SB378: relative to property tax procedures and contingency funds of village districts.

SB 378-FN-LOCAL - AS INTRODUCED

2004 SESSION

04-3085

10/09

SENATE BILL 378-FN-LOCAL

AN ACT relative to property tax procedures and contingency funds of village districts.

SPONSORS: Sen. Johnson, Dist 2; Rep. Philbrick, Carr 5

COMMITTEE: Ways and Means

ANALYSIS

This bill requires all taxes collected for village districts to be paid by December 31 and adds an interest assessment for payments after that date. The bill also increases the amount of funds allowed in a village district contingency fund.

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

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

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

04-3085

10/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Four

AN ACT relative to property tax procedures and contingency funds of village districts.

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

1 Village Districts; Taxation, Procedure. Amend RSA 52:16, II to read as follows:

II. In the case of districts with annual budgets of less than $200,000, the town treasurer shall distribute the [amount of taxes collected and held in trust by the town under paragraph I] village district net assessment to the district treasurer no later than December 31 of each calendar year, unless otherwise agreed to in writing by the town and district treasurers. In the case of districts with annual budgets of $200,000 or more, the town treasurer shall distribute the [amount of taxes collected and held in trust by the town under paragraph I by distributing] village district net assessment to the district treasurer all taxes collected in any given calendar month by the end of the next following month, unless otherwise agreed to in writing by the town and district treasurers. [The town treasurer, furthermore, shall turn over to the district treasurer all interest earned on district tax revenues held in trust by the town and all interest collected by the town on the account of any delinquent district taxpayers' district taxes in the same manner as the tax revenues are distributed.] The total village district net assessment of taxes shall be paid to the district treasurer no later than December 31. Any amount not received by December 31 shall accrue interest at the rate of 10 percent annually until complete payment is received.

2 Village Districts; Contingency Fund. Amend RSA 52:4-a to read as follows:

52:4-a Contingency Fund. Every village district annually by an article in the warrant may establish a contingency fund to meet the cost of unanticipated expenses that may arise during the year. Such fund shall not exceed [one] 10 percent of the amount appropriated exclusive of capital expenditures and amortization of debt by such village district during the preceding year. A detailed report of all expenditures from the contingency fund shall be made annually by the commissioners and published with their report.

3 Effective Date. This act shall take effect April 1, 2004.

LBAO

04-3085

12/18/03

SB 378-FN-LOCAL - FISCAL NOTE

AN ACT relative to property tax procedures and contingency funds of village districts.

FISCAL IMPACT:

The New Hampshire Municipal Association and Department of Revenue state this bill will increase local expenditures by an indeterminable amount in FY 2005 and each year thereafter. There will be no fiscal impact on state, county and local revenue or state and county expenditures.

METHODOLOGY:

The New Hampshire Municipal Association states this bill would require the town to pay the total village district commitment by December 31st, whether or not the town has received payment in full from the taxpayers. Any amount due but not paid by the required date would be subject to 10% interest until paid. These changes will not affect every town because not all towns contain village districts. Those towns that do contain one or more village districts and currently pay the full amount of the village district tax commitment by the required date will also not be affected. Those towns that do not currently distribute the full village district tax commitment by the required date may experience increased costs if they must borrow in anticipation of taxes in order to meet the full village district payment or are subject to the 10% interest penalty. The proposed language also eliminates the requirement that the town pay over to the village district the interest earned on village district taxes held in trust and the interest collected from delinquent taxpayers. The Association cannot determine at this time if the interest amounts would offset the costs of any borrowing in anticipation of taxes that might be required. This bill also allows the contingency fund of village districts used for unanticipated expenses to increase from 1% to 10% of the amount appropriated in the operating budget of the district, however, this provision would have no fiscal impact.

The Department of Revenue Administration states village districts should experience a smoother cash flow, while towns may incur borrowing costs on tax anticipation notes if the taxes are unpaid by the property owners as of December 31st. If the town chooses not to pay by December 31st, they would incur a 10% interest penalty, but should be able to recoup 12% plus costs from the taxpayer on delinquent taxes, therefor, the net cost to the town should be minimal unless a large taxpayer defaults on their taxes.