SENATE BILL 100
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Mary Jane M. Garcia
AN ACT
RELATING TO TAXATION; TEMPORARILY DECREASING OIL AND GAS SEVERANCE TAX RATES; TEMPORARILY INCREASING TAX RATES IMPOSED PURSUANT TO THE OIL AND GAS EMERGENCY SCHOOL TAX ACT; PROTECTING HOLDERS OF SEVERANCE TAX BONDS FROM IMPAIRMENT; DISTRIBUTING A PORTION OF THE REVENUE FROM THE OIL AND GAS EMERGENCY SCHOOL TAX TO THE PUBLIC SCHOOL FUND.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-6.20 NMSA 1978 (being Laws 1985, Chapter 65, Section 6, as amended) is amended to read:
"7-1-6.20. IDENTIFICATION OF MONEY IN EXTRACTION TAXES SUSPENSE FUND--DISTRIBUTION.--
A. Except as provided in Subsection B of this section, after the necessary disbursements have been made from the extraction taxes suspense fund, the money remaining in the suspense fund as of the last day of the month shall be identified by tax source and distributed or transferred in accordance with the provisions of Sections 7-1-6.21 through
7-1-6.23, 7-1-6.61 and 7-1-6.62 NMSA 1978. After the necessary distributions and transfers, any balance, except for remittances unidentified as to source or disposition, shall be transferred to the general fund.
B. Payments on assessments issued by the department pursuant to the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act and the Oil and Gas Severance Tax Act shall be held in the extraction taxes suspense fund until the secretary determines that there is no substantial risk of protest or other litigation, whereupon after the necessary disbursements have been made from the extraction taxes suspense fund, the money remaining in the suspense fund as of the last day of the month attributed to these payments shall be identified by tax source and distributed or transferred in accordance with the provisions of Sections 7-1-6.21 through
7-1-6.23, 7-1-6.61 and 7-1-6.62 NMSA 1978. After the necessary distributions and transfers, any balance, except for remittance unidentified as to source or disposition, shall be transferred to the general fund."
SECTION 2. A new section of the Tax Administration Act, Section 7-1-6.61 NMSA 1978, is enacted to read:
"7-1-6.61. [NEW MATERIAL] DISTRIBUTION TO SEVERANCE TAX BONDING FUND OF OIL AND GAS EMERGENCY SCHOOL TAX RECEIPTS.--Upon the certification of the state board of finance to the secretary that a distribution is necessary to meet debt service obligations on outstanding severance tax bonds and supplemental severance tax bonds or is necessary to maintain a reserve fund for future debt obligations in order to protect the interest of bondholders, a distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the severance tax bonding fund of the net receipts attributable to the taxes and advance payment imposed pursuant to the Oil and Gas Emergency School Tax Act in the amount certified by the state board of finance; provided that no distribution pursuant to this section shall exceed an amount equal to one percent multiplied by the taxable value of products reported pursuant to the Oil and Gas Emergency School Tax Act for the month in which the distribution is made."
SECTION 3. A new section of the Tax Administration Act, Section 7-1-6.62 NMSA 1978, is enacted to read:
"7-1-6.62. [NEW MATERIAL] DISTRIBUTION--PUBLIC SCHOOL FUND.--
A. Subject to the provisions of Subsection B of this section, a distribution pursuant to Section 7-1-6.20 NMSA 1978 shall be made to the public school fund in an amount equal to one percent multiplied by the taxable value of products reported pursuant to the Oil and Gas Emergency School Tax Act. Amounts distributed to the public school fund pursuant to this section shall not revert to the general fund.
B. If a distribution to the severance tax bonding fund is made pursuant to Section 7-1-6.61 NMSA 1978, the distribution pursuant to this section shall be reduced by the amount of the distribution pursuant to Section 7-1-6.61 NMSA 1978."
SECTION 4. A new section of the Tax Administration Act is enacted to read:
"[NEW MATERIAL] PURPOSE--AUTHORITY TO ADJUST OIL AND GAS TAX RATES.--The purpose of this 2011 act is to temporarily decrease tax rates under the Oil and Gas Severance Tax Act and to temporarily increase tax rates under the Oil and Gas Emergency School Tax Act. This 2011 act is not intended to affect the total combined taxes due under those acts. In order to ensure that the total amount paid pursuant to the Oil and Gas Severance Tax Act and the Oil and Gas Emergency School Tax Act is not affected by the change in tax rates pursuant to this 2011 act, the secretary shall, by rule, adjust tax rates under those acts if, because of oil or gas prices, one or more of the following provisions is applicable:
A. Paragraph (3), (4), (5), (6), (7), (8) or (9) of Subsection A of Section 7-29-4 NMSA 1978;
B. Subsection B of Section 7-29-4 NMSA 1978; or
C. Paragraph (4), (5), (6) or (7) of Subsection A of Section 7-31-4 NMSA 1978."
SECTION 5. Section 7-27-14 NMSA 1978 (being Laws 1961, Chapter 5, Section 11, as amended) is amended to read:
"7-27-14. AMOUNT OF TAX--SECURITY FOR BONDS.--
A. The legislature shall provide for the continued assessment, levy, collection and deposit into the severance tax bonding fund of the tax or taxes upon natural resource products severed and saved from the soil of the state that, together with such other income as may be deposited to the fund, will be sufficient to produce an amount that is at least the amount necessary to meet annual debt service charges on all outstanding severance tax bonds and supplemental severance tax bonds.
B. Except as otherwise specifically provided by law, the state board of finance shall issue no severance tax bonds unless the aggregate amount of severance tax bonds outstanding, and including the issue proposed, can be serviced with not more than fifty percent of the annual deposits into the severance tax bonding fund, as determined by the deposits during the preceding fiscal year.
C. The state board of finance shall issue no supplemental severance tax bonds with a term that extends beyond the fiscal year in which the bonds are issued unless the aggregate amount of severance tax bonds and supplemental severance tax bonds outstanding, and including the issue proposed, can be serviced with not more than sixty-two and
one-half percent of the annual deposits into the severance tax bonding fund, as determined by the deposits during the preceding fiscal year.
D. Except as otherwise specifically provided by law, the state board of finance may issue supplemental severance tax bonds with a term that does not extend beyond the fiscal year in which they are issued if the debt service on such supplemental severance tax bonds when added to the debt service previously paid or scheduled to be paid during that fiscal year on severance tax bonds and supplemental severance tax bonds does not exceed ninety-five percent of the deposits into the severance tax bonding fund during the preceding fiscal year.
E. The state board of finance shall issue no severance tax bonds or supplemental severance tax bonds with the expectation that a distribution pursuant to Section 7-1-6.61 NMSA 1978 of oil and gas emergency school tax receipts will be used to satisfy any portion of the debt service due on either the bonds to be issued or any outstanding severance tax bonds or supplemental severance tax bonds.
F. For the purposes of Subsections B, C and D of this section, in determining the deposits into the severance tax bonding fund during the preceding fiscal year:
(1) in lieu of the actual deposits into the fund in fiscal year 2011, the amount used to calculate bonding capacity for fiscal year 2012 shall equal the amount distributed to the fund in fiscal year 2011 pursuant to Section 7-1-6.23 NMSA 1978 less an amount equal to one percent multiplied by the taxable value of products reported pursuant to the Oil and Gas Severance Tax Act for fiscal year 2011;
(2) in lieu of the actual deposits into the fund in fiscal year 2014, the amount used to calculate bonding capacity for fiscal year 2015 shall equal the amount distributed to the fund in fiscal year 2014 pursuant to Section 7-1-6.23 NMSA 1978 plus an amount equal to one percent multiplied by the taxable value of products reported pursuant to the Oil and Gas Severance Tax Act for fiscal year 2014; and
(3) any distributions of oil and gas emergency school tax receipts pursuant to Section 7-1-6.61 NMSA 1978 shall not be considered.
[E.] G. The provisions of this section shall not be modified by the terms of any severance tax bonds or supplemental severance tax bonds hereafter issued."
SECTION 6. Section 7-29-4 NMSA 1978 (being Laws 1980, Chapter 62, Section 5, as amended) is amended to read:
"7-29-4. OIL AND GAS SEVERANCE TAX IMPOSED--
COLLECTION--INTEREST OWNER'S LIABILITY TO STATE--INDIAN LIABILITY.--
A. There is imposed and shall be collected by the department a tax on all products that are severed and sold, except as provided in Subsection B of this section. The measure of the tax and the rates are:
(1) on natural gas severed and sold, except as provided in Paragraphs (4), (6), [and] (7) and (10) of this subsection, three and three-fourths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978;
(2) on oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead, except as provided in Paragraphs (3), (5), (8), [and] (9) and (11) of this subsection, three and three-fourths percent of taxable value determined pursuant to Section 7-29-4.1 NMSA 1978;
(3) on oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead produced from a qualified enhanced recovery project, one and seven-eighths percent of the taxable value determined pursuant to Section
7-29-4.1 NMSA 1978, provided that the annual average price of west Texas intermediate crude oil, determined by the department by averaging the posted prices in effect on the last day of each month of the twelve-month period ending on May 31 prior to the fiscal year in which the tax rate is to be imposed, was less than twenty-eight dollars ($28.00) per barrel;
(4) on the natural gas from a well workover project that is certified by the oil conservation division of the energy, minerals and natural resources department in its approval of the well workover project, two and forty-five hundredths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978, provided that the annual average price of west Texas intermediate crude oil, determined by the department by averaging the posted prices in effect on the last day of each month of the twelve-month period ending on May 31 prior to the fiscal year in which the tax rate is to be imposed, was less than twenty-four dollars ($24.00) per barrel;
(5) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a well workover project that is certified by the oil conservation division of the energy, minerals and natural resources department in its approval of the well workover project, two and forty-five hundredths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978, provided that the annual average price of west Texas intermediate crude oil, determined by the department by averaging the posted prices in effect on the last day of each month of the twelve-month period ending on May 31 prior to the fiscal year in which the tax rate is to be imposed, was less than twenty-four dollars ($24.00) per barrel;
(6) on the natural gas from a stripper well property, one and seven-eighths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978, provided
the average annual taxable value of natural gas was equal to or less than one dollar fifteen cents ($1.15) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(7) on the natural gas from a stripper well property, two and thirteen-sixteenths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978, provided that the average annual taxable value of natural gas was greater than one dollar fifteen cents ($1.15) per thousand cubic feet but not more than one dollar thirty-five cents ($1.35) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(8) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, one and seven-eighths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978, provided that the average annual taxable value of oil was equal to or less than fifteen dollars ($15.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(9) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, two and thirteen-sixteenths percent of the taxable value determined pursuant to Section
7-29-4.1 NMSA 1978, provided that the average annual taxable value of oil was greater than fifteen dollars ($15.00) per barrel but not more than eighteen dollars ($18.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed; [and]
(10) from July 1, 2011 through June 30, 2014, on natural gas severed and sold, except as provided in Paragraphs (4), (6) and (7) of this subsection, two and three-fourths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978;
(11) from July 1, 2011 through June 30, 2014, on oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead, except as provided in Paragraphs (3), (5), (8) and (9) of this subsection, two and three-fourths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978;
[(10)] (12) on carbon dioxide, helium and non-hydrocarbon gases, except as provided in Paragraph (13) of this subsection, three and three-fourths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978; and
(13) from July 1, 2011 through June 30, 2014, on carbon dioxide, helium and non-hydrocarbon gases, two and three-fourths percent of the taxable value determined pursuant to Section 7-29-4.1 NMSA 1978.
B. The tax imposed in Subsection A of this section shall not be imposed on:
(1) natural gas severed and sold from a production restoration project during the first ten years of production following the restoration of production, provided that the annual average price of west Texas intermediate crude oil, determined by the department by averaging the posted prices in effect on the last day of each month of the twelve-month period ending on May 31 prior to each fiscal year in which the tax exemption is to be effective, was less than twenty-four dollars ($24.00) per barrel; and
(2) oil and other liquid hydrocarbons removed from natural gas at or near the wellhead from a production restoration project during the first ten years of production following the restoration of production, provided that the annual average price of west Texas intermediate crude oil, determined by the department by averaging the posted prices in effect on the last day of each month of the twelve-month period ending on May 31 prior to each fiscal year in which the tax exemption is to be effective, was less than twenty-four dollars ($24.00) per barrel.
C. Every interest owner shall be liable for the tax to the extent of [his] the interest owner's interest in such products. Any Indian tribe, Indian pueblo or Indian shall be liable for the tax to the extent authorized or permitted by law.
D. The tax imposed by this section may be referred to as the "oil and gas severance tax"."
SECTION 7. Section 7-31-4 NMSA 1978 (being Laws 1959, Chapter 54, Section 4, as amended) is amended to read:
"7-31-4. PRIVILEGE TAX LEVIED--COLLECTED BY
DEPARTMENT--RATE--INTEREST OWNER'S LIABILITY TO STATE--INDIAN
LIABILITY.--
A. There is levied and shall be collected by the department a privilege tax on the business of every person severing products in this state. The measure of the tax shall be:
(1) on oil and on oil and other liquid hydrocarbons removed from natural gas at or near the wellhead, except as provided in Paragraphs (4), [and] (5) and (8) of this subsection, three and fifteen-hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;
(2) on carbon dioxide, helium and non-hydrocarbon gases, except as provided in Paragraph (10) of this subsection, three and fifteen-hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;
(3) on natural gas, except as provided in Paragraphs (6), [and] (7) and (9) of this subsection, four percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;
(4) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, one and fifty-eight hundredths percent of the taxable value determined pursuant to Section
7-31-5 NMSA 1978, provided that the average annual taxable value of oil was equal to or less than fifteen dollars ($15.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(5) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, two and thirty-six hundredths percent of the taxable value determined pursuant to Section
7-31-5 NMSA 1978, provided that the average annual taxable value of oil was greater than fifteen dollars ($15.00) per barrel but not more than eighteen dollars ($18.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(6) on the natural gas removed from a stripper well property, two percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was equal to or less than one dollar fifteen cents ($1.15) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed; [and]
(7) on the natural gas removed from a stripper well property, three percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was greater than one dollar fifteen cents ($1.15) per thousand cubic feet but not more than one dollar thirty-five cents ($1.35) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;
(8) from July 1, 2011 through June 30, 2014, on oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead, except as provided in Paragraphs (4) and (5) of this subsection, four and fifteen-hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;
(9) from July 1, 2011 through June 30, 2014, on natural gas, except as provided in Paragraphs (6) and (7) of this subsection, five percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978; and
(10) from July 1, 2011 through June 30, 2014, on carbon dioxide, helium and non-hydrocarbon gases, four and fifteen-hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978.
B. Every interest owner, for the purpose of levying this tax, is deemed to be in the business of severing products and is liable for this tax to the extent of [his] the owner's interest in the value of the products or to the extent of [his] the owner's interest as may be measured by the value of the products.
C. Any Indian tribe, Indian pueblo or Indian is liable for this tax to the extent authorized or permitted by law."
SECTION 8. DELAYED REPEAL.--Effective July 1, 2014, Section 7-1-6.61 NMSA 1978, as enacted by Section 2 of this act, Section 7-1-6.62 NMSA 1978, as enacted by Section 3 of this act, and Section 4 of this act are repealed.
SECTION 9. APPLICABILITY.--The distribution pursuant to Section 3 of this act applies to receipts from the oil and gas emergency school tax that are attributable to sales on or after July 1, 2011 and prior to July 1, 2014.
SECTION 10. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.
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