county or regional transit district upon direction of the secretary of finance and administration.
J. As used in this section:
(1) "amounts relating to the current month" means any amounts included in the net receipts of the current month that represent payment of tax due for the current month, correction of amounts processed in the current month that relate to the current month or that otherwise relate to obligations due for the current month;
(2) "amounts relating to prior periods" means any amounts processed during the current month that adjust amounts processed in a period or periods prior to the current month regardless of whether the adjustment is a correction of a department error or due to the filing of amended returns, payment of department-issued assessments, filing or approval of claims for refund, audit adjustments or other cause;
(3) "average distribution or transfer amount" means the following amounts; provided that a distribution or transfer that is negative shall not be used in calculating the amounts:
(a) the annual average of the total amount distributed or transferred to a municipality, [or] county or regional transit district in each of the three twelve-month periods preceding the current month;
(b) if a distribution or transfer to a municipality, [or] county or regional transit district has been made for less than three years, the total amount distributed or transferred in the year preceding the current month; or
(c) if a municipality, [or] county or regional transit district has not received distributions or transfers of net receipts for twelve or more months, the monthly average of net receipts distributed or transferred to the municipality, [or] county or regional transit district preceding the current month multiplied by twelve;
(4) "current month" means the month for which the distribution or transfer is being prepared; and
(5) "repayment agreement" means an agreement between the department and a municipality, [or] county or regional transit district under which the municipality, [or] county or regional transit district agrees to allow the department to recover an amount determined pursuant to Paragraph (2) of Subsection B of this section by decreasing distributions or transfers to the municipality, [or] county or regional transit district for one or more months beginning with the distribution or transfer to be made with respect to a designated month. No interest shall be charged."
SECTION 4. Section 7-1-6.41 NMSA 1978 (being Laws 1997, Chapter 125, Section 1) is amended to read:
"7-1-6.41. ADMINISTRATIVE FEE IMPOSED [APPROPRIATION].--
[A. The taxation and revenue department is directed to withhold an administrative fee of three percent of the net amount to be distributed under the provisions of:
(1) Section 7-1-6.32 NMSA 1978;
(2) Section 66-12-20 NMSA 1978; and
(3) Section 74-1-13 NMSA 1978.
B. The administrative fee to be withheld pursuant to Subsection A of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued
pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.
C. The taxation and revenue department is directed to withhold an additional administrative fee at the following percentage of the net amount to be distributed pursuant to the following provisions of law:
(1) two percent of the net amount to be distributed pursuant to Section 7-1-6.12 NMSA 1978; and
(2) six-tenths of one percent of the net amount to be distributed pursuant to Section 7-1-6.13 NMSA 1978.
D. The administrative fee to be withheld under Subsection C of this section shall be withheld on distributions made on or after July 1, 1997 and shall continue until the earlier of July 1, 2000 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section.
E.] The [administrative fee to be withheld by the taxation and revenue] department [under Section] may withhold an administration fee of three percent of the net amount transferred pursuant to Sections 7-1-6.12 and 7-1-6.13 NMSA 1978 [shall be set at three percent of the net amount to be distributed pursuant to the provisions of those sections.
F. The administrative fee to be withheld under Subsection E of this section shall be withheld on distributions made on or after July 1, 2000 and shall continue until the earlier of December 31, 2006 or the date on which the New Mexico finance authority certifies to the taxation and revenue department that all obligations for bonds issued pursuant to Section 12 of this 1997 act have been fully discharged and directs the department to cease distributing money to the authority pursuant to this section. After the department has been directed by the authority to cease distributing money to the authority pursuant to this section] and the net amount distributed pursuant to Section 1 of this 2021 act. The administrative fee shall be remitted to the state treasurer for deposit in the state general fund each month.
[G. The administrative fee shall be distributed monthly to the New Mexico finance authority to be pledged irrevocably for the payment of principal, interest and any expenses or obligations related to the bonds issued by the authority to finance the taxation and revenue information management systems project.]"
SECTION 5. Section 7-1-8.11 NMSA 1978 (being Laws 2017, Chapter 63, Section 20) is amended to read:
"7-1-8.11. INFORMATION THAT MAY BE REVEALED TO [A WATER AND SANITATION DISTRICT] CERTAIN SPECIAL DISTRICTS.--
A. An employee of the department may reveal to the officials and employees of a [water and sanitation] special district of this state [that has in effect a water and sanitation gross receipts tax imposed by the water and sanitation district upon its] authorized by written request for a period specified by [that water and sanitation] the special district within the twelve months preceding the request for the information by those officials and employees:
(1) the names, taxpayer identification numbers and addresses of registered gross receipts taxpayers reporting gross receipts for that [water and sanitation] special district; the department may also release the information described in this paragraph quarterly or upon any other periodic basis to which the secretary and the special district agree; and
(2) information indicating whether the persons shown on a list of businesses within the [water and sanitation] special district have reported gross receipts to the department but have not reported gross receipts for that [water and sanitation] special district.
B. The officials and employees of [water and sanitation] special districts receiving information as provided in this section shall be subject to the confidentiality provisions of Section 7-1-8 NMSA 1978 and the penalty provisions of Section 7-1-76 NMSA 1978.
C. As used in this section:
(1) "special district" means a water and sanitation district or a regional transit district located in a county that has imposed and has in effect a special district gross receipts tax in the special district; and
(2) "special district gross receipts tax" means:
(a) in the case of a regional transit district, the county regional transit gross receipts tax; and
(b) in the case of a water and sanitation district, the water and sanitation gross receipts tax."
SECTION 6. Section 7-20E-23 NMSA 1978 (being Laws 2004, Chapter 17, Section 2, as amended) is amended to read:
"7-20E-23. COUNTY REGIONAL TRANSIT GROSS RECEIPTS TAX--AUTHORITY TO IMPOSE--RATE--ELECTION REQUIRED.--
A. Upon a request by resolution of the board of directors of a regional transit district, a majority of the members of the governing body of each county that is within the district shall impose by identical ordinances an excise tax at the rate specified in the resolution, but not to exceed one-half percent of the gross receipts of any person engaging in business in the district for the privilege of engaging in business. A tax imposed pursuant to this section may be imposed by one or more ordinances, each imposing any number of tax rate increments, but an increment shall not be less than one-sixteenth percent of the gross receipts of any person engaging in business in the district and the aggregate of all rates shall not exceed one-half percent of the gross receipts of any person engaging in business in the district. The tax may be referred to as the "county regional transit gross receipts tax".
B. Each governing body, at the time of enacting an ordinance imposing the tax authorized in Subsection A of this section, shall dedicate the revenue for the purposes authorized by the Regional Transit District Act.
C. An ordinance imposing a county regional transit gross receipts tax shall not go into effect until after a joint election is held by all counties within the district and a majority of the voters of the district voting in the election votes in favor of imposing the tax. Each governing body shall adopt an ordinance calling for a joint election within seventy-five days of the date the resolution is adopted on the question of imposing the tax. The question shall be submitted to the voters of the district as a separate question at a general election or at a joint special election called for that purpose by each governing body. A joint special election shall be called, conducted and canvassed substantially in the same manner as provided by law for general elections. If a majority of the voters in the district voting on the question approves the ordinance imposing the county regional transit gross receipts tax, the ordinance shall become effective in accordance with the provisions of the County Local Option Gross Receipts Taxes Act. If the question of imposing the county regional transit gross receipts tax fails, the governing bodies shall not again propose the imposition of any increment of the tax for a period of one year from the date of the election.
D. The governing body of a county imposing a county regional transit gross receipts tax shall, prior to January 1, 2022, transfer all proceeds the county receives from the tax pursuant to Section 7-1-6.13 NMSA 1978 to the regional transit district for the purposes specified in the ordinance and in accordance with the provisions of the Regional Transit District Act. On and after January 1, 2022, all revenue from the tax shall be distributed pursuant to Section 1 of this 2021 act.
E. As used in this section, "county within the district" means a county within which lies any portion of a regional transit district."
SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2022.
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