HB 411 — LOCAL GOV'T TAX DISTRIBUTION DEFINITIONS

HOUSEAN BILLACT 411RELATING 54THTO LEGISLATURETAXATION; - STATEOFNEWMEXICO- FIRST SESSION, 2019 INTRODUCED BY Jim R.

TrujilloAMENDING andTHE SusanDEFINITION K.OF "AVERAGE DISTRIBUTION OR TRANSFER AMOUNT" IN 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).

Herrera8 6BE 8IT 10ENACTED ANBY ACTTHE RELATINGLEGISLATURE TOOF TAXATION;THE STATE OF NEW MEXICO:

AMENDING THE DEFINITION OF "AVERAGE DISTRIBUTION OR TRANSFER AMOUNT" IN SECTION 7-1-6.151. NMSA 1978 (BEING LAWS 1983, CHAPTER 211, SECTION 20, AS AMENDED BY LAWS 14 2015, CHAPTER 89, SECTION 1 AND BY LAWS 2015, CHAPTER 100, SECTION 1).

eSection t7-1-6.15 17NMSA BE1978 IT(being ENACTEDLaws BY1983, THEChapter LEGISLATURE211, OFSection THE20, STATEas OFamended NEWby MEXICO:Laws 2015, Chapter 89, Section 1 and by Laws 2015, Chapter 100, Section 1) is amended to read:

w"7-1-6.15. l n d 18 SECTION 1.

SectionADJUSTMENTS 7-1-6.15OF NMSADISTRIBUTIONS 1978OR (beingTRANSFERS LawsTO 1983,MUNICIPALITIES =OR =COUNTIES.-- 19A. Chapter 211, Section 20, as amended by Laws 2015, Chapter 89, a l i a e r 20 Section 1 and by Laws 2015, Chapter 100, Section 1) is amended a t m m 21 to read:

d r e 22 "7-1-6.15.

ADJUSTMENTS OF DISTRIBUTIONS OR TRANSFERS TO c e s k 23 MUNICIPALITIES OR COUNTIES.-- e a n b 24 A.

u [ (1) any distribution to a municipality .212801.2 pursuant to Section 7-1-6.4, 7-1-6.36 or 7-1-6.46 NMSA 1978;

(5) any distribution to a municipality or a HB 411 Page 1 county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;

e e 17 (8) any distribution to a municipality of e e n d 18 gasoline taxes pursuant to Section 7-1-6.27 NMSA 1978;

and = = l ] 19 (9) any distribution to a municipality of a l r i 20 compensating taxes pursuant to Section 7-1-6.55 NMSA 1978.

t e a t B.

Before making a distribution or transfer m m 21 e d r e 22 specified in Subsection A of this section to a municipality or c e r c 23 county for the month, amounts comprising the net receipts shall e a n b 24 be segregated into two mutually exclusive categories.

One u [ category shall be for amounts relating to the current month, .212801.2 - 2 - and the other category shall be for amounts relating to prior periods.

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, then the HB 411 Page 2 following procedures shall be carried out:

Except as provided in Paragraph (2) of this subsection, the net receipts to be distributed or transferred e e 17 to the municipality or county shall be adjusted to equal the e e n d 18 amount for the current month plus the revised total for prior = = l ] 19 periods;

and a l r i 20 (2) if the revised total for prior periods t e a t determined pursuant to Paragraph (1) of this subsection is m m 21 e d r e 22 negative and its absolute value exceeds the greater of one c e r c 23 hundred dollars ($100) or an amount equal to twenty percent of e a n b 24 the average distribution or transfer amount for that u [ municipality or county, the revised total for prior periods .212801.2 - 3 - shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the municipality or county shall be equal to the amount for the current month.

HB 411 Page 3 D.

(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 and that e e 17 the department intends to recover that amount from future e e n d 18 distributions or transfers to the municipality or county;

= = l ] 19 (2) that the municipality or county has ninety a l r i 20 days from the date notice is made to enter into a mutually t e a t agreeable repayment agreement with the department;

m m 21 e d r e 22 (3) that if the municipality or county takes c e r c 23 no action within the ninety-day period, the department will e a n b 24 recover the amount from the next six distributions or transfers u [ following the expiration of the ninety days;

and .212801.2 - 4 - (4) that the municipality or county may inspect, pursuant to Section 7-1-8.9 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.

No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the HB 411 Page 4 department shall begin recovering the recoverable amount from a municipality or county as follows:

or (b) except as provided in Paragraphs (2) e e 17 and (3) of this subsection, if the municipality or county fails e e n d 18 to act within the ninety days, decreasing the amount of the = = l ] 19 next six distributions or transfers to the municipality or a l r i 20 county following expiration of the ninety-day period in t e a t increments as nearly equal as practicable and sufficient to m m 21 e d r e 22 recover the amount;

c e r c 23 (2) if, pursuant to Subsection B of this e a n b 24 section, the secretary determines that the recoverable amount u [ is more than fifty percent of the average distribution or .212801.2 - 5 - transfer of net receipts for that municipality or county, the secretary:

and (b) may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, HB 411 Page 5 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 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 e e 17 may waive recovery of any portion of the recoverable amount, e e n d 18 subject to approval by the state board of finance.

= = l ] 19 F.

No later than ninety days from the date notice a l r i 20 pursuant to Subsection D of this section is given, the t e a t department shall provide the municipality or county adequate m m 21 e d r e 22 opportunity to review an application for a claim for refund c e r c 23 that gave rise to the recoverable amount, exclusive of any e a n b 24 amended returns that may be attached to the application, u [ pursuant to Section 7-1-8.9 NMSA 1978.

.212801.2 - 6 - 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 in the prior fiscal HB 411 Page 6 year.

Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a municipality or e e 17 county, the secretary shall decrease or redirect the next e e n d 18 designated distribution or transfer, and succeeding = = l ] 19 distributions or transfers as necessary, by the amount of the a l r i 20 state distributions intercept authorized by the secretary of t e a t finance and administration pursuant to the State Aid Intercept m m 21 e d r e 22 Act or by the amount of the state distribution intercept c e r c 23 authorized pursuant to an ordinance or a resolution passed by e a n b 24 the county or municipality and a written agreement with the New u [ Mexico finance authority.

The secretary shall transfer the .212801.2 - 7 - 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 HB 411 Page 7 bonds or meet other local revenue bond, loan or other debt obligations of the municipality or county to the New Mexico finance authority.

and e e 17 (2) after an adjustment of a distribution or e e n d 18 transfer of net receipts creating a recoverable amount owed to = = l ] 19 the department shall be subordinate to any collection of any a l r i 20 recoverable amount pursuant to Paragraph (2) of Subsection B of t e a t this section.

m m 21 e d r e 22 I.

Upon the direction of the secretary of finance c e r c 23 and administration pursuant to Section 9-6-5.2 NMSA 1978, the e a n b 24 secretary shall temporarily withhold the balance of a u [ distribution to a municipality or county, net of any decrease .212801.2 - 8 - 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 HB 411 Page 8 audit report required by the Audit Act or a financial report required by Subsection F of Section 6-6-2 NMSA 1978.

e e 17 (1) "amounts relating to the current month" e e n d 18 means any amounts included in the net receipts of the current = = l ] 19 month that represent payment of tax due for the current month, a l r i 20 correction of amounts processed in the current month that t e a t relate to the current month or that otherwise relate to m m 21 e d r e 22 obligations due for the current month;

c e r c 23 (2) "amounts relating to prior periods" means e a n b 24 any amounts processed during the current month that adjust u [ amounts processed in a period or periods prior to the current .212801.2 - 9 - 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, HB 411 Page 9 filing or approval of claims for refund, audit adjustments or other cause;