SENATE BILL 274

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

John Arthur Smith

AN ACT

RELATING TO TAXATION; CONVERTING A DISTRIBUTION FROM GROSS RECEIPTS TAX TO A MUNICIPALITY TO A MUNICIPAL GROSS RECEIPTS TAX; ELIMINATING THE FOOD HOLD HARMLESS DISTRIBUTIONS; CHANGING THE FOOD DEDUCTION TO A CREDIT IN THE AMOUNT OF THE STATE GROSS RECEIPTS TAX OTHERWISE DUE; CREATING A CREDIT AGAINST GROSS RECEIPTS FOR MUNICIPAL GROSS RECEIPTS TAX LIABILITY; INCREASING THE WORKING FAMILIES TAX CREDIT; DECREASING THE GROSS RECEIPTS TAX RATE AND THE COMPENSATING TAX RATE; REPEALING THE MUNICIPAL AND COUNTY HOLD HARMLESS GROSS RECEIPTS TAXES.

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

     SECTION 1. Section 7-1-6.4 NMSA 1978 (being Laws 1983, Chapter 211, Section 9, as amended) is amended to read:

     "7-1-6.4. DISTRIBUTION--MUNICIPALITY FROM GROSS RECEIPTS TAX.--

          A. Except as provided in Subsection B of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to each municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the product of the quotient of one and two hundred twenty-five thousandths percent divided by the tax rate imposed by Section 7-9-4 NMSA 1978 multiplied by the net receipts for the month attributable to the gross receipts tax from business locations:

                [(1) within that municipality;

                (2)] (1) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of that municipality;

                [(3)] (2) outside the boundaries of any municipality on land owned by that municipality; and

                [(4)] (3) on an Indian reservation or pueblo grant in an area that is contiguous to that municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:

                     (a) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and

                     (b) the governing body of the municipality has submitted a copy of the contract to the secretary.

          B. If the reduction made by Laws 1991, Chapter 9, Section 9 to the distribution under this section impairs the ability of a municipality to meet its principal or interest payment obligations for revenue bonds outstanding prior to July 1, 1991 that are secured by the pledge of all or part of the municipality's revenue from the distribution made under this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet any required payment, provided that the distribution amount does not exceed the amount that would have been due that municipality under this section as it was in effect on June 30, 1992.

          C. A distribution 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 municipality pursuant to the Tax Increment for Development Act."

     SECTION 2. Section 7-1-6.46 NMSA 1978 (being Laws 2004, Chapter 116, Section 1, as amended) is amended to read:

     "7-1-6.46. DISTRIBUTION TO MUNICIPALITIES--OFFSET FOR [FOOD DEDUCTION AND] HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--

          A. For a municipality that [has not elected to impose] does not have in effect a municipal hold harmless gross receipts tax through an ordinance and that has a population of less than ten thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to [a] the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to [the sum of:

                (1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent; and

                (2)] the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by [the sum of] the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month [plus one and two hundred twenty-five thousandths percent].

          B. For a municipality not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to [the sum of:

                (1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                (2)] the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations attributable to the municipality multiplied by [the sum of] the combined rate of all municipal local option gross receipts taxes in effect in the municipality on January 1, 2007 plus one and two hundred twenty-five thousandths percent in the following percentages:

                [(a)] (1) prior to July 1, 2015, one hundred percent;

                [(b)] (2) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                [(c)] (3) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                [(d)] (4) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                [(e)] (5) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                [(f)] (6) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                [(g)] (7) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                [(h)] (8) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                [(i)] (9) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                [(j)] (10) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                [(k)] (11) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                [(l)] (12) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                [(m)] (13) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                [(n)] (14) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and

                (o)] (15) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                (16) on or after July 1, 2029, zero percent.

           C. The distribution pursuant to Subsections A and B of this section is in lieu of revenue that would have been received by the municipality but for the [deductions] deduction provided by [Sections 7-9-92 and] Section 7-9-93 NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the municipality in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a municipality not described in Subsection A of this section or to a municipality that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]

          D. If the reductions made by this [2013] 2015 act to the distributions made pursuant to [Subsections A and] Subsection B of this section impair the ability of a municipality to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, 2013 and that are secured by the pledge of all or part of the municipality's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that municipality shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that municipality pursuant to this section does not exceed the amount that would have been due that municipality pursuant to this section as it was in effect on June 30, 2013.

          E. A distribution 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 municipality pursuant to the Tax Increment for Development Act.

          F. With respect to an H class county, the provisions of this section apply only to distributions of municipal local option gross receipts taxes imposed by the H class county.

          [E.] G. For the purposes of this section, "business locations attributable to the municipality" means business locations:

(1) within the municipality;

                (2) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;

                (3) outside the boundaries of the municipality on land owned by the municipality; and

                (4) on an Indian reservation or pueblo grant in an area that is contiguous to the municipality and in which the municipality performs services pursuant to a contract between the municipality and the Indian tribe or Indian pueblo if:

                      (a) the contract describes an area in which the municipality is required to perform services and requires the municipality to perform services that are substantially the same as the services the municipality performs for itself; and

                     (b) the governing body of the municipality has submitted a copy of the contract to the secretary.

          [F. A distribution 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 municipality pursuant to the Tax Increment for Development Act.]"

     SECTION 3. Section 7-1-6.47 NMSA 1978 (being Laws 2004, Chapter 116, Section 2, as amended) is amended to read:

     "7-1-6.47. DISTRIBUTION TO COUNTIES--OFFSET FOR [FOOD DEDUCTION AND] HEALTH CARE PRACTITIONER SERVICES DEDUCTION.--

          A. For a county that [has not elected to impose] does not have in effect a county hold harmless gross receipts tax through an ordinance and that has a population of less than forty-eight thousand according to the most recent federal decennial census, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of:

                [(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county;

                (2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality;

                (3)] (1) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county; and

                [(4)] (2) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality.

          B. For a county not described in Subsection A of this section, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the sum of:

                [(1) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;

                (2) the total deductions claimed pursuant to Section 7-9-92 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; and

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent;

                (3)] (1) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed throughout the county in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and]

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                     (p) on or after July 1, 2029, zero percent; and

                [(4)] (2) the total deductions claimed pursuant to Section 7-9-93 NMSA 1978 for the month by taxpayers from business locations in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect on January 1, 2007 that are imposed in the county area not within a municipality in the following percentages:

                     (a) prior to July 1, 2015, one hundred percent;

                     (b) on or after July 1, 2015 and prior to July 1, 2016, ninety-four percent;

                     (c) on or after July 1, 2016 and prior to July 1, 2017, eighty-eight percent;

                     (d) on or after July 1, 2017 and prior to July 1, 2018, eighty-two percent;

                     (e) on or after July 1, 2018 and prior to July 1, 2019, seventy-six percent;

                     (f) on or after July 1, 2019 and prior to July 1, 2020, seventy percent;

                     (g) on or after July 1, 2020 and prior to July 1, 2021, sixty-three percent;

                     (h) on or after July 1, 2021 and prior to July 1, 2022, fifty-six percent;

                     (i) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;

                     (j) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;

                     (k) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;

                     (l) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;

                     (m) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;

                     (n) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent; [and]

                     (o) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and

                     (p) on or after July 1, 2029, zero percent.

          C. The distribution pursuant to Subsections A and B of this section is in lieu of revenue that would have been received by the county but for the deductions provided by [Sections 7-9-92 and] Section 7-9-93 NMSA 1978. The distribution shall be considered gross receipts tax revenue and shall be used by the county in the same manner as gross receipts tax revenue, including payment of gross receipts tax revenue bonds. [A distribution pursuant to this section to a county not described in Subsection A of this section or to a county that has imposed a gross receipts tax through an ordinance that does not provide a deduction contained in the Gross Receipts and Compensating Tax Act shall not be made on or after July 1, 2029.]

          D. If the reductions made by this [2013] 2015 act to the distributions made pursuant to [Subsections A and] Subsection B of this section impair the ability of a county to meet its principal or interest payment obligations for revenue bonds that are outstanding prior to July 1, 2013 and that are secured by the pledge of all or part of the county's revenue from the distribution made pursuant to this section, then the amount distributed pursuant to this section to that county shall be increased by an amount sufficient to meet the required payment; provided that the total amount distributed to that county pursuant to this section does not exceed the amount that would have been due that county pursuant to this section as it was in effect on June 30, 2013.

          E. A distribution 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.

          F. With respect to an H class county, the provisions of this section apply only to distributions of county local option gross receipts taxes imposed by the H class county."

     SECTION 4. Section 7-2-18.15 NMSA 1978 (being Laws 2007, Chapter 45, Section 9, as amended) is amended to read:

     "7-2-18.15. WORKING FAMILIES TAX CREDIT.--

          A. A resident who files an individual New Mexico income tax return may claim a credit in an amount equal to [ten] fourteen percent of the federal income tax credit for which that individual is eligible for the same taxable year pursuant to Section 32 of the Internal Revenue Code. The credit provided in this section may be referred to as the "working families tax credit".

          B. The working families tax credit may be deducted from the income tax liability of an individual who claims the credit and qualifies for the credit pursuant to this section. If the credit exceeds the individual's income tax liability for the taxable year, the excess shall be refunded to the individual."

     SECTION 5. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:

     "7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--

          A. For the privilege of engaging in business, an excise tax equal to five [and one-eighth] percent of gross receipts is imposed on any person engaging in business in New Mexico.

          B. The tax imposed by this section shall be referred to as the "gross receipts tax"."

     SECTION 6. Section 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:

     "7-9-7. IMPOSITION AND RATE OF TAX--DENOMINATION AS "COMPENSATING TAX".--

          A. For the privilege of using tangible property in New Mexico, there is imposed on the person using the property an excise tax equal to five [and one-eighth] percent of the value of tangible property that was:

                (1) manufactured by the person using the property in the state;

                (2) acquired inside or outside of this state as the result of a transaction with a person located outside this state that would have been subject to the gross receipts tax had the tangible personal property been acquired from a person with nexus with New Mexico; or

                (3) acquired as the result of a transaction that was not initially subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax but which transaction, because of the buyer's subsequent use of the property, should have been subject to the compensating tax imposed by Paragraph (2) of this subsection or the gross receipts tax.

          B. For the purpose of Subsection A of this section, value of tangible property shall be the adjusted basis of the property for federal income tax purposes determined as of the time of acquisition or introduction into this state or of conversion to use, whichever is later. If no adjusted basis for federal income tax purposes is established for the property, a reasonable value of the property shall be used.

          C. For the privilege of using services rendered in New Mexico, there is imposed on the person using such services an excise tax equal to five percent of the value of the services at the time they were rendered. The services, to be taxable under this subsection, must have been rendered as the result of a transaction that was not initially subject to the gross receipts tax but which transaction, because of the buyer's subsequent use of the services, should have been subject to the gross receipts tax.

          D. The tax imposed by this section shall be referred to as the "compensating tax"."

     SECTION 7. Section 7-9-92 NMSA 1978 (being Laws 2004, Chapter 116, Section 5) is amended to read:

     "7-9-92. [DEDUCTION] CREDIT--GROSS RECEIPTS--SALE OF FOOD AT RETAIL FOOD STORE.--

          A. A credit may be claimed with respect to receipts from the sale of food at a retail food store that are not exempt from gross receipts taxation and are not deductible pursuant to another provision of the Gross Receipts and Compensating Tax Act [may be deducted from gross receipts. The deduction provided by this section shall be separately stated by the taxpayer]. The amount of credit shall equal the gross receipts from the sale of food at a retail food store that are not otherwise exempt or deductible multiplied by:

                (1) the difference between the gross receipts tax rate less the rate of one and two hundred twenty-five thousandths percent for receipts of any person engaging in business within a municipality; and

                (2) the gross receipts tax rate for receipts of any person engaging in business outside a municipality.

          B. For the purposes of this section:

                (1) "food" means any food or food product for home consumption that meets the definition of food in 7 USCA [2012(g)(1)] 2012(k)(1) for purposes of the federal [food stamp] supplemental nutrition assistance program; and

                (2) "retail food store" means an establishment that sells food for home preparation and consumption and that meets the definition of retail food store in 7 USCA [2012(k)(1)] 2012(o)(1) for purposes of the federal [food stamp] supplemental nutrition assistance program, whether or not the establishment participates in the [food stamp] supplemental nutrition assistance program."

     SECTION 8. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] CREDIT--GROSS RECEIPTS TAX--MUNICIPAL GROSS RECEIPTS TAX LIABILITY.--A credit shall be allowed for each reporting period against a taxpayer's gross receipts tax liabilities for an amount of municipal gross receipts tax the taxpayer is liable for the reporting period. The credit shall equal the product of the taxable gross receipts reported from the taxpayer within a municipality for the period multiplied by the rate of municipal gross receipts tax imposed by the municipality in effect for the period pursuant to Subsection C of Section 7-19D-9 NMSA 1978."

     SECTION 9. Section 7-19D-7 NMSA 1978 (being Laws 1993, Chapter 346, Section 7, as amended) is amended to read:

     "7-19D-7. COLLECTION BY DEPARTMENT--TRANSFER OF

PROCEEDS--DEDUCTIONS.--

          A. The department shall collect each tax imposed pursuant to the provisions of the Municipal Local Option Gross Receipts Taxes Act in the same manner and at the same time it collects the state gross receipts tax.

          B. Except as provided in Subsection C of this section, the department shall withhold an administrative fee pursuant to Section [1 of this 1997 act] 7-1-6.41 NMSA 1978. The department shall transfer to each municipality for which it is collecting a tax pursuant to the provisions of the Municipal Local Option Gross Receipts Taxes Act the amount of each tax collected for that municipality, less the administrative fee withheld and less any disbursements for tax credits, refunds and the payment of interest applicable to the tax. The transfer to the municipality shall be made within the month following the month in which the tax is collected.

          C. With respect to the municipal gross receipts tax imposed by a municipality pursuant to Section 7-19D-9 NMSA 1978, the department shall withhold the administrative fee pursuant to Section [1 of this 1997 act] 7-1-6.41 NMSA 1978 only on that portion of the municipal gross receipts tax arising from a municipal gross receipts tax rate in excess of [one-half of one] one and seven hundred twenty-five thousandths percent."

     SECTION 10. Section 7-19D-9 NMSA 1978 (being Laws 1978, Chapter 151, Section 1, as amended) is amended to read:

     "7-19D-9. MUNICIPAL GROSS RECEIPTS TAX--AUTHORITY TO IMPOSE RATE.--

          A. The majority of the members of the governing body of any municipality may impose by ordinance an excise tax not to exceed a rate of [one and one-half] two and seven hundred twenty-five thousandths percent of the gross receipts of any person engaging in business in the municipality for the privilege of engaging in business in the municipality. The tax imposed pursuant to this section may be referred to as the "municipal gross receipts tax".

          B. A portion of the tax imposed pursuant to this section shall be imposed by the enactment of one or more ordinances, each imposing any number of municipal gross receipts tax rate increments, but the total municipal gross receipts tax rate imposed by all ordinances pursuant to this subsection shall not exceed an aggregate rate of one and one-half percent of the gross receipts of a person engaging in business. Municipalities may impose increments of one-eighth of one percent.

          [B. The tax imposed pursuant to Subsection A of this section may be referred to as the "municipal gross receipts tax".]

          C. In addition to the tax rate increments that may be imposed pursuant to Subsection B of this section, there is imposed a tax rate of one and two hundred twenty-five thousandths percent of the gross receipts of any person engaging in business in a municipality. The revenue from the tax rate imposed pursuant to this subsection is dedicated to the payment of any outstanding bonds issued by the municipality to the extent that the municipality by ordinance pledged the revenue received from a distribution pursuant to Section 7-1-6.4 NMSA 1978 to the repayment of such bonds, until such time as the bonds are discharged in full or provision has been fully made therefor. If a municipality by ordinance dedicated revenue received from a distribution pursuant to Section 7-1-6.4 NMSA 1978 to a purpose other than repayment of bonds, the revenue from the tax rate imposed by this subsection is subject to such dedication; provided that the municipality may change the dedication at any time. If, as of July 1, 2015, revenue received from a distribution pursuant to Section 7-1-6.4 NMSA 1978 is not dedicated to the repayment of bonds or for any other purpose, the revenue may be used for general purposes.

          [C.] D. The governing body of a municipality may, at the time of enacting an ordinance imposing the tax rate increment authorized in Subsection [A] B of this section, dedicate the revenue for a specific purpose or area of municipal government services, including but not limited to police protection, fire protection, public transportation or street repair and maintenance. If the governing body proposes to dedicate such revenue, the ordinance and, if any election is held, the ballot shall clearly state the purpose to which the revenue will be dedicated, and any revenue so dedicated shall be used by the municipality for that purpose unless a subsequent ordinance is adopted to change the purpose to which dedicated or to place the revenue in the general fund of the municipality.

          [D.] E. An election shall be called on the questions of disapproval or approval of any ordinance enacted pursuant to Subsection [A] B of this section or any ordinance amending such ordinance:

                (1) if the governing body chooses to provide in the ordinance that it shall not be effective until the ordinance is approved by the majority of the registered voters voting on the question at an election to be held pursuant to the provisions of a home-rule charter or on a date set by the governing body and pursuant to the provisions of the Municipal Election Code governing special elections; or

                (2) if the ordinance does not contain a mandatory election provision as provided in Paragraph (1) of this subsection, upon the filing of a petition requesting such an election if the petition is filed:

                     (a) pursuant to the requirements of a referendum provision contained in a municipal home-rule charter and signed by the number of registered voters in the municipality equal to the number of registered voters required in its charter to seek a referendum; or

                     (b) in all other municipalities, with the municipal clerk within thirty days after the adoption of such ordinance and the petition has been signed by a number of registered voters in the municipality equal to at least five percent of the number of the voters in the municipality who were registered to vote in the most recent regular municipal election.

          [E.] F. The signatures on the petition filed in accordance with Subsection [D] E of this section shall be verified by the municipal clerk. If the petition is verified by the municipal clerk as containing the required number of signatures of registered voters, the governing body shall adopt an election resolution calling for the holding of a special election on the question of approving or disapproving the ordinance unless the ordinance is repealed before the adoption of the election resolution. An election held pursuant to Subparagraph (a) or (b) of Paragraph (2) of Subsection [D] E of this section shall be called, conducted and canvassed as provided in the Municipal Election Code for special elections, and the election shall be held within seventy-five days after the date the petition is verified by the municipal clerk or it may be held in conjunction with a regular municipal election if such election occurs within seventy-five days after the date of verification by the municipal clerk.

          [F.] G. If at an election called pursuant to Subsection [D] E of this section a majority of the registered voters voting on the question approves the ordinance imposing the tax, the ordinance shall become effective in accordance with the provisions of the Municipal Local Option Gross Receipts Taxes Act. If at such an election a majority of the registered voters voting on the question disapproves the ordinance, the ordinance imposing the tax shall be deemed repealed and the question of imposing any increment of the municipal gross receipts tax authorized in this section shall not be considered again by the governing body for a period of one year from the date of the election.

          [G.] H. Any municipality that, [has] prior to July 1, 1996, lawfully imposed by the requirements of the Special Municipal Gross Receipts Tax Act a rate of at least one-fourth of one percent shall be deemed to have imposed one-fourth of one percent municipal gross receipts tax pursuant to this section. Any rate of tax deemed to be imposed pursuant to this subsection shall continue to be dedicated to the payment of outstanding bonds issued by the municipality that pledged the tax revenues by ordinance until such time as the bonds are fully paid. A municipality may by ordinance change the purpose for any rate of tax deemed to be imposed at any time the revenues are not committed to payment of bonds.

          [H.] I.  Any law that imposes or authorizes the imposition of a municipal gross receipts tax or that affects the municipal gross receipts tax, or any law supplemental thereto or otherwise appertaining thereto, shall not be repealed or amended or otherwise directly or indirectly modified in such a manner as to impair adversely any outstanding revenue bonds that may be secured by a pledge of such municipal gross receipts tax unless such outstanding revenue bonds have been discharged in full or provision has been fully made therefor."

     SECTION 11. TEMPORARY PROVISION--OUTSTANDING REVENUE BONDS SECURED BY MUNICIPAL OR COUNTY HOLD HARMLESS GROSS RECEIPTS TAX.--If an ordinance imposing tax pursuant to Section 7-19D-18 or 7-20E-28 NMSA 1978, as those sections were in effect prior to July 1, 2015, is in effect on July 1, 2015

and revenue from the tax secures repayment of outstanding bonded indebtedness, the ordinance enacting the tax shall continue in effect until the debt is repaid or is otherwise discharged or the tax expires or is repealed by the body that enacted it; provided that no such tax may be extended beyond the term provided in the ordinance in effect on the effective date of this section.

     SECTION 12. REPEAL.--Sections 7-19D-18 and 7-20E-28 NMSA 1978 (being Laws 2013, Chapter 160, Sections 11 and 12) are repealed.

     SECTION 13. APPLICABILITY.--

          A. The provisions of Sections 1 through 3 of this act apply to net receipts with respect to reporting periods beginning on or after July 1, 2015.

          B. The provisions of Section 4 of this act apply to taxable years beginning on or after January 1, 2015.

     SECTION 14. EFFECTIVE DATE.--

          A. The effective date of the provisions of Sections 1 through 3 of this act is August 1, 2015.

          B. The effective date of the provisions of Sections 5 through 12 of this act is July 1, 2015.

- 31 -