2003 SESSION

03-0115

09/10

SENATE BILL 224-FN-A-LOCAL

COMMITTEE: Ways and Means

ANALYSIS

This bill grants a total homestead exemption against the education property tax. Non-homestead property owners shall pay the education property tax directly to the department of revenue administration. This bill establishes a needs-based method for determining the amount of per pupil adequate education grants.

The bill authorizes payments from the general fund to municipalities as compensation for interest lost due to changes in education property tax collection procedures.

The bill also reduces the rates of the business enterprise tax and the business profits tax.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-0115

09/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

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

1 Education Property Tax; Exemption for Homestead Property. RSA 76:3 is repealed and reenacted to read as follows:

76:3 Education Property Tax.

I. An annual education property tax at the uniform rate of $5.80 on each $1000 of the value of taxable property is hereby imposed on all persons and property taxable pursuant to RSA 72 and RSA 73, except as provided in paragraph II and except property subject to tax under RSA 82 and RSA 83-F.

II. A person's homestead shall be exempt from the education property tax. For purposes of this section:

(a) "Homestead" means a dwelling owned and used as the principal place of residence for not less than 240 days in a calendar year and includes the following:

(1) The land upon which the dwelling stands;

(2) Visual and ordinary appurtenant structures such as but not limited to garages, wood sheds, barns, and other outbuildings;

(3) The land upon which such appurtenant structures stand;

(4) Land contiguous to such dwelling and appurtenant structures that is groomed and maintained around them; and

(5) Land necessary to the support and service of the dwelling such as but not limited to driveways and maintained rights-of-way for purposes of ingress and egress to the dwelling.

(b) A homestead may consist of a part of a multi-unit dwelling and its proportionate share of the land upon which it stands and other ordinary appurtenant common facilities.

(c) In this paragraph the term "owned" includes a vendee in possession under a land contract and one or more joint tenants or tenants in common.

(d) "Homestead" shall not include personal property such as furniture, furnishings or appliances, or structures.

(e) Manufactured housing shall be considered a dwelling.

III. The education property tax bills shall be mailed by each municipality at the same time local property tax bills are mailed. Education property tax bills shall be on forms approved by the department of revenue administration.

IV. Education property tax bills shall be paid to the department of revenue administration within 30 days of receipt by the taxpayer.

V. Taxes not paid when due shall be subject to appropriate penalties and interest under RSA 21-J.

VI. The commissioner shall collect and shall pay over to the state treasurer the taxes, interest, additions to tax, and penalties imposed under this chapter. The state treasurer shall deposit all taxes collected in the education trust fund established by RSA 198:39.

VII. The commissioner may institute actions in the name of the state to recover any tax, interest on tax, additions to tax or the penalties imposed by this section.

VIII. In the collection of the tax imposed by this section, the commissioner may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes. The commissioner shall also have all of the duties imposed upon the tax collectors by RSA 80 that are applicable to the commissioner. The provisions of RSA 80:26 shall apply to the sale of land for the payment of taxes due under this chapter, and the state treasurer is authorized to purchase the land for the state. If the state purchases the land, the state treasurer shall certify the purchase to the governor, and the governor shall draw a warrant for the purchase price out of any money in the treasury not otherwise appropriated.

IX. Appeals regarding valuation of property shall be made to the board of tax and land appeals or the superior court of the county in which the taxpayer resides in the manner prescribed in RSA 76:16-a and RSA 76:17. Appeals other than appeals of valuation shall be made according to the procedure and subject to the time limits provided for other taxes administered by the department under RSA 21-J.

2 Reference Change; Source of Funds; Education Trust Fund. RSA 198:39, I(g) is repealed and reenacted to read as follows:

(g) Education property taxes paid over to the state treasurer by the department of revenue administration pursuant to RSA 76:3.

3 Needs-Based Targeted Education Aid; Determination of Per Pupil Adequate Education Grant. RSA 198:40, I is repealed and reenacted to read as follows:

I.(a) For the biennium beginning July 1, 2003, and every biennium thereafter, the cost per pupil shall be established using the following formula:

(1) The equalized valuation per pupil shall be determined by dividing the equalized value of property within the municipality by the number of weighted pupils.

(2) If the equalized valuation per pupil is greater than $1,000,000, the average base per pupil cost shall be zero.

(3) If the equalized valuation per pupil is $1,000,000 or less, the average base cost per pupil shall be determined on a sliding scale from 0 to 4000 as follows:

(1 minus the equalized valuation per pupil) divided by $1,000,000 multiplied by 4000.

(b) The $1,000,000 used in the calculation under subparagraph (a) shall be adjusted annually by the department of education to reflect changes in the most recently available Consumer Price Index for northeast urban consumers, published by the United States Department of Labor.

4 Determination of Adequate Education Grants. Amend RSA 198:41, I to read as follows:

I. Except for municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of education shall determine the amount of the adequate education grant for the municipality as follows:

(a) Multiply the average base cost per pupil of an elementary pupil by the weighted average daily membership in residence for the municipality;

(b) Add to the product of subparagraph (a), 70 percent of the municipality's apportioned transportation cost[;

(c) Subtract from the sum of subparagraph (b) the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:9 for the next tax year.]

5 Reference Change. Amend RSA 198:41, II(b) to read as follows:

(b) The total amount paid for items of current education expense as determined by the department of education [minus the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:9 for the next tax year].

6 References to Business Profits Tax and Business Enterprise Tax Deleted. Amend RSA 6:12, I(www) to read as follows:

(www) Money received under [77-A, RSA 77-E,] RSA 78, RSA 78-A, RSA 78-B, RSA 83-F, RSA 198:46, and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.

7 Business Profits Tax; Rate of Tax. Amend RSA 77-A:2 to read as follows:

77-A:2 Imposition of Tax. A tax is imposed at the rate of [8.5] 8 percent upon the taxable business profits of every business organization.

8 Business Profits Tax; Distribution of Funds. Amend RSA 77-A:20-a, I to read as follows:

I. The commissioner shall determine the additional amounts of revenue produced by an increase of [1.5] one percent in the rate of tax imposed by RSA 77-A:2 for each fiscal year and shall certify such amounts to the state treasurer by October 1 of that year for deposit in the education trust fund established by RSA 198:39.

9 Business Enterprise Tax; Rate Reduction. Amend RSA 77-E:2 to read as follows:

77-E:2 Imposition of Tax. A tax is imposed at the rate of [3/4] 1/2 of one percent upon the taxable enterprise value tax base of every business enterprise.

10 Business Enterprise Tax; Distribution of Funds. Amend RSA 77-E:14, I to read as follows:

I. The commissioner shall determine the additional amounts of revenue produced by an increase of [.50] .25 percent in the rate of tax imposed by RSA 77-E:2 for each fiscal year and shall certify such amounts to the state treasurer by October 1 of that year for deposit in the education trust fund established by RSA 198:39.

11 Payments to Municipalities. In order to compensate municipalities for lost interest from education property taxes collected by the municipalities prior to July 1, 2003, each municipality may, prior to December 31, 2003 bill the state treasurer for an amount equal to $2 per land parcel for which a tax bill was sent. The state treasurer shall pay such bills from the general fund during fiscal year 2002.

12 Repeal. The following are repealed:

I. RSA 76:8, I and II, relative to the commissioner's warrant.

II. RSA 76:9, relative to the commissioner's report.

13 Effective Date. This act shall take effect July 1, 2003.

LBAO

03-0115

Revised 3/5/03

SB 224 FISCAL NOTE

FISCAL IMPACT:

METHODOLOGY: