2023 New Mexico Statutes › Chapter 7 - Taxation › Article 1 - Administration › Section 7-1-6.46 - Distribution to municipalities; offset for food deduction and health care practitioner services deduction.

A. For a municipality that did not have in effect on June 30, 2019 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 the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the applicable maximum distribution for the municipality.
B. For a municipality that did not have in effect on June 30, 2019 a municipal hold harmless gross receipts tax through an ordinance and has a population of at least 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 the municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the following percentages of the applicable maximum distribution for the municipality:
(1) for a municipality that has a municipal poverty level two percentage points or more above the state poverty level, eighty percent;
(2) for a municipality that has a poverty level of less than two percentage points above or below the state poverty level, fifty percent; and
(3) for a municipality that has a poverty level two percentage points or more below the state poverty level:
(a) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(b) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(c) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent; and
(d) on or after July 1, 2025, thirty percent.
C. For a municipality not described in Subsection A or B 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 applicable maximum distribution for the municipality multiplied by the following percentages:
(1) on or after July 1, 2022 and prior to July 1, 2023, forty-nine percent;
(2) on or after July 1, 2023 and prior to July 1, 2024, forty-two percent;
(3) on or after July 1, 2024 and prior to July 1, 2025, thirty-five percent;
(4) on or after July 1, 2025 and prior to July 1, 2026, twenty-eight percent;
(5) on or after July 1, 2026 and prior to July 1, 2027, twenty-one percent;
(6) on or after July 1, 2027 and prior to July 1, 2028, fourteen percent;
(7) on or after July 1, 2028 and prior to July 1, 2029, seven percent; and
(8) on and after July 1, 2029, zero percent.
D. A distribution pursuant to this section is in lieu of revenue that would have been received by the municipality but for the deductions provided by Sections 7-9-92 and 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.
E. If the changes made by this 2022 act to the distributions made pursuant to 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, 2022 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, 2022.
F. For the purposes of this section:
(1) "business locations attributable to the municipality" means business locations:
(a) within the municipality;
(b) on land owned by the state, commonly known as the "state fairgrounds", within the exterior boundaries of the municipality;
(c) outside the boundaries of the municipality on land owned by the municipality; and
(d) 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: 1) 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 2) the governing body of the municipality has submitted a copy of the contract to the secretary;
(2) "maximum distribution" means:
(a) for a municipality that did not have in effect on June 30, 2019 a municipal hold harmless gross receipts tax, the total deductions claimed pursuant to Sections 7-9-92 and 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; and
(b) for a municipality not described in Subparagraph (a) of this paragraph, the total deductions claimed pursuant to Sections 7-9-92 and 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; and
(3) "poverty level" means the percentage of persons in poverty, according to the most recent five-year American community survey, as published by the United States census bureau. For the purposes of determining the poverty level of a municipality, "poverty level" means the percentage of persons in poverty in a municipality, according to the most recent five-year American community survey, as published by the United States census bureau, that includes adequate data to make a determination as to the poverty level of the municipality.
G. 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 [Chapter 5, Article 15 NMSA 1978].
History:
Laws 2004, ch. 116, § 1; 2006, ch. 75, § 33; 2007, ch. 331, § 2; 2013, ch. 160, § 1; 2022, ch. 47, § 1.
ANNOTATIONS
The 2022 amendment,
effective July 1, 2022, provided that certain municipalities are exempt from the hold harmless distribution phase-out if they did not have a hold harmless gross receipts tax in effect on June 30, 2019, allowed municipalities with a population of at least ten thousand to retain a percentage of the hold harmless distribution based on the poverty level of the municipality, and defined "maximum distribution"; in Subsection A, after "For a municipality that", deleted "has not elected to impose" and added "did not have in effect on June 30, 2019", after "equal to the", deleted "sum of" and added "applicable maximum distribution for the municipality", and deleted Paragraphs A(1) and A(2); added a new Subsection B and redesignated former Subsections B through F as Subsections C through G, respectively; in Subsection C, after "described in Subsection A", added "or B", after "equal to the", deleted "sum of" and added "applicable maximum distribution for the municipality multiplied by", deleted former Paragraph (1) and the language "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", deleted Subparagraphs (2)(a) through 2(h) and redesignated former Subparagraphs (2)(i) through (2)(o) as Paragraphs C(1) through C(7), respectively, and added Paragraph C(8); in Subsection D, deleted "The" and added "A", after "pursuant to", deleted "Subsections A and B of", and deleted "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."; in Subsection E, after "If the", deleted "reductions" and added "changes", after "pursuant to", deleted "Subsections A and B of", and substituted each occurrence of "2013" with "2022" throughout the subsection; and in Subsection F, redesignated former Paragraphs (1) through (4) as Subparagraphs F(1)(a) through F(1)(d), respectively, in Subparagraph F(1)(d), redesignated former Subparagraphs (4)(a) and (4)(b) as Items F(1)(d)1) and F(1)(d)2), respectively, and added Paragraphs F(2) and F(3).
The 2013 amendment,
effective July 1, 2013, offset the effects of revenue reductions from decreasing the corporate income tax rate and the use of a single sales factor by phasing out certain local government hold harmless provisions over a fifteen-year period; in Subsection A, at the beginning of the sentence, added the language up to "a distribution pursuant to Section 7-1-6.1 NMSA 1978"; deleted former Paragraph (1) of Subsection A, which provided a distribution for municipalities having a population of less than ten thousand and a per capita taxable gross receipts less than the average for all municipalities; in Subsection B, after "described in", deleted "Paragraph (1) of this" and after "Section", added the remainder of the sentence; in Paragraph (1) of Subsection B, in the introductory sentence, added "in the following percentages" and added Subparagraphs (a) through (o); in Paragraph (2) of Subsection B, after "percent", added "in the following percentages" and added Subparagraphs (a) through (o); in Subsection C, in the first sentence, after "pursuant to", changed "Subsection A" to "Subsections A and B", and added the third sentence; and added Subsection D.
The 2007 amendment,
effective July 1, 2007, added Paragraph (1) of Subsection A and Subparagraphs (a) and (b) of Paragraph (2) of Subsection A.
The 2006 amendment,
effective March 6, 2006, added Subsection D to provide an adjustment for a distribution to a tax increment development district.