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AN ACT

RELATING TO TAXATION; PHASING OUT THE COAL SURTAX; PROVIDING

FOR A DELAYED REPEAL OF THE COAL SURTAX EXEMPTION.

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

Section 1. Section 7-26-6 NMSA 1978 (being Laws 1982,

Chapter 77, Section 1, as amended) is amended to read:

"7-26-6. SEVERANCE TAX ON COAL.--

A. The severance tax on coal is measured by the

quantity of coal severed and saved. The taxable event is

sale, transportation out of New Mexico or consumption of the

coal, whichever first occurs. Upon each short ton (two

thousand pounds) of coal severed and saved, there shall be

imposed on the severer a severance tax. The severance tax

rate shall be for surface coal, fifty-seven cents ($.57); and

for underground coal, fifty-five cents ($.55).

B. Until June 30, 2007, the severance tax on coal

shall be increased by a surtax, hereby imposed. The surtax

shall be imposed on the unit of quantity of such product or

natural resource at the following rates:

(1) surface coal, sixty cents ($.60); and

(2) underground coal, fifty-eight cents

($.58).

C. The surtax rate on coal imposed pursuant to

Subsection B of this section shall be increased on

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July 1, 1994 and on July 1 of each succeeding year by an

amount equal to the product of the dollar amount of the

severance tax imposed on each ton of coal by a percentage

equal to the percentage rise in the producer price index for

coal from the calendar year 1992 to the calendar year just

prior to the year in which the surtax rates are computed, but

in no case shall the surtax rate be decreased. The rates so

computed shall be computed by the department in April of 1994

and in April of each year thereafter and published on or

before May 1, 1994 and on or before May 1 of each year

thereafter.

If the producer price index for coal is substantially

revised or if the base year used as an index of one hundred

is changed, the department shall make an adjustment in the

percentage used to compute the surtax rates that would

produce results equivalent, as nearly as possible, to those

that would have been obtained if the producer price index for

coal had not been so revised or if the base year had not been

changed. If this index ceases to become available, then a

comparable index based upon changes in the price of coal

shall be adopted by the department by regulation.

D. From July 1, 2007 until June 30, 2008, the

severance tax on coal shall be increased by a surtax, hereby

imposed. The surtax shall be imposed on the unit of quantity

of such product or natural resource at the following rates:

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(1) surface coal, forty-eight cents ($.48);

and

(2) underground coal, forty-seven cents

($.47).

E. From July 1, 2008 until June 30, 2009, the

severance tax on coal shall be increased by a surtax, hereby

imposed. The surtax shall be imposed on the unit of quantity

of such product or natural resource at the following rates:

(1) surface coal, twenty-four cents ($.24);

and

(2) underground coal, twenty-three cents

($.23).

F. As used in this section:

(1) "producer price index for coal" means

the commodity code 05-1 as reported annually by the bureau of

labor statistics at the United States department of labor in

their annual producer price indexes data;

(2) "surface coal" means coal that is

severed using surface mining methods;

(3) "surface mining" means the extraction of

coal from the earth by removing the material overlying a coal

seam and then removing the coal by common methods, including,

but not limited to, contour mining, strip mining, mountain

top removal mining, box cut mining, open pit mining and area

mining; and

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(4) "underground coal" means all coal that is

not surface coal."

Section 2. DELAYED REPEAL.--Section 7-26-6.2 NMSA 1978

(being Laws 1990, Chapter 83, Section 1 and also Laws 1990,

Chapter 84, Section 1, as amended) is repealed effective

July 1, 2009.

Section 3. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.