SB 4 INCREASE OCCUPANCY RATE TAX

Sen Ron Griggs

Actions: [1] SCC/STBTC/SFC-SCC

Scheduled: Not Scheduled

 Senate Bill 4 (SB 4) increases the Occupancy Tax (Lodger’s Tax Act) and modifies the uses of the tax to include quality-of-life facilities. SB 4 allows bond issue to help defray the cost of the facilities. 

 Senate Bill 4 (SB 4) increases the Occupancy Tax (tax) (Lodger’s Tax Act) that municipalities may impose from 5% to 7% of gross taxable rent. Counties rate remains 5%.

SB 4 expands qualified purposes and conditions of the tax. The bill removes the provision that certain counties (non-Class A, tax rate of more than 2%) must dedicate a minimum, prorated portion of the first 3% of taxes collected for tourist-related expenses. If the local government imposes a tax rate greater than 2%, then at least 1/3 (decreased from ½ for Class A counties) of the proceeds must be expended on tourist-related expenses otherwise, ¼ of the proceeds must be dedicated.

Quality-of-life facilities are eligible projects with the tax proceeds. This includes dedicating revenue for securing bond issue, operating, purchasing, constructing, improving, maintaining, and purchase of property. The tax may not be used for quality-of-life facility promotion, law enforcement and fire protection, nor sanitation services unless they are tourist-related. Quality-of-life facilities are facilities and infrastructure for parks, zoos, and sport or exercise programs.

SB 4 repeals §3-38-21 NMSA 1978 and combines sections to include modifications made by the bill.

SB4’s effective date is July 1, 2024, if passed and signed into law.
 

 The tax rate is capped at 5% of gross taxable rent for local governments. Expenditure of proceeds is limited to promotion of tourist-related facilities, attractions, and events and not permitted for other facilities. A minimum of ¼ of the proceeds in municipalities located in non-Class A counties with a rate no more than 2% and ½ of the proceeds in municipalities located in Class A counties with a rate over 2% must be spent on tourist-related expenses.