HB 0767

HB 767-FN-A-LOCAL - AS INTRODUCED

AN ACT establishing the excellence in learning in New Hampshire school funding and improvement program and making an appropriation therefor.

SPONSORS: Rep. Burling, Sull 1; Rep. Dokmo, Hills 14; Rep. Leishman, Hills 13; Rep. Clemons, Hills 31

I. Reduces the education property tax from $6.60 to $4.90 per $1,000 of assessed value and provides that a 2/3 vote of each house of the general court shall be necessary to increase the rate.

II. Reduces the rate of the interest and dividends tax from 5 percent to 4 ½ percent.

III. Reduces the rate of the business enterprise tax from ½ of one percent to ¼ of one percent.

IV. Reduces by 50 percent the amount of real estate transfer tax revenues deposited into the education trust fund.

V. Implements a low and moderate income homeowners' property tax relief program which makes certain persons eligible for property tax relief based on income restrictions.

VI. Establishes a comprehensive, statewide educational accountability system, which includes the creation of an education improvement fund within the department of education to provide needed education improvement assistance to local school districts and dedicates an amount equal to 1/3 of one percent of the statewide cost of providing an adequate education in each fiscal year beginning July 1, 2002 to the fund.

VII. Implements an early literacy and reading improvement program and an associated fund within the department of education and dedicates an amount equal to 1/3 of one percent of the statewide cost of providing an adequate education in each of the fiscal years beginning July 1, 2001 and July 1, 2002, and 2/3 of one percent of the statewide cost of providing an adequate education for the fiscal year beginning July 1, 2003 and each fiscal year thereafter, to the early literacy and reading improvement fund.

VIII. Imposes a sales tax of 2 ½ percent upon retail sales of tangible personal property, except for property subject to certain other taxes, food, fuel products, certain clothing products, prescription and non-prescription medicines, and medical supplies, and provides that a 2/3 vote of each house of the general court shall be necessary to increase the rate.

IX. Makes certain changes to the formula for determining an adequate education and for determining eligibility for free and reduced-price meals, and requires that adequate education grants shall be calculated every fiscal year.

X. Limits increases in the annual base per pupil cost of an adequate education to 3-year rolling average percentage changes in the northeast consumer price index-u.

XI. Repeals the 1999 provisions of law that repealed the education property tax.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

AN ACT establishing the excellence in learning in New Hampshire school funding and improvement program and making an appropriation therefor.

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

I. In the 21st century, New Hampshire's economic prosperity will depend more and more on a skilled, educated workforce. Success in the 21st century economy is built on ideas, innovation, and information, and the foundation for this new economy is education. We must ensure that our children, no matter where they live, have the skills and education to allow them to take full advantage of the opportunities offered by an increasingly high-technology, global economy.

II. To meet the needs of New Hampshire business and our children, we must provide adequate and reliable funding for our public schools; set rigorous performance standards for our schools and hold schools accountable for meeting these standards; and invest in early learning and literacy to ensure that all children are reading at grade level by grade 3.

2 State Treasurer; Application of Receipts Amended. Amend RSA 6:12, I (www) to read as follows:

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

3 State Treasurer; Application of Receipts Amended. Amend RSA 6:12, I (www) to read as follows:

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

4 Assessment and Abatement of Taxes; Education Property Tax Rate Reduced; Super Majority Vote Requirement. Amend RSA 76:3 to read as follows:

76:3 Education Property Tax. An annual education property tax at the uniform rate of [~~$6.60~~] $4.90 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. A 2/3 majority of those present and voting of each house of the general court shall be necessary to increase the tax rate under this section.

77:1 Rate. The annual tax upon incomes shall be levied at the rate of [5] 4.5 percent.

77-E:2 Imposition of Tax. A tax is imposed at the rate of [~~1/2~~] 1/4 of one percent upon the taxable enterprise value tax base of every business enterprise. A 2/3 majority of those present and voting of each house of the general court shall be necessary to increase the tax rate under this section.

7 Tax on Transfer of Real Property; Distribution to Education Trust Fund Amended. Amend RSA 78-B:13, I to read as follows:

I. The commissioner shall determine the additional amounts of revenue produced by an increase of [~~$.25~~] $.125 per $100 in the rate of tax imposed by RSA 78-B:1 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.

8 New Chapter; Sales and Use Tax For Education. Amend RSA by inserting after chapter 78-C the following new chapter:

I. "Business activity" means a group of actions performed by a person or persons for the purpose of earning income or profit from such actions and includes every operation which forms a part of, or a step in, the process of earning income or profit from such group of actions. The actions ordinarily include, but are not limited to, the receipt of money, property, or other items of value and the incurring or payment of expenses.

(4) Sewing equipment and supplies, including knitting needles, patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles.

on the person or in conjunction with clothing including, but not limited to, the following items:

IV. "Commissioner" means the commissioner of the department of revenue administration.

V. "Construction" or "constructing" means building, reconstructing, remodeling, altering, repairing, demolishing, or maintaining any building, road, or similar structure upon real estate and includes leveling or clearing land, excavating earth, drilling wells of any type, or similar activity upon real estate.

VI. "Delivery charges" means charges by the seller for preparation and delivery to a location designated by the purchaser of tangible personal property including, but not limited to, transportation, shipping, postage, handling, crating, and packing.

VIII. "Electronic data submission" means the use of either the telephone or computer to transmit information.

IX. "Food" and "food ingredients" mean substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Food" and "food ingredients" does not include the following:

(a) "Alcoholic beverages", meaning beverages that are suitable for human consumption and contain 1/2 of one per cent or more of alcohol by volume, or

(b) "Tobacco", meaning cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.

X. "In this state" or "within this state" means within the legal jurisdictional boundaries of New Hampshire and includes all territory within these limits owned by or ceded to the United States.

XI. "Lease," "leasing," or "rental" means any arrangement whereby, for a consideration, property is possessed or employed for or by a person other than the owner of the property.

(a) Having or maintaining within this state, directly or by a subsidiary, an office, distribution house, sales house, warehouse, service enterprise, or other place of business, or any agent of general or restricted authority irrespective of whether the place of business or agent is located here permanently or temporarily or whether the person or subsidiary maintaining such place of business or agent is authorized to do business within this state;

(b) The engaging in any business activity within this state by any person, directly or by a subsidiary, in connection with the lease, sale, or delivery of tangible personal property or the performance of services thereon for use, storage, or consumption including, but not limited to, having, maintaining or using any office, distribution house, sales house, warehouse, or other place of business, any stock of goods or any solicitor, salesman, agent, or representative under its authority, at its direction or with its permission, regardless of whether the person or subsidiary is authorized to do business in this state.

XIII. "Manufacture" or "manufacturing" means the performance of manufacturing, fabricating, compounding, processing, or other operations, engaged in as business activity, which place any tangible personal property in a form, composition, or character different from that in which it is acquired whether for sale or use by the manufacturer, and shall include, but not be limited to every operation commencing with the first production stage and ending with the completion of tangible personal property having the physical qualities, including packaging, if any, passing to the ultimate consumer, which it has when transferred by the manufacturer to another.

(d) Constructing, altering, servicing, or repairing manufactured housing as defined by RSA 674:31 or presite built housing as defined by RSA 674:31-a.

XIV. "Person" means an individual, partnership, trust or association, with or without transferable shares, joint stock company, corporation, limited liability company, society, club, organization, institution, estate, receiver, trustee, assignee, or referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of individuals acting as a unit.

XV. "Processing" means the performance of the following activities when engaged in as business activity:

(a) The scouring, carbonizing, cording, combing, throwing, twisting, or winding of natural or synthetic fibers, or the spinning, bleaching, dyeing, printing, or finishing of yarns or fabrics, when such activities are performed prior to sale to the ultimate consumer.

(b) The electroplating, galvanizing, enameling, anodizing, coloring, finishing, impregnating, or heat treating of metals or plastics for sale or in the process of manufacturing.

(c) The blanking, shearing, leveling, slitting, or burning and the rolling, drawing, or extruding of ferrous and non-ferrous metals for sale to or use by a manufacturer or processor.

(e) The operation of a saw mill or planing mill for the production of lumber or lumber products for sale.

XVI. "Protective equipment" means items for human wear and designed as protection of the wearer against injury or disease or as protection against damage or injury of other persons or property but not suitable for general use including but not limited to the following:

XVII.(a) "Purchase price" or "sales price" means the total value of anything paid or delivered, or promised to be paid or delivered, whether it be money, credit, property, or services, in complete performance of a sale at retail without any deduction for the following:

(3) The cost or value of labor or service, interest, or discount paid or allowed after the sale is consummated.

(4) Any other taxes imposed by New Hampshire on the seller or any other expense.

(5) The value of exempt tangible personal property given to the purchaser where taxable and exempt tangible personal property have been included together and sold by the vendor as a single product or merchandise unit.

(4) Separately stated interest, financing, and carrying charges from credit extended on the sale of tangible personal property.

(6) The value of any tangible personal property actually taken in trade or exchange in lieu of the whole or any part of the purchase price. For the purpose of this subparagraph, the amount allowed by reason of tangible personal property actually taken in trade or exchange shall be considered the value of such property.

XVIII. "Purchaser" means a person who purchases tangible personal property, the receipts from the retail sale of which are taxable under this chapter and includes a buyer, vendee, lessee, licensee, or grantee.

XIX. "Real estate" or "real property" means land and improvements thereto, including streets, roads, highways, parking lots, stadiums and stadium seating, recreational courts, sidewalks, foundations, structural supports, walls, floors, ceilings, roofs, doors, canopies, millwork, elevators, windows and window coverings, outdoor advertising boards or signs, airport runways, bridges, dams, dikes, traffic control devices including traffic signs, satellite dishes, antennas, guardrail posts, pipes, fittings, pipe supports and hangers, valves, underground tanks, wire, conduit, receptacle and junction boxes, insulation, and ductwork and coverings thereof; and any structure similar to any of the foregoing, whether or not the item constitutes a fixture or is affixed to the real estate, or whether or not damage would be done to the item or its surroundings upon removal.

(a) Any transfer of ownership, custody, or possession of tangible personal property for a consideration, including the grant of a license to use or consume and transactions where the possession of such property is transferred but where the transferor retains title only as security for payment of the selling price whether such transaction be designated as bailment lease, conditional sale, or otherwise.

(b) The physical incorporation of tangible personal property as an ingredient or constituent into other tangible personal property which is to be sold in the regular course of business or where the person incorporating such property has undertaken at the time of purchase to cause it to be transported in interstate commerce to a destination outside this state.

XXI. "Retail sale" or "sale at retail" means any sale, lease, or rental of tangible personal property for any purpose other than for resale, sublease, or subrent.

XXII. "Sport or recreational equipment" means items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use including, but not limited to, the following:

XXIII. "Tangible personal property" means corporeal personal property of any nature consisting of any produce, goods, wares, merchandise, and commodities whatsoever, brought into, produced, manufactured, or being within this state.

XXV. "Taxpayer" means any person required to make returns or pay the tax imposed by this chapter.

XXVI. "United States Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended, without the rules, regulations, forms, and procedures of the United States Internal Revenue Service. The rules, regulations, forms, and procedures of the United States Internal Revenue Service may, however, be used by the commissioner of revenue administration in formulating rules for adoption under RSA 541-A.

XXVII. "Use" means the exercise of any right or power incidental to the ownership, custody, or possession of tangible personal property including, but not be limited to, distribution, transportation, storage, or consumption of such property. "Use" does not include the sale at retail of such property.

XXVIII. "Vendor" means any person maintaining a place of business in this state, engaged in the business activity of selling or leasing tangible personal property the sale or use of which is subject to the tax imposed by this chapter.

I. A tax is imposed upon each separate sale at retail after December 31, 2001 of tangible personal property within this state at the rate of 2 ½ percent of the purchase price, which tax shall be collected by the vendor from the purchaser, and shall be paid over to the state as provided in this chapter.

II. A tax is imposed upon the use, after December 31, 2001, within this state of tangible personal property purchased at retail on or after the effective date of this chapter, at the rate of 2 ½ percent of the purchase price, which tax shall be paid to the state by the person who makes such use as provided in this chapter, except that such tax shall not be paid to the state where the tax imposed by paragraph I has been paid by such person or such person has paid the tax imposed by this paragraph to the vendor with respect to such use.

III. A 2/3 majority of those present and voting of each house of the general court shall be necessary to increase the tax rate under this chapter.

(b) If the purchase price is 11 cents or more but less than 41 cents, one cent shall be collected.

(d) If the purchase price is 81 cents or more but less than $1.21, 3 cents shall be collected.

(e) If the purchase price is $1.21 or more but less than $1.61, 4 cents shall be collected.

(f) If the purchase price is $1.61 or more up to and including $2.00, 5 cents shall be collected.

II. If the purchase price is more than $2.00, 2 ½ percent of each dollar of purchase price, plus any fractional part of a cent rounded up to the next whole cent, shall be collected.

I. Food and food ingredients for human consumption shall be exempt from the taxes imposed by this chapter

II. The following medical and hygiene-related products shall be exempt from the taxes imposed by this chapter:

(c) Artificial limbs, artificial eyes, and artificial hearing devices when designed to be worn on the person of the purchaser or user.

(e) Eyeglasses when especially designed or prescribed by an ophthalmologist, oculist, or optometrist for the personal use of the owner or purchaser.

(f) Artificial braces and supports designed solely for the use of disabled persons or any other therapeutic, prosthetic, or artificial device designed for the use of a particular individual to correct or alleviate a physical incapacity, including but not limited to hospital beds, iron lungs, and kidney machines.

(g) Disposable diapers, pre-moistened wipes, incontinence products, colostomy deodorants, toilet paper, sanitary napkins, tampons, or similar items used for feminine hygiene.

III. All clothing worn or carried on or about the human body shall be exempt from the taxes imposed by this chapter except that clothing accessories or equipment, sport or recreational equipment, protective equipment and ornamental wear, formal day or evening apparel, and articles made of fur on the hide or pelt or any material imitative of fur and articles of which such fur, real, imitation, or synthetic, is the component material of chief value, but only if such value is more than 3 times the value of the next most valuable component material, shall not be exempt from the tax.

IV. Steam, natural and manufactured and bottled gas, fuel oil, electricity, or cord wood or other forest products intended for use as fuel when purchased directly by the user thereof shall be exempt from the taxes imposed by this chapter.

VI. Tangible personal property purchased or used by the following shall be exempt from the taxes imposed by this chapter:

(b) The state of New Hampshire or any instrumentality or political subdivision thereof.

(c) Any foreign nation or agency, instrumentality, or political subdivision thereof, but only when required by a treaty in force to which the United States is a party.

(d) Any volunteer fire department organized pursuant to RSA 154:1; any not-for-profit private firefighting unit certified pursuant to RSA 153:4-a; and any not-for-profit emergency medical service unit licensed pursuant to RSA 153-A; provided, however, that such sales or use shall not be exempt unless such organization shall have first obtained a certification from the commissioner pursuant to RSA 78-D:20, III stating that it is entitled to such exemption; and further that this exemption shall only apply to tangible personal property directly used by the volunteer fire department, not-for-profit private firefighting unit, not-for-profit ambulance service, rescue squad or fast squad in responding to fires and other emergencies as defined in RSA 154:7 or in providing emergency medical services for the benefit of the public.

VII. Tangible personal property, other than motor vehicles, trailers, semi-trailers, motor boats, aircraft, recreational vehicles, or other similar tangible personal property required under either federal law or laws of this state to be registered or licensed, sold by or purchased from a person not a vendor in an isolated transaction, or sold by or purchased from a person who is a vendor but is not a vendor with respect to the tangible personal property sold or purchased in such transaction shall be exempt from the taxes imposed by this chapter, provided that inventory and stock in trade so sold or purchased shall not be exempted from the tax.

VIII. Any tangible personal property consisting of personal or household effects of an individual purchased and used outside this state and brought into this state in connection with the establishment by such individual of an initial residence in this state shall be exempt from the taxes imposed by this chapter.

IX. Any tangible personal property purchased by a nonresident person outside of this state, and brought into this state for use therein for a period not to exceed 7 days or for any period of time when such nonresident is a tourist or vacationer and, in either case not consumed within this state, shall be exempt from the taxes imposed by this chapter.

X. Any tangible personal property purchased outside this state for use outside this state by a person engaged in business activity not actually doing business within this state, who later brings such tangible personal property into this state in connection with the establishment of a permanent business in this state, provided that such property was purchased more than 6 months prior to the date it was first brought into this state or prior to the establishment of such business, whichever first occurs, shall be exempt from the taxes imposed by this chapter. This exemption shall not apply to tangible personal property temporarily brought into New Hampshire for the performance of contracts for the construction of real estate.

XI. Motor vehicles, trailers, and semi-trailers, or bodies attached to the chassis thereof, sold to a nonresident of New Hampshire to be used outside of New Hampshire and which are registered in a state other than New Hampshire within 20 days after delivery to the purchaser shall be exempt from the taxes imposed by this chapter.

XII. Materials, tools, and fuel, or any substitute therefor, which become an ingredient or component part of tangible personal property to be sold or which are consumed and used directly and exclusively in the manufacture of tangible personal property to be sold shall be exempt from the taxes imposed by this chapter.

XIII. Machinery, or replacement parts thereof, used directly and exclusively in the manufacture of tangible personal property to be sold shall be exempt from the taxes imposed by this chapter.

XIV. Materials, tools, and fuel, or any substitute therefor, which become an ingredient or component part of tangible personal property to be sold or which are consumed and used directly and exclusively in agricultural production or commercial fishing shall be exempt from the taxes imposed by this chapter.

XV. Machinery or replacement parts thereof, used directly and exclusively in agricultural production or commercial fishing shall be exempt from the taxes imposed by this chapter.

XVI. Livestock and poultry of a kind which ordinarily constitute food for human consumption, and feed, including the bags in which the feed is customarily contained, for livestock and poultry of a kind which ordinarily constitute food for human consumption, shall be exempt from the taxes imposed by this chapter.

XVII. Seeds and plants, including parts of plants, suitable for planting to produce food for human consumption, including parts thereof or the produce thereof, shall be exempt from the taxes imposed by this chapter.

XVIII. Textbooks for use in schools, colleges, and universities, either public or nonpublic when purchased in behalf of or through such schools, colleges, or universities, provided such institutions of learning are recognized by the department of education, and textbooks used for approved homeschooling shall be exempt from the taxes imposed by this chapter.

XIX. The sale or transfer of the following shall be exempt from the taxes imposed by this chapter:

(d) Property subject to taxation pursuant to RSA 422:39, relative to the airways toll on aviation fuels, and RSA 422:39-a, relative to the airways toll on other aviation fuels.

(e) Property subject to taxation pursuant to RSA 79, relative to forest conservation and taxation, but only to the extent such property remains in its original condition immediately following the point at which such property became taxable under said chapter.

(f) Property subject to taxation pursuant to RSA 72-B, relative to excavation activity taxation, but only to the extent such property remains in its original condition immediately following the point at which such property became taxable under said chapter.

(h) Property subject to the fees imposed pursuant to RSA 178:28 and RSA 178:30, relative to alcoholic beverages.

XX. Coffins, caskets, and burial vaults for human remains, and markers and tombstones for human graves shall be exempt from the taxes imposed by this chapter.

XXI. Fabric or cloth made up of natural or synthetic fibers and used to make clothes shall be exempt from the taxes imposed by this chapter.

I. Every vendor maintaining a place of business in this state and selling or leasing tangible personal property the sale or use of which is subject to tax shall collect the tax from the purchaser or lessee at the time of making the sale or lease, and shall remit the tax to the state as provided in RSA 78-D:11. Vendors whose average monthly tax collections do not exceed $100 may apply to the commissioner to remit taxes annually or on such other schedule as the commissioner may require. Approval of such requests shall be at the discretion of the commissioner.

II. Any vendor required under this chapter to collect tax from another person, who shall fail to collect the proper amount of such tax, shall be liable for the full amount of the tax which the vendor should have collected. Any tax required to be collected, and any tax received by a vendor, shall become a personal debt of the vendor until paid to the state. The vendor shall be relieved of further liability for such taxes in the event that the tax is paid directly to the state by the purchaser or other person.

I. Except as provided in paragraph II, every purchaser shall be liable for the tax imposed by this chapter and such liability shall not be extinguished until the tax has been paid to the state, except that payment to a vendor required to collect the tax pursuant to RSA 78-D:5 is sufficient to relieve the purchaser from further liability for the tax.

II. Purchasers shall not be liable for nor vendors required to collect tax on any tangible personal property purchased or used in this state prior to the effective date of this chapter.

I. It shall be presumed that all gross receipts of a vendor from the sale of tangible personal property are from sales subject to tax until the contrary is established.

II. The burden of proving that a sale of tangible personal property by any vendor is not a sale at retail shall be upon such vendor, unless the vendor takes from the purchaser a certificate to the effect that the property is purchased for resale or that the purchase is exempt and such certificate is received by the commissioner not later than 60 days from the date of notice from the commissioner to produce such certificate. Where a certificate is received within the 60-day time limit but is deficient in some material manner and where such deficiency is thereafter removed, within 30 days of the receipt of the deficient certificate, the receipt of such certificate shall be deemed to have satisfied the time requirement of this section.

I. In determining the amount of tax due on the sale or use of tangible personal property, it is presumed, in the absence of preponderant evidence of another value, that the value of the purchase price is the total amount of money or the fair market value of other consideration paid for such property at the time of purchase.

II.(a) Where there is a transfer or retention of possession or custody, whether it be termed a rental, lease, service, or otherwise, of tangible personal property the full consideration paid or delivered to the vendor or lessor shall be considered the purchase price, even though such consideration is separately stated and is designated as payment for processing, laundering, service, maintenance, insurance, repairs, depreciation, or otherwise.

(b) Where the vendor or lessor supplies or provides an employee to operate such tangible personal property, the value of the labor thus supplied may be excluded and shall not be considered as part of the purchase price if separately stated.

(c) There shall also be included as part of the purchase price the value of anything paid or delivered, or promised to be paid or delivered by a lessee, whether it be money or otherwise, to any person other than the vendor or lessor by reason of the maintenance, insurance, or repair of the tangible personal property which a lessee has the possession or custody of under a rental contract or lease arrangement.

III.(a) In determining the purchase price on the sale or use of taxable tangible personal property where, because of affiliation of interests between the vendor and purchaser, or irrespective of any such affiliation, if for any other reason the purchase price declared by the vendor or taxpayer on the taxable sale or use of such tangible personal property is, in the opinion of the department, not indicative of the true value of the property or the fair price thereof, the department shall, pursuant to uniform and equitable rules, determine the amount of constructive purchase price upon the basis of which the tax shall be computed and levied. Such rules shall provide for a constructive amount of purchase price for each such sale or use which would naturally and fairly be charged in an arm's-length transaction in which the element of common interest between the vendor or purchaser is absent or if no common interest exists, any other element causing a distortion of the price or value is likewise absent.

(b) For the purpose of this subsection where a taxable sale or purchase at retail transaction occurs between a parent and a subsidiary, affiliate, or controlled corporation of such parent corporation, there shall be a rebuttable presumption that, because of such common interest, such transaction was not an arm's-length transaction.

78-D:9 Credits. A credit against the tax imposed by this chapter shall be granted with respect to tangible personal property purchased for use outside this state equal to the tax paid to another state by reason of the imposition by such other state of a tax similar to the tax imposed by this chapter, provided however, that no such credit shall be granted unless such other state grants substantially similar tax relief by reason of the payment of tax under this chapter.

(a) Unless a vendor shall have taken from the purchaser a certificate, signed by the purchaser and bearing the purchaser's name and address and the number of the purchaser's vendor's license, indicating the general character of the tangible personal property sold, and certifying that the property was purchased for resale, the purchase shall be deemed a taxable purchase at retail.

(b) The certificate shall relieve the vendor from the burden of proof imposed by RSA 78-D:7 and this section only if taken in good faith from a person who is engaged in the business of selling tangible personal property of the same kind as the property sold and who holds the license as provided for in RSA 78-D:20, I and who, at the time of purchasing the tangible personal property, intends to sell the property in a sale at retail in the regular course of business or is unable to ascertain at the time of purchase whether the property will be sold or will be used for some other purpose.

(d) If the purchaser giving a certificate makes any use of the property other than retention, demonstration, or display while holding it for sale in the regular course of business, the use shall be deemed a retail sale by the purchaser as of the time the property is first used by the purchaser, and the cost of the property to the purchaser shall be deemed the purchase price from such retail sale. If the sole use of the property other than retention, demonstration, or display in the regular course of business is the rental of the property while holding it for sale, the purchaser may elect to include in the purchase price the amount of the rental charge rather than the cost of the property.

(a) If the tax does not apply to the sale or lease of tangible personal property, the purchaser or lessee shall furnish to the vendor a certificate, signed by the purchaser and bearing the purchaser's name and address and the number of the purchaser's exemption certificate, indicating the general character of the tangible personal property sold, and certifying that the sale is not legally subject to the tax. An exemption certificate, which is complete and regular on its face and discloses a valid basis of exemption, if taken in good faith, shall relieve the vendor from the liability imposed by RSA 78-D:5 and the burden of proof imposed by RSA 78-D:7.

(b) Where the tangible personal property is of a type which is never subject to the tax imposed by this chapter or where the sale or lease is in interstate commerce, such certificate need not be furnished.

(c) Where a series of transactions are not subject to tax, a purchaser may furnish the vendor with a single exemption certificate.

(e) If the purchaser giving an exemption certificate makes any use of the property other than the one therein certified, the use shall be deemed a retail sale by the purchaser as of the time the property is first so used and the purchaser's cost of the property shall be deemed the purchase price from such retail sale.

(a) The commissioner may authorize a purchaser or lessee who acquires tangible personal property under circumstances which make it impossible at the time of acquisition to determine the manner in which the tangible personal property will be used, to pay the tax directly to the department, and waive the collection of the tax by the vendor. No such authority shall be granted or exercised, except upon application to the commissioner, and the issuance by the commissioner, in the commissioner's discretion, of a direct payment permit. If a direct payment permit is granted, its use shall be subject to conditions specified by the commissioner, and the payment of tax on all acquisitions pursuant to the permit shall be made directly to the department by the permit holder.

(b) A direct pay permit, which is complete and regular on its face, if taken in good faith, shall relieve the vendor from the liability imposed by RSA 78-D:5 and the burden of proof imposed by RSA 78-D:7.

I.(a) Every vendor shall, on or before the 20th day of the calendar month following the collection of taxes imposed by this chapter, file a report by electronic data submission of the sales and taxes collected thereon for the preceding month to the department. This report shall be filed even though no tax may be due.

(b) If a vendor has been granted permission to make other than monthly filings, as provided in RSA 78-D:5, I the vendor shall make the report required in subparagraph I(a) in accordance with the schedule permitted by the commissioner, even though no tax may be due.

(c) On or before the 20th day of September, every vendor liable to collect and pay over the taxes imposed by this chapter shall make a return to the department reporting the results of the preceding 12 month period beginning July 1 and ending June 30. Such return shall recapitulate the reports filed as required by subparagraph I(a) or (b) and shall provide such other information as the commissioner shall require.

(d) On or before the 20th day of September, 2002, every vendor liable to collect and pay over the taxes imposed by this chapter shall make a return to the department reporting the results of the preceding 6 month period beginning January 1, 2002 and ending June 30, 2002. Such return shall recapitulate the reports filed as required by subparagraph I(a) or (b) and shall provide such other information as the commissioner shall require.

II.(a) Every purchaser to whom permission has been granted to pay tax directly to the department pursuant to RSA 78-D:10, III shall, on or before the 20th day of the calendar month following the purchase or use of tangible personal property upon which taxes are imposed by this chapter, file a report by electronic data submission of the taxes due thereon for the preceding month to the department. This report shall be filed even though no tax may be due.

(b) If a purchaser has been granted permission to pay directly on other than a monthly basis, the purchaser shall make the report required in subparagraph II(a) in accordance with the schedule permitted by the commissioner, even though no tax may be due.

(c) On or before the 20th day of the third month following the close of the calendar or fiscal year, every purchaser permitted to pay directly taxes imposed by this chapter shall make a return to the department reporting the results of the preceding year. Such return shall recapitulate the reports filed as required by subparagraph II(a) or (b) and shall provide such other information as the commissioner shall require.

III. Taxes collected by every vendor or to be paid directly by a purchaser shall be paid to the state on or before the 20th day of the calendar month following collection of the tax or the purchase or use of tangible personal property. The vendor or purchaser shall remit the taxes due by electronic funds transfer to the department.

IV. Notwithstanding the provisions of any other law, reports, returns, and remittances due under this chapter shall be considered timely only if received by the department on or before the 20th day of the calendar month in which they were due. If this due date falls on a Saturday, Sunday, or legal holiday, then the returns and remittances due under this chapter shall be filed no later than the next business day.

V. The department shall notify the vendor or purchaser of a successful electronic filing and remittance and provide the vendor or purchaser with a confirmation number which shall serve as proof of filing and remittance.

VI. All reports and returns shall contain an electronic authorization by the vendor or purchaser or their authorized representative which shall be subject to the pains and penalties of perjury.

VII. Any vendor who ceases to engage in business activity in this state, including making sales at retail for consumption, and is thereby not responsible for filing reports and returns under this chapter, shall file a final return with the department not more than one month after discontinuing such activity. This requirement shall apply notwithstanding any other provision of this chapter regarding the time within which to file a report or return.

VIII. If the commissioner finds that the information required for the making of an accurate return cannot reasonably be compiled by a vendor within the period provided in this section, the commissioner may grant an extension of time for the filing of such return. Any such extension shall be granted for a period not to exceed 31 calendar days. The granting of such extension may be conditioned upon the payment by the vendor of an amount of money equal to the amount estimated by the commissioner to be due with the return when filed under extension. All such estimated payments shall be credited against the vendor's liabilities under this chapter. The vendor shall pay to the department the amount of tax imposed by this chapter at the time the return is due.

I. Every vendor maintaining a place of business in this state or required to file or actually filing in this state and every purchaser making direct tax payments to the department under this chapter shall keep books, records, papers, certificates, and other documents which are adequate to reflect the information required to be reported to the department by the filing of timely reports or returns or maintained for inspection by the department.

II. All books, records, and other papers and documents required to be kept by this chapter shall, at all times during business hours of the day, be subject to inspection by the department.

I. If a return required by this chapter is not filed, or if a return when filed, is incorrect or insufficient, the amount of tax due shall be determined and assessed by the commissioner from any information available. If necessary, the tax may be estimated on the basis of external indices, such as stock on hand, purchases, rental paid, location, scale of rents or charges, comparable rents or charges, number of employees, or other factors.

II. The commissioner may provide by rule for the exclusion from taxable receipts of amounts representing sales where the contract of sale has been canceled, the property has been returned, or the receipt or charge has been ascertained to be uncollectible. If the tax has been paid upon that receipt or charge, the commissioner may provide for refund or credit of the tax so paid.

III. When the commissioner has reason to believe that a vendor has failed to file a report or return or to include any part of the taxable receipts of sales by such vendor in a filed report or return, the commissioner may require the vendor to file a return or a supplementary return showing such additional information as the commissioner prescribes. The making of such additional return does not relieve the vendor of any penalty for failure to make a correct original report or return, or relieve it from liability for interest imposed under RSA 21-J:28 or for any additional charges imposed by the commissioner. This section shall not be construed to modify or extend the statute of limitations provided in RSA 21-J:29.

I. In computing the amount of tax due, a vendor may deduct bad debts from the total amount upon which the tax is calculated for any return. Any deduction taken or refund paid which is attributed to bad debts shall not include interest.

II. For purposes of this section, "bad debts" means any portion of the purchase price of a transaction that a vendor has reported as taxable and for which the vendor legally claims a bad debt for federal income tax purposes. "Bad debts" include, but are not limited to, worthless checks, worthless credit card payments, and uncollectible credit accounts. "Bad debts" do not include financing charges or interest, sales or use taxes charged on the purchase price, uncollectible amounts on property that remains in the possession of the vendor until the full purchase price is paid, expenses incurred in attempting to collect any debt, debts sold or assigned to third parties for collection, and repossessed property.

III. Bad debts may be deducted within 12 months following the month in which the bad debt has been charged off for federal income tax purposes. For purposes of this paragraph, "charged off for federal income tax purposes" includes the charging off of unpaid balances due on accounts as uncollectible, or declaring as uncollectible such unpaid balance due on accounts in the instance of a seller who is not required to file federal income tax returns.

IV. If a deduction is taken for bad debts and the vendor subsequently collects the debt in whole or in part, the tax on the amount so collected shall be reported and paid on the return for the period in which the collection is made.

V. A vendor may obtain a refund of tax on any amount of bad debt that exceeds the amount of taxable sales within a 12-month period defined by the bad debt.

VI. For the purposes of computing a bad debt deduction or reporting a payment received on a previously claimed bad debt, any payments made on a debt or account shall be applied first to the price of the property and sales tax thereon, proportionally, and second to interest, service charges, and any other charges.

I. The commissioner shall collect the taxes imposed under this chapter, interest on tax, additions to tax, and penalties imposed, and pay over to the state treasurer the amount of funds collected under this chapter for deposit in the education trust fund established in RSA 198:39.

(e) The recovery of any tax, interest on tax, additions to tax, or penalties imposed by RSA 78-D or RSA 21-J.

III.(a) The commissioner shall adopt emergency rules under RSA 541-A relative to:

(3) Alternative filing procedures in the event there is an electronic equipment malfunction.

(5) The recovery of any tax, interest on tax, additions to tax, or penalties imposed by RSA 78-D or RSA 21-J.

(b) 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.

I. When the commissioner deems it necessary to protect the revenues due under this chapter, the commissioner may, after notice and hearing, require any vendor required to collect the tax imposed by this chapter to file with the commissioner a bond issued by a surety company authorized by the New Hampshire insurance department to do business in this state, in an amount fixed by the commissioner, to secure the payment of any tax, interest, or penalties due, or which may become due. The vendor shall file a bond within 10 days after the department has issued and mailed such notice. Surety bonds may be required in situations such as, but not limited to, failure to file reports or returns, failure to make payments with reports or returns at the time required by law, tender by a vendor of checks returned for insufficient funds, failure to pay interest and penalties assessed, vendors who are itinerant, transient, or temporary, and any other situation which, in the discretion of the commissioner, renders the collection of the tax in jeopardy.

II. The surety on such bond shall be discharged from the liability accruing on the bond after the expiration of 60 days from the date on which the surety shall have logged with the department a written request to be so discharged; but such request shall not discharge such surety from any liability already accrued or which shall accrue before the expiration of this 60-day period. The duration of surety bonds shall be for one year only, unless the requirement is canceled or revised by the commissioner before the expiration of the one-year period.

III. In lieu of a bond, cash in an amount prescribed by the commissioner may be deposited with the state treasurer who may, at any time, upon instructions from the commissioner and without notice to the depositor, apply the cash deposited to any tax or interest or penalties due. Cash deposited in lieu of a surety bond shall not earn interest.

IV. Failure to comply with the provisions of this section shall result in the suspension of the vendor's registration license, as provided in RSA 78-D:21.

78-D:17 Deferred Payment Purchases. The commissioner may provide that the tax upon receipts from purchases on installment plan, seasonal purchases, or deferred payment purchases may be paid on the amount of each deferred payment and upon the date when the payment is received.

78-D:18 Motor Vehicles, Aircraft, Boats, and Recreational Equipment Registration; Trade-ins.

I. For the purposes of this chapter, every transfer of the registration of a motor vehicle, as defined in RSA 259:60, shall be presumed to be for storage, use, or other consumption in New Hampshire. Upon the return of the certificate of registration, as required by RSA 261, the director of the division of motor vehicles shall forthwith inform the commissioner of the date of transfer and the names and addresses of the former and new owners.

II. No certificate of registration shall be issued by the director of the division of motor vehicles to the new owner until such new owner shall furnish evidence, on such forms as shall be prescribed by the commissioner and the director of the division of motor vehicles, that any tax due under the provisions of this chapter has been paid. If payment of any such tax due is made by check and said check is not duly paid, the director of the division of motor vehicles may, after hearing, revoke the certificate of registration. Such tax shall be considered as a first encumbrance against such vehicle and the vehicle may not be transferred without first payment in full of such tax and any interest additions or penalties which shall accrue thereon in accordance with this chapter or RSA 21-J.

III. The department of safety shall not issue a certificate of registration for any vessel required to be registered under RSA 270-E:3 and the commissioner of transportation shall not register an aircraft under RSA 422:24, except in the case of a renewal by the same owner, until the owner shall furnish evidence, on such forms as shall be prescribed by the commissioner, that any tax due under the provisions of this chapter has been paid or that no such tax is due.

IV. The executive director of the fish and game department shall not issue a certificate of registration for any off highway recreational vehicle required to be registered under RSA 215-A:21, except in the case of a renewal by the same owner, until the owner shall furnish evidence, on such forms as shall be prescribed by the commissioner, that any tax due under the provisions of this chapter has been paid or that no such tax is due.

V. Where a trade-in of a motor vehicle or trailer is received by a dealer in such vehicles holding a valid vendor's registration, upon the sale of another motor vehicle or trailer to a purchaser, the tax shall be imposed only on the difference between the sales price of the motor vehicle or trailer purchased and the amount allowed on the motor vehicle or trailer traded in on such purchase. When any such motor vehicle or trailer traded in is subsequently sold to a consumer or user, the tax provided for in this chapter shall apply.

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

II. In the collection of the tax imposed by this chapter, the commissioner may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes, except that the tax imposed by this chapter shall not take precedence over prior recorded mortgages. 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.

I. On or before January 1, 2002, or in the case of vendors commencing business or opening new places of business after that date, within 3 days after the commencement or opening, every vendor required to collect any tax imposed by this chapter and every vendor purchasing tangible personal property for resale shall file with the commissioner a license application in a form prescribed by the commissioner. The commissioner shall issue, without charge, to each applicant a license of authority empowering the applicant to collect the tax. Each license shall state the place of business to which it is applicable. The license shall be prominently displayed in the place of business of the vendor. A vendor who has no regular place of doing business shall attach the certificate to the vendor cart, stand, truck, or other merchandising device, or carry it on the vendor person. The certificate shall be nonassignable and nontransferable and shall be surrendered to the commissioner immediately upon the vendor ceasing to do business at the place named.

II. Any person who is not otherwise required to collect any tax imposed by this chapter and who makes sales to persons within the state of tangible personal property, the use of which is subject to tax under this chapter, may, if such person so elects, file a license application with the commissioner who may, in the commissioner's discretion and subject to such conditions as the commissioner may impose, issue to such person a license of authority to collect the tax imposed by this chapter.

III.(a) An organization asserting exemption pursuant to RSA 78-D:4, VI(d) shall first register with the commissioner and request issuance of a certificate of exemption.

(b) Upon satisfying the commissioner it is entitled to such exemption, the commissioner shall issue the organization a certificate which shall be effective for a period of 5 years from the date of its issuance. In order to be entitled to a continuance of such exemption beyond the expiration date of any existing certificate, such organization shall obtain from the commissioner a renewal of such certificate.

(c) Registration may be suspended or revoked for cause by the commissioner in the manner provided with respect to suspension or revocation of licenses under RSA 78-D:21.

I. The commissioner may, after notice and hearing, suspend or revoke the license of any vendor required to collect the tax or may refuse to issue or renew any license for failure to comply with this chapter or with any rules adopted hereunder.

II. Any person required to collect the tax aggrieved by a suspension, revocation, or refusal may appeal therefrom, in the same manner as provided in RSA 21-J:28-b for appeal for redetermination or reconsideration of assessments, within 10 days after written notice of the suspension, revocation, or refusal has been mailed or delivered to such person.

III. If the appealing person required to collect the tax files a bond running to the state as provided in RSA 78-D:16, then the suspension or revocation shall be inoperative during the appeal.

I. Claims for refund or credit may be made by a purchaser who has actually paid the tax or by a vendor required to collect the tax who has collected and paid over the tax to the department; provided, however, that the claim is timely made in accordance with RSA 21-J:28-a and RSA 21-J:29. No actual refund of moneys shall be made to a vendor until such person establishes to the satisfaction of the commissioner, under such rules as the commissioner may adopt, that such vendor has repaid to the purchaser the amount for which the application for refund is made or established that no refund is due the purchaser. The commissioner may, in lieu of any refund, allow credit on payments due from the claimant.

II. If the commissioner determines, on a claim for refund or otherwise, that a person has paid an amount of tax under this chapter which, as of the date of the determination, exceeds the amount of tax liability owing from the person to the state, with respect to the current and all preceding taxable periods, under any provision of this title, the commissioner shall forthwith refund the excess amount to the person together with interest as provided in RSA 21-J:28.

78-D:23 Bulk Sales. Every person who shall sell or cause to be sold at auction, or who shall sell or transfer in bulk, 51 percent or more of any stock of goods, wares, or merchandise of any kind, fixtures, machinery, equipment, buildings, or real estate, involved in a business for which such person is licensed or required to be licensed under the provisions of this chapter, or is liable for filing use tax returns in accordance with the provisions of this chapter, shall give the department 10 days' written notice of the sale or transfer prior to the completion of the transfer of such property. Whenever the seller or transferor shall fail to give such notice to the department, or whenever the department shall upon written notice inform the purchaser or transferee that a possible claim for tax imposed by this act exists, any sums of money, property, or choses in action or other consideration, which the purchaser or transferee is thereafter required to transfer over to the seller or transferor, shall be subject to a first priority right and lien for any such taxes theretofore or thereafter determined to be due from the seller or transferor, and the purchaser or transferee is forbidden to transfer to the seller or transferor any such sums of money, property, or choses in action to the extent of the amount of the state of New Hampshire's claim. For failure to comply with the provisions of this section, the purchaser or transferee shall be liable for the payment to this state of any such taxes theretofore or thereafter determined to be due from the seller or transferor, and such liability may be assessed and enforced in the same manner as the liability for tax under this chapter; provided, that nothing contained in this provision shall apply to sales or transfers made under any order of court.

78-D:24 Liens. If any person required to pay or collect and transmit a tax under this chapter neglects or refuses to pay the same after demand, the amount, together with all penalties and interest provided for in this chapter and together with any costs that may accrue in addition thereto, shall be a lien in favor of the state of New Hampshire upon all property and rights to property, whether real or personal, belonging to such person. Such lien shall arise at the time demand is made by the commissioner and shall continue until the liability for such sum with interest and costs is satisfied or becomes unenforceable. No lien upon real estate for taxes imposed by this chapter is valid and binding against any person other than the taxpayer until notice of such lien, stating the name and address of the taxpayer and the amount of the tax due, shall have been filed and recorded in the registry of deeds in the grantor index in the county in which such real estate is located. Notwithstanding the provisions of any other law, the lien shall continue and shall be valid and binding until the liability for the sum, with interest and costs, is satisfied or becomes unenforceable.

9 New Subparagraphs; Providing Additional Assessment Data on Reading Performance and Reporting Assessment Data in Compliance with Federal Law and Regulations. Amend RSA 193-C:3, IV by inserting after subparagraph (h) the following new subparagraphs:

(i) At the end of grade 3, to determine if students are reading at the adequate level on the reading component of the statewide assessment, where adequate level means the ability to read with understanding materials that are appropriate for third grade students.

(j) At the school, district, and state levels, to provide performance reports on specific subgroups of students as required by federal law and regulations, including performance reports on students with disabilities, educationally disadvantaged students, and vocational education students.

10 Reporting on the Delivery of an Adequate Education. RSA 193-E:3 is repealed and reenacted to read as follows:

I. By July 15, 2001, and annually thereafter, each school district shall report to the department of education data at the school and district levels for the previous school year on the following indicators. Provided, however, that the department shall develop a reasonable schedule to phase in the reporting of data that is not being collected systematically during school year 2000-2001.

(a) Numbers and percentages of students with disabilities, limited English proficient students, vocational education students, gifted and talented students, and students eligible for free or reduced-price meals.

(b) Student mobility rates calculated as the percentages of students who transfer into or out of a school each year. These percentages shall not include students who enter the school on opening day at the lowest grade in the school or students who leave the school upon completion of the highest grade in the school.

(d) Percentage of students reading at the adequate level on the reading component of the grade 3 statewide educational assessment administered pursuant to RSA 193-C.

(e) Performance on state tests administered pursuant to RSA 193-C and other standardized tests administered at local option.

(f) Percentage of graduating students going on to post-secondary education, military service, and apprenticeship programs in the workplace.

(g) Average class size for instructional purposes at the primary, intermediate, and secondary levels.

(i) Number and percentage of educators teaching one or more courses outside of his or her area of certification.

(j) Average number of years that current classroom teachers have been employed by the district as classroom teachers.

(k) Number of years that each principal has been employed by the district as a principal.

(l) Number of years that the superintendent of schools has been employed by the district as a superintendent.

(m) Extent to which teachers and other staff engage in performance-based professional development activities designed to promote the improvement of student learning.

(n) School safety data, including the numbers and percentages of students suspended or expelled for misconduct or for the possession of alcohol, drugs, or weapons.

(o) Numbers and types of partnerships with the community, business, or higher education.

(p) Extent to which community members are satisfied with the educational system.

II. In order to reduce school districts' administrative time and costs, the department of education shall develop and utilize user-friendly computer forms and programs to collect the data enumerated in paragraph I as well as all enrollment and cost data related to determining the cost of an adequate education The department shall request funds as part of its biennial operating budget to develop, update, and maintain the required forms and programs.

III. No later than December 1, 2001, and annually thereafter, the department of education shall issue a public report on the condition of education statewide and on a district-by-district and school-by-school basis. This report shall be entitled "New Hampshire School District Profiles." It shall include demographic and student performance data including, but not limited to, district and school performance on state tests administered pursuant to RSA 193-C, other standardized tests administered at local option by at least 25 percent of school districts, all other data provided under paragraph I, as well as other relevant statistics as determined by the department of education. Comparisons with state averages shall be provided for data reported under subparagraphs I(a) through (j). Comparisons with state school performance standards shall be provided for data reported under subparagraphs I(c) through (f). Comparisons of each district and school to itself based on its own performance for either the prior school year or its most recent 3-year rolling averages shall be provided for data reported under subparagraphs I(c) through (f). Statewide rankings of each district and school shall be provided for data reported under subparagraphs I(c) through (i). The report shall be organized and presented in a manner that is easily understood by the public and that assists each school district with the identification of trends, strengths, and weaknesses and the development of its local school education improvement and assessment plan.

IV. Between January 1 and the end of the school year, each school district at a meeting of the local school board shall provide the opportunity for a public discussion of its school district profile issued pursuant to paragraph III, any local school education improvement and assessment plan developed, implemented, evaluated, and reviewed in accordance with RSA 193-E:5, and, if applicable, the listing of a school in the district on the watch list compiled and disseminated in accordance with RSA 193-E:7, IV. At least 10 days prior to the meeting, the school district shall make its profile and other relevant information and data available to the public.

V. No later then January 1, 2003, the department of education shall prepare and submit to the education committees of the house and senate a plan for collecting and evaluating data to determine the correlation between level of academic performance and such factors as students' gender, socioeconomic status, and race, cost per pupil, class size, teacher qualifications, and use of various instructional strategies as well as an in-depth study of community members' perceptions of their involvement in education and of important educational issues. The plan shall include an estimate of the costs to the department and local school districts of collecting, analyzing, and reporting the results of these studies.

11 New Subdivision; Comprehensive Statewide Educational Accountability System. Amend RSA 193-E by inserting after section 3 the following new subdivision:

IV. "Plan" means the local school education improvement and assessment plan required by RSA 193-E:5.

V. "NHEIAP" means the New Hampshire education improvement and assessment program established in accordance with RSA 193-C.

VI. "Performance standards" means the school performance standards established in RSA 193-E:6.

VII. "Primary school" means a school that includes grades K-3 or any grouping thereof.

VIII. "Elementary school" means a school that includes grades K-8 or any grouping thereof.

IX. "Middle school" means a school that includes grades 4-8 or any grouping thereof.

X. "Junior high school" means a school that includes grades 7-9 or any grouping thereof.

XI. "High school" means a school that includes grades 9-12 or any grouping thereof.

XII. "Education improvement fund" means the education improvement fund established in RSA 193-E:7, I.

193-E:5 Local School Education Improvement and Assessment Plan. The superintendent in conjunction with the principal of each school shall be responsible for coordinating the development and implementation of a 5-year local school education improvement and assessment plan. The plan shall be evaluated and reviewed annually. To the extent practicable, a local plan may be developed at the district level as long as provisions are made for addressing individual school needs and evaluating and reviewing the performance of each school. The development and implementation of the plan and the annual evaluation and review shall be carried out with input from administrators, teachers, parents, employers, and other community members. The plan shall be approved by the local school board, which shall also receive and act on the annual review and evaluation report. The initial plan for each district or school in operation during school year 2000-2001 shall be approved no later then June 30, 2003, with subsequent plans completed and approved every 5 years thereafter. The initial plan for a school or district that commences operation after school year 2000-2001 shall be approved no later than June 30 of its third full year of operation, with subsequent plans completed and approved every 5 years thereafter. At a minimum, each plan shall:

I. Identify and set forth objectives for the school or each school in the district to achieve over a 5-year period, including objectives and annual benchmarks for improved student performance in each of the applicable areas in which statewide performance standards have been established in RSA 193-E:6 as well as objectives and annual benchmarks in each of the additional areas included as part of the criteria for an adequate education established in RSA 193-E:2.

III. Specify how the school or each school in the district will work to make improvements in the combined performance of all students enrolled in a school as well as the performance of discrete subgroups of students, including students with disabilities, limited English proficient students, vocational education students, and low-income students.

IV. Specify the methods and assessments to be used in addition to NHEIAP assessments for the annual evaluation and review of the plan, including data to be collected, analyzed, and reported. This shall include the data specified in RSA 193-E:3, I as well as additional data determined locally. In conducting the annual evaluation and review, the local planning committee shall consider the combined performance of all students enrolled in the school or each school in the district as well as the performance of discrete subgroups of students.

V. Provide an overview of the curriculum for the school or each school in the district, including methods of instruction, materials to be utilized, and the use of technology as an instructional tool.

VI. Specify strategies to provide students with the opportunity to participate in enrichment programs, including advanced placement and honors courses.

VII. Specify strategies to maintain a safe, disciplined, and supportive learning environment.

VIII. Provide for the periodic collection and analysis of community members' perceptions of their involvement in education and of important educational issues.

IX. Specify strategies to promote family and community involvement in the school or each school in the district as well as partnerships with the community, business, and higher education.

X. Provide for the design and implementation of a professional development program that includes the following elements:

(a) Activities to enable teachers to improve their expertise in subject-area knowledge, curriculum redesign, teaching and assessment strategies, and the use of technology.

(b) Strategies to enable teachers to improve their ability to help all students reach high standards, including the analysis and use of data on student performance as well as techniques to promote the alignment of high standards, curriculum, instruction, and assessment.

(c) Follow-up and supervision activities to ensure that new knowledge, skills, and strategies are utilized in the classroom.

193-E:6 School Performance Standards. A school shall meet or exceed each of the following performance standards that apply to it, or shall demonstrate that the school is making satisfactory progress toward meeting these standards in accordance with paragraph VII:

I.(a) The percentage of students performing at the adequate level on the reading component of the statewide assessment administered in grade 3 pursuant to RSA 193-C shall be:

(b) The most recent 3-year rolling average shall be used to determine if a school is meeting this performance standard, except that a 2-year average shall be used for school year 2002-2003. If, starting in school year 2003-2004, a 3-year rolling average is not available for a particular school, either a 2-year average or, if a 2-year average is not available, a single year's data shall be used for this purpose.

(c) For students with disabilities who qualify for the alternate version of the statewide assessment, performance at the adequate level shall be based on the communication component of the alternate assessment.

(d) For students whose native language is other than English and whose English language reading ability prevents them from participating in the statewide assessment, school districts, in conjunction with the department, shall provide an alternate assessment of each student's reading ability in his or her native language. The school district shall report student performance to the department of education for inclusion in school, district, and state third grade reading reports. If it is not feasible to administer the assessment in the student's native language, then the student may be excused from the assessment.

II.(a) The percentage of students performing at the basic and above levels in the designated academic areas assessed on the statewide tests administered in accordance with RSA 193-C shall be:

(b) The most recent 3-year rolling averages shall be used to determine if a school is meeting the academic-area statewide assessment performance standards that apply to it, except that if 3-year rolling averages are not available for a particular school, either 2-year averages or, if 2-year averages are not available, a single year's data shall be used for this purpose:

IV. The percentage of students who drop out of school annually shall not exceed the following rates:

V. The percentage of graduating students who go on to post-secondary education, military service, and apprenticeship programs in the workplace shall be at least 66 percent.

VI. Each school shall comply with the applicable standards for school approval adopted by the state board pursuant to RSA 21-N:9, I.

VII. No later than May 1, 2004, and annually thereafter, the commissioner shall determine if a school has demonstrated that it has met, or exceeded, or is making satisfactory progress toward meeting the performance standards. The criteria to be used to determine if a school is making satisfactory progress shall be established as follows:

(a) No later than May 1, 2002, and every 3 years thereafter, based on generally accepted statistical procedures, the commissioner of education in conjunction with the state board shall determine and publish the criteria for making satisfactory progress in each of the areas established in paragraphs I-V. In making these determinations, consideration shall be given to the impact of school and grade-level enrollments on the validity and comparability of the data collected and, to the extent feasible, the performance of discrete subgroups of students, including students with disabilities, limited English proficient students, vocational education students, and low income students. Consideration shall also be given to the use of additional performance data collected at the school and district levels to enhance the criteria for determining if a school is making satisfactory progress, provided that such data shall be collected and reported in a manner that is statistically valid and comparable from school to school.

(1) Satisfactory progress in meeting the reading performance standard established in paragraph I shall be based on the average of the mean-scaled scores obtained on the reading component of the grade 3 statewide assessment administered in accordance with RSA 193-C. The most recent 3-year rolling averages shall be used to determine if a school is making satisfactory progress in reading, except that if 3-year rolling averages are not available for a particular school, either 2-year averages or, if 2-year averages are not available, a single year's data shall be used for this purpose. If a primary school does not include grade 3, then reading performance shall be based on the performance of the students from that school who attend grade 3 in the elementary school attended by the majority of the students from said primary school.

(2) Satisfactory progress in meeting the NHEIAP performance standards established in paragraph II shall be based on the grade-level average(s) of the mean-scaled scores obtained in the academic areas assessed at each grade level. The most recent 3-year rolling averages shall be used to determine if a school is making satisfactory progress at a grade level, except that if 3-year rolling averages are not available for a particular school, either 2-year averages or, if 2-year averages are not available, a single year's data shall be used for this purpose. If a school does not include a grade assessed in NHEIAP, then NHEIAP performance shall be based on the performance of the students from that school who attend the next highest NHEIAP grade level assessed in the school attended by the majority of the students from the school that does not include a grade assessed in NHEIAP.

(3) Satisfactory progress in meeting the performance standards established in paragraphs III-V shall be based on the rolling 3-year averages of performance in these areas. The most recent 3-year rolling averages shall be used to determine if a school is making satisfactory progress, except that if 3-year rolling averages are not available for a particular school, either 2-year averages or, if 2-year averages are not available, a single year's data shall be used for this purpose.

(b) A school shall be considered to be making satisfactory progress in meeting the school approval standards specified in paragraph VI, if it either has been conditionally approved or granted a delay in full compliance by the state board.

VIII. No later then January 1, 2005, and every 3 years thereafter, the state board shall submit to the governor and the education committees of the house and senate a report outlining the results of the state board's review of the performance standards established in paragraphs I-VI, together with any recommendations to the general court for changes in these standards that have been adopted by a majority of the state board. In conducting its review, the state board shall consider the statistical validity and comparability of using additional performance data collected at the school and district levels.

193-E:7 State Assistance to Local School Districts; Education Improvement Fund Established.

I. There is hereby established an education improvement fund in the department of education for the purpose of providing assistance to local school districts. The department is authorized to use the amounts transferred to the education improvement fund to provide instructional improvement assistance to local school districts, administer the fund, collect, analyze, and report data, and provide technical assistance to schools. This fund shall be nonlapsing and shall be administered by the department. Beginning July 1, 2002, and annually thereafter, 1/3 of one percent of the statewide cost of providing an adequate education as calculated in accordance with RSA 198:40, III shall be transferred from the education trust fund to the education improvement fund. Moneys transferred to this fund shall be in addition to the funds required to distribute adequate education grants to municipalities' school districts pursuant to RSA 198:42. The governor is authorized to draw a warrant from the education trust fund to satisfy the provisions of this paragraph.

II. For the biennium beginning July 1, 2001, grants from the education improvement fund may be used to assist schools and school districts with the development and implementation of local school education improvement and assessment plans and the development and implementation of procedures to improve the collection of data specified in RSA 193-E:3, I. For the biennium beginning July 1, 2003, and each biennium thereafter, grants shall be used exclusively to improve performance in the areas specified in RSA 193-E:6, I-V. In administering the education improvement grants, the department shall be responsible for the following:

(a) Establishing forms and procedures for districts to use for the development and submission of education improvement grant requests, including a detailed assistance plan and budget and the opportunity to request up to 3 years of financial assistance.

(b) Providing assistance to districts in the development of an assistance plan and budget.

(1) Includes an evaluation of each proposal's adequacy, educational appropriateness, and cost effectiveness, and the extent to which additional revenues are required to implement the proposed plan and activities.

(2) Gives priority to districts with lower-performing schools that have satisfactorily addressed the review criteria required under subparagraph (c)(1) and are proposing reasonable efforts to improve performance.

(d) Reviewing grant requests and forwarding them to the commissioner and the state board with recommendations for approval.

(e) Distributing grant payments to school districts in accordance with the payment schedule specified by the commissioner in the district's grant approval notification.

III. No later than May 1, 2004, and annually thereafter, the commissioner shall compile and disseminate to the governor and council, the general court, the state board, local school board chairs, superintendents of schools, school principals, and the public, a list, to be known as the watch list, of schools that, pursuant to the criteria established in RSA 193-E:6, VII are not making satisfactory progress toward meeting the performance standards that apply to it.

(a) A school district may request assistance from the department for any school within the district that is on the watch list, including technical assistance and, in accordance with paragraph II, financial assistance from the education improvement fund.

(b) If a district does not request assistance for a school on the watch list within 6 months following the annual publication of the list, the department may initiate a more thorough review of the school's academic performance, including the review of additional performance data collected at the school and district levels and, to the extent feasible, the performance of discrete subgroups of students, including students with disabilities, limited English proficient students, vocational education students, and low income students. On the basis of its review the department may offer assistance to the school district, but the district shall not be required to accept the proposed assistance.

IV. No later than 8 months following the listing of a school on the watch list for any 3 years out of a consecutive 5-year period, the school board chair, the superintendent of schools, the principal, and a representative of the department shall appear before a public session of the state board. At this session, the department shall recommend an action plan to improve academic performance in said school. This action plan may include requiring the school to implement a comprehensive education improvement and assessment plan that has been developed by the department in consultation with local school officials or such other steps identified by the department in consultation with local school officials that will best address areas in which the school is not making satisfactory progress. The department shall also recommend that an action plan be funded, in whole or in part, with resources from the education improvement fund, or with resources from a portion of the district's cost of providing an adequate education calculated by combining the district's share of the adequate education costs of its constituent municipality or municipalities calculated in accordance with RSA 198:41, I (a) and (b), or both. Following the department's presentation and an opportunity for comments from the designated local school officials, the state board shall determine by a majority vote whether or not to approve the action plan recommended by the department. The decision of the state board shall be final and binding upon all parties.

(a) An approved action plan shall cover a period of not more than 3 years, provided however, that if a school remains on the watch list upon the expiration of the plan, the department shall develop and submit a new plan to the state board for its consideration.

(b) During the course of implementing an approved action plan, any significant change in the plan shall require the prior approval of the state board.

12 New Chapter; Early Literacy and Reading Improvement. Amend RSA by inserting after chapter 193-F the following new chapter:

193-G:1 Purpose. The general court finds that in order to implement New Hampshire's policy of providing all pupils with the opportunity to acquire an adequate public elementary and secondary education, it is essential that by the end of grade 3 virtually all children shall demonstrate that they have developed the interest and ability to read with fluency and understanding materials appropriate for third grade pupils.

IV. "Primary school" means a school that includes grades K-3 or any grouping thereof.

V. "Pre-school children" means children from birth through age 5 that are not enrolled in a primary school.

VI. "Early child care providers" means individuals that are paid to provide care and education to children from birth through age 5 that are not enrolled in a primary school.

VII. "Master teacher" means an experienced teacher who by virtue of specialized training, appropriate experience, and demonstrated success has the knowledge and skills necessary to provide early learning and/or reading assistance to other individuals.

VIII. "Fund" means the early literacy and reading improvement fund established in
RSA 193-G:3.

I. There is hereby established an early literacy and reading improvement fund in the department of education. This fund shall be used for the purpose of providing instruction and support to parents, grandparents, guardians, and early child care providers in the development by pre-school children of early literacy skills that are aligned with reading instruction in the schools as well as for the purpose of improving reading instruction in public primary schools. This fund shall be nonlapsing and shall be administered by the department. For each of the fiscal years beginning July 1, 2001, and July 1, 2002, 1/3 of one percent of the statewide cost of providing an adequate education for that fiscal year as calculated in accordance with RSA 198:40, III shall be transferred from the education trust fund to the early literacy and reading improvement fund. Beginning July 1, 2003, and each July 1 thereafter, 2/3 of one percent of the statewide cost of providing an adequate education for that fiscal year as calculated in accordance with RSA 198:40, III shall be transferred from the education trust fund to the early literacy and reading improvement fund. Moneys transferred to this fund shall be in addition to the funds required to distribute adequate education grants to school districts pursuant to RSA 198:42. The governor is authorized to draw a warrant from the education trust fund to satisfy the provisions of this paragraph.

II. To carry out the purposes for which this fund is established, the department is authorized to use the amounts transferred to the fund to provide early literacy and reading improvement assistance, including grants, to local school districts as well as to administer the fund, to develop and provide research-based programs and courses, and to provide technical assistance and professional development activities through grants, contracts with consultants, and the employment of individuals to fill authorized full-time, permanent positions. Funds shall be used for no other purposes.

III. For the fiscal year beginning July 1, 2001, and each fiscal year thereafter, grants to local school districts shall be used to address the areas specified in RSA 193-G:4, as well as other demonstrated needs related directly to early literacy and the improvement of reading. In administering the early literacy and reading improvement grant program, the department shall be responsible for the following:

(a) Establishing forms and procedures for districts to use for the development and submission of early literacy and/or reading improvement grant requests, including:

(1) A detailed plan and budget, with the opportunity to request up to 3 years of financial assistance and the further opportunity to apply for additional assistance based on demonstrated need.

(2) An assurance that grant funds will be used only to supplement and not supplant on-going local efforts.

(3) A description, if applicable, of how grant activities were planned in consultation with and will be implemented in coordination with the department of education, the department of health and human services, institutions of higher education, early child care providers, and parents, grandparents, and guardians.

(2) Gives priority to districts with lower-performing schools in reading that have satisfactorily addressed the review criteria in subparagraph (1) and are proposing reasonable efforts to address early literacy needs and/or improve reading performance

(d) Reviewing grant requests and forwarding them to the commissioner and the state board with recommendations for approval, including level of funding.

(e) Distributing grant payments to school districts in accordance with the payment schedule specified by the commissioner in the district's grant approval notification.

193-G:4 Comprehensive Early Literacy and Reading Improvement Initiative. The department of education shall provide research-based support and education to the parents, grandparents, guardians, early child care providers, and primary school teachers and administrators that shape the language and literary development of children from birth through the end of grade 3 through a comprehensive early literacy and reading improvement initiative that shall:

I. Provide structured, research-based, school-wide professional development in reading instruction to primary school teachers and administrators, through the use of intensive summer institutes, regional meetings, and reading master teachers who will provide follow-up activities and continuous technical assistance during the school year.

II. Utilize early childhood education master teachers to provide instruction and support to center-based and home-based early child care providers in the development by pre-school children of early literacy skills that are aligned with reading instruction in the schools.

III. Provide scholarships for early child care providers to enable them to participate in college credit courses in the development by pre-school children of early literacy skills that are aligned with reading instruction in the schools.

IV. Implement a research-based program that utilizes school-based parent educators to provide information and examples as well as demonstrate to parents, grandparents, and guardians the key elements in developing a pre-school child's early literacy knowledge and skills.

V. Involve institutions of higher education in partnerships to better prepare new teachers to deliver research-based early literacy knowledge and skills and/or reading instruction.

VI. Coordinate opportunities for local school districts, the department of education, the department of health and human services, institutions of higher education, early child care providers, and parents, grandparents, and guardians to work together to deliver high-quality, research-based reading instruction to primary school children as well as provide research-based support for the development of early literacy in pre-school children.

13 School Money; Education Trust Fund Amended. Amend 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~~] to fund the education improvement fund established in RSA 193-E:7, to fund the early literacy and reading improvement fund established under RSA 193-G:3, and to provide tax claim refunds under RSA 198:61. The state treasurer shall deposit into [~~this~~] the education trust fund immediately upon receipt:

(a) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-A:20-a, relative to business profits taxes.

(b) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-E:14, relative to business enterprise tax.

(c) Funds collected and paid over to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-A:26, III relative to the tax on motor vehicle rentals.

(d) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 78:32, relative to tobacco taxes.

(e) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-B:13, relative to real estate transfer taxes.

(f) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 83-F:7, I, relative to the utility property tax.

(g) The full amount of excess education property tax payments from the department of revenue administration pursuant to RSA 198:46.

(h) All moneys due the fund in accordance with RSA 284:21-j, relative to sweepstakes.

(i) [~~Tobacco~~] All tobacco settlement funds [~~in the amount of $40,000,000 annually~~] less any amounts deposited into the tobacco use prevention fund established in RSA 126-K:15.

(j) The school portion of any revenue sharing funds distributed pursuant to RSA 31-A:4 which were apportioned to school districts in the property tax rate calculations in 1998.

(k) [~~Any other moneys appropriated from the general fund~~] Funds collected and paid over to the state treasurer by the commissioner of the department of revenue administration pursuant to RSA 78-D:15, I, relative to the sales tax for education.

14 School Money; State Aid for Educational Adequacy; Free and Reduced Price Lunches Amended. RSA 198:38, VII(d) is repealed and reenacted to read as follows:

VII.(d) An elementary school pupil who is eligible to receive a free or reduced-price meal shall receive an additional weight as follows:

(1) If the pupil is in a district in which less than 8 percent of the resident pupils in grades one through 8 are eligible to receive a free or reduced-price meal, an additional weight of zero.

(2) If the pupil is in a district in which 8 percent or more of the resident pupils in grades one through 8 are eligible to receive a free or reduced-price meal, an additional weight equal to the lesser of 1.3 or a number equal to 5 times the difference between the decimal equivalent of the percentage of resident pupils in grades one through 8 eligible to receive a free or reduced-price meal and .08, provided there are 10 or more resident pupils in grades one through 8 in the district. If there are less than 10 resident pupils in grades one through 8 in the district, the percentage of resident pupils in grades one through 8 eligible to receive a free or reduced-price meal shall be equal to the eligible percentage for the district that the majority of the pupils attend.

15 School Money; Definitions Amended. Amend RSA 198:38, X and XI to read as follows:

X. "Average daily membership in residence" and "resident pupils" mean the average daily membership in residence as defined in RSA 189:1-d, IV except that no preschool or kindergarten pupil shall count as more than 1/2 day attendance per calendar day.

XI. "Transportation costs" means the costs of transporting pupils to and from school and other school activities less any local transportation revenues reported by school districts on the [~~MS-25~~] DOE-25 form.

16 School Money; Determination of Per Pupil Adequate Education Grants Amended. Amend RSA 198:40, I and II to read as follows:

198:40 Determination of Per Pupil Adequate Education Cost and Adequate Education Grant.

I. For the [~~biennium~~] fiscal year beginning July 1, [~~1999~~] 2002, and every [~~biennium~~] fiscal year thereafter, the cost per pupil shall be established using the following formula:

(a) The department of education shall calculate the base expenditure per pupil for each school district that operates an elementary school by subtracting from the total expenditures at the elementary school level, tuition to other school districts or approved educational programs, capital costs and debt service on such costs, special education costs, food service costs, transportation costs, adult/continuing education and community services costs, and federal revenues not otherwise deducted. For each school district, this amount shall be divided by the average daily membership in attendance at the elementary school level to attain the base expenditure per pupil.

(1) The department of education shall identify those school districts where [40 to 60 percent of the elementary pupils enrolled in the grades tested on the day testing began, achieved a scaled score, in the statewide educational improvement and assessment program administered pursuant to RSA 193-C, in all areas tested, equivalent to performance at the basic level or above], for each of the 3 previous years, a minimum of 11 pupils were assessed in each subject area of the statewide assessment program administered pursuant to RSA 193-C to pupils in the third and sixth grades. For each grade and year, the department shall determine the average percentage of pupils performing at the basic level or above. The average shall be based on the number of pupils enrolled on the test date. A basic level or above percentage for each district shall be computed using the average of each grade and year. Districts where the 3-year average performance at the basic level or above is between 50 percent and 70 percent shall be selected.

(2) From the school districts [~~identified~~] selected in subparagraph I(b)(1) of this section, the department of education shall then identify those school districts that have the lowest base expenditure per pupil as calculated pursuant to subparagraph I(a) and which represent, as nearly as possible, 50 percent of the average daily membership in attendance at the elementary level of the school districts identified in subparagraph I(b)(1) of this section.

(3) The department of education shall calculate [~~the~~] an average base cost per pupil of an adequate education at the elementary school level by multiplying the base expenditure per pupil of each school district identified in subparagraph I(b)(2) of this section by the average daily membership in attendance at each of the selected school districts, and add the results across all districts selected. This sum shall then be divided by the total average daily membership in attendance at the elementary school level in all of the selected school districts and the result shall be multiplied by .9025.

(4) The department shall calculate an alternative base cost per pupil of an adequate education at the elementary level by adjusting the base cost per pupil calculated in the immediately preceding fiscal year by the 3-year rolling average percentage of change in the unadjusted northeast consumer price index-u as published by the United States Department of Labor.

(5) The base cost per pupil for each fiscal year shall be the lower of the base cost per pupil calculated in subparagraphs I(b)(3) and I(b)(4).

II. [~~The~~] For the fiscal year beginning July 1, 2002 and each fiscal year thereafter, weighted average daily membership in residence for each municipality shall be calculated by combining the elementary average daily membership in residence with the weighted high school average daily membership in residence, the average daily membership in residence resulting from educationally disabled children, and the [~~additional~~] weighted average daily membership in residence [~~resulting from elementary pupils eligible to receive a free or reduced-price meal~~] calculated in accordance with RSA 198:38, VII(d). The statewide weighted average daily membership in residence of pupils shall be calculated by combining the weighted average daily membership in residence of each municipality in the state.

17 New Paragraph; Determination of Per Pupil Adequate Education Cost and Adequate Education Grant; Certification. Amend RSA 198:40 by inserting after paragraph III the following new paragraph:

IV. No later than May 1 of each year, the commissioner of the department of education shall certify to the commissioner of the department of revenue administration the cost of an adequate education for the second fiscal year after each May 1 based on enrollment and financial data collected from schools for the preceding school year.

18 Apportionment, Assessment, and Abatement of Taxes; Commissioner's Report Amended. Amend RSA 76:9 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~~] June 1, a statement of the education property tax warrants to be issued for the tax year commencing April 1 of the succeeding year.

19 New Subdivision; Low and Moderate Income Homeowners Property Tax Relief. Amend RSA 198 by inserting after section 55 the following new 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:

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. "Household income" shall also include all income of any trust through which the claimant holds equitable title, or the beneficial interest for life, in the homestead.

IV. "Tax relief" means the low and moderate income homeowners property tax relief provided in this subdivision.

V. "New Hampshire household" means any person filing a federal income tax return as head of household or 2 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.

VI. "Dependent" means a person residing in a homestead who is claimed as a dependent for federal income tax purposes.

I. Pursuant to the provisions of this subdivision, eligible claimants shall be granted tax relief following the effective date of this act.

II. Residents shall apply to the department of revenue administration for such tax relief.

(a) Owns a homestead or interest in a homestead subject to the education property tax;

(b) Resided in such homestead on April 1 of the year for which the claim is made, 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; and

(2) $40,000 or less if a head of a New Hampshire household with a dependent or dependents, or if a married person.

IV. All or a portion of an eligible tax relief claimant's education property taxes, RSA 76:3, shall be rebated as follows:

(a) Multiply the total local assessed value of the claimant's property by the percentage of such property that qualifies as the claimant's homestead;

(b) Multiply the product determined in subparagraph (a) by the current education property tax rate;

(d) Multiply either the product of the calculation in subparagraph (b) or (c), whichever is less, by the following percentage as applicable to determine the amount of tax relief available to the claimant:

(2) If a head of a New Hampshire household or a married person and total household income is:

(e) The amount determined by subparagraph (d) is the allowable tax relief in any year.

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, tax 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 for tax relief shall be filed with the department of revenue administration between May 1 and June 30 following the due date of the education property taxes.

VII. Each claim shall be accompanied by a copy of the claimant's federal income tax return filed by the claimant for the corresponding 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. A claimant who asserts ownership in a homestead because he or she holds equitable title, or the beneficial interest for life, in the homestead shall also submit a copy of the document creating such interest and a copy of the federal tax return, if any, for the immediately prior tax period, of the trust holding legal title to the homestead. Any documents submitted shall be considered confidential, and protected under RSA 21-J:14.

VIII. The provisions of RSA 359-C shall not apply to the documents required to be submitted under this section.

I. The commissioner shall adopt rules, under RSA 541-A, relative to the administration of excess tax payments and the tax relief provisions of this subdivision.

II. The commissioner shall approve and provide forms relative to the administration of this subdivision.

(b) Sections for information concerning the claimant, the claimant's household, the property for which tax relief is sought, and such other information as is reasonably necessary to determine the accuracy of the claim;

(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 tax relief provisions in a suitable manner.

I. Any person who files a claim for tax relief under this subdivision 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 property tax relief relative to a fraudulent or erroneously paid claim for tax relief 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.

I. Whenever the commissioner refuses to grant a claimant a tax 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 commissioner's refusal 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.

198:61 Refund of Tax Claims. The department of revenue administration shall review a claim for tax relief filed with it and, if such claim is determined to be valid, shall certify such amount to the state treasurer within 120 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.

20 Advertising and Promotional Program. The commissioner of the department of resources and economic development shall, in consultation with the Retail Merchants Association of New Hampshire, develop and implement a program for the purpose of advertising and promoting retail shopping in New Hampshire.

I. RSA 86:6, relative to taxable property and tax rate of the legacies and succession tax.

II. RSA 198:50 through 198:55, relative to education property tax hardship relief.

III. 1999, 338:21, relative to the repeal of the education property tax, and the determination of adequate education grants.

IV. 1999, 338:25, I, relative to the effective dates of the repeal of 1999, 338:21.

V. RSA 77-E:14, relative to estimates of increased business enterprise tax revenues.

VI. RSA 198:39, I(b), relative to deposits of sums certified pursuant to RSA 77-E:14.

VIII. RSA 21-I:18, I(l), relative to purchases of services with respect the administration of education property tax hardship relief claims.

22 Administration of Sales and Use Tax for Education; Purchases of Services Exempt. Purchases of services from private contractors by the department of revenue administration made during the fiscal biennium ending June 30, 2003 with respect to the administration of the sales and use tax under RSA 78-D shall be exempt from the provisions of RSA 21-I.

23 Education Trust Fund; Permissible Use of Funds. Notwithstanding RSA 198:39, I, the specific uses of funds appropriated from the education trust fund in section 24 of this act are hereby authorized for the purposes set forth in section 24 of this act.

I. The sum of $3,400,000 for the fiscal year ending June 30, 2002, is hereby appropriated from the education trust fund in RSA 198:39 to the department of revenue administration, for the purpose of implementing and administering the provisions of RSA 78-D.

II. The sum of $8,200,000 for the fiscal year ending June 30, 2003, is hereby appropriated from the education trust fund in RSA 198:39 to the department of revenue administration, for the purpose of implementing and administering the provisions of RSA 78-D.

III. The sum of $2,500,000 for the fiscal year ending June 30, 2002, and the sum of $2,500,000 for the fiscal year ending June 30, 2003, are hereby appropriated from the education trust fund established in RSA 198:39 to the department of resources and economic development, for the purpose of implementing the provisions of section 20 of this act.

IV. The sum of $600,000 for the fiscal year ending June 30, 2003, is hereby appropriated from the education trust fund in RSA 198:39 to the department of revenue administration, for the purpose of implementing and administering the provisions of RSA 198:56-61.

V. The sum of $1,000,000 for the fiscal year ending June 30, 2002, is hereby appropriated from the education trust fund in RSA 198:39 to the department of education for the education improvement fund established in RSA 193-E:7, I.

I. Sections 2, 5, 7-17, 22, and 24, and paragraph I of section 21 of this act shall take effect July 1, 2001.

II. Sections 3, 4, 6, and 19, and paragraphs II, V, and VI of section 21 of this act shall take effect July 1, 2002.

AN ACT establishing the excellence in learning in New Hampshire school funding and improvement program and making an appropriation therefor.

The Office of Legislative Budget Assistant is unable to complete a fiscal note for this bill as it is awaiting information from an agency.