SENATE BILL 4

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

Ron Griggs

 

 

 

 

 

AN ACT

RELATING TO TAXATION; INCREASING THE RATE OF THE OCCUPANCY TAX THAT MAY BE IMPOSED BY A MUNICIPALITY PURSUANT TO THE LODGERS' TAX ACT; AMENDING THE LIMITATIONS ON USES OF CERTAIN OF THE PROCEEDS OF THE TAX; ADDING DEFRAYING THE COSTS FOR QUALITY-OF-LIFE-RELATED FACILITIES AS A NEW ALLOWABLE USE OF PROCEEDS OF THE TAX; ALLOWING FOR THE ISSUANCE OF BONDS TO DEFRAY CERTAIN COSTS FOR QUALITY-OF-LIFE-RELATED FACILITIES; COMBINING MULTIPLE SECTIONS REGARDING THE USE OF THE TAX PROCEEDS INTO ONE SECTION; AMENDING AND REPEALING SECTIONS OF THE NMSA 1978.

 

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

     SECTION 1. Section 3-38-15 NMSA 1978 (being Laws 1969, Chapter 199, Section 3, as amended) is amended to read:

     "3-38-15. AUTHORIZATION OF TAX--[LIMITATIONS ON] USE OF PROCEEDS.--

          A. A municipality may impose by ordinance an occupancy tax for revenues on lodging within the municipality [and] at a rate not to exceed seven percent of the gross taxable rent.

          B. The board of county commissioners of a county may impose by ordinance an occupancy tax for revenues on lodging within that part of the county outside of the incorporated limits of a municipality [B. The occupancy tax shall not] at a rate not to exceed five percent of the gross taxable rent.

          C. Every vendor who is furnishing any lodgings within a municipality or county is exercising a taxable privilege.

          D. The following portions of the proceeds from the occupancy tax that are collected based on the first thirty days a vendee rents lodgings in taxable premises shall be used only for advertising, publicizing and promoting tourist-related facilities [and], attractions and [tourist-related] events:

                (1) if the municipality or county imposes an occupancy tax of no more than two percent, not less than one-fourth of the proceeds shall be used for those purposes; and

                [(2) if the occupancy tax imposed is more than two percent and the municipality is not located in a class A county or the county is not a class A county, not less than one-half of the proceeds from the first three percent of the occupancy tax and not less than one-fourth of the proceeds from the occupancy tax in excess of three percent shall be used for those purposes; and

                (3)] (2) if the occupancy tax imposed is more than two percent, [and the municipality is located in a class A county or the county is a class A county] not less than [one-half] one-third of the proceeds from the occupancy tax shall be used for those purposes.

          E. The proceeds from the occupancy tax that are collected based on the first thirty days a vendee rents lodgings in taxable premises in excess of the amount required to be used for advertising, publicizing and promoting tourist-related facilities [and], attractions and [tourist-related] events may be used [for any purpose authorized in Section 3-38-21 NMSA 1978] to defray costs of:

                (1) collecting and otherwise administering the occupancy tax, including the performance of audits required by the Lodgers' Tax Act pursuant to guidelines issued by the department of finance and administration;

                (2) establishing, operating, purchasing, constructing, reconstructing, extending, improving, maintaining, equipping, furnishing or acquiring real property or any interest in real property for the site or grounds for quality-of-life-related facilities, tourist-related facilities and attractions or tourist-related transportation systems of the municipality or county;

                (3) the principal of and interest on any prior redemption premiums due in connection with and any other charges pertaining to revenue bonds authorized by Section 3-38-23 or 3-38-24 NMSA 1978;

                (4) advertising, publicizing and promoting tourist-related attractions, facilities and events of the municipality or county and tourist-related facilities, attractions and events within the area;

                (5) providing police and fire protection and sanitation service for tourist-related facilities, attractions and events located in the respective municipality or county;

                (6) providing a required minimum revenue guarantee for air service to the municipality or county to increase the ability of tourists to easily access the municipality's or county's tourist-related facilities, attractions and events; or

                (7) any combination of the foregoing purposes or transactions stated in this section, but for no other municipal or county purpose.

          F. The proceeds from the occupancy tax that are required to be used to advertise, publicize and promote tourist-related facilities [and], attractions and [tourist-related] events shall be used within two years of the close of the fiscal year in which they were collected and shall not be accumulated beyond that date or used for any other purpose.

          [G. Notwithstanding the provisions of Paragraph (2) of Subsection D of this section, any use by a municipality or county of occupancy tax proceeds on January 1, 1996 may continue to be so used after July 1, 1996 in accordance with the provisions of this section and Section 3-38-21 NMSA 1978 as they were in effect prior to July 1, 1996; provided, any change in the use of those occupancy tax proceeds after July 1, 1996 is subject to the limitations of that paragraph.

          H. Notwithstanding the provisions of Paragraph (2) of Subsection D of this section, the payment of principal and interest on outstanding bonds issued prior to January 1, 1996 pursuant to Section 3-38-23 or 3-38-24 NMSA 1978 shall be made in accordance with the retirement schedules of the bonds established at the time of issuance. The amount of expenditures required under Paragraph (2) of Subsection D of this section shall be reduced each year, if necessary, to make the required payments of principal and interest of all outstanding bonds issued prior to January 1, 1996.]

          G. A municipality or county imposing an occupancy tax may use the proceeds from the occupancy tax that are collected based on the thirty-first and subsequent days a vendee rents lodgings in taxable premises for any municipality or county purpose; provided that the use is stated in the ordinance imposing the tax.

          H. As used in this section:

                (1) "minimum revenue guarantee" is the amount of money guaranteed by a municipality or county to be earned by an airline providing air services to and from that municipality or county, which is the difference between the minimum flight charge revenue specified in the contract between the municipality or county and the airline and the amount of actual flight charge revenue received by the airline that is less than that contractual amount; and

                (2) "quality-of-life-related facilities" means facilities that have the primary purpose of providing facilities or other infrastructure for parks, zoos and sport or exercise programs."

     SECTION 2. Section 3-38-17.2 NMSA 1978 (being Laws 1996, Chapter 58, Section 5) is amended to read:

     "3-38-17.2. FINANCIAL REPORTING.--

          A. The governing body of any municipality or county imposing and collecting an occupancy tax shall furnish to the advisory board that portion of any proposed budget, report or audit filed or received by the governing body pursuant to either Chapter 6, Article 6 NMSA 1978 or the Audit Act that relates to the expenditure of occupancy tax funds within ten days of the filing or receipt of such proposed budget, report or audit by the local governing body.

          B. The governing body of any municipality or county imposing and collecting an occupancy tax shall report to the local government division of the department of finance and administration on a quarterly basis any expenditure of occupancy tax funds [pursuant to Sections 3-38-15 and 3-38-21 NMSA 1978] and shall furnish a copy of this report to the advisory board when it is filed with the division."

     SECTION 3. Section 3-38-21.1 NMSA 1978 (being Laws 1996, Chapter 58, Section 8) is amended to read:

     "3-38-21.1. CONTRACTING FOR SERVICES.--

          A. The governing body of a municipality or county may contract for the management of programs and activities funded with revenue from the occupancy tax authorized in Section 3-38-15 NMSA 1978. The governing body shall require periodic reports to the governing body, at least quarterly, listing the expenditures for those periods. Within ten days of receiving the reports, the governing body shall furnish copies of them to the advisory board. Funds provided to the contracting person or governmental agency shall be maintained in a separate account established for that purpose and shall not be commingled with any other money.

          B. A person or governmental agency with whom a municipality contracts under this section to conduct an activity authorized by Subsection E of Section [3-38-21] 3-38-15 NMSA 1978 shall maintain complete and accurate financial records of each expenditure of the occupancy tax revenue made and upon request of the governing body of the municipality or county shall make such records available for inspection.

          C. The occupancy tax revenue spent for a purpose authorized by the Lodgers' Tax Act may be spent for day-to-day operations, supplies, salaries, office rental, travel expenses and other administrative costs only if those administrative costs are incurred directly for that purpose.

          D. A person or governmental agency with whom a local governmental body contracts under this section may subcontract with the approval of the governing body of the municipality or county. A subcontractor shall be subject to the same terms and conditions as the contractor regarding separate financial accounts, periodic reports and inspection of records."

     SECTION 4. Section 3-38-23 NMSA 1978 (being Laws 1969, Chapter 199, Section 10, as amended) is amended to read:

     "3-38-23. REVENUE BONDS.--

          A. Revenue bonds may be issued at any time or from time to time by a municipality or county to defray wholly or in part the costs of any one, all or any combination of purposes authorized in Paragraphs (2) through (5) of Subsection [A of Section 3-38-21] E of Section 3-38-15 NMSA 1978.

          B. The revenue bonds may be payable from and such payment may be secured by a pledge of and lien on the revenues derived from:

                (1) the proceeds of the occupancy tax of the municipality or county after the deduction of those amounts required to be expended pursuant to Subsection D of Section 3-38-15 NMSA 1978 and the administration costs pertaining to the occupancy tax in an amount not to exceed ten percent of the occupancy tax receipts collected by the municipality or county in any fiscal year, excluding from the computation of such costs the administration costs ultimately recovered from delinquent vendors by civil action as penalties, costs of collection and attorney fees but not as interest on unpaid principal;

                (2) the tourist-related facilities and attractions or tourist-related transportation systems to which the bonds pertain, after provision is made for the payment of the operation and maintenance expenses of the tourist-related facilities and attractions or tourist-related transportation systems; or

                (3) a combination of such net revenues from both sources designated in Paragraphs (1) and (2) of this subsection.

          C. The bonds shall bear interest at a rate as authorized in the Public Securities Act, and the first interest payment may be for any period authorized in the Public Securities Act.

          D. Except as otherwise provided in the Lodgers' Tax Act, revenue bonds authorized in the Lodgers' Tax Act shall be issued in accordance with the provisions of Sections 3-31-2 through 3-31-6 NMSA 1978."

     SECTION 5. Section 6-6-4.1 NMSA 1978 (being Laws 1996, Chapter 58, Section 11) is amended to read:

     "6-6-4.1. LOCAL GOVERNMENT DIVISION--ADDITIONAL DUTIES--OCCUPANCY TAX QUARTERLY REPORTS.--The local government division of the department of finance and administration shall promulgate rules [and regulations] that require the governing body of any municipality or county imposing and collecting an occupancy tax pursuant to the Lodgers' Tax Act to report to the division on a quarterly basis any expenditure of occupancy tax funds pursuant to [Sections 3-38-15 and 3-38-21 NMSA 1978] that act."

     SECTION 6. REPEAL.--Section 3-38-21 NMSA 1978 (being Laws 1969, Chapter 199, Section 9, as amended) is repealed.

     SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2024.

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