HB 1601

This bill sets a time frame for the commissioner of revenue administration to review the appropriations and calculations used to set tax rates of towns, cities, or unincorporated places. The bill also provides that for any disallowed appropriations which are subject to a hearing, the commissioner shall request an opinion of the attorney general for such hearing.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Paragraph; Setting of Tax Rates by Commissioner of Revenue Administration; Time for Review. Amend RSA 21-J:35 by inserting after paragraph II the following new paragraph:

II-a. The commissioner shall complete the review under paragraph II within 30 days of the receipt of the minutes and reports required from a town, city, or unincorporated place under RSA 21-J:34.

2 Review of Appropriations; Hearing Procedure. Amend RSA 21-J:35, III-VI to read as follows:

III. If the commissioner finds that appropriations were made in a manner which is inconsistent with statute [he], the commissioner shall delete the appropriation or that portion in question.

IV. If the commissioner finds that the estimated revenues included are inaccurate or inappropriate [he], the commissioner shall adjust the estimates in question.

V. At the time of completion of the review under paragraph II-a, the commissioner shall notify in writing the governing body of each city or town of the rate [~~he has~~] established. This notification shall include a detailed explanation of all changes made in the appropriations or revenue estimates submitted by the municipality or district in question.

VI. Any town, city, or unincorporated place which is dissatisfied with the tax rate set under this section may, within 10 days of notification, request an oral hearing on this matter before the commissioner of revenue administration. If such a request is made, the commissioner shall request an opinion of the attorney general on any questions of law on a disallowed appropriation and shall promptly schedule and conduct a hearing pursuant to rules [~~he shall adopt~~] adopted under RSA 541-A. After hearing, the decision of the commissioner shall be final.

The Department of Revenue Administration indicates this bill will increase state revenue and local expenditures by $849,900 in FY 2000, $764,910 in FY 2001, $688,419 in FY 2002, $619,577 in FY 2003, and $557,619 in FY 2004. The Department indicates that state expenditures will increase by $144,673 in FY 2000, $138,713 in FY 2001, $142,874 in FY 2002, $157,160 in FY 2003, and $151,575 in FY 2004. There is no fiscal impact on county and local revenue or county expenditures.

The Department determined the fiscal impact of this bill using the assumptions listed below.

The increase in state revenue and local expenditures results from the Department assessing penalties provided in RSA 21-J:36 to ensure compliance with reporting due dates. Under current submission rates, this would result in an estimated increase in local costs (state revenue) of $849,900 to be assessed by the Department. The Department calculated the penalty revenue from delinquent preliminary documents based on 360 entities x 4 documents x $5 x an average of 90 days = $648,000, plus $105,000 for late financial reports; 350 entities x $5 x an average of 60 days. In addition, the Department calculated final review penalties at $96,900 based on 323 entities x 2 documents x $5 x an average of 30 days. The $849,900 estimate was reduced in future years by 10% annually to reflect increased compliance by local entities.

The increase in state expenditures was determined as follows. Currently, each Department auditor finalizes for approval approximately 62 tax rates in the two-month period from mid-September to mid-November. To shorten that 8-week time period to 4 weeks from September 1 to September 30, the Department would require two additional full-time auditors and two temporary auditors (for approximately 1,000 additional hours for auditing and approval) and 200 hours for additional temporary clerical support to process the paperwork. Also needed would be administrative expenses for computers and supplies. The increase in expenditures is calculated at $144,673 for the first year, with annual increases of 3% in future years, net of the one-time first year costs.