Bill > SB633

This bill amends existing New Mexico law to eliminate certain "hold harmless" reductions in distributions made to municipalities and counties. Previously, these distributions, which are intended to offset revenue lost due to specific tax deductions (like those for food and healthcare practitioner services, referenced by Sections 7-9-92 and 7-9-93 NMSA 1978), were gradually reduced over time for entities that had not opted into a "municipal hold harmless gross receipts tax" or "county hold harmless gross receipts tax." This bill now states that if a municipality or county has not had such a tax in effect since January 1, 2016, they will receive their "applicable maximum distribution," which is defined based on population and tax rates from specific past dates. Conversely, any municipality or county that *has* had a hold harmless tax in effect since January 1, 2016, will no longer receive distributions under this section. The bill also clarifies that these distributions are in lieu of lost tax revenue and can be used for general purposes, including paying off bonds, and can be adjusted for distributions to tax increment development districts. The effective date for these changes is January 1, 2016.