CHAPTER 338
HB 999-FN-A-LOCAL - FINAL VERSION
3nov99.....2229h
1999 SESSION
HOUSE BILL 999-FN-A-LOCAL
AN ACT establishing a uniform education property tax to provide funding for an adequate public education and providing education property tax hardship relief to low and moderate income taxpayers.
This bill:
I. Establishes funding for an adequate education.
II. Establishes a uniform statewide education property tax.
III. Establishes education property tax hardship relief for certain taxpayers.
IV. Repeals RSA 76:3, relative to the education property tax, and RSA 198:40 and 198:41, relative to determination of per pupil cost and the amount of the adequate education grant.
V. Provides for tax policy simulation and forecasting model software for the legislative budget assistant.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
3nov99.....2229h
99-1057
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord One Thousand Nine Hundred and Ninety-Nine
AN ACT establishing a uniform education property tax to provide funding for an adequate public education and providing education property tax hardship relief to low and moderate income taxpayers.
Be it Enacted by the Senate and House of Representatives in General Court convened:
338:1 Purpose; Intent.
I. In view of the Supreme Court decision of October 15, 1999, which determined that portions of the statewide property tax enacted in 1999, 17, are unconstitutional, the New Hampshire general court desires to reenact a state wide property tax to provide funding for an adequate public education.
II. The general court recognizes that over the years it has enacted numerous property tax exemptions providing relief to taxpayers who meet identified criteria, and that when the means employed to effect tax relief comport with the articulated justifications, that tax relief is constitutional and constitutes a valid purpose.
III. The general court has determined that the implementation of a uniform education property tax will have serious adverse economic consequences on certain taxpayers. The economic burden on these at-risk taxpayers should be mitigated, at least in part. It is reasonable and fair to award education property tax hardship relief to taxpayers who meet defined criteria. The hardship relief provisions of this act contain criteria that limit its assistance to those low and moderate income taxpayers who may face the risk of bankruptcy, foreclosure, or the loss of their primary residence due to the immediate implementation of a uniform education property tax. The taxpayers that will benefit from the property tax hardship relief will face the harms that the hardship relief is intended to prevent. Therefore, the general court finds that its remedy satisfies the underlying rationale and assists a class of taxpayer for whom disparate tax treatment is justified.
IV. It is the general court's intention to reenact those provisions of 1999, 17, which were declared unconstitutional in the Claremont decision of October 15, 1999, with appropriate revisions.
338:2 Education Property Tax. RSA 76:3 is repealed and reenacted to read as follows:
76:3 Education Property Tax. An annual education property tax at the uniform rate of $6.60 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 property subject to tax under RSA 82 and RSA 83-F.
338:3 What Taxes Assessed. RSA 76:5 is repealed and reenacted to read as follows:
76:5 What Taxes Assessed. The selectmen shall seasonably assess all state and county taxes for which they have the warrants of the commissioner of revenue administration and county treasurers respectively; all taxes duly voted in their towns; and all school and village district taxes authorized by law or by vote of any school or village district duly certified to them; and all sums required to be assessed by RSA 33.
338:4 Commissioner's Warrant. RSA 76:8 is repealed and reenacted to read as follows:
76:8 Commissioner's Warrant.
I. The commissioner of revenue administration shall annually calculate the proportion of education property tax to be raised by each municipality by multiplying the uniform education property tax rate by the total equalized value of all property in the municipality as determined under RSA 21-J:3, XIII, except property taxable under RSA 82 or RSA 83-F.
II. The commissioner shall issue a warrant under the commissioner's hand and official seal for the amount computed in paragraph I to the selectmen or assessors of each municipality at the time of the setting of the tax rate directing them to assess such sum and pay it to the municipality for the use of the school district or districts and, if there is an excess education tax payment due pursuant to RSA 198:46, directing them to assess the amount of the excess payment and pay it to the department of revenue administration for deposit in the education trust fund. Such sums shall be assessed at such times as may be prescribed for other taxes assessed by such selectmen or assessors of the municipality.
III. Municipalities are authorized to assess local property taxes necessary to fund school district appropriations not funded by the education property tax, by distributions from the education trust fund under RSA 198:39, or by other revenue sources.
338:5 Commissioner's Report. RSA 76:9 is repealed and reenacted to read as follows:
76:9 Commissioner's Report. The commissioner of revenue administration shall report to the governor, the speaker of the house of representatives, the president of the senate, and the commissioner of education each year on or before October 1, a statement of the education property tax warrants to be issued for the tax year commencing April 1 of the succeeding year.
338:6 Information Required. RSA 76:11-a, I is repealed and reenacted to read as follows:
I. The tax bill which is sent to every person taxed, as provided in RSA 76:11, shall show the rate for municipal, local education, state education, and county taxes separately, the assessed valuation of all lands and buildings for which said person is being taxed, and the right to apply in writing to the selectmen or assessors for an abatement of the tax assessed as provided under RSA 76:16. The department of revenue administration shall compute for each town and city the rates which are to appear on the tax bills and shall furnish the required information to the appropriate town or city.
338:7 Extent. RSA 85:1 is repealed and reenacted to read as follows:
85:1 Who May Issue. The state treasurer or the commissioner of revenue administration, and each county and town treasurer, may issue extents under their hands and seals respectively, in cases authorized by law, and such extents shall be deemed to be executions against the person and property.
338:8 Education Trust Fund; Purpose; Hardship Relief Added. Amend the introductory paragraph of RSA 198:39, I to read as follows:
I. The state treasurer shall establish an education trust fund in the treasury. Moneys in such fund shall not be used for any purpose other than to distribute adequate education grants to municipalities' school districts pursuant to RSA 198:42, and to provide education property tax hardship relief under RSA 198:55. The state treasurer shall deposit into this fund immediately upon receipt:
338:9 Education Trust Fund. RSA 198:39, I(g) is repealed and reenacted to include the following:
(g) The full amount of excess education property tax payments from the department of revenue administration pursuant to RSA 198:46.
338:10 Determination of Adequate Education Grants. RSA 198:41, I and II are repealed and reenacted 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 per cent 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.
II. 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 each municipality as the lesser of the two following calculations:
(a) The amount calculated in accordance with paragraph I of this section; or
(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.
338:11 Excess Education Property Tax Payments; Maintenance of Local Control. RSA 198:46-48 are repealed and reenacted to read as follows:
198:46 Excess Education Property Tax Payment.
I. Municipalities for which the education property tax exceeds the amount necessary to fund an adequate education determined by RSA 198:40 shall collect and remit such excess amount to the department of revenue administration on or before March 15 of the tax year in which the excess occurs.
II. The amount of such excess to be remitted shall not include any income derived from the investment of funds by the town treasurer under RSA 41:29. Any funds remaining after full payment of the excess tax required in paragraph I shall become available for unrestricted use by the municipality.
III. The commissioner of the department of revenue administration shall collect from the selectmen the excess tax and pay the excess tax over to the state treasurer for deposit in the education trust fund established by RSA 198:39.
IV. The commissioner of the department of revenue administration shall calculate the excess amount owed by each municipality pursuant to paragraph I for the tax year 1999.
198:47 Forms. The commissioner shall approve and provide forms relative to the reporting and remitting of excess education property tax by the municipalities.
198:48 Maintenance of Local Control. Distributions under RSA 198:42 depend only on weighted average daily membership in residence and the per pupil adequacy cost amounts as determined in this subdivision and are independent of how the municipalities decide to spend the distributions or other funds they may raise for education. Notwithstanding any other provision of law, nothing in this subdivision is intended in any way to limit or control how school districts operate or spend their budgets.
338:12 New Subdivision; Education Property Tax Hardship Relief. Amend RSA 198 by inserting after section 49 the following new subdivision:
Education Property Tax Hardship Relief
198:50 Definitions. In this subdivision:
I. "Commissioner" means the commissioner of the department of revenue administration.
II. "Homestead" means the dwelling owned by a claimant or, in the case of a multi-unit dwelling, the portion of the dwelling which is owned and used as the claimant's principal place of residence and the claimant's domicile for purposes of RSA 654:1. "Homestead" shall not include land and buildings taxed under RSA 79-A or land and buildings or the portion of land and buildings rented or used for commercial or industrial purposes. 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.
III. "Household income" means the sum of the adjusted gross income for federal income tax purposes of the claimant and any member of the claimant's household who resides in the homestead for which a claim is made.
IV. "New Hampshire household" means any person filing a federal income tax return as head of household or two or more adults who jointly share the benefit of the homestead. New Hampshire household shall not include those adults who share the homestead under a landlord tenant relationship.
198:51 Education Property Tax Hardship Relief.
I. Pursuant to the provisions of this subdivision, eligible claimants shall be granted education property tax hardship relief following the effective date of the reenactment of the statewide property tax under RSA 76:3 in this act.
II. Residents shall apply to the department of revenue administration for such relief.
III. An eligible hardship relief claimant is a person who:
(a) Owns a homestead or interest in a homestead subject to the education property tax;
(b) Has resided in such homestead for a period of one year, except such persons as are on active duty in the United States armed forces or are temporarily away from such homestead but maintain the homestead as a primary domicile;
(c) Realizes in any year after the effective date of the reenactment of the statewide property tax under RSA 76:3 in this act a net increase in property taxes, exclusive of municipal and county taxes, which exceeds the local education property tax portion of such claimant's local property taxes for the tax year ended March 31, 1999; and
(d) Realizes total household income of $25,000 or less if a single person and $50,000 or less if a married person or head of a New Hampshire household.
IV. A portion of the net increase in an eligible hardship relief claimant's property taxes, exclusive of municipal and county taxes, shall be rebated as follows:
(a) Deduct the municipal and county tax rates from the claimant's total current tax rate;
(b) Subtract the amount of the claimant's local education property tax rate for the tax year ended March 31, 1999 from the sum computed in subparagraph (a) to determine the net rate increase;
(c) Multiply the net rate increase computed in subparagraph (b) by the following percentage as applicable to determine the amount of the hardship relief:
(1) If a single person and total household income is:
(A) less than $15,000, 100 percent of the net rate increase;
(B) $15,000 but less than $20,000, 66 2/3 percent of the net rate increase; or
(C) $20,000 but less than $25,000, 33 1/3 percent of the net rate increase.
(2) If a married person or a head of a New Hampshire household and total household income is:
(A) less than $30,000, 100 percent of the net rate increase;
(B) $30,000 but less than $40,000, 66 2/3 percent of the net rate increase; or
(C) $40,000 but less than $50,000, 33 1/3 percent of the net rate increase;
(d) Multiply the amount computed in subparagraph (c) by the local assessed valuation from the 1998 property tax bill;
(e) The total amount of tax relief allowable in any year shall not exceed the amount the claimant would receive with respect to a homestead with an equalized value of $200,000 in that municipality for tax year 1998.
V. If a homestead is owned by 2 or more persons as joint tenants or tenants in common, and one or more of such joint owners do not principally reside at such homestead, hardship relief applies to the proportionate share of the homestead value that reflects the ownership percentage of the claimant. Only one claim may be filed for a single homestead.
VI. Claims filed with the department of revenue administration shall be filed within 60 days of the due date of the taxes.
VII. Each claim shall be accompanied by a copy of the claimant's federal income tax return filed by the claimant for the immediately prior tax period. Claimants who were not required to file a federal tax return for the immediately prior tax period may submit an affidavit to such effect in lieu of a tax return which document shall include the claimant's social security number. Any documents submitted shall be considered confidential, handled so as to protect the privacy of the claimant, and shall be destroyed after all appeal periods have expired.
VIII. The provisions of RSA 359-C shall not apply to the documents required to be submitted under this section.
198:52 Rulemaking; Forms; Notice.
I. The commissioner shall adopt emergency rules under RSA 541-A relative to the administration of excess tax payments and the hardship relief provisions of this subdivision. Notwithstanding RSA 541-A:18, II, such emergency rules shall be effective for 180 days. After 180 days the commissioner shall adopt rules pursuant to RSA 541-A.
II. The commissioner shall approve and provide forms relative to the administration of this subdivision.
III. Claim forms shall include the following:
(a) Instructions on completing and filing the form;
(b) Sections for information concerning the claimant, the claimant's household, the property for which relief is sought, and such other information as is reasonably necessary to determine the accuracy of the claim;
(c) Instructions on appeal procedure and time limits relative to such appeals;
(d) A place for the claimant's signature with a certification by the claimant that the claim is made in good faith and that the facts contained in the claim are true.
IV. The commissioner shall publicize notice of the education property tax hardship relief provisions in a suitable manner.
198:53 Penalties; Assessment of Erroneous Claims.
I. Any person who files a claim under this chapter with fraudulent intent and any person who assisted in the preparation or filing of the claim or supplied information upon which the claim was prepared shall be guilty of a misdemeanor.
II. The commissioner may assess and collect the amount of any sums granted for hardship relief relative to a fraudulent or erroneously paid claim including interest provided under RSA 21-J:28 and an additional penalty of 25 percent for the erroneous amount of such claim or an additional penalty of the greater of 25 percent or $1,000 for a fraudulent claim.
198:54 Appeals.
I. Whenever the commissioner refuses to grant a claimant an education property tax hardship relief claim, the claimant may appeal in writing within 30 days of notice of such refusal to the board of tax and land appeals.
II. When a taxpayer appeals the denial of a claim to the board of tax and land appeals, the board may reverse or affirm, wholly or partly, or may modify the decision brought up for review when there is an error of law or when the board finds the commissioner's action to be arbitrary or unreasonable.
198:55 Refund of Tax Claims. The department of revenue administration shall review a claim for hardship relief filed with it and, if such claim is determined to be valid, shall certify such amount to the state treasurer within 90 days. The state treasurer shall pay the claim to the claimant from funds in the education trust fund. The department shall notify a claimant whose claim is rejected in whole or in part of such determination within 90 days of the department's receipt of the claim and all required documentation.
338:13 Tax Equity and Efficiency Committee. Amend 1999, 17:55, I to read as follows:
I. There is established a tax equity and efficiency commission to study issues relating to tax fairness, proportionality, efficiency and complexity for funding public education, [and] to examine all taxes currently imposed on the citizens of New Hampshire to fund public education, and to review the provisions for hardship relief to determine whether the program should continue and to recommend parameters for its continuation if so determined.
338:14 Semi-annual Rate for Property Tax Payments. 1999, 17:51 is repealed and reenacted to read as follows:
17:51 1999 Semi-annual Rate for Property Tax Payments.
I. Notwithstanding the provisions of RSA 76:15-a and RSA 76:15-b for the tax year beginning April 1, 1999, in municipalities liable for an excess statewide education property tax payment pursuant to RSA 198:46, the partial payment of taxes assessed shall be computed by taking the prior year's assessed valuation times ½ of the previous year's municipal tax rate; ½ of the previous year's county tax rate; ½ of the previous year's local school tax rate; and adding thereto ½ of the statewide education property tax rate which would collect the amount to be collected and remitted for tax year 1999 under RSA 198:46, IV, as determined by the department of revenue administration; provided, however, that whenever it shall appear to the selectmen or assessors that certain individual properties have physically changed in valuation, they may use the current year's appraisal in place of the prior year's valuation to compute the partial payment.
II. Notwithstanding the provisions of RSA 76:15-a and RSA 76:15-b for the tax year beginning April 1, 1999, in all other municipalities, the partial payment of taxes assessed shall be computed by taking the prior year's assessed valuation times ½ of the previous year's municipal tax rate; ½ of the previous year's county tax rate; ½ of the previous year's local school tax rate deducting therefrom, if the municipality so chooses, ½ of the rate which would collect the amount of the increase in state aid from fiscal year 1999 to fiscal year 2000 resulting from the adequate education grant under RSA 198:42 for the 1999 tax year as determined by the department of revenue administration; provided, however, that whenever it shall appear to the selectmen or assessors that certain individual properties have physically changed in valuation, they may use the current year's appraisal in place of the prior year's valuation to compute the partial payment.
III. In order to avoid a disproportionate semi-annual collection of taxes, the commissioner of revenue administration may, upon request of a municipality, approve the use of a different method to calculate that municipality's 1999 semi-annual property tax rate.
338:15 Special Transition Rules. 1999, 17:52, II-V as amended by 1999, 65:7 are repealed and reenacted to read as follows:
II. Notwithstanding any other provision of law, the commissioner of revenue administration shall for the April 1, 1999 tax year issue the warrants required by RSA 76:8 on or before 30 days after passage of this act.
III. Notwithstanding any other provision of law, the commissioner of education shall determine the amount of the adequate education grant for each municipality pursuant to RSA 198:41 for the 1999/2000 school year on or before 30 days after the effective date of this section.
IV. Notwithstanding the provisions of RSA 76:11-a, I, the governing body of any municipality may choose to combine the local and state education property tax rates on the tax bill.
V. Notwithstanding any other provision of law, for any taxpayer required to pay utility property tax directly to the state for deposit in the education trust fund pursuant to RSA 83-F, the selectmen or assessors shall abate the state education property tax amount shown on any tax bill sent to such taxpayer pursuant to RSA 76:11-a, I. Such abatements shall be exempt from the limitation in RSA 76:6.
338:16 Appropriation. The sum of $200,000 is hereby appropriated for the biennium ending June 30, 2001 from the education trust fund established in RSA 198:39 to the department of revenue administration for the purpose of administering the education property tax hardship relief provisions established in RSA 198:50-55.
338:17 General Fund; Deposit of Undesignated Surplus into the Education Trust Fund for the Biennium Ending June 30, 1999. Notwithstanding the provisions of RSA 9:13-e, the state treasurer shall deposit any general fund undesignated surplus as of June 30, 1999 into the education trust fund as established in RSA 198:39.
338:18 Estimate of General Fund Undesignated Surplus for Biennium Ending June 30, 2001; Lapses Adjusted. Amend 1999, 159:13 to read as follows
13 Estimate of General Fund Undesignated Surplus.
GENERAL FUND
(Dollars in Thousands)
FY 2000 FY 2001
Balance, July 1 $0 [$(3,509)] $1,491
Additions:
Unrestricted Revenue
Unrestricted Revenue-Net of Medicaid 961,148 1,003,757
Medicaid Enhancement Revenues 63,700 65,300
Uncompensated Care 10,000 10,000
Total Unrestricted Revenue 1,034,848 1,079,057
Appropriations:
Gross Appropriations (Section 1) 1,064,842 1,093,465
Legislative Specials 530 455
Footnote Reductions/Adjustments 5,548 13,024
Reduction in Judicial Appropriation (4,563) (4,480)
Total Appropriations 1,066,357 1,102,464
Less Lapses [(26,000)] (31,000) [(26,000)] (31,000)
Lapse Percent [2.44%] 2.90% [2.36%] 2.81%
Net Appropriations [1,040,357] 1,035,357 [1,076,464] 1,071,464
GAAP Adjustment 2,000 2,000
Current Year Balance [(3,509)] 1,491 [4,593] 9,593
Balance, June 30 [(3,509)] 1,491 [1,084] 11,084
338:19 New Subparagraph; Exemption from Purchasing Requirements. Amend RSA 21-I:18, I by inserting after subparagraph (k) the following new subparagraph:
(l) Purchases of services from private contractors by the department of revenue administration with respect to the administration of education property tax hardship relief claims under RSA 198:50-55.
338:20 Intent; Repeals. By repealing RSA 198:40 and RSA 198:41 in section 21 of this act, the legislature intends to reconsider the per pupil adequate education amount and the formula for determination of adequate education grants in light of the December 1, 2000 report of the adequate education and education financing commission.
338:21 Repeal. The following are repealed:
I. RSA 76:3, relative to the education property tax.
II. RSA 198:40, relative to the determination of per pupil adequate education cost and the adequate education grant.
III. RSA 198:41, relative to determination of adequate education grants.
338:22 Repeal. The following are repealed:
I. RSA 21-I:18, I(l), relative to an exemption granted the department of revenue administration to contract for services with respect to the administration of education property tax hardship relief claims.
II. RSA 198:50-55, relative to education property tax hardship relief.
338:23 Tax Policy Simulation and Forecasting Models. The legislative budget assistant, in consultation with the fiscal committee shall issue a request for proposals for the development and acquisition of a complete system of tax policy simulation and forecasting models for the state of New Hampshire including all necessary database development and training. The fiscal committee shall select and contract for the services of a qualified independent consultant and shall draw on existing sources of funds within the budget of the legislative budget assistant to fund the contract developed as a result of the selected proposal. The department of revenue administration and the department of administrative services shall provide such assistance as is requested by the fiscal committee, the legislative budget assistant, or the consultant in the development of databases for the models. The fiscal committee shall also develop a policy to allow access by the department of revenue administration and the department of administrative services to the system and training in its use. In the event certain tax models with databases from the Internal Revenue Service cannot reside in the office of the legislative budget assistant, then they shall be located in the department of revenue administration.
338:24 Severability. If any provision of this act or the application thereof to any person or circumstance is deemed invalid, the invalidity does not affect the other provisions or applications of the act which can be given effect without the invalid provisions or applications and to this end the provisions of this act are severable.
338:25 Effective Date.
I. Section 21 of this act shall take effect January 2, 2003.
II. Section 22 of this act shall take effect July 1, 2003.
III. The remainder of this act shall take effect upon its passage.
(Approved: November 3, 1999)
(Effective Date: I. Section 21 effective January 2, 2003
II. Section 22 effective July 1, 2003
III. Remainder effective November 3, 1999)