Out of Recess.

The committee on Enrolled Bills has examined and found correctly Enrolled the following entitled House and/or Senate Bill:

HB 54, allowing simultaneous service of a demand for rent and a notice to quit.

Senator D'Allesandro moved adoption.

Senator Cohen moved that the business of the day being completed that the Senate now adjourn until Thursday, March 25, 1999 at 9:00 a.m.

The Senate met at 9:00 a.m.

A quorum was present.

The prayer was offered by the Rev. David P. Jones, Senate Chaplain.

Senator Roberge led the Pledge of Allegiance.

SJR 1, supporting the reduction of the sulfur content of gasoline. Environment Committee. Vote 7-0. Ought to Pass, Senator Cohen for the committee.

HB 93, permitting a dam to be constructed on Rand Pond in Goshen. Environment Committee. Vote 6-0. Ought to Pass, Senator Pignatelli for the committee.

HB 207-FN-A, directing the office of state planning to conduct a study of the effects of sprawl in the state and making an appropriation therefor. Environment Committee. Vote 5-0. Ought to pass with amendment, Senator Pignatelli for the committee.

1999-0461s

05/10

Amend paragraph I of section 2 of the bill by replacing it with the following:

I. The office of state planning is authorized to conduct a study of the effects of sprawl in New Hampshire. The study shall examine the effects of sprawl on the economy, taxes, loss of open land, air quality, water quality, wildlife habitat, tourism, community identity and quality of life. The study shall make recommendations on local, regional and state growth management and associated legislative initiatives.

SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws. Environment Committee. Vote 7-0. Inexpedient to Legislate, Senator Russman for the committee.

Senator D’Allesandro moved to have SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws, laid on the table.

SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws.

SB 135, relative to the water supply land protection grants. Environment Committee. Vote 7-0. Ought to Pass, Senator Cohen for the committee.

Senator J. King moved to have SB 135, relative to the water supply land protection grants, laid on the table.

SB 135, relative to the water supply land protection grants.

HB 248, relative to the Monadnock advisory commission. Executive Departments and Administration Committee. Vote 4-0. Ought to Pass, Senator Brown for the committee.

CACR 20, relating to the election of governor and senators. Providing that beginning with the 2002 general election, and every 4 years thereafter, the governor and senators shall be elected. Internal Affairs Committee. Vote 5-1. Inexpedient to Legislate, Senator Francoeur for the committee.

Senator D’Allesandro moved to have CACR 20, relating to the election of governor and senators. Providing that beginning with the 2002 general election, and every 4 years thereafter, the governor and senators shall be elected, laid on the table.

CACR 20, relating to the election of governor and senators. Providing that beginning with the 2002 general election, and every 4 years thereafter, the governor and senators shall be elected.

SB 124, establishing a committee to study the integration of technology at the state and municipal level. Internal Affairs Committee. Vote 6-0. Ought to Pass, Senator Klemm for the committee.

SB 222-FN-A-L, relative to guarantee of loans to local development organizations. Internal Affairs Committee. Vote 6-0. Ought to Pass, Senator Fraser for the committee.

SB 64, relative to powers of appointment. Judiciary Committee. Vote 6-0. Ought to pass with amendment, Senator Fernald for the committee.

1999-0499s

08/10

Amend the bill by replacing all after section 1 with the following:

2 Applicability of Act.

I. On and after the effective date of this act, this act shall apply to all testamentary powers of appointment created by will or by trust executed on or after the effective date of this act, and to testamentary powers of appointment created by will or trust described in Section 1433(b)(2) of the Tax Reform Act of 1986, Pub. L. No. 99-514, as amended.

II. Notwithstanding the foregoing, this act shall not apply to any of the following:

(a) Any testamentary powers of appointment created pursuant to the terms of a trust executed prior to the effective date of this act and for which a federal estate tax marital deduction was allowed with respect to the donor’s estate pursuant to Internal Revenue Code Section 2056(b)(5) or Section 2523(e).

(b) Any testamentary powers of appointment created by will or trust executed prior to the effective date of this act where the donee of the power has exercised or attempted to exercise such testamentary power of appointment in favor of the donee’s estate, creditors of the donee, or creditors of the estate of the donee, in accordance with the provisions of the instrument creating the power, which exercise or attempted exercise is made in a document executed prior to the effective date of this act.

(c) Nontestamentary powers of appointment, whether created before or after the effective date of this act.

3 Effective Date. This act shall take effect upon its passage.

SB 109, deleting the witnessing requirement for notices of lease. Judiciary Committee. Vote 7-0. Ought to Pass, Senator Gordon for the committee.

SB 111, relative to requirements for acknowledgements and jurats by justices of the peace. Judiciary Committee. Vote 6-0. Ought to pass with amendment, Senator Gordon for the committee.

1999-0505s

09/10

Amend RSA 455-A:3 as inserted by section 1 of the bill by replacing it with the following:

455-A:3 Powers. Every justice of the peace shall have the power to administer oaths, perform marriage ceremonies, acknowledge instruments, and any other power prescribed by law. A justice of the peace signing an acknowledgment or jurat on any document or instrument shall type, print, or stamp the name of the justice of the peace on the document or instrument; however, failure to meet this requirement shall not impair the legal validity of any acknowledgment or jurat.

SB 112, relative to the guardianship of minors. Judiciary Committee. Vote 6-0. Ought to pass with amendment, Senator Gordon for the committee.

1999-0471s

04/01

Amend RSA 458-A:2, III as inserted by section 1 of the bill by replacing it with the following:

III. "Custody proceeding" includes proceedings in which a custody determination is at issue or is one of several issues, including any action or proceeding brought to annul a marriage or to declare the nullity of a void marriage, or for a separation, or for a divorce, or relative to the guardianship of a minor, but not including proceedings for adoption, child protective proceedings or proceedings for permanent termination of parental custody, or proceedings involving the guardianship and custody of neglected or dependent children pursuant to RSA 169-B, 169-C, or 169-D.

SB 125, prohibiting prison inmates and persons on probation or parole from changing their names. Judiciary Committee. Vote 6-0. Ought to pass with amendment, Senator Gordon for the committee.

1999-0506s

09/01

Amend the title of the bill by replacing it with the following:

AN ACT placing restrictions on name changes for certain felons.

Amend the bill by replacing all after the enacting clause with the following:

1 Change of Name. RSA 547:3-i is repealed and reenacted to read as follows:

547:3-i Change of Name.

I. The probate court may grant the petition of any person to change the name of that person or the name of another person, with the exception of a person serving a prison sentence or on probation or parole, or required to register as a sexual offender or an offender against children pursuant to RSA 651-B. The court shall not require the petitioner to obtain consents to the name change. Except as provided in paragraph II, the court may proceed with or without notice, in accordance with RSA 550:4.

II. The court may override the exception under paragraph I only if the petitioner makes a compelling showing that a name change is necessary.

III. Before the probate court may grant a change of name pursuant to this section, the person petitioning for a name change shall serve a copy of the petition on the department of corrections if the person is incarcerated or on probation or parole, or on the department of safety if the person is required to register as a sexual offender or an offender against children and is no longer subject to supervision by the department of corrections.

2 Name Change; Duty to Inform. Amend RSA 651-B:5 to read as follows:

651-B:5 Change of Name or Alias or Address; Duty to Inform. When any person required to be registered under this chapter changes residence, the person shall give written notification of the person's new address to the local law enforcement agency to which [he] such person last reported under RSA 651-B:4 within 10 days of such change of residence. Such notice shall not relieve the person of the duty to report under RSA 651-B:4 at the new place of residence. The local law enforcement agency receiving such notice shall forward a copy to the division within 3 days after receipt. The division shall notify the local law enforcement agency at the new place of residence, or the appropriate out-of-state law enforcement agency if the new place of residence is outside New Hampshire, and shall include such change-of-address information in the LENS system. Persons required to report address changes in this section shall also have a duty to inform local law enforcement of any name or alias changes.

3 Effective Date. This act shall take effect January 1, 2000.

1999-0506s

AMENDED ANALYSIS

This bill places certain restrictions on the rights of certain felons to legally change their names.

SB 130, establishing a committee to study issues regarding procedures and standards for selection and supervision of court-appointed guardians ad litem. Judiciary Committee. Vote 5-0. Ought to pass with amendment, Senator Trombly for the committee.

1999-0465s

08/01

Amend the bill by replacing section 6 with the following:

6 Effective Date. This act shall take effect upon its passage.

SB 150, making certain reference changes to the department of youth development services. Public Institutions, Health and Human Services Committee. Vote 6-0. Ought to pass with amendment, Senator Wheeler for the committee.

1999-0521s

04/03

Amend the bill by replacing all after the enacting clause with the following:

1 Delinquent Children; Reference to the Department of Youth Development Services Added. Amend RSA 169-B:19, III-a (a) to read as follows:

III-a.(a) Prior to the seventeenth birthday of a minor who had been adjudicated delinquent for committing a violent crime as defined in RSA 169-B:35-a, I(c), or who had been petitioned to court on 4 or more occasions and adjudicated delinquent in 4 separate adjudicatory hearings which alleged misdemeanor or felony offenses, the prosecutor or the department of health and human services may file a motion with the court to extend jurisdiction pursuant to RSA 169-B:4, V. The department of youth development services may file a motion to extend jurisdiction for any minor committed to its custody pursuant to RSA 169-B:19, I(j). The department of corrections shall be served a copy of the motion and be a party to the proceeding.

2 New Subparagraph; Juvenile Case and Court Records; Accessibility of Records Amended. Amend RSA 169-B:35, III by inserting after subparagraph (b) the following new subparagraph:

(c) The commissioner of the department of youth development services shall have access to all records in the possession of the department of health and human services concerning minors committed to the custody of the department of youth development services pursuant to RSA 169-B:19, I(j), or detained or placed at facilities operated by the department.

3 Administrative Release; Definition Amended. Amend RSA 170-H:2, I to read as follows:

I. "Administrative release to parole" means an administrative procedure to provide a period of community adjustment before parole status is granted [subject to approval of the juvenile parole board at its next regular meeting].

4 New Paragraph; Parole of Delinquents; Definitions; Reference to Commissioner of Youth Development Services Added. Amend RSA 170-H:2 by inserting after paragraph IV the following new paragraph:

IV-a. "Commissioner" means the commissioner of the department of youth development services.

5 Parole of Delinquents; Definitions; Reference to Commissioner of Youth Development Services Added; Age Changed. Amend RSA 170-H:2, V to read as follows:

V. "Delinquent" means any person under [18] 17 years of age who has been adjudicated delinquent by a district or superior court and committed to the custody of the [administrator] commissioner.

6 Parole of Delinquents; Administrative Release Amended. Amend RSA 170-H:5 to read as follows:

The [administrator] commissioner, if he or she determines it is in the best interests of a delinquent and the public, may place a delinquent in [his] custody on administrative release. [Such] Except in cases of emergency as determined by the commissioner, such an administrative release shall be in effect for no longer than 30 days.

7 Parole of Delinquents; Reference Amended. Amend RSA 170-H:7 to read as follows:

170-H:7 Juvenile Parole Records. The board shall have access to all juvenile [parole] records of the department. Notwithstanding any provision of law to the contrary, the board shall have access to all records in the possession of the department of health and human services concerning juveniles committed to the custody of the department of youth development services pursuant to RSA 169-B:19, I(j). The board shall review the records of the department for each offender in its custody at least once every 36 months.

8 Parole of Delinquents; Effect of Recommittal; Age of Delinquency and Reference Amended. Amend RSA 170-H:11 to read as follows:

170-H:11 Effect of Recommittal. Any delinquent whose parole is revoked shall be returned to the custody of the [administrator] commissioner. The offender may at any time prior to his [eighteenth] or her seventeenth birthday be paroled again. If not paroled, a delinquent shall remain in custody until his [eighteenth] or her seventeenth birthday.

9 Parole of Delinquents; Reference Amended. Amend RSA 170-H:13, I to read as follows:

I. The juvenile parole board shall be administratively attached to the department of [health and human] youth development services.

10 Parole of Delinquents; Reference Amended. Amend RSA 170-H:13, II(a) to read as follows:

(a) Exercise its powers, duties, functions and responsibilities independently of the department of [health and human] youth development services and without approval or control of the department, except as otherwise specifically provided by statute;

11 Parole of Delinquents; Reference Amended. Amend the introductory paragraph of RSA 170-H:13, III to read as follows:

III. The department of [health and human] youth development services shall:

12 Youth Development Center; Administrative Release to Parole Amended. Amend RSA 621:3, I to read as follows:

I. "Administrative release to parole" means an administrative procedure to provide a period of community adjustment before parole status is granted[, subject to approval by the department at its next regular meeting].

13 Youth Development Services; Authority to Apprehend Amended. Amend RSA 621:33 to read as follows:

621:33 Authority to Apprehend. Certain employees of the [center] department who satisfactorily complete a prescribed course of instruction and are certified by the [administrator of the bureau of residential services] commissioner shall be designated as ex officio constables to possess general police powers, including the power of arrest, but limited as follows:

I. These powers shall extend to employees only during the period of duty with

the [center] department.

II. These powers shall extend only to property controlled by the [center] department with 3 exceptions:

(a) When an employee is in hot pursuit of a person who has committed a crime while on grounds, in buildings, or in vehicles controlled by the [center] department;

(b) When an on duty employee observes a child whom the employee knows has escaped from the [center] department or failed to return from furlough, or who is in violation of the terms of parole; or

(c) When an employee is transporting a detained or committed child to another location.

14 Youth Development Services; Rulemaking Amended. Amend RSA 621-A:4, IV to read as follows:

IV. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the management of the youth services center and the youth development center, and all other facilities and programs operated by the department and all persons connected with the youth services center, the youth development center and all other facilities and programs operated by the department, and for the admission and care of children at the youth services center, the youth development center and all other facilities and programs operated by the department.

15 Youth Development Services; Rulemaking Amended. Amend RSA 621-A:8, I to read as follows:

I. The management of the youth services center, the youth development center and all other facilities and programs operated by the department and the admission and care of children at the youth services center, the youth development center and all other facilities and programs operated by the department pursuant to RSA 621-A:4, IV.

16 Reference Changes. Amend the following RSA provisions by replacing "administrator" with "commissioner": RSA 170-H:4, I-II; 170-H:8; and 170-H:10.

17 Repeal. The following are repealed:

I. RSA 170-H:2, II, relative to definition of administrator for the department of youth development services.

II. RSA 621:35, relative to the rulemaking authority of the commissioner of health and human services over the youth development center.

III. 1988, 197:12, relative to the certification of shelter care and detention beds.

IV. 1990, 201:16, relative to extending the deadline for certification of shelter care and detention beds.

18 Effective Date. This act shall take effect upon its passage.

SB 164, relative to persons exempted from the registration of ophthalmic dispensers. Public Institutions, Health and Human Services Committee. Vote 6-0. Ought to pass with amendment, Senator McCarley for the committee.

1999-0522s

10/03

Amend the bill by replacing all after the enacting clause with the following:

1 Ophthalmic Dispensers; Application of Chapter. Amend RSA 327-A:13, IV to read as follows:

IV. The activities of any employee of an ophthalmic dispenser, licensed physician, or optometrist if the employee is not engaged in [the] ophthalmic dispensing [of eyeglasses or contact lenses including, but not limited to, the sale of related products, laboratory technicians and the making of minor mechanical repairs upon eyeglasses or frames] as defined in RSA 327-A:1, I.

2 Repeal. RSA 327-A:13, II, relative to activities of ancillary personnel in ophthalmic dispensing, is repealed.

3 Effective Date. This act shall take effect 60 days after its passage.

1999-0522s

AMENDED ANALYSIS

This bill clarifies the application of the registration requirement for persons in ophthalmic dispensing.

SB 169-FN-A, establishing a commission to study the department of health and human services and making an appropriation therefor. Public Institutions, Health and Human Services Committee. Vote 6-0. Inexpedient to Legislate, Senator Krueger for the committee.

Senator Russman moved to have SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws, taken off the table.

Senator Trombly moved to have SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws, laid on the table.

SB 72, exempting certain portions of Seabrook Beach Village District and certain portions of Hampton Beach from certain provisions of the excavating, filling, and construction permit laws.

Senator Cohen moved to have SB 135, relative to the water supply land protection grants, taken off the table.

SB 135, relative to the water supply land protection grants.

Senator F. King moved to have HB 112-FN-A, increasing the tobacco tax, taken off the table.

HB 112-FN-A, increasing the tobacco tax.

Senator F. King offered a floor amendment.

1999-0566s

04/03

Floor Amendment to HB 112-FN-A

Amend the title of the bill by replacing it with the following:

Amend the bill by replacing all after the enacting clause with the following:

1 Findings.

I. In December 1997, the New Hampshire supreme court in the Claremont II decision ruled that it is the state’s duty to define and provide all New Hampshire’s public school students with an adequate education, and further that the manner of raising revenue to pay for an adequate education be through a system of taxation that is proportional in substance and just and reasonable in application.

II. Through the passage of House Bill 1075, the general court defined an adequate education. The definition grew out of work undertaken in the early 1990’s to develop curriculum frameworks which specifically address the importance of establishing and measuring what all New Hampshire students should know and be able to do. The curriculum frameworks were developed with the widespread participation of educators, business people, government officials, community representatives, and parents. They have evolved into a critical component of providing a quality public education to New Hampshire students.

2 New Subdivision; Adequate Public Education; Adequate Education and Education Financing Reform Commission Established. Amend RSA 193-E by inserting after section 3 the following new subdivision:

Adequate Education and Education

Financing Reform Commission

193-E:4 Adequate Education and Education Financing Reform Commission Established; Membership.

I. There is hereby established an adequate education and education financing reform commission which shall be composed of 22 members as follows:

(a) Three house members, including one member of the education committee, one member of the finance committee, and one member of the minority party, appointed by the speaker of the house.

(b) Three senators, including one member of the education committee, one member of the finance committee, and one member of the minority party, appointed by the senate president.

(c) Four members appointed by the governor, one of whom shall be an elementary or secondary special education teacher, one of whom shall be a primary teacher who does not teach special education, and one of whom shall be a member of the business community.

(d) The commissioner of the department of education or designee.

(e) The chancellor of the university system of New Hampshire or designee.

(f) The commissioner of the regional community-technical college system.

(g) One member from the state board of education, appointed by the chairperson of the state board of education.

(h) One member from a special education advocacy organization, appointed by such organization; and

(i) Seven members who shall be agreed to and jointly appointed by the governor, the president of the senate, and the speaker of the house consisting of the following:

(1) One local school board member, recommended by the New Hampshire School Boards Association.

(2) One school administrator, recommended by the New Hampshire School Administrators Association.

(3) One special education administrator at the elementary or secondary school level, recommended by the New Hampshire Association of Special Education Administrators.

(4) Two parents of school-age children, one of whom shall be the parent of a child with an educational disability.

(5) One member from the business community, who shall be associated with the School to Work Initiative.

(6) One school business official, recommended by the New Hampshire Association of School Business Officials.

II. The commission shall elect a chairperson from among its membership and shall form subcommittees necessary to perform its duties. The chairperson shall determine the frequency of meetings at its first meeting.

III. The members of the commission shall serve without compensation, provided that legislative members of the commission shall receive mileage at the legislative rate while attending to the duties of the commission, and provided that the parent members of the commission shall be reimbursed for travel expenses associated with their duties on the commission.

IV. In order to ensure that all students are provided an adequate education, the duties of the commission shall be as follows:

(a) Determine and recommend the costs of an adequate education for all students in New Hampshire by determining and calculating adjustments for individual school districts based on yearly inflation, cost of living variances, diseconomies of scale, transportation variability, demographics, including for school districts with a disproportionate number of students who are economically disadvantaged or have educational disabilities, and such other factors as deemed relevant.

(b) Determine and recommend the amount of state aid, including building aid, to be distributed to cities and towns based upon the cost of an adequate education as set forth in subparagraph (a) and the method for distributing the state aid.

(c) Recommend changes in policy and procedure in the areas of educational improvement and accountability.

(d) Recommend interim and permanent processes to ensure adequate planning and implementation at the local and state level of special education and educationally related services, including planning for and development, on an interagency basis, of local school based options for pupils who have been placed in alternative or separate schools who could be placed in appropriate less restrictive options if available.

V. The commission shall be divided into the following policy subcommittees: adequacy and cost, educational improvement and accountability, and special education funding.

VI. The commission shall report its findings and recommendations no later than December 1, 2000. The report shall include, for each recommendation, proposed implementation schedules with timelines, specific steps, agencies and persons responsible, and resources needed. Where feasible, all plans, measures and initiatives shall be proposed as legislation or regulation so that they will have the force of law. All recommendations and plans shall be designed to be fully implemented no later than September 1, 2004.

VII. The department of justice, department of revenue administration, department of education, and department of health and human services shall provide the commission with assistance.

3 District Foundation Aid; Version Effective July 1, 1999; Per Weighted Pupil Amount Amended. Amend RSA 198:36, IV to read as follows:

IV. The foundation amount shall be [$4,959] $7,200 per weighted pupil. The general court is constitutionally obligated to fund the cost of an adequate education and there are hereby appropriated, for the fiscal years ending June 30, 2001, June 30, 2002, June 30, 2003, and June 30, 2004, funds necessary to make the payments required in this section. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated. The total of 50 percent of all monies appropriated under this paragraph shall be used by cities and towns for the purpose of providing local property tax relief to resident taxpayers.

4 New Paragraph; District Foundation Aid; Annual Increases Established. Amend RSA 198:36 by inserting after paragraph IV the following new paragraph:

IV-a. For all fiscal years following fiscal year 2001, the district foundation aid amount specified in this section shall be determined by adjusting the foundation aid amount for the year immediately preceding, by using the latest 12-month consumer price index for education, as determined by the United States Department of Labor, to increase the district foundation aid amount as required. In any fiscal year where the consumer price index for education would require a decrease in the district foundation aid amount, such foundation aid amount shall remain equal to the amount established in the immediately preceding year.

5 New Paragraph; District Foundation Aid; Calculation of Minimum School Tax Rate. Amend RSA 198:36 by inserting after paragraph V the following new paragraph:

VI. The local equalized school tax rate for every city and town in the state, prior to the calculation of any aid amounts received under this subdivision, shall be at least equal to the lowest local equalized school tax rate established in any fiscal year, in any city or town. This paragraph shall apply to the establishment of the local equalized school tax rate in every city or town in the state whether or not such city or town applies for or receives aid under this subdivision. Nothing in this paragraph shall prevent a city or town from establishing a local equalized school tax rate that is greater than the lowest local equalized school tax rate amount established in any fiscal year.

6 Tax Equity and Efficiency Commission Established.

I. There is established a tax equity and efficiency commission to study issues relating to tax fairness and administrative implementation which may be appropriate for further legislative action.

II. The commission shall consist of the following members:

(a) Eight house members, including the chairperson or vice-chairperson of the finance committee, the chairperson or vice-chairperson of the education committee, and at least 3 members of the minority party, appointed by the speaker of the house.

(b) Five senators, including the chairperson or vice-chairperson of the finance committee, the chairperson or vice-chairperson of the ways and means committee, the chairperson or vice-chairperson of the education committee, and at least 2 members of the minority party, appointed by the senate president.

(c) The governor or designee.

(d) The commissioner of the department of revenue administration or designee.

(e) The commissioner of the department of education or designee.

(f) The state treasurer or designee.

(g) One representative appointed by the New Hampshire Municipal Association.

(h) One representative appointed by the New Hampshire School Administrators Association.

(i) One representative appointed by Claremont Lawsuit Coalition.

(j) One representative appointed by the New Hampshire Society of Certified Public Accountants.

(k) One public member, appointed by the governor.

III. The commission shall study issues arising under this act relating to tax fairness and administrative implementation which may be appropriate for further legislative action. As part of its study, the commission shall consider:

(a) The most appropriate means for evaluating the following types of property for taxation purposes:

(1) Utility property.

(2) Railroad property.

(3) Nuclear station property.

(b) The fairness of the renters credit under the income tax.

(c) The determination of the homestead exemption for owners of multi-unit dwellings or parcels with mixed uses.

(d) Whether a resident fiduciary responsible for payment of property taxes should qualify for the homestead exemption.

(e) The income tax treatment of pension payments received in lieu of social security payments or pension payments from pensions to which the taxpayer’s contributions to the pension were previously taxed.

(f) The proper income tax treatment of military personnel on active duty residing out-of-state.

(g) The property tax treatment of non-conventional single owner or unusual residential situations such as nursing homes, dormitories, group homes, residential communities, condominiums, and cooperatives.

IV. The members of the commission shall elect a chairperson from among the members. The first meeting of the committee shall be called by the first named senate member and shall be held within 30 days of the effective date of this section.

V. The commission shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the senate president, the house clerk, the senate clerk, the governor, and the state library on or before September 15, 1999 and on or before December 31, 1999.

7 Appropriation. The sum of $150,000 for the fiscal year ending June 30, 2000, is hereby appropriated for the purposes of the commission established in RSA 193-E:4 as inserted by section 2 of this act. This sum shall not lapse until June 30, 2004. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

8 Repeal. The following are repealed:

I. 1998, 389:14, relative to district foundation aid.

II. Sections 1-7 of this act.

9 Effective Date.

I. Section 3 of this act shall take effect at 12:01 a.m. on July 1, 1999.

II. Section 8, paragraph II of this act shall take effect June 30, 2004.

III. The remainder of this act shall take effect upon its passage.

1999-0566s

AMENDED ANALYSIS

This bill:

(1) Establishes an educational adequacy and education financing reform commission and makes an appropriation to the commission.

(2) Establishes a tax equity and efficiency commission to study issues related to tax fairness.

(3) Increases the district foundation aid amounts to $7,200 per pupil for fiscal years 2001, 2002, 2003, and 2004, as adjusted by the consumer price index for education in these fiscal years, and provides that all district foundation aid disbursements are constitutionally mandated obligations of the state.

(4) Requires that, prior to the calculation of any alternative foundation aid amounts, the department of education establish in every city and town in the state, a local equalized school tax rate that is equal to the lowest local equalized school tax rate established in any city or town in a fiscal year. The bill permits local school districts to authorize additional spending in excess of this amount.

Senator Cohen moved to have HB 112, increasing the tobacco tax, laid on the table.

HB 112, increasing the tobacco tax.

In recess.

Out of recess.

Senator Russman moved to have HB 112-FN-A, increasing the tobacco tax, taken off the table.

HB 112-FN-A, increasing the tobacco tax.

Senator Brown offered a floor amendment.

Sen. Brown, Dist. 17

Sen. Krueger, Dist. 16

1999-0557s

10/09

Floor Amendment to HB 112-FN-A

Amend the title of the bill by replacing it with the following:

Amend the bill by replacing all after the enacting clause with the following:

1 Purpose. Recognizing the duty of the legislators and magistrates to cherish the interest of literature and the sciences, and all seminaries and public schools, as referred to in Art. 83 of Part 2 of the New Hampshire constitution, the general court hereby establishes an education homestead act. The purpose of this act is to provide support to local communities proportionate to their unique individual needs, evidenced by the varying property tax rates across the state. Beginning in 2000, the state will provide an education allowance for homeowners that will equal ½ of the education portion of their property tax bills, up to $100,000 of homestead value of their primary residence. This allowance will be printed on the face of the individual property tax bills, and the state will pay to the taxing authority the total homestead allowance in that political subdivision, and the costs of administration.

2 New Subparagraph; State Accounts; Application of Receipts. Amend RSA 6:12, I by inserting after subparagraph (vvv) the following new subparagraph:

(www) Moneys deposited in the education homestead allowance fund established in RSA 76-A:2.

3 New Paragraph; Revenue Administration; Rulemaking Authority. Amend RSA 21-J:13 by inserting after paragraph XI the following new paragraph:

XII. The form and content for the application and statement of principal residency under RSA 76-A:1, II, and other matters necessary for the implementation of reimbursement to local tax collectors of towns, cities, and unorganized places of funds held in the education homestead allowance reimbursement fund under RSA 76-A.

4 New Paragraph; Revenue Administration; Municipal Services. Amend RSA 21-J:15 by inserting after paragraph IV the following new paragraph:

V. The administration of the education homestead allowance fund established in RSA 76-A:2, and the determination of the reimbursement due to the tax collectors of each town, city, or unorganized place from the fund pursuant to the provisions of RSA 76-A:3.

5 Taxes Collected by Tax Collector; Reference to Education Homestead Allowance Added. Amend RSA 76:10 to read as follows:

76:10 Selectmen's Lists and Warrant. A list of all property taxes by them assessed shall be made by the selectmen under their hands, with a warrant under their hands and seal. The list shall be directed to the collector of such town, requiring [him] the collector to collect the [same] portion due from each listed property and to certify the education homestead allowances pursuant to RSA 76:10-b for reimbursement pursuant to RSA 76-A, and to pay to the town treasurer such sums and at such times as may be therein prescribed. The selectmen shall assess such taxes to the owner as of April 1, or to the current owner, if known. The selectmen of a town or the board of assessors of a city may round off to the nearest dollar the total tax due on each parcel appearing on the list.

6 New Section; Certification of Education Homestead Allowances; Reimbursement of Costs. Amend RSA 76 by inserting after section 10-a the following new section:

76:10-b Certification of Education Homestead Allowances. The selectmen or assessors shall provide to the tax collector the total of the education homestead allowances granted in each town, city, or unorganized place. It shall be the duty of the tax collector to certify to the commissioner of revenue administration by October 1 of each year the total amount of the education homestead allowances granted and the actual cost to the town, city, or unorganized place of administering the provisions of RSA 76-A.

7 Tax Bills; Reference to Education Homestead Allowance Added. Amend RSA 76:11 to read as follows:

76:11 Delivery of List; Notice to Taxpayer; Other Bills. Such list shall be delivered to the collector within 30 days from the receipt of information by the selectmen from the commissioner of revenue administration of the rate percent of taxation as provided in RSA 41:15, unless for good cause the time is extended by the commissioner of revenue administration. The collector shall, within 30 days after the receipt of such list, send to every person taxed, a bill for [such] taxes due by first class mail, unless for good cause the time is extended by the commissioner of revenue administration. [Said] The bill shall include any education homestead allowance granted under RSA 76-A. The bill shall be mailed separately and not included with mailing of other town or city bills, unless the governing body of the town or city votes to mail other town or city bills or information directly related to municipal business along with the tax bill. Under no circumstances shall a city or town mail statements of position on matters of public policy along with the tax bill. Upon written request of a mortgagee or its representative, the tax collector of a city or town shall mail a duplicate copy of the property tax bill, as it was sent to the property taxpayer, to the party making such request. Other form of notification of tax owed, acceptable to the mortgagee and the tax collector, may be substituted for the duplicate tax bill. A separate written request, with specific property identification, shall be required for each duplicate copy or form. The governing body of a city or town may establish a reasonable fee to be charged for each duplicate copy or form. Resident tax bills may be included with property tax bills when the inclusion of such resident tax bills will not unduly delay the mailing of either the resident or property tax bills.

8 New Chapter; Education Homestead Act. Amend RSA by inserting after chapter 76 the following new chapter:

CHAPTER 76-A

76-A:1 Education Homestead Allowance.

I. Every owner of residential real estate shall be entitled to an education homestead allowance on the amount of school property taxes assessed by the local tax collector.

II. No person shall be entitled to the education homestead allowance under this section unless the person has filed with the selectmen or assessors, by March 1 following the date of notice of tax under RSA 72:1-d, a permanent application therefor and a statement of principal residency, signed under penalty of perjury, on a form approved and provided by the commissioner of revenue administration, showing that the applicant is the true and lawful owner of the property on which the education homestead allowance is claimed and that the applicant was duly qualified upon April 1 of the year in which the education homestead allowance is first claimed. The form shall include such other information deemed necessary by the commissioner, pursuant to rules adopted under RSA 541-A.

III. The education homestead allowance, except where limited under the provisions of RSA 76-A:3, shall be 50 percent of the effective school tax rate in the town, city, or unorganized place, applied to the first $100,000 of equalized assessed value.

IV. For purposes of this section, "residential real estate" means the real estate which the person liable for the payment of local school property taxes occupies as his or her principal place of abode together with any land or buildings appurtenant thereto and shall include manufactured housing if used for said purpose.

76-A:2 Fund Established. There is established an education homestead allowance fund for the purpose of reimbursing tax collectors of towns, cities, and unorganized places the total amount of education homestead allowance under RSA 76-A:1 and costs of administration. The fund shall be nonlapsing and continually appropriated for the purposes of this chapter. All moneys in this fund shall be used to provide payment to local tax collectors for the amount of the education homestead allowance against school taxes on property in towns, cities, or unorganized places and the costs of administration. The state treasurer shall deposit into the fund any sums appropriated from the general fund or received from any other source whatsoever for the purpose of the education homestead allowance fund.

76-A:3 Reimbursement from Fund. The commissioner of revenue administration shall review the amounts certified by local tax collectors pursuant to RSA 76:10-b and shall determine for each town, city, or unorganized place the total amount of education homestead allowances against local school property taxes, and shall by December 1 of each year reimburse the local tax collectors, from the fund established in RSA 76-A:2, the amount due each town, city, or unorganized place. Such reimbursement shall include the actual cost of administration by the local tax collectors of the provisions of this chapter in the town, city, or unorganized place. Provided however, that beginning in tax year 2001, for any town, city, or unorganized place the amount of the reimbursement due under this section for any year shall be limited to an increase from the previous year of the lesser of 2 percent or the increase in the New England Consumer Price Index for the year as determined by the federal Bureau of Labor Statistics.

76-A:4 Obligation of State. The sums due to local tax collectors under the provisions of this chapter shall be the obligation of the state and not subject to collection and enforcement under RSA 80. No owner of residential real estate granted an education homestead allowance against local school taxes shall be held liable for the sums required to be paid from the education homestead allowance fund.

9 Information on Tax Bills. Amend RSA 76:11-a, I and II to read as follows:

I. The tax bill which is sent to every person taxed, as provided in RSA 76:11, shall show the rate for municipal, school and county taxes separately, the assessed valuation of all lands and buildings for which said person is being taxed, the amount of any education homestead allowance, and the right to apply in writing to the selectmen or assessors for an abatement of the tax assessed as provided under RSA 76:16. The department of revenue administration shall compute for each town and city the rates which are to appear on the tax bills and shall furnish the required information to the appropriate town or city.

II. The tax bill shall also contain a statement informing the taxpayer of the types of tax relief for which the taxpayer has the right to apply. The following statement shall be considered adequate:

"If you are elderly, disabled, blind, a veteran, or veteran's spouse, are the owner of your principal place of residence, or are unable to pay taxes due to poverty or other good cause, you may be eligible for a tax exemption, credit, abatement, homestead allowance, or deferral. For details and application information, contact (insert title of local assessing officials or office to which application should be made)."

This statement shall be prominent and legible, and may either be printed on the tax bill itself, or on a separate sheet of paper enclosed with the tax bill. A municipality may in its discretion choose to include more detailed information about the eligibility criteria for different forms of tax relief, provided, however, that the information in the above statement shall be considered a minimum.

10 Unorganized Places; Reference to Education Homestead Allowance Added. Amend RSA 198:16, III to read as follows:

III. The county commissioners shall, following receipt of [the] taxes collected under this section and any sums received as education homestead allowance under RSA 76-A, pay them to the county treasurer. From time to time, as deemed advisable by the department of education, it shall submit to the county commissioners bills for payment for the costs of education of the children from such unincorporated towns, unorganized places, and towns where by act of the legislature the school districts have been abolished and the education of the children made the responsibility of the state.

11 Appropriation; Education Homestead Allowance Reimbursement Fund. The sum of $1 is appropriated to the education homestead allowance reimbursement fund established in RSA 76-A:2 from the general fund for the fiscal year ending June 30, 2000. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

12 Effective Date. This act shall take effect July 1, 1999.

1999-0557s

AMENDED ANALYSIS

This bill establishes the education homestead allowance against the school taxes assessed on the principal place of residence of taxpayers. The education homestead allowance shall be ½ of the school tax rate applied to a certain amount of equalized assessed value of real estate. The amount of the allowance shall be paid by the state from a fund established for the purpose of reimbursing tax collectors.

The following Senators voted No: F. King, Gordon, Fraser, Below, McCarley, Trombly, Disnard, Fernald, Squires, Pignatelli, Larsen, J. King, Russman, D’Allesandro, Wheeler, Hollingworth, Cohen.

Senator Gordon offered a floor amendment.

1999-0563s

09/10

Floor Amendment to HB 112-FN-LOCAL

Amend the title of the bill by replacing it with the following:

Amend the bill by replacing all after the enacting clause with the following:

1 New Chapter; Sales and Use Tax. Amend RSA by inserting after chapter 77-E the following new chapter:

77-F:1 Definitions. In this chapter:

I. "Casual sale" means an isolated or occasional sale of an item of tangible personal property by a person who is not regularly engaged in the business of making sales of that general type of property at retail where the property was obtained by the person making the sale, through purchase or otherwise, for his or her own use. Aircraft, snowmobiles, motorboats, and vessels, are hereby specifically excluded from the definition of casual sale.

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

III. "In this state" or "in the state" means within the exterior limits of the state of New Hampshire and includes all territory within these limits owned by or ceded to the United States of America.

IV. "Person" means an individual, partnership, society, association, joint stock company, corporation, public corporation or public authority, estate, receiver, trustee, assignee, referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise and any combination of the foregoing.

V. "Persons required to collect tax" or "persons required to collect any tax imposed by this chapter" means and includes every vendor of taxable tangible personal property or services. These terms shall also include any officer or employee of a corporation or of a dissolved corporation who as that officer or employee is under a duty to act for the corporation in complying with any requirement of this chapter and any member of a partnership.

VI. "Property and services the use of which is subject to tax" means and includes all property sold to a person within the state, whether or not the sale is made within the state, the use of which property is subject to tax under RSA 77-F:4 or will become subject to tax when such property is received by or comes into the possession or control of such person within the state.

VII. "Purchaser" means a person who purchases property or who receives services taxable under this chapter.

VIII. "Receipt" means the amount of the sales price of any property taxable under this chapter valued in money, whether received as money or otherwise, without any deduction for expenses or early payment discount, but excluding any amount for which credit is allowed by the vendor to the purchaser, and excluding any allowance in cash or by credit made upon the return of merchandise pursuant to warranty or the price of property returned by customers when the full price thereof is refunded either in cash or by credit, and excluding the price received for labor or services used in installing or applying to repairing the property sold, if separately charged or stated, and the cost of transportation from the retailer's place of business or other point from which shipment is made directly to the purchaser provided those charges are separately stated and provided the transportation occurs by means of common carrier, contract carrier or the United States mails.

IX. "Retail sale" or "sold at retail" means the sale of tangible personal property to any person for any purpose, other than for resale, except resale as a casual sale. Sales of tangible personal property to all contractors, subcontractors or repairpersons of materials and supplies for use by them in erecting structures for others, or building on, or otherwise improving, altering, or repairing real property of others are deemed to be retail sales.

X. "Sales, selling or purchase" means any transfer of title or possession or both, exchange or barter, rental, lease or license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration, or any agreement therefor; except professional, insurance, personal service transactions, advertising services and computer and data processing services where tangible personal property is transferred as part of such service transaction so long as no separate charge is made for the tangible personal property and so long as the value of the tangible personal property transferred is essentially an inconsequential element in relation to the value of the service transaction. The provisions of this paragraph shall be retroactive if to the benefit of the taxpayer.

XI. "Tangible personal property" means personal property which may be seen, weighed, measured, felt, touched or in any other manner perceived by the senses and shall include fuel, but shall not include rights and credits, insurance policies, bills of exchange, stocks and bonds, and similar evidences of indebtedness or ownership. Tangible personal property shall also include electricity unless RSA 83-E, the electricity consumption tax, is in effect.

XII. "Use" means the exercise of any right or power over tangible personal property by the purchaser thereof and includes, but is not limited to, the receiving, storage or any keeping or retention for any length of time, withdrawal from storage, any installation, any affixation to real or personal property, or any consumption of that property.

XIII. "Vendor" means and includes:

(a) A person making sales of tangible personal property or services, the receipts from which are taxed by this chapter;

(b) A person maintaining a place of business in the state and making sales, whether at that place or business or elsewhere, to persons within the state of tangible personal property or services, the use of which is taxed by this chapter;

(c) A person who solicits business either by employees, independent contractors, agents or other representatives or by distribution of catalogs or other advertising matter and by reason thereof makes sales to persons within the state of tangible personal property or services, the use of which is taxed by this chapter;

(d) Any other person making sales to persons within the state of tangible personal property or services, the use of which is taxed by this chapter, who may be authorized by the commissioner to collect the tax imposed by this chapter; and

(e) The state of New Hampshire or any of its agencies, instrumentalities, public authorities, public corporations, including a public corporation created pursuant to agreement or compact with another state, or political subdivision when that entity sells services or property of a kind ordinarily sold by private persons.

77-F:2 Imposition of Sales Tax. Except as otherwise provided in this chapter, there shall be paid a tax of 4 percent upon the receipts from the sale of tangible personal property purchased at retail in this state.

77-F:3 Tax Bracket Schedule.

I. For the purpose of adding and collecting the tax imposed by RSA 77-F:2, or an amount equal as nearly as possible or practicable to the average equivalent thereof, to be reimbursed to the vendor by the purchaser, the following formula shall be in force and effect as follows:

Amount of Sale Amount of Tax

0.51 - 1.00 .04

II. In addition to a tax of .04 on each full dollar, a tax shall be collected on each part of a dollar in excess of a full dollar in accordance with the following formula:

III. When several taxable articles are purchased together at the same time, the tax shall be computed on the total amount of the purchase of several taxable items.

77-F:4 Imposition of Compensating Use Tax. Unless property has already been or will be subject to the purchase tax under RSA 77-F:2, there is imposed on every person a use tax at the rate of 4 percent for the use within this state, except as otherwise exempted under this chapter:

I. Of any tangible personal property purchased at retail; and

II. Of any tangible personal property manufactured, processed or assembled by the user, if items of the same kind of tangible personal property are offered for sale by the user in the regular course of business, but the mere storage, keeping, retention or withdrawal from storage of tangible personal property or the use for demonstrational or instructional purposes of tangible personal property by the person who manufactured, processed or assembled such property shall not be deemed a taxable use by such person.

77-F:5 Administration; Rulemaking. In addition to other powers granted to the commissioner in this chapter and in RSA 21-J, the commissioner shall:

I. Collect the taxes, interest, additions to tax, and penalties imposed under this chapter and RSA 21-J.

II. Adopt rules, pursuant to RSA 541-A, relative to:

(a) The administration of the sales and use tax.

(b) The recovery of any tax, interest on tax, additions to tax, or the penalties imposed by RSA 77-F or RSA 21-J.

(c) The form of any returns, certificates and documents and the data which they must contain for the correct determination on computation of receipts and the tax assessed thereon.

III. Require any person required to collect taxes to keep detailed records of all receipts, received, charged or accrued, including those claimed to be nontaxable, and also of the nature, type, value, and amount of all purchases, sales, and other facts relevant in determining the amount of tax due and to furnish that information upon request to the commissioner.

IV. Publish and maintain, as the commissioner deems necessary, lists of specific items of tangible personal property which are found to be exempt from tax under RSA 77-F:2.

77-F:6 Liability for Tax. Every person required to collect any tax imposed by this chapter shall be personally liable for the tax imposed, collected or required to be collected, under this chapter. That person shall have the same rights in collecting the tax from the purchaser or regarding nonpayment of the tax by the purchaser as if the tax were a part of the purchase price of the property, and payable at the same time; provided, however, that the commissioner shall be joined as a party in any action or proceeding brought to collect the tax.

77-F:7 Principal and Agent; Joint Liability. When, in the opinion of the commissioner, it is necessary for the efficient administration of this chapter to treat any salesperson, representative, peddler, or canvasser as the agent of the vendor, distributor, supervisor, or employer under whom the person operates or from whom the person obtains tangible personal property sold by the person or for whom the person solicits business, the commissioner may, in the commissioner’s discretion, treat such agent as the vendor jointly responsible with the principal, distributor, supervisor, or employer for the collection and payment of the tax.

77-F:8 Payment and Return by Purchaser.

I. Where any purchaser has failed to pay a tax imposed by this chapter to the person required to collect the same, then in addition to all other rights, obligations and remedies provided, the tax shall be payable by the purchaser directly to the commissioner and it shall be the duty of the purchaser to file a return with the commissioner and to pay the tax to the commissioner within 20 days of the date the tax was required to be paid.

II. The commissioner may, whenever the commissioner deems it necessary for the proper enforcement of this chapter, provide by rule that purchasers shall file returns and pay directly to the commissioner any tax herein imposed, at such times as returns are required to be filed and paid by persons required to collect the tax.

77-F:9 Transfers not in Course of Business; Notice; Lien.

I. Whenever a person required to collect the tax shall make a sale, transfer, or assignment in bulk of any part or the whole of such person’s business assets, otherwise than in the ordinary course of business, the purchaser, transferee or assignee shall, at least 10 days before taking possession of the subject of the sale, transfer or assignment, or payment therefor, notify the commissioner by registered mail of the proposed sale and of the price, terms and conditions thereof whether or not the seller, transferer or assignor, has represented, to, or informed the purchaser, transferee or assignee that any tax is owed pursuant to this chapter, and whether or not the purchaser, transferee, or assignee has knowledge that the taxes are owing, and whether any taxes are in fact owing.

II. Whenever the purchaser, transferee or assignee shall fail to give notice to the commissioner as required by paragraph I, or whenever the commissioner shall inform the purchaser, transferee or assignee that a possible claim for the tax or taxes exists, any sums of money, property or choses in action, or other consideration, which the purchaser, transferee or assignee is required to transfer over to the seller, transferer or assignor shall be subject to first priority right and lien for any taxes theretofore or thereafter determined to be due from the seller, transferer or assignor to the state, and the purchaser, transferee or assignee is forbidden to transfer to the seller, transferer or assignor any sums of money, property or choses in action to the extent of the amount of the state's claim. For failure to comply with this section the purchaser, transferee or assignee shall be personally liable for the payment to the state of any taxes theretofore or thereafter determined to be due to the state from the seller, transferer or assignor, and the liability may be assessed and enforced in the same manner as the liability for tax under this chapter.

77-F:10 Registration.

I. On or before September 1, 1999, or in the case of persons commencing business or opening new places of business after that date, within 3 days after the commencement or opening, every person required to collect any tax imposed by this chapter and every person purchasing tangible personal property for resale shall file with the commissioner a certificate of registration in a form prescribed by the commissioner. The commissioner shall issue, without charge, to each registrant a certificate of authority empowering the registrant to collect the tax. Each certificate shall state the place of business to which it is applicable. The certificate of authority shall be prominently displayed in the place of business of the registrant. A registrant who has no regular place of doing business shall attach the certificate to the registrant’s cart, stand, truck or other merchandising device, or carry it on the registrant’s person. The certificate shall be nonassignable and nontransferable and shall be surrendered to the commissioner immediately upon the registrant's 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 or services, the use of which is subject to tax under this chapter, may, if such person so elects, file a certificate of registration 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 certificate of authority to collect the compensating use tax imposed by this chapter.

77-F:11 Restrictions on Advertising.

I. No person required to collect any tax imposed by this chapter shall advertise or hold out to any person or to the public in general, in any manner, directly or indirectly, that the tax is not considered as an element in the price payable by the customer, or that such person will pay the tax, that the tax will not be separately charged and stated to the customer, or that the tax will be refunded to the customer.

II. Upon written application duly made and proof duly presented to the satisfaction of the commissioner showing that in the vendor’s particular business it would be impractical for such vendor to separately charge the tax to the customer, the commissioner may waive the application of the requirement herein as to such vendor.

III. Whenever reference is made in placards or advertisements or in any other publications to any tax imposed by this chapter, the reference shall be in substantially the following form: "sales and use tax"; except that in any bill, receipt, statement or other evidence or memorandum of sale issued or employed by a person required to collect tax, if the tax is required to be stated separately thereon as provided in RSA 77-F:23, the word "tax" shall suffice.

77-F:12 Recordkeeping. Every person required to collect any tax imposed by this chapter shall keep records of every sale and of all amounts paid or charged or due thereon and of the tax payable thereon, in such form as the commissioner shall require. These records shall include a true copy of each sales slip, invoice, receipt, statement or memorandum upon which RSA 77-F:23 requires that the tax be stated separately. The records shall be available for inspection and examination at any time upon demand by the commissioner or the commissioner’s duly authorized agent or employee and shall be preserved for a period of 3 years, except that the commissioner may consent to their destruction within that period or may require that they be kept longer.

Exemptions

77-F:13 Sales not Covered. Receipts from the following shall be exempt from the tax on retail purchases imposed under RSA 77-F:2 and the use tax imposed under RSA 77-F:4:

I. Sales not within the taxing power of this state under the Constitution of the United States.

II. All health care items, including, but not limited to, purchases of medicines and drugs sold pursuant to a doctor's prescription for human use, oxygen for medical purposes, blood, blood plasma, artificial components of the human body, prosthetic devices, medicinal appliances, corrective appliances, corrective optical devices, dentures, hearing aids, seeing eye dogs, crutches, wheelchairs, hospital type beds, medical and dental devices and instruments, medical and dental equipment (including component parts thereof) and supplies used in treatment intended to alleviate human suffering or to correct, in whole or in part, human physical disabilities.

III. Casual sales.

IV. Purchases of all alcoholic beverages.

V. Purchases of motor fuels; taxed or exempted under RSA 260, provided, however, that jet fuel shall be taxed under this chapter.

VI. Purchases of tobacco products taxed or exempted under RSA 78.

VII. Rents for rooms, taxed under RSA 78-A and the transactions exempted therefrom.

VIII. Purchases of meals, taxed or exempted under RSA 78-A.

IX. Purchases of food, food stamps, purchases made with food stamps, food products and beverages sold for human consumption off the premises where sold.

X. Purchases of equipment, supplies, and building materials made directly to volunteer fire departments, volunteer ambulance companies, or volunteer rescue squads for official use by the volunteer organizations.

XI. Funeral charges, including, but not limited to, sales of tangible personal property such as caskets, vaults, boxes, clothing, crematory urns, and other such funeral furnishings as are necessary incidents of the funeral, and other items sold as an accommodation rather than as an integral part of the funeral service or preparation therefor.

XII. Tangible personal property purchased for use or consumption directly and exclusively, except for isolated or occasional uses, in commercial, industrial or agricultural research or development in the experimental or laboratory sense. It shall be rebuttably presumed that uses are not isolated or occasional if they total more than 4 percent of the time the machinery or equipment is operated. Such research or development shall not be deemed to include the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising promotions, or research in connection with literary, historical or similar projects.

XIII. Purchases of electricity, oil, gas and other fuels used in a residence for all domestic uses including heating, and sales of such fuels when used by businesses and farms for farming and business purposes.

XIV. All vessels over 50 tons.

XV. Home and household items, including but not limited to, firewood and kindling, propane gas for grills and stoves, fertilizer, fungicides, insecticides, cloth diapers, which are reusable and recyclable, plants and seeds which produce food for human consumption, and car seats.

XVI. All items of clothing and shoes and fabric goods under $250 and fire, police, waitress and nurse work uniforms and footwear.

XVII. Purchases of bibles, prayer books, missals, and other religious texts.

77-F:14 Transactions not Covered. This chapter shall not cover the following transactions:

I. Private yard sales which consist of the casual sale of tangible personal property.

II. The transfer of tangible personal property to a corporation solely in consideration for the issuance of its stock, pursuant to a merger or consolidation effected under the laws of New Hampshire or any other jurisdiction.

III. The distribution of property by a corporation to its stockholders as a liquidating dividend.

IV. The distribution of property by a partnership to its partners in whole or partial liquidation.

V. The distribution of property by a limited liability company to its members in whole or partial liquidation.

VI. The transfer of property to a corporation upon its organization in consideration for the issuance of its stock.

VII. The contribution of property to a partnership in consideration for a partnership interest.

VIII. The contribution of property to a limited liability company in consideration for a membership interest.

IX. The sale of tangible personal property where the purpose of the vendee is to hold the thing transferred as security for the performance of an obligation of the vendor.

X. The sawing of lumber owned by the person requesting the sawing or such person’s agent.

77-F:15 Organizations not Covered. Any purchase or service charged by or to any of the following or any use by any of the following are not subject to the sales and use taxes imposed under this chapter:

I. The state of New Hampshire, or any of its agencies, instrumentalities, public authorities, public corporations, including a public corporation created pursuant to agreement or compact with another state, or political subdivisions when it is the purchaser, user or consumer, or when it is a vendor of services or property of a kind not ordinarily sold by private persons.

II. The United States of America, any of its agencies and instrumentalities, insofar as it is immune from taxation when it is the purchaser, user or consumer, or when it sells services or property of a kind not ordinarily sold by private persons.

III. Organizations which qualify for exempt status under the provisions of Section 501(c)(3) of the United States Internal Revenue Code, as the same may be amended or redesignated, excepting sales, storage or use in activities which are mainly commercial enterprises; provided, however:

(a) That the organization first shall have obtained a certificate from the commissioner stating that it is entitled to the exemption;

(b) That the sale or service or use is for the exempt purpose of such organization; and

(c) That the vendor keeps a record of the purchase price of each such separate purchase, the name of the purchaser, the date of each separate purchase, and the number of the certificate.

IV. Purchases of building materials and supplies to be used in the construction, reconstruction, alteration, remodeling or repair of:

(a) Any building structure or other public work owned by or held in trust for the benefit of any governmental body or agency mentioned in paragraphs I and II of this section and used exclusively for public purposes;

(b) Any building or structure owned by or held in trust for the benefit of any organization described in paragraph III and used exclusively for the purposes upon which its exempt status is based; and

(c) Any building or housing project subject to the provisions of RSA 204-C, provided, however, that the governmental body or agency, the organization, or person has first obtained a certificate from the commissioner stating that it is entitled to the exemption and the vendor keeps a record of the purchase price of each separate purchase, the name of the purchaser, the date of each separate purchase, and the number of the certificate. In this paragraph, the words "building materials and supplies" shall include all materials and supplies consumed, employed or expended in the construction, reconstruction, alteration, remodeling, or repair of any building, structure, or other public work as well as the materials and supplies physically incorporated therein.

V. Organizations which qualify for exempt status under the provisions of Section 501(c)(4)-(13) and (19), and political organizations as defined in Section 527(e) of the United States Internal Revenue Code, as the same may be amended or redesignated, shall not be exempt from taxation of the purchase or use of tangible personal property as defined in RSA 77-F:1.

77-F:16 Property Exempt From Use Tax.

I. The following uses of property are not subject to the compensating use tax imposed under this chapter:

(a) Property used by the purchaser in this state prior to July 1, 1999.

(b) Property purchased by the user while a nonresident of this state, except in the case of tangible personal property which the user, in the performance of a contract, incorporates into real property located in the state and except in the case of vessels under 50 tons and used in the waters of this state for at least 30 days.

(c) Property or services to the extent that a retail sales or use tax was legally due and paid thereon, without any right to a refund or credit thereof, to any other state or jurisdiction within any other state but only when it is shown that the other state or jurisdiction allows a corresponding exemption with respect to the purchase or use of tangible personal property or services upon which such a purchase tax or compensating use tax was paid to this state. To the extent that the tax imposed by this chapter is at a higher rate than the rate of tax in the first taxing jurisdiction, this exemption shall be inapplicable and the tax imposed by RSA 77-F:4 shall apply to the extent of the difference in the rates.

(d) Property withdrawn from inventory for the purpose of donating such property to an entity described in RSA 77-F:15, I, II, or III.

II. A person while engaged in any manner in carrying on in this state any employment, trade, business or profession, not entirely in interstate or foreign commerce, shall not be deemed a nonresident with respect to the use in this state of property in that employment, trade, business or profession.

77-F:17 Certificate or Affidavit of Exemption. 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 registration certificate, to the effect that the property was purchased for resale or the purchaser prior to taking delivery, furnishes to the vendor any affidavit, statement or additional evidence, documentary or otherwise, which the commissioner may require demonstrating that the purchaser is an exempt organization described in RSA 77-F:15, the purchase shall be deemed a taxable purchase at retail. Provided, however, the commissioner may authorize a purchaser, who acquires tangible personal property or services under circumstances which make it impossible at the time of acquisition to determine the manner in which the tangible personal property or services will be used, to pay the tax directly to the commissioner and waive the collection of the tax by the vendor. Provided, further, the commissioner shall authorize any contractor, subcontractor or repairperson who acquires tangible personal property consisting of materials and supplies for use in erecting structures for others, or building on, or otherwise improving, altering, or repairing real property of others, to pay the tax directly to the commissioner 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 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 commissioner by the permit holder.

77-F:18 Computing Receipts and Consideration.

I. The retail purchase tax imposed under RSA 77-F:2 and the compensating use tax imposed under RSA 77-F:4 when computed in respect to tangible personal property wherever manufactured, processed or assembled and used by such manufacturer, processor or assembler in the regular course of business within the state, shall be based on the price at which items of the same kind of tangible personal property are offered for sale by such manufacturer, processor or assembler.

II. Tangible personal property which has been purchased by a resident of the state outside of this state for use outside of this state and subsequently becomes subject to the compensating use tax imposed under this chapter, shall be taxed on the basis of the purchase price of the property, provided however:

(a) That where a taxpayer affirmatively shows that the property was used outside the state by the taxpayer for more than 6 months prior to its use within this state, the property shall be taxed on the basis of current market value of the property at the time of its first use within this state but the value of the property, for compensating use tax purposes, may not exceed its cost.

(b) That the compensating use tax on the tangible personal property brought into this state, other than for complete consumption or for incorporation into real property located in this state, and used in the performance of a contract or subcontract within this state by a purchaser or user for a period of less than 6 months may be based, at the option of the taxpayer, on the fair rental value of the property for the period of use within this state.

III. For purposes of RSA 77-F:4, I the tax shall be at the rate of 4 percent of the consideration given or contracted to be given for the property or for the use of the property adjusted in the same manner as is the sales price under the purchase tax to arrive at "receipts."

IV. For purposes of RSA 77-F:4, II the tax shall be at the rate of 4 percent of the price at which items of the same kind of tangible personal property are offered for sale by the user.

77-F:19 Returns.

I. Every person required to collect or pay tax under this chapter shall on or before the twenty-eighth day of February and the thirtieth day of each other month make and file a return for the preceding month with the commissioner. The return of a vendor of tangible personal property shall show such vendor’s receipts from sales and also the aggregate value of tangible personal property sold, the use of which is subject to tax under this chapter.

II. The commissioner may extend, for cause shown, the time of filing any return for a period not exceeding 3 months on such terms and conditions as the commissioner may require.

III. The commissioner may permit or require returns to be made covering other periods upon such dates as the commissioner specifies. In addition, the commissioner may require payment of tax liability at such intervals and based upon such classifications as the commissioner may designate. In prescribing the other periods to be covered by the return or intervals or classifications for payment of tax liability, the commissioner may take into account the dollar volume of tax involved as well as the need for insuring the prompt and orderly collection of the taxes imposed.

IV. The commissioner may require amended returns to be filed within 20 days after notice and to contain the information specified in the notice.

77-F:20 Payment of Tax.

I. Every person required to file a return under this chapter shall, at the time of filing the return, pay to the commissioner the taxes imposed by this chapter as well as all other moneys collected by such person under this chapter; provided, however, that every person who collects the tax from purchasers of taxable items according to the tax bracket schedule of RSA 77-F:3 shall be allowed to retain, as partial compensation for services rendered to the state of New Hampshire in collecting the tax, any amount lawfully collected by such person in excess of the tax imposed by this chapter.

II. All the taxes for the period for which a return is required to be filed or for such lesser interval as shall have been designated by the commissioner, shall be due and payable to the commissioner on the date established for the filing of the return for that period, or on the date for such lesser interval as the commissioner has designated, without regard to whether a return is filed or whether the return which is filed correctly shows the amount of receipts, or the value of property or services sold or purchased or the taxes due thereon.

77-F:21 Surety Bonds.

I. When the commissioner deems it necessary to protect the revenues to be obtained 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 returns, failure to make payments with 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 lodged 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 said 60-day period. The duration of surety bonds shall be for one year only, unless the requirement is cancelled 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 license, as provided in RSA 77-F:27.

77-F:22 Determination of Tax.

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, type of accommodations and service, 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 cancelled, the property returned or the receipt or charge has been ascertained to be uncollectable or, in the case the tax has been paid upon that receipt or charge, for refund or credit of the tax so paid.

77-F:23 Collection of Tax From Purchaser. Every person required to collect the tax shall collect the tax from the purchaser when collecting the price to which it applies. If the purchaser is given any sales slip, invoice, receipt or other statement or memorandum of the price paid or payable, the tax shall be stated, charged and shown separately on the first of the documents given to him. The tax shall be paid to the person required to collect it as trustee for and on account of the state.

77-F:24 Deferred Payment Purchases. The commissioner may provide that the tax upon receipts from purchases on the 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.

77-F:25 Refunds.

I. Claims for refund or credit may be made by a customer who has actually paid the tax or by a person required to collect the tax, who has collected and paid over the tax to the commissioner, provided 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 person until such person establishes to the satisfaction of the commissioner, under such rules as the commissioner may adopt, that such person has repaid to the customer the amount for which the application for refund is made. The commissioner may, in lieu of any refund, allow credit on payments due from the claimant.

II. If the commissioner determines, on a petition 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.

77-F:26 Proceedings to Recover Tax.

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 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.

77-F:27 Suspension or Revocation of Certificates; Appeal.

I. The commissioner may, after notice and hearing, suspend or revoke the certificate of registration of any person required to collect the tax or may refuse to issue or renew any registration for failure to comply with this chapter or with any pertinent 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 77-F:22, then the suspension or revocation shall be inoperative during the appeal.

77-F:28 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 of taxes 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.

77-F:29 Disposition of Tax. All revenues collected under this chapter shall be deposited in the education trust fund established in RSA 198:39.

2 State Contribution to Retirement Benefits. Amend RSA 100-A:16, II (c) to read as follows:

(c) The contributions of each employer for benefits under the retirement system on account of group I members shall consist of a percentage of the earnable compensation of its members to be known as the "normal contribution", and an additional amount to be known as the "accrued liability contribution"; provided that, in the case of teachers, any employer, other than the state, shall pay [65] 100 percent of such total contributions, [and 35 percent thereof shall be paid by the state;] and provided further that in case of teacher members employed by the state the state shall pay both normal and accrued liability contributions. The rate percent of such normal contribution in each instance shall be fixed on the basis of the liabilities of the system with respect to the particular members of the various member classifications as shown by actuarial valuation, except as provided in subparagraphs (h) and (i). With respect to the balance of the unfunded accrued liability attributable to the state for group I members, as of June 30, 1994, such balance shall be funded prospectively as an additional normal contribution percentage as determined by the actuary. Such additional normal contribution percentage shall be assessed against the state payroll for the respective group I members until such time as the unfunded accrued liability is fully funded.

3 New Subdivisions; State Aid for Educational Adequacy; Education Trust Fund; Commission. Amend RSA 198 by inserting after section 37 the following new subdivisions:

State Aid for Educational Adequacy; Education Trust Fund

198:38 Definitions. In this subdivision:

I. "Municipality" means a city, town, or unincorporated place.

II. "Elementary school" means a school with any of the grades kindergarten through 8.

III. "High school" means a school with any of the grades 9 through 12.

IV. "Base expenditure per pupil" means the amounts calculated in accordance with RSA 198:39, II.

V. "Average base cost per pupil of an adequate education" means the amount as calculated in accordance with RSA 198:39, III.

VI. "Weighted pupils" means resident pupils who have been assigned to one or more of the following classifications:

(a) An elementary pupil, which shall include kindergarten pupils, 1.0.

(b) A high school pupil, 1.2.

(c) An elementary pupil who is eligible to receive a free or reduced-priced meal shall receive an additional weight of .14.

VII. "Educationally disabled child" means an educationally disabled child as defined in RSA 186-C:2, I.

VIII. "Consumer price index" means the consumer price index for urban consumers for Boston-Brockton-Nashua published by the United States Department of Labor.

IX. "Special education costs" means the cost of special education and educationally related services provided to educationally disabled children reported by school districts on the MS-25 form less any federal IDEA funds, state special education catastrophic aid, and special education medicaid reimbursement received by the districts.

X. "Average daily membership in attendance" means average daily membership in attendance as defined in RSA 189:1-d, III.

XI. "Average daily membership in residence" and "resident pupils" mean the average daily membership in residence as defined in RSA 189:1-d, IV.

XII. "Transportation costs" means the costs of transporting pupils to and from school and other school activities reported by school districts on the MS-25 form.

198:39 Education Trust Fund Created and Invested.

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 pursuant to RSA 198:42 and make catastrophic aid payments under RSA 186-C:18, III(d). The state treasurer shall deposit into this fund immediately upon receipt:

(a) Sales tax revenues collected by the department of revenue administration under RSA 77-F.

(b) All moneys due the fund in accordance with RSA 284:21-j.

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

(d) Any other moneys appropriated from the general fund.

II. The education trust fund shall be nonlapsing. The state treasurer shall invest that part of the fund which is not needed for immediate distribution in short-term interest-bearing investments. The income from these investments shall be returned to the fund.

198:40 Methodology for Calculating the Cost of an Adequate Education.

I. For the biennium ending June 30, 2001, the department of education shall use financial and student membership data reported to it by school districts for the 1996-97 school year and statewide education improvement and assessment scores for 1997 in making the calculations required by this subdivision. For each school district the number of elementary pupils eligible to receive a free or reduced-priced meal shall be based on the district percentage of such eligible pupils reported to the department of education on October 1, 1997.

(a) For fiscal year 2000, the department of education shall adjust the average base cost per pupil of an adequate education, special education costs, and transportation costs by the change in the consumer price index between January 1997 and January 1998 and the average daily membership in residence by 2.2 percent.

(b) For fiscal year 2001, the department of education shall adjust the average base cost per pupil of an adequate education, special education costs, and transportation costs for fiscal year 2000 by the change in the consumer price index between January 1998 and January 1999 and the average daily membership in residence by 2.2 percent.

(c) If the general court makes no change in the method of calculating the cost of an adequate education for subsequent fiscal years, the average base cost per pupil for the previous fiscal year shall be adjusted by the change in the consumer price index between the January immediately preceeding the beginning of the fiscal year of distribution and the second preceding January. In making the calculations required by this subdivision in subsequent fiscal years, the department of education shall use the average daily membership in residence, special education costs, and transportation costs for the second preceding school year and the district percentage of pupils eligible to receive a free or reduced-priced meal reported to the department of education on October 1 of the second preceding calendar year.

II. 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 and continuing education, summer school, 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 obtain the base expenditure per pupil.

III. The cost of an adequate education shall be calculated as follows:

(a) The department of education shall identify those school districts where an average of 40 to 100 percent of the elementary pupils enrolled in the grades tested on the day testing began achieved a scaled score equivalent to performance at the basic level or above in all areas tested in the statewide education improvement and assessment program administered pursuant to RSA 193-C.

(b) From the school districts identified in subparagraph III(a) 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 paragraph II 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 III(a) of this section.

(c) The department of education shall calculate the average base cost per pupil of an adequate education by multiplying the base expenditure per pupil of each school district identified in subparagraph III(b) of this section by the average daily membership in attendance at each of the selected school districts, and then adding 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 of all of the selected school districts.

IV. The weighted average daily membership in residence for each district shall be calculated by combining the district’s elementary average daily membership in residence with its weighted high school average daily membership in residence and the district’s additional average daily membership in residence resulting from elementary pupils eligible to receive a free or reduced-priced meal. The weighted average daily membership in residence of pupils statewide shall be calculated by combining the weighted average daily membership in residence of each school district in the state.

V. For each fiscal year, the statewide cost of an adequate public education for all pupils shall be calculated by multiplying the average base cost per pupil of an adequate education by the weighted average daily membership in residence of pupils statewide and then adding 99.5 percent of total special education costs statewide plus 70 percent of total district transportation costs statewide.

198:41 Adequate Education Grant; Payments to School Districts.

I. Except for school districts that do not maintain schools, the state shall pay annually to each district an adequate education grant that is equal to the district’s weighted average daily membership in residence multiplied by the average base cost per pupil of an adequate education plus 99.5 percent of the district’s special education costs plus 70 percent of the district’s transportation costs.

II. For school districts that do not maintain schools, the state shall pay annually to each school district the lesser of the following 2 calculations:

(a) The amount calculated in accordance with paragraph I of this section; or

(b) The total amount paid for items of current education expense as determined by the department of education.

198:42 Distribution Schedule of Adequate Education Grant.

I. The adequate education grant determined in RSA 198:41 shall be distributed to each school district from the education trust fund in 4 payments of 30 percent on August 1, 30 percent on October 1, 20 percent on January 1, and 20 percent on April 1 of each school year.

II. For the fiscal year beginning July 1, 1999, $495,854,000 is hereby appropriated from the education trust fund created under RSA 198:39 to the department of revenue administration to fund the grants under RSA 198:41.

III. The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated the funds necessary to make the payments required under RSA 198:41. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

IV. The department of revenue administration shall certify the amount of each grant to the state treasurer and direct the payment thereof to the school district.

198:43 Additional Education Expenditures. Nothing in this subdivision shall prevent the assessment and collection of property taxes locally, under general provisions of law, to meet budgeted expenses of education not funded through distributions from the education trust fund under RSA 198:39.

198:44 Use of Funds for Education Purposes.

I. Annually, each school district shall appropriate an amount that equals or exceed the amount necessary to fund an adequate education for the pupils in that district. Notwithstanding any other provision of law, in the event a school district fails to appropriate at least the required amount, that amount shall be assessed and collected by the municipality, appropriated to the school district, and expended for educational purposes in accordance with paragraph IV without a vote of the school district.

II. On or before June 30 of each year, the individual with fiscal responsibility in each municipality shall submit a statement to the commissioner of revenue administration that the funds collected by the municipality pursuant to RSA 76:8 and the funds received from the state pursuant to RSA 198:42 have been expended for educational purposes in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

III. If a municipality uses any part of the funds collected pursuant to RSA 76:8 and received pursuant to RSA 198:42 for non-educational purposes, the municipality shall pay to the school district an amount equal to the portion of funds used for such non-educational purposes.

IV. The funds collected by municipalities pursuant to RSA 76:8 and the funds received from the state pursuant to RSA 198:42 shall be appropriated by a school district only for current education expenses or transfers to reserves or trusts funds and shall not be used for any other purpose.

V. On or before June 30 of each year, the individual with fiscal responsibility in each school district shall submit a statement to the commissioner of revenue administration that an amount of money that equals the amount necessary to fund an adequate education for the pupils in that district was used in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

198:45 Duties of the Department of Education and the Board of Education.

I. The department of education shall, on or before September 30 of each year, collect from the school districts final data concerning all aspects of student attendance for the school year ending June 30 of that year necessary to establish the average daily membership, average daily membership in residence, and weighted average daily membership in residence, including the municipality of residence for each pupil for that year. The department of education shall submit a report by December 31 to the speaker of the house of representatives and the senate president to be used for purposes of determination by the legislature of the appropriation to the education trust fund. A copy of such report shall, at the same time, be given to the department of revenue administration.

II. The board of education shall adopt rules pursuant to RSA 541-A necessary to the proper administration of this subdivision.

198:46 Adequate Education and Education Financing Reform Commission Established; Membership.

I. There is hereby established an adequate education and education financing reform commission which shall be composed of 18 members as follows:

(a) The chairpersons of the house education and house finance committees, appointed by the speaker of the house.

(b) The chairpersons of the senate education and senate finance committees, appointed by the president of the senate.

(c) Four members appointed by the governor, one of whom shall be an elementary or secondary special education teacher, one of whom shall be a primary teacher who does not teach special education, and one of whom shall be a member of the business community.

(d) The chancellor of the university system of New Hampshire or designee.

(e) The commissioner of the regional community-technical college system.

(f) One member from the state board of education, appointed by the chairperson of the state board of education.

(g) One member from a special education advocacy organization, appointed by such organization; and

(h) Six members who shall be agreed to and jointly appointed by the governor, the president of the senate, and the speaker of the house consisting of the following:

(1) One local school board member, recommended by the New Hampshire School Boards Association.

(2) One school administrator, recommended by the New Hampshire School Administrators Association.

(3) One special education administrator at the elementary or secondary school level, recommended by the New Hampshire Association of Special Education Administrators.

(4) Two parents of school-age children, one of whom shall be the parent of a child with an educational disability.

(5) One member from the business community, who shall be associated with the School to Work Initiative.

(6) One school business official, recommended by the New Hampshire Association of School Business Officials.

II. The commission shall elect a chairperson from among its membership and shall form subcommittees necessary to perform its duties. The chairperson shall determine the frequency of meetings at its first meeting.

III. The members of the commission shall serve without compensation, provided that legislative members of the commission shall receive mileage at the legislative rate while attending to the duties of the commission, and provided that the parent members of the commission shall be reimbursed for travel expenses associated with their duties on the commission.

IV. In order to ensure that all students are provided an adequate education, the duties of the commission shall be as follows:

(a) Determine and recommend the costs of an adequate education for all students in New Hampshire by determining and calculating adjustments for individual school districts based on yearly inflation, cost of living variances, diseconomies of scale, transportation variability, demographics, including for school districts with a disproportionate number of students who are economically disadvantaged or have educational disabilities, and such other factors as deemed relevant.

(b) Determine and recommend the amount of state aid, including building aid, to be distributed to cities and towns based upon the cost of an adequate education as set forth in subparagraph (a) and the method for distributing the state aid.

(c) Recommend changes in policy and procedure in the areas of educational improvement and accountability.

(d) Recommend interim and permanent processes to ensure adequate planning and implementation at the local and state level of special education and educationally related services, including planning for and development, on an interagency basis, of local school based options for pupils who have been placed in alternative or separate schools who could be placed in appropriate less restrictive options if available.

V. The commission shall be divided into the following policy subcommittees: adequacy and cost, educational improvement and accountability, and special education funding.

VI. The commission shall report its findings and recommendations no later than December 1, 2000. The report shall include, for each recommendation, proposed implementation schedules with timelines, specific steps, agencies and persons responsible, and resources needed. Where feasible, all plans, measures and initiatives shall be proposed as legislation or regulation so that they will have the force of law. All recommendations and plans shall be designed to be fully implemented no later than September 1, 2004.

VII. The department of justice department of revenue administration, department of education, and department of health and human services shall provide the commission with assistance.

4 New Subparagraphs; Special Education; Catastrophic Aid Payments Constitutionally Obligated. Amend RSA 186-C:18, III by inserting after subparagraph (c) the following new subparagraph:

(d) For each fiscal year beginning with the fiscal year ending June 30, 2000, 0.5 percent of the total special education costs statewide adjusted as provided in RSA 198:40, I shall be appropriated from the education trust fund established in RSA 198:39 to the department of education to assist those school districts which, under rules adopted by the state board of education, qualify for emergency assistance in meeting special education catastrophic costs pursuant to this section.

(e) The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated for the biennium ending June 30, 2001, the funds necessary to make the payments required in this section. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

5 Appropriation. The sum of $150,000 for the fiscal year ending June 30, 2000, is hereby appropriated for the purposes of the commission established in RSA 198:46 as inserted by section 26 of this act. This sum shall be nonlapsing until June 30, 2001. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

6 Minimum Property Tax Enforcement. Amend RSA 198:1 to read as follows:

198:1 Annual Tax. The selectmen in each town shall assess an annual tax of $3.50 on each $1,000 of the value of the ratable estate taxable therein for the support of the public schools. This amount shall be applied toward the state’s constitutional obligation to provide an adequate education.

7 Definitions; Meals and Rooms Tax; Operator. Amend RSA 78-A:3, IV to read as follows:

IV. "Operator" means any person operating a hotel, whether as owner or proprietor or lessee, sublessee, mortgagee, licensee, or otherwise; and any person charging for a taxable meal; and any person [engaged in both activities], corporation, partnership, proprietor, lessee, sublessee, mortgagee, licensee or otherwise engaged in the business of rental of motor vehicles.

8 New Paragraphs; Meals and Rooms Tax; Motor Vehicle Rental; Definitions. Amend RSA 78-A:3 by inserting after paragraph XIII the following new paragraphs:

XIV. "Motor vehicle" means a self-propelled vehicle designed to transport persons or property on a public highway, including a van or jeep. The term does not include the following:

(a) A device moved only by human power;

(b) A device used exclusively on stationary rails or tracks;

(c) Road-building machinery; or

(d) A mobile office.

XV. "Rental agreement" means an agreement by the owner of a motor vehicle to provide, for not longer than 180 days, the exclusive use of that motor vehicle to another for consideration.

XVI. "Gross rental receipts" means value received or promised as consideration to the owner of a motor vehicle for rental of the vehicle, but does not include:

(a) Separately stated charges for insurance;

(b) Charges for damages to the motor vehicle occurring during the rental agreement period;

(c) Separately stated charges for motor fuel sold by the owner of the motor vehicle.

XVII. "Owner of a motor vehicle" means a person named in the certificate of title as the owner of the vehicle or a person who has the exclusive use of a motor vehicle by reason of rental and holds the vehicle for re-rental.

XVIII. "Department" means the department of revenue administration.

XIX. "Renter" means any person who, for consideration paid to another, is provided a vehicle under a rental agreement.

9 Meals and Rooms Tax; Licenses Required; Penalty. Amend RSA 78-A:4 to read as follows:

78-A:4 Licenses Required; Penalty.

I. Each operator shall register with the department the name and address of each place of business within the state where [he] it operates a hotel [or], sells taxable meals, or provides rentals of motor vehicles. The operator shall pay $5 for each registration, upon receipt of which the department shall issue a license for each place in such form as it determines, attesting that the registration has been made. The license expires on June 30 in each odd-numbered year unless sooner revoked or suspended by the department. The license shall be conspicuously posted in a public area upon the premises to which it relates.

II. No person shall engage in serving taxable meals [or], renting rooms, or renting motor vehicles without first obtaining the license required by this section. The license is nonassignable and cannot be transferred. Any person who fails to register or obtain a license as provided in this section shall be subject to the penalty provisions of RSA 21-J:39.

10 New Paragraph; Tax Imposed on Motor Vehicle Rentals. Amend RSA 78-A:6 by inserting after paragraph II the following new paragraph:

II-a. A tax of 8 percent is imposed upon the gross rental receipts of each rental.

11 Meals and Rooms Tax; Collection of Tax. Amend RSA 78-A:7, I to read as follows:

I. The operator shall either state the amount of the tax to each occupant [or], purchaser of a meal or renter, or state that the tax is included in the price of the occupancy or meal or the gross rental receipts received. The operator shall demand and collect the tax from the occupant [or], purchaser, or renter. The occupant [or], purchaser, or renter shall pay the tax to the operator. If the tax is included in the price of the meal or occupancy or the gross rental receipts received, upon request the operator shall state to the purchaser [or], occupant, or renter the amount of the tax.

12 New Subparagraph; Education Trust Fund. Amend RSA 6:12, I by inserting after subparagraph (vvv) the following new subparagraph:

(www) Money received under RSA 77-F, and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.

13 Sweepstakes. RSA 284:21-j is repealed and reenacted to read as follows:

284:21-j Establishment. The state treasurer shall credit all moneys received from the sweepstakes commission, and interest received on such moneys, to a special fund from which the treasurer shall pay all expenses of the commission incident to the administration of this subdivision and RSA 287-E. Any balance left in such fund after such expenses are paid shall be deposited in the education trust fund established under RSA 198:39.

14 Transition. As of July 1, 1999, all funds, from any source derived, which would be distributed as foundation aid and kindergarten aid shall be deposited in the education trust fund under RSA 198:39, including the $62,000,000 appropriated under 1998, 389:16, II.

15 Removing Reference to Foundation Aid. Amend RSA 198:21, V to read as follows:

V. No pupil counted by any school district for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purposes of grants pursuant to RSA 198:22.

16 Removing Reference to Foundation Aid. Amend RSA 198:22, V to read as follows:

V. No pupil counted by any school for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purpose of grants pursuant to RSA 198:21.

17 Special Provision for Foundation Aid. Notwithstanding the repeal pursuant to section 18 of this act of RSA 198:27-37, relative to foundation aid and alternative foundation aid, the payment of foundation aid to be made in April 1999 pursuant to RSA 198:31 before such section is repealed, shall be calculated by the department of education and distributed to the recipients as if such repeal had not occurred.

18 Repeal. The following are repealed:

I. RSA 78:20, relative to the applicability of the tobacco tax.

II. RSA 78-B:10-a, relative to the real estate transfer questionnaire.

III. RSA 83-D, relative to the tax on nuclear station property.

IV. RSA 21-J:3, XXIII, relative to the commissioner of revenue administration's duty to determine local per capita income for purposes of foundation aid.

V. RSA 21-J:13, XI, relative to the form and content of the real estate transfer questionnaire.

VI. RSA 194-B:11, VIII, relative to foundation aid in relation to charter and open enrollment schools.

VII. RSA 198:1-3, relative to required annual district property taxes.

VIII. RSA 198:15-i-RSA 198:15-q, relative to kindergarten incentive program, kindergarten aid and alternative kindergarten programs.

IX. RSA 198:21, V, relative to the applicability of foundation aid and child benefit service grant recipients in the calculation of average daily membership.

X. RSA 198:22, V, relative to the applicability of foundation aid and dual enrollment grant recipients in the calculation of average daily membership.

XI. RSA 198:27-37, relative to foundation aid and alternative foundation aid.

19 Effective Date. This act shall take effect April 1, 1999.

1999-0563s

AMENDED ANALYSIS

I. This bill provides for funding of an adequate education by:

(a) Establishing a 4 percent sales tax.

(b) Adding a tax on rental of motor vehicles to the meals and rooms tax.

(c) Dedicating certain other state revenues to education.

(d) Requiring the minimum property tax of $3.50 per $1,000 to be applied toward the state’s constitutional obligation to provide an adequate education.

II. This bill:

(a) Establishes an educational adequacy and education financing reform commission.

(b) Establishes a system for calculating and disbursing state grants for educational adequacy for fiscal years 2000 and 2001 by multiplying the average base cost per pupil of an adequate education by the weighted number of the average daily membership in residence of pupils statewide and adding to that sum 70 percent of total district transportation costs and 99.5 percent of the district’s costs for special education less any federal or state moneys received to offset such special education expenses.

(c) Appropriates funds to the commission for the purposes of this bill.

(d) Provides that all expenses related to catastrophic special education are constitutionally mandated and shall be borne by the state.

1999-0563s

09/10

Floor Amendment to HB 112-FN-LOCAL

Amend the title of the bill by replacing it with the following:

Amend the bill by replacing all after the enacting clause with the following:

1 New Chapter; Sales and Use Tax. Amend RSA by inserting after chapter 77-E the following new chapter:

77-F:1 Definitions. In this chapter:

I. "Casual sale" means an isolated or occasional sale of an item of tangible personal property by a person who is not regularly engaged in the business of making sales of that general type of property at retail where the property was obtained by the person making the sale, through purchase or otherwise, for his or her own use. Aircraft, snowmobiles, motorboats, and vessels, are hereby specifically excluded from the definition of casual sale.

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

III. "In this state" or "in the state" means within the exterior limits of the state of New Hampshire and includes all territory within these limits owned by or ceded to the United States of America.

IV. "Person" means an individual, partnership, society, association, joint stock company, corporation, public corporation or public authority, estate, receiver, trustee, assignee, referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise and any combination of the foregoing.

V. "Persons required to collect tax" or "persons required to collect any tax imposed by this chapter" means and includes every vendor of taxable tangible personal property or services. These terms shall also include any officer or employee of a corporation or of a dissolved corporation who as that officer or employee is under a duty to act for the corporation in complying with any requirement of this chapter and any member of a partnership.

VI. "Property and services the use of which is subject to tax" means and includes all property sold to a person within the state, whether or not the sale is made within the state, the use of which property is subject to tax under RSA 77-F:4 or will become subject to tax when such property is received by or comes into the possession or control of such person within the state.

VII. "Purchaser" means a person who purchases property or who receives services taxable under this chapter.

VIII. "Receipt" means the amount of the sales price of any property taxable under this chapter valued in money, whether received as money or otherwise, without any deduction for expenses or early payment discount, but excluding any amount for which credit is allowed by the vendor to the purchaser, and excluding any allowance in cash or by credit made upon the return of merchandise pursuant to warranty or the price of property returned by customers when the full price thereof is refunded either in cash or by credit, and excluding the price received for labor or services used in installing or applying to repairing the property sold, if separately charged or stated, and the cost of transportation from the retailer's place of business or other point from which shipment is made directly to the purchaser provided those charges are separately stated and provided the transportation occurs by means of common carrier, contract carrier or the United States mails.

IX. "Retail sale" or "sold at retail" means the sale of tangible personal property to any person for any purpose, other than for resale, except resale as a casual sale. Sales of tangible personal property to all contractors, subcontractors or repairpersons of materials and supplies for use by them in erecting structures for others, or building on, or otherwise improving, altering, or repairing real property of others are deemed to be retail sales.

X. "Sales, selling or purchase" means any transfer of title or possession or both, exchange or barter, rental, lease or license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration, or any agreement therefor; except professional, insurance, personal service transactions, advertising services and computer and data processing services where tangible personal property is transferred as part of such service transaction so long as no separate charge is made for the tangible personal property and so long as the value of the tangible personal property transferred is essentially an inconsequential element in relation to the value of the service transaction. The provisions of this paragraph shall be retroactive if to the benefit of the taxpayer.

XI. "Tangible personal property" means personal property which may be seen, weighed, measured, felt, touched or in any other manner perceived by the senses and shall include fuel, but shall not include rights and credits, insurance policies, bills of exchange, stocks and bonds, and similar evidences of indebtedness or ownership. Tangible personal property shall also include electricity unless RSA 83-E, the electricity consumption tax, is in effect.

XII. "Use" means the exercise of any right or power over tangible personal property by the purchaser thereof and includes, but is not limited to, the receiving, storage or any keeping or retention for any length of time, withdrawal from storage, any installation, any affixation to real or personal property, or any consumption of that property.

XIII. "Vendor" means and includes:

(a) A person making sales of tangible personal property or services, the receipts from which are taxed by this chapter;

(b) A person maintaining a place of business in the state and making sales, whether at that place or business or elsewhere, to persons within the state of tangible personal property or services, the use of which is taxed by this chapter;

(c) A person who solicits business either by employees, independent contractors, agents or other representatives or by distribution of catalogs or other advertising matter and by reason thereof makes sales to persons within the state of tangible personal property or services, the use of which is taxed by this chapter;

(d) Any other person making sales to persons within the state of tangible personal property or services, the use of which is taxed by this chapter, who may be authorized by the commissioner to collect the tax imposed by this chapter; and

(e) The state of New Hampshire or any of its agencies, instrumentalities, public authorities, public corporations, including a public corporation created pursuant to agreement or compact with another state, or political subdivision when that entity sells services or property of a kind ordinarily sold by private persons.

77-F:2 Imposition of Sales Tax. Except as otherwise provided in this chapter, there shall be paid a tax of 4 percent upon the receipts from the sale of tangible personal property purchased at retail in this state.

77-F:3 Tax Bracket Schedule.

I. For the purpose of adding and collecting the tax imposed by RSA 77-F:2, or an amount equal as nearly as possible or practicable to the average equivalent thereof, to be reimbursed to the vendor by the purchaser, the following formula shall be in force and effect as follows:

Amount of Sale Amount of Tax

0.51 - 1.00 .04

II. In addition to a tax of .04 on each full dollar, a tax shall be collected on each part of a dollar in excess of a full dollar in accordance with the following formula:

III. When several taxable articles are purchased together at the same time, the tax shall be computed on the total amount of the purchase of several taxable items.

77-F:4 Imposition of Compensating Use Tax. Unless property has already been or will be subject to the purchase tax under RSA 77-F:2, there is imposed on every person a use tax at the rate of 4 percent for the use within this state, except as otherwise exempted under this chapter:

I. Of any tangible personal property purchased at retail; and

II. Of any tangible personal property manufactured, processed or assembled by the user, if items of the same kind of tangible personal property are offered for sale by the user in the regular course of business, but the mere storage, keeping, retention or withdrawal from storage of tangible personal property or the use for demonstrational or instructional purposes of tangible personal property by the person who manufactured, processed or assembled such property shall not be deemed a taxable use by such person.

77-F:5 Administration; Rulemaking. In addition to other powers granted to the commissioner in this chapter and in RSA 21-J, the commissioner shall:

I. Collect the taxes, interest, additions to tax, and penalties imposed under this chapter and RSA 21-J.

II. Adopt rules, pursuant to RSA 541-A, relative to:

(a) The administration of the sales and use tax.

(b) The recovery of any tax, interest on tax, additions to tax, or the penalties imposed by RSA 77-F or RSA 21-J.

(c) The form of any returns, certificates and documents and the data which they must contain for the correct determination on computation of receipts and the tax assessed thereon.

III. Require any person required to collect taxes to keep detailed records of all receipts, received, charged or accrued, including those claimed to be nontaxable, and also of the nature, type, value, and amount of all purchases, sales, and other facts relevant in determining the amount of tax due and to furnish that information upon request to the commissioner.

IV. Publish and maintain, as the commissioner deems necessary, lists of specific items of tangible personal property which are found to be exempt from tax under RSA 77-F:2.

77-F:6 Liability for Tax. Every person required to collect any tax imposed by this chapter shall be personally liable for the tax imposed, collected or required to be collected, under this chapter. That person shall have the same rights in collecting the tax from the purchaser or regarding nonpayment of the tax by the purchaser as if the tax were a part of the purchase price of the property, and payable at the same time; provided, however, that the commissioner shall be joined as a party in any action or proceeding brought to collect the tax.

77-F:7 Principal and Agent; Joint Liability. When, in the opinion of the commissioner, it is necessary for the efficient administration of this chapter to treat any salesperson, representative, peddler, or canvasser as the agent of the vendor, distributor, supervisor, or employer under whom the person operates or from whom the person obtains tangible personal property sold by the person or for whom the person solicits business, the commissioner may, in the commissioner’s discretion, treat such agent as the vendor jointly responsible with the principal, distributor, supervisor, or employer for the collection and payment of the tax.

77-F:8 Payment and Return by Purchaser.

I. Where any purchaser has failed to pay a tax imposed by this chapter to the person required to collect the same, then in addition to all other rights, obligations and remedies provided, the tax shall be payable by the purchaser directly to the commissioner and it shall be the duty of the purchaser to file a return with the commissioner and to pay the tax to the commissioner within 20 days of the date the tax was required to be paid.

II. The commissioner may, whenever the commissioner deems it necessary for the proper enforcement of this chapter, provide by rule that purchasers shall file returns and pay directly to the commissioner any tax herein imposed, at such times as returns are required to be filed and paid by persons required to collect the tax.

77-F:9 Transfers not in Course of Business; Notice; Lien.

I. Whenever a person required to collect the tax shall make a sale, transfer, or assignment in bulk of any part or the whole of such person’s business assets, otherwise than in the ordinary course of business, the purchaser, transferee or assignee shall, at least 10 days before taking possession of the subject of the sale, transfer or assignment, or payment therefor, notify the commissioner by registered mail of the proposed sale and of the price, terms and conditions thereof whether or not the seller, transferer or assignor, has represented, to, or informed the purchaser, transferee or assignee that any tax is owed pursuant to this chapter, and whether or not the purchaser, transferee, or assignee has knowledge that the taxes are owing, and whether any taxes are in fact owing.

II. Whenever the purchaser, transferee or assignee shall fail to give notice to the commissioner as required by paragraph I, or whenever the commissioner shall inform the purchaser, transferee or assignee that a possible claim for the tax or taxes exists, any sums of money, property or choses in action, or other consideration, which the purchaser, transferee or assignee is required to transfer over to the seller, transferer or assignor shall be subject to first priority right and lien for any taxes theretofore or thereafter determined to be due from the seller, transferer or assignor to the state, and the purchaser, transferee or assignee is forbidden to transfer to the seller, transferer or assignor any sums of money, property or choses in action to the extent of the amount of the state's claim. For failure to comply with this section the purchaser, transferee or assignee shall be personally liable for the payment to the state of any taxes theretofore or thereafter determined to be due to the state from the seller, transferer or assignor, and the liability may be assessed and enforced in the same manner as the liability for tax under this chapter.

77-F:10 Registration.

I. On or before September 1, 1999, or in the case of persons commencing business or opening new places of business after that date, within 3 days after the commencement or opening, every person required to collect any tax imposed by this chapter and every person purchasing tangible personal property for resale shall file with the commissioner a certificate of registration in a form prescribed by the commissioner. The commissioner shall issue, without charge, to each registrant a certificate of authority empowering the registrant to collect the tax. Each certificate shall state the place of business to which it is applicable. The certificate of authority shall be prominently displayed in the place of business of the registrant. A registrant who has no regular place of doing business shall attach the certificate to the registrant’s cart, stand, truck or other merchandising device, or carry it on the registrant’s person. The certificate shall be nonassignable and nontransferable and shall be surrendered to the commissioner immediately upon the registrant's 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 or services, the use of which is subject to tax under this chapter, may, if such person so elects, file a certificate of registration 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 certificate of authority to collect the compensating use tax imposed by this chapter.

77-F:11 Restrictions on Advertising.

I. No person required to collect any tax imposed by this chapter shall advertise or hold out to any person or to the public in general, in any manner, directly or indirectly, that the tax is not considered as an element in the price payable by the customer, or that such person will pay the tax, that the tax will not be separately charged and stated to the customer, or that the tax will be refunded to the customer.

II. Upon written application duly made and proof duly presented to the satisfaction of the commissioner showing that in the vendor’s particular business it would be impractical for such vendor to separately charge the tax to the customer, the commissioner may waive the application of the requirement herein as to such vendor.

III. Whenever reference is made in placards or advertisements or in any other publications to any tax imposed by this chapter, the reference shall be in substantially the following form: "sales and use tax"; except that in any bill, receipt, statement or other evidence or memorandum of sale issued or employed by a person required to collect tax, if the tax is required to be stated separately thereon as provided in RSA 77-F:23, the word "tax" shall suffice.

77-F:12 Recordkeeping. Every person required to collect any tax imposed by this chapter shall keep records of every sale and of all amounts paid or charged or due thereon and of the tax payable thereon, in such form as the commissioner shall require. These records shall include a true copy of each sales slip, invoice, receipt, statement or memorandum upon which RSA 77-F:23 requires that the tax be stated separately. The records shall be available for inspection and examination at any time upon demand by the commissioner or the commissioner’s duly authorized agent or employee and shall be preserved for a period of 3 years, except that the commissioner may consent to their destruction within that period or may require that they be kept longer.

Exemptions

77-F:13 Sales not Covered. Receipts from the following shall be exempt from the tax on retail purchases imposed under RSA 77-F:2 and the use tax imposed under RSA 77-F:4:

I. Sales not within the taxing power of this state under the Constitution of the United States.

II. All health care items, including, but not limited to, purchases of medicines and drugs sold pursuant to a doctor's prescription for human use, oxygen for medical purposes, blood, blood plasma, artificial components of the human body, prosthetic devices, medicinal appliances, corrective appliances, corrective optical devices, dentures, hearing aids, seeing eye dogs, crutches, wheelchairs, hospital type beds, medical and dental devices and instruments, medical and dental equipment (including component parts thereof) and supplies used in treatment intended to alleviate human suffering or to correct, in whole or in part, human physical disabilities.

III. Casual sales.

IV. Purchases of all alcoholic beverages.

V. Purchases of motor fuels; taxed or exempted under RSA 260, provided, however, that jet fuel shall be taxed under this chapter.

VI. Purchases of tobacco products taxed or exempted under RSA 78.

VII. Rents for rooms, taxed under RSA 78-A and the transactions exempted therefrom.

VIII. Purchases of meals, taxed or exempted under RSA 78-A.

IX. Purchases of food, food stamps, purchases made with food stamps, food products and beverages sold for human consumption off the premises where sold.

X. Purchases of equipment, supplies, and building materials made directly to volunteer fire departments, volunteer ambulance companies, or volunteer rescue squads for official use by the volunteer organizations.

XI. Funeral charges, including, but not limited to, sales of tangible personal property such as caskets, vaults, boxes, clothing, crematory urns, and other such funeral furnishings as are necessary incidents of the funeral, and other items sold as an accommodation rather than as an integral part of the funeral service or preparation therefor.

XII. Tangible personal property purchased for use or consumption directly and exclusively, except for isolated or occasional uses, in commercial, industrial or agricultural research or development in the experimental or laboratory sense. It shall be rebuttably presumed that uses are not isolated or occasional if they total more than 4 percent of the time the machinery or equipment is operated. Such research or development shall not be deemed to include the ordinary testing or inspection of materials or products for quality control, efficiency surveys, management studies, consumer surveys, advertising promotions, or research in connection with literary, historical or similar projects.

XIII. Purchases of electricity, oil, gas and other fuels used in a residence for all domestic uses including heating, and sales of such fuels when used by businesses and farms for farming and business purposes.

XIV. All vessels over 50 tons.

XV. Home and household items, including but not limited to, firewood and kindling, propane gas for grills and stoves, fertilizer, fungicides, insecticides, cloth diapers, which are reusable and recyclable, plants and seeds which produce food for human consumption, and car seats.

XVI. All items of clothing and shoes and fabric goods under $250 and fire, police, waitress and nurse work uniforms and footwear.

XVII. Purchases of bibles, prayer books, missals, and other religious texts.

77-F:14 Transactions not Covered. This chapter shall not cover the following transactions:

I. Private yard sales which consist of the casual sale of tangible personal property.

II. The transfer of tangible personal property to a corporation solely in consideration for the issuance of its stock, pursuant to a merger or consolidation effected under the laws of New Hampshire or any other jurisdiction.

III. The distribution of property by a corporation to its stockholders as a liquidating dividend.

IV. The distribution of property by a partnership to its partners in whole or partial liquidation.

V. The distribution of property by a limited liability company to its members in whole or partial liquidation.

VI. The transfer of property to a corporation upon its organization in consideration for the issuance of its stock.

VII. The contribution of property to a partnership in consideration for a partnership interest.

VIII. The contribution of property to a limited liability company in consideration for a membership interest.

IX. The sale of tangible personal property where the purpose of the vendee is to hold the thing transferred as security for the performance of an obligation of the vendor.

X. The sawing of lumber owned by the person requesting the sawing or such person’s agent.

77-F:15 Organizations not Covered. Any purchase or service charged by or to any of the following or any use by any of the following are not subject to the sales and use taxes imposed under this chapter:

I. The state of New Hampshire, or any of its agencies, instrumentalities, public authorities, public corporations, including a public corporation created pursuant to agreement or compact with another state, or political subdivisions when it is the purchaser, user or consumer, or when it is a vendor of services or property of a kind not ordinarily sold by private persons.

II. The United States of America, any of its agencies and instrumentalities, insofar as it is immune from taxation when it is the purchaser, user or consumer, or when it sells services or property of a kind not ordinarily sold by private persons.

III. Organizations which qualify for exempt status under the provisions of Section 501(c)(3) of the United States Internal Revenue Code, as the same may be amended or redesignated, excepting sales, storage or use in activities which are mainly commercial enterprises; provided, however:

(a) That the organization first shall have obtained a certificate from the commissioner stating that it is entitled to the exemption;

(b) That the sale or service or use is for the exempt purpose of such organization; and

(c) That the vendor keeps a record of the purchase price of each such separate purchase, the name of the purchaser, the date of each separate purchase, and the number of the certificate.

IV. Purchases of building materials and supplies to be used in the construction, reconstruction, alteration, remodeling or repair of:

(a) Any building structure or other public work owned by or held in trust for the benefit of any governmental body or agency mentioned in paragraphs I and II of this section and used exclusively for public purposes;

(b) Any building or structure owned by or held in trust for the benefit of any organization described in paragraph III and used exclusively for the purposes upon which its exempt status is based; and

(c) Any building or housing project subject to the provisions of RSA 204-C, provided, however, that the governmental body or agency, the organization, or person has first obtained a certificate from the commissioner stating that it is entitled to the exemption and the vendor keeps a record of the purchase price of each separate purchase, the name of the purchaser, the date of each separate purchase, and the number of the certificate. In this paragraph, the words "building materials and supplies" shall include all materials and supplies consumed, employed or expended in the construction, reconstruction, alteration, remodeling, or repair of any building, structure, or other public work as well as the materials and supplies physically incorporated therein.

V. Organizations which qualify for exempt status under the provisions of Section 501(c)(4)-(13) and (19), and political organizations as defined in Section 527(e) of the United States Internal Revenue Code, as the same may be amended or redesignated, shall not be exempt from taxation of the purchase or use of tangible personal property as defined in RSA 77-F:1.

77-F:16 Property Exempt From Use Tax.

I. The following uses of property are not subject to the compensating use tax imposed under this chapter:

(a) Property used by the purchaser in this state prior to July 1, 1999.

(b) Property purchased by the user while a nonresident of this state, except in the case of tangible personal property which the user, in the performance of a contract, incorporates into real property located in the state and except in the case of vessels under 50 tons and used in the waters of this state for at least 30 days.

(c) Property or services to the extent that a retail sales or use tax was legally due and paid thereon, without any right to a refund or credit thereof, to any other state or jurisdiction within any other state but only when it is shown that the other state or jurisdiction allows a corresponding exemption with respect to the purchase or use of tangible personal property or services upon which such a purchase tax or compensating use tax was paid to this state. To the extent that the tax imposed by this chapter is at a higher rate than the rate of tax in the first taxing jurisdiction, this exemption shall be inapplicable and the tax imposed by RSA 77-F:4 shall apply to the extent of the difference in the rates.

(d) Property withdrawn from inventory for the purpose of donating such property to an entity described in RSA 77-F:15, I, II, or III.

II. A person while engaged in any manner in carrying on in this state any employment, trade, business or profession, not entirely in interstate or foreign commerce, shall not be deemed a nonresident with respect to the use in this state of property in that employment, trade, business or profession.

77-F:17 Certificate or Affidavit of Exemption. 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 registration certificate, to the effect that the property was purchased for resale or the purchaser prior to taking delivery, furnishes to the vendor any affidavit, statement or additional evidence, documentary or otherwise, which the commissioner may require demonstrating that the purchaser is an exempt organization described in RSA 77-F:15, the purchase shall be deemed a taxable purchase at retail. Provided, however, the commissioner may authorize a purchaser, who acquires tangible personal property or services under circumstances which make it impossible at the time of acquisition to determine the manner in which the tangible personal property or services will be used, to pay the tax directly to the commissioner and waive the collection of the tax by the vendor. Provided, further, the commissioner shall authorize any contractor, subcontractor or repairperson who acquires tangible personal property consisting of materials and supplies for use in erecting structures for others, or building on, or otherwise improving, altering, or repairing real property of others, to pay the tax directly to the commissioner 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 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 commissioner by the permit holder.

77-F:18 Computing Receipts and Consideration.

I. The retail purchase tax imposed under RSA 77-F:2 and the compensating use tax imposed under RSA 77-F:4 when computed in respect to tangible personal property wherever manufactured, processed or assembled and used by such manufacturer, processor or assembler in the regular course of business within the state, shall be based on the price at which items of the same kind of tangible personal property are offered for sale by such manufacturer, processor or assembler.

II. Tangible personal property which has been purchased by a resident of the state outside of this state for use outside of this state and subsequently becomes subject to the compensating use tax imposed under this chapter, shall be taxed on the basis of the purchase price of the property, provided however:

(a) That where a taxpayer affirmatively shows that the property was used outside the state by the taxpayer for more than 6 months prior to its use within this state, the property shall be taxed on the basis of current market value of the property at the time of its first use within this state but the value of the property, for compensating use tax purposes, may not exceed its cost.

(b) That the compensating use tax on the tangible personal property brought into this state, other than for complete consumption or for incorporation into real property located in this state, and used in the performance of a contract or subcontract within this state by a purchaser or user for a period of less than 6 months may be based, at the option of the taxpayer, on the fair rental value of the property for the period of use within this state.

III. For purposes of RSA 77-F:4, I the tax shall be at the rate of 4 percent of the consideration given or contracted to be given for the property or for the use of the property adjusted in the same manner as is the sales price under the purchase tax to arrive at "receipts."

IV. For purposes of RSA 77-F:4, II the tax shall be at the rate of 4 percent of the price at which items of the same kind of tangible personal property are offered for sale by the user.

77-F:19 Returns.

I. Every person required to collect or pay tax under this chapter shall on or before the twenty-eighth day of February and the thirtieth day of each other month make and file a return for the preceding month with the commissioner. The return of a vendor of tangible personal property shall show such vendor’s receipts from sales and also the aggregate value of tangible personal property sold, the use of which is subject to tax under this chapter.

II. The commissioner may extend, for cause shown, the time of filing any return for a period not exceeding 3 months on such terms and conditions as the commissioner may require.

III. The commissioner may permit or require returns to be made covering other periods upon such dates as the commissioner specifies. In addition, the commissioner may require payment of tax liability at such intervals and based upon such classifications as the commissioner may designate. In prescribing the other periods to be covered by the return or intervals or classifications for payment of tax liability, the commissioner may take into account the dollar volume of tax involved as well as the need for insuring the prompt and orderly collection of the taxes imposed.

IV. The commissioner may require amended returns to be filed within 20 days after notice and to contain the information specified in the notice.

77-F:20 Payment of Tax.

I. Every person required to file a return under this chapter shall, at the time of filing the return, pay to the commissioner the taxes imposed by this chapter as well as all other moneys collected by such person under this chapter; provided, however, that every person who collects the tax from purchasers of taxable items according to the tax bracket schedule of RSA 77-F:3 shall be allowed to retain, as partial compensation for services rendered to the state of New Hampshire in collecting the tax, any amount lawfully collected by such person in excess of the tax imposed by this chapter.

II. All the taxes for the period for which a return is required to be filed or for such lesser interval as shall have been designated by the commissioner, shall be due and payable to the commissioner on the date established for the filing of the return for that period, or on the date for such lesser interval as the commissioner has designated, without regard to whether a return is filed or whether the return which is filed correctly shows the amount of receipts, or the value of property or services sold or purchased or the taxes due thereon.

77-F:21 Surety Bonds.

I. When the commissioner deems it necessary to protect the revenues to be obtained 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 returns, failure to make payments with 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 lodged 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 said 60-day period. The duration of surety bonds shall be for one year only, unless the requirement is cancelled 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 license, as provided in RSA 77-F:27.

77-F:22 Determination of Tax.

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, type of accommodations and service, 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 cancelled, the property returned or the receipt or charge has been ascertained to be uncollectable or, in the case the tax has been paid upon that receipt or charge, for refund or credit of the tax so paid.

77-F:23 Collection of Tax From Purchaser. Every person required to collect the tax shall collect the tax from the purchaser when collecting the price to which it applies. If the purchaser is given any sales slip, invoice, receipt or other statement or memorandum of the price paid or payable, the tax shall be stated, charged and shown separately on the first of the documents given to him. The tax shall be paid to the person required to collect it as trustee for and on account of the state.

77-F:24 Deferred Payment Purchases. The commissioner may provide that the tax upon receipts from purchases on the 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.

77-F:25 Refunds.

I. Claims for refund or credit may be made by a customer who has actually paid the tax or by a person required to collect the tax, who has collected and paid over the tax to the commissioner, provided 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 person until such person establishes to the satisfaction of the commissioner, under such rules as the commissioner may adopt, that such person has repaid to the customer the amount for which the application for refund is made. The commissioner may, in lieu of any refund, allow credit on payments due from the claimant.

II. If the commissioner determines, on a petition 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.

77-F:26 Proceedings to Recover Tax.

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 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.

77-F:27 Suspension or Revocation of Certificates; Appeal.

I. The commissioner may, after notice and hearing, suspend or revoke the certificate of registration of any person required to collect the tax or may refuse to issue or renew any registration for failure to comply with this chapter or with any pertinent 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 77-F:22, then the suspension or revocation shall be inoperative during the appeal.

77-F:28 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 of taxes 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.

77-F:29 Disposition of Tax. All revenues collected under this chapter shall be deposited in the education trust fund established in RSA 198:39.

Senator D’Allesandro offered a floor amendment.

1999-0559s

09/10

Floor Amendment to HB 112-FN-A-LOCAL

Amend the title of the bill by replacing it with the following:

Amend the bill by replacing all after the enacting clause with the following:

1 Purpose; Intent.

I. In December 1997, the New Hampshire supreme court in the Claremont II decision ruled that it is the state’s duty to define and provide all New Hampshire’s public school students with an adequate education, and further that the manner of raising revenue to pay for an adequate education be through a system of taxation that is proportional in substance and just and reasonable in application.

II. Through the passage of House Bill 1075, the general court defined an adequate education. The definition grew out of work undertaken in the early 1990’s to develop curriculum frameworks which specifically address the importance of establishing and measuring what all New Hampshire students should know and be able to do. The curriculum frameworks were developed with the widespread participation of educators, business people, government officials, community representatives, and parents. They have evolved into a critical component of providing a quality public education to New Hampshire students.

III. The New Hampshire educational improvement and assessment program ("NHEIAP") tests were developed in conjunction with the curriculum frameworks as a measure of student performance. The general court therefore finds that the NHEIAP tests are a measure of student performance and can be used to develop and implement effective methods for assessing learning and its application. The general court further finds that in determining the cost of a constitutionally adequate education, performance based outcome criteria, specifically the NHEIAP test scores, can be used to identify school districts that are delivering such a constitutionally adequate education. The NHEIAP tests are comprehensive and difficult. Students taking these tests in the third, sixth, and tenth grades are scored on 4 levels of performance: novice, basic, proficient, and advanced. The general court finds that students who score in the basic, proficient, and advanced levels on these state tests are making progress toward achieving the goals set forth in House Bill 1075. Furthermore, each school district shall receive 70 percent of its total transportation costs and shall receive special education costs as defined in this act.

IV. The general court recognizes the inherent imprecision, subjectivity, and difficulty in determining the cost of an adequate education. Numerous complex financial, budgetary, administrative, and educational elements must be in place in order for the state to fully meet the mandates of Claremont II. Those mandates coupled with the policy of the state recognize that an adequate public education is not a static concept removed from the demands of an evolving world. An adequate education transcends mere competence in the reading, writing and arithmetic. Such an education shall provide all students with a meaningful opportunity to acquire the knowledge and skills necessary to prepare them for successful participation in the social, economic, scientific, technological, and civic realities of society, now and in the years to come. To ensure these fundamental rights, as recognized by the court, thoughtful and deliberate planning with the involvement of many sources of expertise as well as phased-in implementation of the major elements over time is required. Concomitantly, such planning and implementation is required in order to ensure:

(a) That the educational needs of all children are met, including regular education students, students with special needs such as students with disabilities, students who are economically disadvantaged or are otherwise educationally at risk, or those who are intellectually gifted;

(b) That the needed changes are long-term in nature, truly embedded on the local and state level, gain acceptance and are both cost and educationally effective, and to those ends address underlying or systemic issues; and

(c) Compliance with all applicable federal laws.

V. Under Claremont II, and as recently reaffirmed by the court in its November 1998 opinion, a funding system for a constitutionally adequate education must be in place for the beginning of the 1999 tax year which begins on April 1, 1999.

VI. Therefore, in order to meet the aforementioned competing requirements of a long-range, carefully planned, and phased-in solution and to address the need to have an acceptable system in place by April 1, 1999, this act establishes a special commission to develop long-term plans and solutions to comprehensively and permanently meet constitutional mandates.

2 Cigarette Tax. Amend RSA 78:7 to read as follows:

78:7 Tax Imposed. A tax upon the retail consumer is hereby imposed at the rate of [37] 62 cents for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes, on all tobacco products sold at retail in this state. The payment of the tax shall be evidenced by affixing stamps to the smallest packages containing the tobacco products in which such products usually are sold at retail. The word "package" as used in this section shall not include individual cigarettes. No tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.

3 New Subdivision; Disposition of Tobacco Tax Revenues; Special Fund. Amend RSA 78 by inserting after section 31 the following new subdivision:

Disposition of Revenues

78:32 Disposition of Revenues. Three million dollars of the gross revenues collected under this chapter shall be deposited at the end of each fiscal year beginning June 30, 2000 in the tobacco use prevention and cessation fund established in RSA 78:33.

78:33 Tobacco Use Prevention and Cessation Fund. There is established within the office of the state treasurer a tobacco use prevention and cessation fund. Money from this fund shall be continually appropriated to the department of health and human services for tobacco use prevention and cessation programs and shall be allocated as follows:

Percentage Amount

I. Tobacco use prevention community programs and grants 25 $750,000

II. Tobacco use prevention school programs and grants 18 $540,000

III. Tobacco use prevention state-wide programs and grants 15 $450,000

IV. Tobacco use cessation programs 15 $450,000

V. Tobacco use prevention and cessation counter marketing 18 $540,000

VI. Evaluation 5 $150,000

VII. Administration and enforcement 4 $120,000

4 New Subparagraph; Special Fund. Amend RSA 6:12, I by inserting after subparagraph (vvv) the following new subparagraph:

(www) Three million dollars of the annual gross revenues of the tobacco tax collected under RSA 78, which shall be credited as provided in RSA 78:32 to the tobacco use prevention and cessation fund established under RSA 78:33.

5 Applicability. Section 2 of this act shall apply to all persons licensed under RSA 78:2. Such persons shall inventory all taxable tobacco products in their possession and file a report of such inventory with the department of revenue administration on a form prescribed by the commissioner within 20 days after the effective date of this act. The tax rate effective April 1, 1999, shall apply to such inventory and the difference, if any, in the amount paid previously on such inventory and the current effective rate of tax shall be paid with the inventory form. The inventory form shall be treated as a tax return for the purpose of computing penalties under RSA 21-J.

6 Gender Reference Change. Amend the introductory paragraph of RSA 21-J:3 to read as follows:

In addition to the powers, duties, and functions otherwise vested by law, including RSA 21-G, in the commissioner of the department of revenue administration, [he] the commissioner shall:

7 Duties of Commissioner. Amend RSA 21-J:3, XIII to read as follows:

XIII. Equalize annually the valuation of the property in the several towns, cities, and unincorporated places in the state, including the value of property exempt pursuant to RSA 72:37-b, 72:62, 72:66, and 72:70, by adding to or deducting from the aggregate valuation of the property in towns, cities, and unincorporated places such sums as will bring such valuations to the true and market value of the property, including the equalized value of property formerly taxed pursuant to the provisions of RSA 72:7; 72:15, I, V, VII, VIII, IX, X, and XI; 72:16; 72:17; 73:26; 73:27; and 73:11 through 16 inclusive, which were relieved from taxation by the laws of 1970, 5:3; 5:8; 57:12; and 57:15, the equalized valuation of which is to be determined by the amount of revenue returned in such year in accordance with RSA 31-A, and by making such adjustments in the value of other property from which the towns, cities, and unincorporated places receive taxes or payments in lieu of taxes as may be equitable and just, so that any public taxes that may be apportioned among them shall be equal and just. In carrying out the duty to equalize the valuation of property, the commissioner shall follow the procedures set forth in RSA 21-J:9-a.

8 Duties of the Commissioner. Amend RSA 21-J:3, XV to read as follows:

XV. Establish and approve tax rates as required by law including the uniform education tax rate.

9 New Paragraph; Duties of Commissioner. Amend RSA 21-J:3 by inserting after paragraph XXIV the following new paragraph:

XXV. Petition the board of tax and land appeals to issue an order for reassessment of property pursuant to the board's powers under RSA 71-B:16-19 whenever the valuation of property for equalization purposes in a particular city, town, or unincorporated place is disproportional to the valuation for equalization purposes in other cities, towns, or unincorporated places in the state.

10 Division of Property Appraisal; Department of Revenue Administration. RSA 21-J:9 is repealed and reenacted to read as follows:

21-J:9 Division of Property Appraisal. There is established within the department the division of property appraisal, under the supervision of a classified director of property appraisal who shall be responsible for the following functions, in accordance with applicable laws:

I. Assisting and supervising municipalities and appraisers in appraisals and valuations as provided in RSA 21-J:10 and RSA 21-J:11.

II. Appraising state-owned forest and recreation land under RSA 227-H and RSA 216-A.

III. Annually determining the total equalized valuation of properties in the cities and towns and unincorporated places according to the requirements of RSA 21-J:9-a.

IV. Preparing a standard appraisal manual which may be used by assessing officials, and holding meetings throughout the state with such officials to instruct them in appraising property.

11 New Section; Equalization Procedure. Amend RSA 21-J by inserting after section 9 the following new section:

21-J:9-a Equalization Procedure. The following procedures shall apply in determining the equalization of property within the cities, towns, and unincorporated places as required by RSA 21-J:3, XIII:

I. The commissioner shall annually conduct a sales-assessment ratio study which shall include arm’s length sales or transfers of property that occurred 6 months prior to and 6 months following April 1 of the tax year for which such equalization is made.

II. In determining the arm's length sales or transfers that are included in the sales-assessment ratio study, the commissioner may use a randomly selected sample of such sales and transfers the size of which shall be determined by the total taxable parcels in the city, town, or unincorporated place.

III. If less than 2 percent of the total taxable parcels in a city, town, or unincorporated place has been transferred by an arm's length sale or transfer during the 6 months prior to and 6 months following April 1 of the tax year for which such equalization is made or the commissioner determines the sales are not representative of the property within the municipality, the commissioner may choose one or more of the following options:

(a) Include appraisals of any of the taxable property of such city, town, or unincorporated place in the sales-assessment ratio study. Such appraisals shall be based on full and true market value pursuant to RSA 75:1 and shall be performed by department appraisers. The property to be appraised shall be selected by the commissioner.

(b) Consider recent equalization ratio activity in adjoining cities, towns, or unincorporated places.

(c) Include arm's length sales or transfers in the city, town, or unincorporated place, within 2-1/2 years preceding April 1 of the year preceding the tax year for which such equalization is made.

IV. The commissioner shall use the inventory of property transfers authorized by RSA 74:18 in determining the equalized value of property and may consider such other evidence as may be available to the commissioner on or before the time the final equalized value is determined.

12 Appraisals of Property for Ad Valorem Tax Purposes. RSA 21-J:11 is repealed and reenacted to read as follows:

21-J:11 Appraisals of Property For Ad Valorem Tax Purposes.

I. Every person, firm, or corporation intending to engage in the business of making appraisals on behalf of a municipality for tax assessment purposes in this state shall notify the commissioner of that intent in writing. No person, firm, or corporation engaged in the business of making appraisals of taxable property for municipalities and taxing districts shall enter into any contract or agreement with any town, city, or other governmental division without first submitting the proposed contract or agreement to the commissioner for examination and approval and submitting to the commissioner evidence of financial responsibility and professional capability of personnel to be employed under the contract.

II. The commissioner, at no expense to the municipality, shall monitor appraisals of property and supervise appraisers as follows:

(a) Assure that appraisals comply with all applicable statutes and rules;

(b) Assure that appraisers are complying with the terms of any appraisal contract;

(c) Review the accuracy of appraisals by inspection, evaluation, and testing, in whole or in part, of data collected by the appraisers; and

(d) Report to the governing body on the progress and quality of the municipality’s appraisal process.

III. The commissioner shall adopt rules under RSA 541-A relative to the provisions required of all contracts for appraisal services and the methodology for inspection, evaluation, and testing of data for the purposes of appraisal monitoring.

13 Reports Required. Amend the introductory paragraph of RSA 21-J:34 to read as follows:

The governing body of each city, town, unincorporated [town, unorganized] place, school district, and village district, and the clerk of each county convention shall submit to the commissioner of revenue administration the following reports necessary to compute and establish the uniform education property tax rate and the tax rate for each city, town, unincorporated [town, unorganized] place, school district, village district, and county. The commissioner shall adopt rules under RSA 541-A establishing the form and content of these reports:

14 New Paragraph; Reports Required. Amend RSA 21-J:34 by inserting after paragraph XIV the following new paragraph:

XV. A report filed by the assessing officials of each city, town, and unincorporated place shall certify sales-assessment information necessary for the department to conduct the annual sales-assessment ratio study required by RSA 21-J:9-a. This report shall be filed within 45 days after receipt from the department.

15 New Paragraph; Setting of Tax Rates by Commissioner. Amend RSA 21-J:35 by inserting after paragraph I the following new paragraph:

I-a. The commissioner shall set the uniform education property tax rate at $6.25 on each $1,000 of total equalized value of all property in the municipality as determined under RSA 21-J:3, XIII.

16 Revenue Sharing. Amend RSA 31-A:4, I to read as follows:

17 Board of Tax and Land Appeals; Authority. Amend RSA 71-B:5, II to read as follows:

II.(a) To hear and determine [any] appeals by municipalities relating to the [equalization of valuation performed] equalized valuation of property determined by the commissioner of revenue administration pursuant to RSA 21-J:3, XIII. Any [town] municipality aggrieved by [an] its equalized valuation as determined by the commissioner of revenue administration must appeal to the board in writing within 30 days of [the town's notification] notice of [the] its final equalized valuation by the commissioner. The board shall hear and make a final ruling on such appeal within 45 days of its receipt by the board. The board’s decision on such appeal shall be final pending a decision by the supreme court of any appeal by any municipality of a board’s decision. The supreme court shall give any appeal under this section priority in the court calendar.

18 New Paragraph; Order for Reassessment. Amend RSA 71-B:16, IV to read as follows:

IV. When a complaint is filed with the board alleging that all of the taxable real estate or taxable property in a taxing district should be reassessed or newly assessed for any reason, provided that such complaint must be signed by at least 50 property taxpayers or 1/3 of the property taxpayers in the taxing district, whichever is less[.]; or

V. When the commissioner of revenue administration files a petition with it pursuant to RSA 21-J:3, XXV.

19 New Section; Inventory of Property Transfers. Amend RSA 74 by inserting after section 17 the following new section:

74:18 Inventory of Property Transfers.

I. In order to properly equalize the value of property under RSA 21-J:3, XIII, an inventory of property transfers shall be filed with the department of revenue administration and with the municipality where the property is located for each transfer of real estate or interest in real estate. Each form may include the following information:

(a) The buyer and seller's names and post transaction addresses and the name and address of a contact person if the buyer or seller is a trust or corporation.

(b) A description of the exact location of the property by town, street, and the assessor’s map, lot, and block number.

(c) The acreage included in the sale.

(d) An accurate description of the property included in the sale, the neighborhood where the property is located, and the type and style of the property sold.

(e) The buyer's ownership interest in the property.

(f) The sale price, date of transfer, and the amount mortgaged.

(g) The description of the type of transfer that has taken place.

(h) The amount of personal property included in the sale price.

(i) Whether the property was previously occupied and whether the property will serve as the buyer's primary residence.

(j) The financing arrangements made to purchase the property to be answered at the option of the buyer.

(k) Whether any concessions were made in the sale.

(l) Whether the property was in current use.

(m) Whether land use taxes were considered in the sale.

(n) The buyer’s dated signature certifying that the information indicated on the form is true.

II. The inventory of property transfers required by this section shall be filed with the department of revenue administration and with the municipality where the property is located by the purchaser, grantee, assignee, or transferee, no later than 30 days from the recording of the deed at the register of deeds or transfer of real estate, whichever is later. Persons required to file the inventory of property transfers who willfully fail to file or willfully make false statements on the forms shall be guilty of a violation.

III. No deed, recording a transfer of real estate or any interest in real estate, executed before October 1, 1995, shall be required to comply with this section.

IV. Failure to comply with this section shall not be construed to cloud title.

V. Any information provided to the department or the municipality pursuant to this section shall be exempt from the right-to-know law, RSA 91-A.

20 Education Property Tax. RSA 76:3 is repealed and reenacted to read as follows:

76:3 Education Property Tax. An annual education property tax at the uniform rate calculated by the commissioner of revenue administration pursuant to the authority granted in RSA 21-J:35, I-a is hereby imposed on all persons and property taxable pursuant to RSA 72 and RSA 73, except such property subject to tax under RSA 82.

21 What Taxes Assessed. Amend RSA 76:5 to read as follows:

76:5 What Taxes Assessed. The selectmen shall seasonably assess all state and county taxes for which they have the warrants of the [state] commissioner of revenue administration and county treasurers respectively; all taxes duly voted in their towns; and all school[, schoolhouse,] and village district taxes authorized by law or by vote of any school or village district duly certified to them; and all sums required to be assessed by RSA 33.

22 Commissioner’s Warrant. RSA 76:8 is repealed and reenacted to read as follows:

76:8 Commissioner’s Warrant.

I. The commissioner of revenue administration shall annually calculate the proportion of the education property tax to be raised by each municipality by multiplying the uniform education property tax rate by the total equalized value of all property in the municipality as determined under RSA 21-J:3, XIII.

II. The commissioner shall issue a warrant under the commissioner’s hand and official seal for the amount computed in paragraph I to the selectmen or assessors of each municipality at the time of the setting of the tax rate directing them to assess such sum and pay it to the municipality for the use of the school district or districts and, if there is an excess education tax payment due under RSA 198:47, I, directing them to assess the amount of that excess education tax payment and pay it to the department of revenue administration for deposit in the education trust fund. The commissioner shall also issue a warrant under the commissioner’s hand and official seal for such sums and at such times as may be prescribed for other taxes assessed by such selectmen or assessors of the municipality.

III. Municipalities are authorized to assess and collect property taxes locally to meet budgeted expenses of education not funded through distributions from the education trust fund under RSA 198:39.

23 Commissioner’s Report. RSA 76:9 is repealed and reenacted to read as follows:

76:9 Commissioner’s Report. The commissioner of revenue administration shall report to the governor, the speaker of the house of representatives, the president of the senate, and the commissioner of education each year on or before October 1, a statement of the education property tax warrants to be issued for the tax year commencing April 1 of the succeeding year.

24 Information Required. Amend RSA 76:11-a, I to read as follows:

I. The tax bill which is sent to every person taxed, as provided in RSA 76:11, shall show the rate for municipal, [school] local education, state education, and county taxes separately, the assessed valuation of all lands and buildings for which said person is being taxed, and the right to apply in writing to the selectmen or assessors for an abatement of the tax assessed as provided under RSA 76:16. The department of revenue administration shall compute for each town and city the rates which are to appear on the tax bills and shall furnish the required information to the appropriate town or city.

25 Extent. Amend RSA 85:1 to read as follows:

85:1 Who May Issue. The state treasurer or the commissioner of revenue administration, and each county and town treasurer, may issue extents under their hands and seals respectively, in cases authorized by law, and such extents shall be deemed to be executions against the person and property.

26 New Subdivisions; State Aid for Educational Adequacy; Education Trust Fund; Excess Education Property Tax Payment; Commission. Amend RSA 198 by inserting after section 37 the following new subdivisions:

State Aid for Educational Adequacy; Education Trust Fund

198:38 Definitions. In this subdivision:

I. "Municipality" means a city, town, or unincorporated place.

II. "School district" means school district as defined in RSA 194:1 or RSA 195:1.

III. "Elementary school" means a school with any of the grades kindergarten through 8.

IV. "High school" means a school with any of the grades 9 through 12.

V. "Average base per pupil cost of an elementary school pupil" means the amount as determined in accordance with RSA 198:40.

VI. "Weighted pupils" means resident pupils who have been assigned to one or more of the following classifications:

(a) An elementary pupil, which shall include kindergarten pupils, 1.0.

(b) A high school pupil, 1.2.

(c) An elementary pupil who is eligible to receive a free or reduced-priced meal shall receive an additional weight of .14.

VII. "Educationally disabled child" means an educationally disabled child as defined in RSA 186-C:2, I.

VIII. "Consumer price index" means the consumer price index for all items for urban consumers for the Northeast published by the United States Department of Labor.

IX. "Special education costs" means the cost of special education and educationally related services provided to educationally disabled children reported by school districts on the MS-25 form less any federal IDEA funds, state special education catastrophic aid, and special education medicaid reimbursement received by the districts.

X. "Average daily membership in attendance" means average daily membership in attendance as defined in RSA 189:1-d, III.

XI. "Average daily membership in residence" and "resident pupils" mean the average daily membership in residence as defined in RSA 189:1-d, IV.

XII. "Transportation costs" means the costs of transporting pupils to and from school and other school activities reported by school districts on the MS-25 form.

198:39 Education Trust Fund Created and Invested.

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 make catastrophic aid payments under RSA 186-C:18, III(d). The state treasurer shall deposit into this fund immediately upon receipt:

(a) The full amount of excess property tax payments from the department of revenue administration pursuant to RSA 198:47.

(b) The total amount of hardship claims reported by the commissioner of revenue administration under RSA 198:48, VII.

(c) All moneys due the fund in accordance with RSA 284:21-j.

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

(e) Tobacco settlement funds in the amount of $4,000,000 annually.

(f) Any other moneys appropriated from the general fund.

II. The education trust fund shall be nonlapsing. The state treasurer shall invest that part of the fund which is not needed for immediate distribution in short-term interest-bearing investments. The income from these investments shall be returned to the fund.

198:40 Methodology for Calculating the Cost of an Adequate Education.

I. For the fiscal year beginning July 1, 1999, the average base per pupil cost of an elementary school pupil shall be $3,246.

II. For the fiscal year beginning July 1, 2000, the average base per pupil cost of an elementary school pupil shall be $3,295.

III. For the biennium beginning July 1, 2001, and every biennium thereafter, the average base per pupil cost of an elementary school pupil shall be established by the general court.

IV. If the general court makes no change in the average base per pupil cost of an elementary school pupil, the average base per pupil cost for the previous fiscal year shall be adjusted by the change in the consumer price index between the January immediately preceeding the beginning of the fiscal year of distribution and the second preceding January. In making the calculations required by this subdivision in subsequent fiscal years, the department of education shall use the average daily membership in residence, special education costs, and transportation costs for the second preceding school year and the district percentage of pupils eligible to receive a free or reduced-priced meal reported to the department of education on October 1 of the second preceding calendar year.

V. The weighted average daily membership in residence for each district shall be calculated by combining the district’s elementary average daily membership in residence with its weighted high school average daily membership in residence and the district’s additional average daily membership in residence resulting from elementary pupils eligible to receive a free or reduced-priced meal. The statewide weighted average daily membership in residence of pupils shall be calculated by combining the weighted average daily membership in residence of each school district in the state.

VI. For each fiscal year, the statewide cost of an adequate education for all pupils shall be calculated by multiplying the average base per pupil cost of an adequate education by the statewide weighted average daily membership in residence of pupils and then adding 99.5 percent of total statewide special education costs plus 70 percent of total statewide district transportation costs.

198:41 Determination of Adequate Education Grants.

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

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

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

(c) Add to the sum of subparagraph (b), 99.5 percent of the municipality’s apportioned special education cost;

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

II. For municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of revenue administration shall determine the amount of the adequate education grant for each municipality as the lesser of the following 2 calculations:

(a) The amount calculated in accordance with paragraph I of this section; or

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

198:42 Distribution Schedule of Adequate Education Grant.

I. The adequate education grant determined in RSA 198:41 shall be distributed to each municipality’s school district or districts from the education trust fund in 4 payments of 20 percent on July 1, 20 percent on September 1, 30 percent on January 1, and 30 percent on April 1 of each school year.

II. For the fiscal year beginning July 1, 1999, $400,000,000 is hereby appropriated from the education trust fund created under RSA 198:39 to the department of revenue administration to fund the grants under RSA 198:41.

III. The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated the funds necessary to make the payments required under RSA 198:41. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

IV. The department of revenue administration shall certify the amount of each grant to the state treasurer and direct the payment thereof to the school district. When a payment of a grant is made to a school district, the municipality on whose behalf the payment is made, shall receive notification from the state treasurer of the amount of the payment made to its school district or districts.

198:43 Additional Education Expenditures. School districts are authorized to dedicate additional resources to schools and to develop educational programs beyond those required for an adequate education. School districts shall raise and appropriate funds to meet budgeted expenses of education not funded through distributions from the education trust fund under RSA 198:39.

198:44 Use of Funds for Education Purposes.

I. Annually, each school district shall appropriate an amount that equals or exceeds the amount necessary to fund an adequate education for the pupils in that district. Notwithstanding any other provision of law, in the event a school district fails to appropriate at least the required amount, that amount shall be assessed and collected by the municipality, appropriated to the school district, and expended for educational purposes in accordance with paragraph IV without a vote of the school district.

II. On or before June 30 of each year, the individual with fiscal responsibility in each municipality shall submit a statement to the commissioner of revenue administration and the commissioner of education that the funds collected by the municipality pursuant to RSA 76:8 have been paid over to the school district or districts to be expended for educational purposes in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

III. If a municipality uses any part of the funds collected pursuant to RSA 76:8 for non-educational purposes, the municipality shall pay to the school district an amount equal to the portion of funds used for such non-educational purposes.

IV. The funds collected by municipalities pursuant to RSA 76:8 and the funds received from the state pursuant to RSA 198:42 shall be appropriated by a school district only for current education expenses or transfers to reserves or trusts funds and shall not be used for any other purpose.

V. On or before June 30 of each year, the individual with fiscal responsibility in each school district shall submit a statement to the commissioner of revenue administration and the commissioner of education that an amount of money that equals the amount necessary to fund an adequate education for the pupils in that district was used in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

198:45 Duties of the Department of Education and the Board of Education.

I. The department of education shall, on or before September 30 of each year, collect from the school districts final data concerning all aspects of student attendance for the school year ending June 30 of that year necessary to establish the average daily membership, average daily membership in residence, and weighted average daily membership in residence, including the municipality of residence for each pupil for that year. The department of education shall submit a report by December 31 to the speaker of the house of representatives and the senate president to be used for purposes of determination by the legislature of the appropriation to the education trust fund. A copy of such report shall, at the same time, be given to the department of revenue administration.

II. The board of education shall adopt rules pursuant to RSA 541-A necessary to the proper administration of this subdivision.

198:46 Submission of Data by School Districts. Each school district shall submit all attendance information required by the department of education under this subdivision on or before September 30 of each year.

Excess Education Property Tax Payment; Hardship Relief

198:47 Excess Education Property Tax Payment.

I. Except as provided in paragraph IV and RSA 198:48, VI, municipalities for which the education property tax exceeds the amount necessary to fund an adequate education determined by RSA 198:40 shall collect and remit such excess amount to the department of revenue administration on or before March 15 of the tax year in which the excess occurs.

II. The amount of such excess to be remitted shall not include any income derived from the investment of funds by the town treasurer under RSA 41:29. Any funds remaining after full payment of the excess tax required in paragraph I shall become available for unrestricted use by the municipality.

III. The commissioner of the department of revenue administration shall collect from the selectmen the excess tax and pay the excess tax over to the state treasurer for deposit in the education trust fund established by RSA 198:39.

IV. The commissioner of the department of revenue administration shall calculate the excess amount owed by each municipality pursuant to paragraph I for the tax year 1999. Notwithstanding any other provision of this section, the warrant issued pursuant to RSA 76:8 shall direct municipalities to only collect and remit to the department of revenue administration not more than the following percentages of excess amounts during the tax years 1999-2001:

(a) In tax year 1999, 25 percent;

(b) In tax year 2000, 50 percent; and

(c) In tax year 2001, 75 percent.

198:48 Education Property Tax Hardship Relief.

I. As provided in this section, eligible claimants shall be granted hardship relief from the state education property tax due on their homesteads under RSA 76:3 for 4 tax years following the enactment of RSA 76:3.

II. The following definitions apply to this section:

(a) "Homestead" means the dwelling owned by a claimant or in the case of a multi-unit dwelling, the portion of the dwelling which is used as the claimant’s principal residence. "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, a dwelling is "owned" by a claimant if the claimant is in possession of the dwelling as a vendee under a land contract. A dwelling may be "owned" by more than one person if they hold the property as joint tenants or tenants in common.

(b) "Household income" means the sum of the adjusted gross incomes 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.

III. An eligible hardship relief claimant is a person who:

(a) Resides in a taxing jurisdiction that realizes in the first year after the effective date of the state education property tax in RSA 76:3 a net increase in education property taxes of greater than 20 percent, comparing the amount calculated for education property taxes for the property tax year ending March 31, 2000, to the amount of the school portion of the claimant’s local property tax on the same property for the tax year ending March 31, 1999;

(b) Pays school property taxes on homestead property; and

(c) Has total household income of less than 75 percent of the median total household income of all New Hampshire residents in the year in which the claim for relief is made.

IV. The amount of hardship relief shall be calculated as follows:

(a) Start with the amount of education property taxes due on the claimant’s homestead property for the tax year ending March 31, 2000;

(b) Subtract the amount of the school portion of the local property tax due on the same property for the tax year ending March 31, 1999; and

(c) Apply the appropriate percentage to the difference computed in subparagraph (b) as follows:

(1) For the tax year ending March 31, 2000, the percentage is 50:

(2) For the tax year ending March 31, 200l, the percentage is 25;

(3) For the tax year ending March 31, 2002, the percentage is 10;

(4) For the tax year ending March 31, 2003, the percentage is 10;

V. To receive hardship relief under this section, a claimant shall file a form with the claimant’s final property tax payment and shall deduct the hardship amount calculated on the form from the amount due. The commissioner shall develop a form for taxpayers to claim hardship relief under the authority of RSA 198:49.

VI. The total amount of hardship claims received by a municipality shall be deducted from the amount collected and remitted to the department of revenue administration under RSA 198:47, I, and each municipality shall send to the department of revenue administration the claim forms it receives from claimants along with the excess property tax it remits under that section.

VII. On or before May 1 of each year, the commissioner of the department of revenue administration shall report to the governor, the treasurer, the speaker of the house of representatives, and the president of the senate the total amount of hardship claims. The treasurer shall deposit into the education trust fund established in RSA 198:39 the total amount of hardship claims reported by the commissioner of the department of revenue administration. The funds necessary for the deposit required by this paragraph are hereby appropriated and the governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

198:49 Form. The commissioner shall approve and provide forms relative to the reporting and remitting of excess education property tax by the municipalities and relative to hardship claims.

Adequate Education and Education

Financing Reform Commission

198:50 Adequate Education and Education Financing Reform Commission Established; Membership.

I. There is hereby established an adequate education and education financing reform commission which shall be composed of 19 members as follows:

(a) The chairpersons of the house education and house finance committees, appointed by the speaker of the house.

(b) The chairpersons of the senate education and senate finance committees, appointed by the president of the senate.

(c) Four members appointed by the governor, one of whom shall be an elementary or secondary special education teacher, one of whom shall be a primary teacher who does not teach special education, and one of whom shall be a member of the business community.

(d) The chancellor of the university system of New Hampshire or designee.

(e) The commissioner of the regional community-technical college system.

(f) One member from the state board of education, appointed by the chairperson of the state board of education.

(g) One member from a special education advocacy organization, appointed by such organization; and

(h) Seven members who shall be agreed to and jointly appointed by the governor, the president of the senate, and the speaker of the house consisting of the following:

(1) One local school board member, recommended by the New Hampshire School Boards Association.

(2) One school administrator, recommended by the New Hampshire School Administrators Association.

(3) One special education administrator at the elementary or secondary school level, recommended by the New Hampshire Association of Special Education Administrators.

(4) Two parents of school-age children, one of whom shall be the parent of a child with an educational disability.

(5) One member from the business community, who shall be associated with the School to Work Initiative.

(6) One school business official, recommended by the New Hampshire Association of School Business Officials.

II. The commission shall elect a chairperson from among its membership and shall form subcommittees necessary to perform its duties. The chairperson shall determine the frequency of meetings at its first meeting.

III. The members of the commission shall serve without compensation, provided that legislative members of the commission shall receive mileage at the legislative rate while attending to the duties of the commission, and provided that the parent members of the commission shall be reimbursed for travel expenses associated with their duties on the commission.

IV. In order to ensure that all students are provided an adequate education, the duties of the commission shall be as follows:

(a) Determine and recommend the costs of an adequate education for all students in New Hampshire by determining and calculating adjustments for individual school districts based on yearly inflation, cost of living variances, diseconomies of scale, transportation variability, demographics, including for school districts with a disproportionate number of students who are economically disadvantaged or have educational disabilities, and such other factors as deemed relevant.

(b) Determine and recommend the amount of state aid, including building aid, to be distributed to cities and towns based upon the cost of an adequate education as set forth in subparagraph (a) and the method for distributing the state aid.

(c) Recommend changes in policy and procedure in the areas of educational improvement and accountability.

(d) Recommend interim and permanent processes to ensure adequate planning and implementation at the local and state level of special education and educationally related services, including planning for and development, on an interagency basis, of local school based options for pupils who have been placed in alternative or separate schools who could be placed in appropriate less restrictive options if available.

V. The commission shall be divided into the following policy subcommittees: adequacy and cost, educational improvement and accountability, and special education funding.

VI. The commission shall report its findings and recommendations no later than December 1, 2000. The report shall include, for each recommendation, proposed implementation schedules with timelines, specific steps, agencies and persons responsible, and resources needed. Where feasible, all plans, measures and initiatives shall be proposed as legislation or regulation so that they will have the force of law. All recommendations and plans shall be designed to be fully implemented no later than September 1, 2004.

VII. The department of justice, department of revenue administration, department of education, and department of health and human services shall provide the commission with assistance.

27 Appropriation. The sum of $150,000 for the fiscal year ending June 30, 2000, is hereby appropriated for the purposes of the commission established in RSA 198:50 as inserted by section 26 of this act. This sum shall be nonlapsing until June 30, 2001. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

28 New Subparagraphs; Special Education; Catastrophic Aid Payments Constitutionally Obligated. Amend RSA 186-C:18, III by inserting after subparagraph (c) the following new subparagraphs:

(d) For each fiscal year beginning with the fiscal year ending June 30, 2000, 0.5 percent of the total statewide special education costs as defined in RSA 198:38, IX shall be appropriated from the education trust fund established in RSA 198:39 to the department of education to assist those school districts which, under rules adopted by the state board of education, qualify for emergency assistance in meeting special education catastrophic costs pursuant to this section.

(e) The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated for the biennium ending June 30, 2001, the funds necessary to make the payments required in this section. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

29 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:7, I to read as follows:

I. If a cooperative school district was organized prior to July 1, 1963, during the first 5 years after the formation of a cooperative school district each preexisting district shall pay its share of all capital outlay costs and all operational costs in excess of the amount determined necessary to provide an adequate education under RSA 198:40 in accordance with either one of the following formulas as determined by a majority vote of the cooperative district meeting:

30 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:14, I(b) to read as follow:

(b) The commissioner of revenue administration shall examine such certificates and delete any appropriations which appear not made in accordance with the law, and adjust any sum, in accordance with RSA 21-J:35, which may be used as a setoff against the amount appropriated when it appears to the commissioner of revenue administration such adjustment is in the best public interest. The commissioner of revenue administration shall apply the total amount of all adequate education grants received pursuant to RSA 198:42.

31 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:18, III(e) to read as follows:

(e) The method of apportioning [the] all operating expenses in excess of the amount determined necessary to provide an adequate education under RSA 198:40, of the cooperative school district among the several preexisting districts and the time and manner of payment of such shares. Home education pupils who do not receive services from the cooperative school district, except an evaluation pursuant to RSA 193-A:6, II, shall not be included in the average daily membership relative to apportionment formulas.

32 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:18, IX to read as follows:

IX. The organization meeting of a cooperative school district shall be called to order by the chairperson of the cooperative school district planning board, or by the clerk-treasurer thereof, who shall serve as temporary chairperson for the first order of business which shall be the election of a moderator and of a temporary clerk, by ballot, who shall be qualified voters of the district. From and after the issuance of the certificate of formation by the board to the date of operating responsibility of the cooperative school district, such district shall have all the authority and powers of a regular school district for the purposes of incurring indebtedness, for the construction of school facilities and for such other functions as are necessary to obtain proper facilities for a complete program of education. When necessary in such interim, the school board of the cooperative school district is authorized to prepare a budget and call a special meeting of the voters of the district, which meeting shall have the same authority as an annual meeting, for the purpose of adopting the budget, making necessary appropriations, and borrowing money. Whenever the organization meeting is held on or before April 20 in any calendar year, no annual meeting need be held in such calendar year. Sums of money raised and appropriated at the organization meeting or any interim meeting prior to the first annual meeting shall be forthwith certified to the commissioner of revenue administration and the state department of education upon blanks prescribed and provided by the commissioner of revenue administration for the purpose, together with a certificate of estimated revenues, so far as known, and such other information as the commissioner of revenue administration may require. The commissioner of revenue administration shall examine such certificates and delete any appropriations which appear not made in accordance with the law, and adjust any sum which may be used as a setoff against the amount appropriated when it appears to the commissioner such adjustment is in the best public interest. The commissioner of revenue administration shall apply the total amount of all adequate education grants received pursuant to RSA 198:40 as a setoff against the amount appropriated. The commissioner of revenue administration shall certify to the state department of education the total amount of taxes to be raised for said cooperative school district and the state department of education shall determine the proportional share of said taxes to be borne by each preexisting school district and notify the commissioner of revenue administration of its determination. Upon certification by the commissioner of revenue administration the selectmen of each town shall seasonably assess the taxes as provided by law. The selectmen shall pay over to the treasurer of the cooperative district such portion of the sums so raised as may reasonably be required according to a schedule of payments needed for the year as prepared by the treasurer and approved by the cooperative school board, but no such payment shall be greater in percentage to the total sum to be raised by one local district than that of any other local district comprising such cooperative school district.

33 Reference Change. Amend RSA 193:1, I(c) to read as follows:

(c) The relevant school district superintendent has excused a child from attendance because the child is physically or mentally unable to attend school, or has been temporarily excused upon the request of the parent for purposes agreed upon by the school authorities and the parent. Such excused absences shall not be permitted if they cause a serious adverse effect upon the student's educational progress. Students excused for such temporary absences may be claimed as full-time pupils for purposes of calculating state aid under RSA 186-C:18 and [RSA 198:27-37] adequate education grants under RSA 198:41.

34 Reimbursement Anticipation Notes; Version Effective Until July 1, 1999. Amend RSA 198:20-d to read as follows:

198:20-d Reimbursement Anticipation Notes. Notwithstanding any other provision of law to the contrary, a school district may incur debt in anticipation of reimbursement under RSA 186-C:18 and under RSA 198:42. The governing body, after receiving authorization for borrowing from the legislative body, may elect to recognize the proceeds of the borrowing as revenue for property tax rate setting purposes by providing written notification, prior to September 1, to the commissioner of the department of revenue administration stating the specific amount of borrowing to be recognized as revenue.

35 Reimbursement Anticipation Notes; July 1, 1999 Version. Amend RSA 198:20-d to read as follows:

198:20-d Reimbursement Anticipation Notes. Notwithstanding any other provision of law to the contrary, a school district may incur debt in anticipation of reimbursement under RSA 186-C:18 and under RSA 198:42. The governing body, after notice and public hearing, may elect to borrow such funds and to recognize the proceeds of the borrowing as revenue for property tax rate setting purposes by providing written notification to the commissioner of the department of revenue administration stating the specific amount of borrowing to be recognized as revenue. Any borrowing under this section shall be exempt from the provisions of RSA 33, relative to debt limits.

36 Sweepstakes. RSA 284:21-j is repealed and reenacted to read as follows:

284:21-j Establishment. The state treasurer shall credit all moneys received from the sweepstakes commission, and interest received on such moneys, to a special fund from which the treasurer shall pay all expenses of the commission incident to the administration of this subdivision and RSA 287-E. Any balance left in such fund after such expenses are paid shall be deposited in the education trust fund established under RSA 198:39.

37 Transition. As of July 1, 1999, all funds, from any source derived, which would be distributed as foundation aid shall be deposited in the education trust fund under RSA 198:39, including the $62,000,000 appropriated under 1998, 389:16, II.

38 Removing Reference to Foundation Aid. Amend RSA 198:21, V to read as follows:

V. No pupil counted by any school district for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purposes of grants pursuant to RSA 198:22.

39 Removing Reference to Foundation Aid. Amend RSA 198:22, V to read as follows:

V. No pupil counted by any school for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purpose of grants pursuant to RSA 198:21.

40 Payment in Lieu of Taxes. Amend RSA 227-H:17 to read as follows:

227-H:17 Payment in Lieu of Taxes. The commissioner of revenue administration shall adopt rules, pursuant to RSA 541-A, relative to forms for application to the commissioner of revenue administration for payment for lost taxes. [In any year in which no state tax is levied,] Any town in which national forest lands and land held by the state for operation and development as state forestland, as defined by the department for the purposes of this section, are situated, whether acquired by gift, devise, purchase, or in any other manner, may apply, by its selectmen, to the commissioner of revenue administration on forms provided by the commissioner, annually before September 1, for the payment of an amount not exceeding the taxes for all purposes which such town might have received from taxes on such lands in such year had such lands been taxable. In the event that the amount appropriated in any biennium shall be insufficient for the purposes under this section, then the towns entitled to benefits under this section shall be reimbursed proportionately, unless otherwise subsequently ordered by the legislature.

41 Special Transition Rules. The following special transition rules shall apply to the implementation of the uniform education property tax established by sections 6-44 of this act in the first fiscal year following enactment:

I. "Total equalized value" as defined in RSA 21-J:3, XIII shall be based upon the amounts reported for the 1997 tax year as determined by the commissioner of revenue administration pursuant to RSA 21-J:3, XIII.

II. For the school year 1999/2000, the adequate education grant determined in RSA 198:41 shall be distributed to each municipality’s school district or districts from the education trust fund in 4 payments as follows:

(a) On July 1, 1999, and September 1, 1999, 1/8 the total adequate education grant;

(b) On January 1, 2000, and April 1, 2000, 3/8 the total adequate education grant. The commissioner of revenue administration shall certify the amount of each grant to the state treasurer and direct the payment thereof to the municipality’s school district or districts. When a payment of a grant is made to a school district, the municipality on whose behalf the payment is made, shall receive notification from the state treasurer of the amount of the payment made to its school district or districts..

III. Notwithstanding any other provision of law, the commissioner of revenue administration, for the April 1, 1999 tax year, shall issue the warrants required by RSA 76:8 on or before 30 days after the effective date of this act.

IV. Notwithstanding any other provision of law, the commissioner of revenue administration shall determine the amount of the adequate education grant for each municipality pursuant to RSA 198:41 for the 1999/2000 school year on or before 30 days after the effective date of this act.

42 Special Provision for Foundation Aid. Notwithstanding the repeal pursuant to section 44 of this act of RSA 198:27-37, relative to foundation aid and alternative foundation aid, the payment of foundation aid to be made in April 1999 pursuant to RSA 198:31 before such section is repealed, shall be calculated by the department of education and distributed to the recipients as if such repeal had not occurred.

43 Severability. If any provision of this uniform education property tax enacted in sections 6-44 of this act or the application thereof to any person or circumstance is deemed invalid, the invalidity does not affect the other provisions or applications of this act which can be given effect without the invalid provisions or applications and to this end the provisions of this act are severable.

44 Repeal. The following are repealed:

I. RSA 78:20, relative to the applicability of the tobacco tax.

II. RSA 78-B:10-a, relative to the real estate transfer questionnaire.

III. RSA 83-D, relative to the tax on nuclear station property.

IV. RSA 21-J:3, XXIII, relative to the commissioner of revenue administration's duty to determine local per capita income for purposes of foundation aid.

V. RSA 21-J:13, XI, relative to the form and content of the real estate transfer questionnaire.

VI. RSA 194-B:11, VIII, relative to foundation aid in relation to charter and open enrollment schools.

VII. RSA 198:1-3, relative to required annual district property taxes.

VIII. RSA 198:15-i-RSA 198:15-q, relative to kindergarten incentive program, kindergarten aid and alternative kindergarten programs.

IX. RSA 198:21, V, relative to the applicability of foundation aid and child benefit service grant recipients in the calculation of average daily membership.

X. RSA 198:22, V, relative to the applicability of foundation aid and dual enrollment grant recipients in the calculation of average daily membership.

XI. RSA 198:27-37, relative to foundation aid and alternative foundation aid.

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

77-A:2 Imposition of Tax. A tax is imposed at the rate of [7] 8 percent upon the taxable business profits of every business organization.

46 Business Enterprise Tax; Rate Increased; Super Majority to Increase Tax Deleted. Amend RSA 77-E:2 to read as follows:

77-E:2 Imposition of Tax. A tax is imposed at the rate of [1/4] ¾ 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.]

47 Capital Gains; Interest and Dividends Tax; Who Taxable. Amend RSA 77:3 to read as follows:

77:3 Who Taxable.

[I.] Taxable income is that income received from interest [and], dividends, and capital gains during the tax year prior to the assessment date by:

[(a)] I. Individuals who are inhabitants or residents of this state for any part of the taxable year whose net gains from sales of capital assets and gross interest and dividend income from all sources exceeds [$2,400] $2,500 during that taxable period.

[(b)] II. Partnerships, limited liability companies, associations, and trusts, the beneficial interest in which is not represented by transferable shares, whose net gains from sales of capital assets and gross interest and dividend income from all sources exceeds [$2,400] $2,500, during the taxable year, but not including a [qualified investment company as defined in RSA 77-A:1, XXI, or] a trust comprising a part of an employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974, section 3.

[(c)] III. Fiduciaries deriving their appointment from a court of this state whose net gains from sales of capital assets and gross interest and dividend income from all sources exceeds [$2,400] $2,500 during the taxable year.

[II. No person shall be subject to tax under RSA 77 solely due to its holding an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI.]

48 New Paragraph; Sales of Capital Assets Taxable; Interest and Dividends Tax. Amend RSA 77:4 by inserting after paragraph VI the following new paragraph:

VII. Net gains from the sale or exchange of capital assets which shall be the net capital gain as determined for federal income tax purposes, after due allowance for losses and holding periods, from sales or exchanges of capital assets or assets treated as capital assets, other than notes, bonds or other obligations of the state of New Hampshire or any of the political subdivisions thereof, or its or their respective agencies or instrumentalities, or from transactions or events taxable to the taxpayer as such sales or exchanges, and being the net amount includable in the taxpayer's adjusted gross income, with respect to all such sales, exchanges, transactions, or events, under the provisions of the United States Internal Revenue Code in effect for the taxable year.

49 Exemptions; Interest and Dividends Tax. Amend RSA 77:5 to read as follows:

77:5 Exemptions. Each taxpayer shall have the following exemptions:

I. Taxable income of [$2,400] $2,500.

II. An additional $1,200 if either or both taxpayers are 65 years of age or older on the last day of the tax year.

III. An additional [$1,200] $2,500 if either or both taxpayers are blind.

IV. An additional $1,200 if either or both taxpayers are disabled, unable to work, and have not yet reached their sixty-fifth birthday.

50 Reference to Capital Gains Added. Amend RSA 77:5-a to read as follows:

77:5-a Married Taxpayers; Joint Returns. A married taxpayer may claim the exemptions provided in RSA 77:5 for both self and spouse, regardless of the ownership of the income from net capital gains, interest or dividends, provided that both husband and wife file a joint return.

51 Repeal. The following are repealed:

I. RSA 77:4-c, relative to sale or exchange of transferable shares not taxable.

II. RSA 77:4, V, relative to the taxation of interests in qualified investment companies.

III. RSA 77:4, VI, relative to the taxation of interests in qualified capital companies.

52 Definitions; Meals and Rooms Tax; Operator. Amend RSA 78-A:3, IV to read as follows:

IV. "Operator" means any person operating a hotel, whether as owner or proprietor or lessee, sublessee, mortgagee, licensee, or otherwise; and any person charging for a taxable meal; and any person [engaged in both activities], corporation, partnership, proprietor, lessee, sublessee, mortgagee, licensee or otherwise engaged in the business of rental of motor vehicles.

53 New Paragraphs; Meals and Rooms Tax; Motor Vehicle Rental; Definitions. Amend RSA 78-A:3 by inserting after paragraph XIII the following new paragraphs:

XIV. "Motor vehicle" means a self-propelled vehicle designed to transport persons or property on a public highway, including a van or jeep. The term does not include the following:

(a) A device moved only by human power;

(b) A device used exclusively on stationary rails or tracks;

(c) Road-building machinery; or

(d) A mobile office.

XV. "Rental agreement" means an agreement by the owner of a motor vehicle to provide, for not longer than 180 days, the exclusive use of that motor vehicle to another for consideration.

XVI. "Gross rental receipts" means value received or promised as consideration to the owner of a motor vehicle for rental of the vehicle, but does not include:

(a) Separately stated charges for insurance;

(b) Charges for damages to the motor vehicle occurring during the rental agreement period;

(c) Separately stated charges for motor fuel sold by the owner of the motor vehicle.

XVII. "Owner of a motor vehicle" means a person named in the certificate of title as the owner of the vehicle or a person who has the exclusive use of a motor vehicle by reason of rental and holds the vehicle for re-rental.

XVIII. "Department" means the department of revenue administration.

XIX. "Renter" means any person who, for consideration paid to another, is provided a vehicle under a rental agreement.

54 Meals and Rooms Tax; Licenses Required; Penalty. Amend RSA 78-A:4 to read as follows:

78-A:4 Licenses Required; Penalty.

I. Each operator shall register with the department the name and address of each place of business within the state where [he] it operates a hotel [or], sells taxable meals, or rents motor vehicles. The operator shall pay $5 for each registration, upon receipt of which the department shall issue a license for each place in such form as it determines, attesting that the registration has been made. The license expires on June 30 in each odd-numbered year unless sooner revoked or suspended by the department. The license shall be conspicuously posted in a public area upon the premises to which it relates.

II. No person shall engage in serving taxable meals [or], renting rooms, or renting motor vehicles without first obtaining the license required by this section. The license is nonassignable and cannot be transferred. Any person who fails to register or obtain a license as provided in this section shall be subject to the penalty provisions of RSA 21-J:39.

55 New Paragraph; Tax Imposed on Motor Vehicle Rentals. Amend RSA 78-A:6 by inserting after paragraph II the following new paragraph:

II-a. A tax of 8 percent is imposed upon the gross rental receipts of each rental.

56 Meals and Rooms Tax; Collection of Tax. Amend RSA 78-A:7, I to read as follows:

I. The operator shall either state the amount of the tax to each occupant [or], purchaser of a meal or renter, or state that the tax is included in the price of the occupancy or meal or the gross rental receipts received. The operator shall demand and collect the tax from the occupant [or], purchaser, or renter. The occupant [or], purchaser, or renter shall pay the tax to the operator. If the tax is included in the price of the meal or occupancy or the gross rental receipts received, upon request the operator shall state to the purchaser [or], occupant, or renter the amount of the tax.

57 Tobacco Settlement Funds. Beginning with the fiscal year ending June 30, 1999, $4,000,000 of funds received each fiscal year by the state of New Hampshire as a result of the settlement in 1998 of litigation against tobacco companies shall be deposited in the education trust fund established in RSA 198:39. The governor is authorized to draw a warrant for said sums out of funds received by the state from settlement of the tobacco litigation.

58 Statement of Purpose. In adopting sections 59-65 of this act, the general court finds that:

I. The economic vitality of New Hampshire’s grand hotels is threatened by the creation of large gaming and resort complexes in southern New England and Canada. The grand hotels will be further impacted if the proposed expansion of gaming occurs in the southern part of the state. New Hampshire’s grand hotels are an inherent part of our state’s traditions, character and quality of life. Their preservation and continued existence is of fundamental importance to the economic vitality, tourism trade, hospitality, and educational opportunities of the state and to the preservation and enhancement of employment in the communities in which they exist. Therefore, the grand hotels must be given an opportunity to position themselves in a changing and increasingly competitive environment.

II. New Hampshire’s grand hotels provide substantial and positive impacts on the economies of the local communities in which they are located, as well as on that of the state of New Hampshire. The grand hotels pay substantial local property taxes, fees, and rooms and meals taxes and provide jobs to thousands of New Hampshire residents. The grand hotels are an important part of the tourism industry.

III. The pari-mutuel industry provides substantial and positive impacts on the economies of the local communities in which racetracks are located, as well as that of the state of New Hampshire. The pari-mutuel facilities pay substantial local property taxes and fees and provide jobs to thousands of New Hampshire residents. The pari-mutuel industry is also a significant part of tourism in the state.

IV. The pari-mutuel industry and the grand hotels face substantial competition from various sources. Racetracks in other jurisdictions are assessed lower taxes and receive substantial incentives to support this industry. Large resort hotels in other states have access to state-created amenities to attract year-round guests.

59 New Chapter; Electronic Games of Chance. Amend RSA by inserting after chapter 284 the following new chapter:

CHAPTER 284-A

Electronic Games of Chance

284-A:1 Definitions. In this chapter:

I. "Electronic games of chance machine" means an electronic, mechanical, or computerized machine licensed by the gaming oversight authority which, upon the insertion of cash, tokens or the payment of any consideration whatsoever, is available to be played where, by chance or skill, or both, the player may receive cash, tokens or any consideration whatsoever. Electronic games of chance machines include, but are not limited to, slot machines, video poker machines, and video lottery machines. Electronic games of chance machines do not include any redemption slot machines and redemption poker machines as defined in RSA 647 or video poker machines or other similar machines used for amusement purposes only and which do not disburse cash or tokens.

II. "Gaming oversight authority" means the authority established by RSA 284-A:2.

III. "Grand hotel" means a facility which operated with a minimum of 195 rental units in a single structure available to the public as of July 1, 1998, has restaurant facilities, restrooms, bathing facilities, public telephones, an attached 18-hole golf course in common ownership with the grand hotel facility and adequate parking for patrons.

IV. "Grand hotel applicant" means a person who owns and operates a grand hotel.

V. "Grand hotel licensee location" means the sole location within the grand hotel where electronic games of chance machines are located, which location must have existed as of January 1, 1998.

VI. "Net machine income" means all cash or other consideration utilized to play an electronic games of chance machine, less all cash or other consideration paid to players of electronic games of chance machines as winnings.

VII. "Operator applicant" means the entity in which a pari-mutuel licensee, grand hotel or resort hotel applicant will participate and apply for an operator’s license to operate electronic games of chance machines at the pari-mutuel, grand hotel, or resort hotel licensee location, as applicable.

VIII. "Operator’s license" means the license issued by the gaming oversight authority to an operator licensee which allows the operator licensee to possess, conduct and operate electronic games of chance machines in accordance with this chapter.

IX. "Operator licensee" means a pari-mutuel licensee, grand hotel applicant, resort hotel applicant or the operator applicant who is issued a license by the gaming oversight authority to operate electronic games of chance machines pursuant to this chapter.

X. "Pari-mutuel commission" means the New Hampshire pari-mutuel commission as established in RSA 284:6-a.

XI. "Pari-mutuel licensee" means an entity licensed and authorized to conduct either:

(a) Live horse racing as provided in RSA 284:16 for at least the number of days as required in RSA 284:22-a, II(a)(3) as determined by the pari-mutuel commission; or

(b) Live dog racing as provided in RSA 284:16-a for at least the number of days as required in RSA 284:22-a, II(a)(3) as determined by the pari-mutuel commission.

XII. "Pari-mutuel licensee location" means the facility at which the pari-mutuel licensee is located and where the pari-mutuel licensee conducts live thoroughbred horse racing or live dog racing as of January 1, 1998 and any real estate in which the pari-mutuel licensee has an interest as of January 1, 1998 which is adjacent to the real estate on which the pari-mutuel licensee conducts live thoroughbred horse racing or live dog racing; provided that the pari-mutuel licensee location shall include any structures that may be constructed at such location after January 1, 1998.

XIII. "Resort hotel" means a facility which operated with a minimum of 150 rental units in a single structure available to the public as of July 1, 1998, has restaurant facilities, restrooms, bathing facilities, public telephones and adequate parking for patrons in compliance with local zoning ordinances.

XIV. "Resort hotel applicant" means a person who owns and operates a resort hotel.

XV. "Resort hotel licensee location" means the sole location within the resort hotel where electronic games of chance machines are located, which location must have existed as of January 1, 1998.

XVI. "Sweepstakes commission" means the New Hampshire sweepstakes commission as established by RSA 284:21-a.

XVII. "Technology provider" means any person or entity which designs, manufactures, installs, distributes, or supplies electronic games of chance machines for sale or lease to the sweepstakes commission, and which are for use by an operator licensee for conducting electronic games of chance in accordance with this chapter.

XVIII. "Token" means the coin, which is not legal tender, sold by a cashier in a face amount equal to the cash paid by a player for the sole purpose of playing an electronic games of chance machine at a pari-mutuel licensee location or paid to a player of an electronic games of chance machine, which can be exchanged for cash at the pari-mutuel licensee location where the electronic games of chance machine is located.

284-A:2 Gaming Oversight Authority.

I. There is hereby established the New Hampshire gaming oversight authority. The gaming oversight authority shall consist of the attorney general, the commissioner of safety, and the commissioner of revenue administration or their respective designees. The attorney general or the designee of the attorney general shall serve as the chairperson of the gaming oversight authority.

II. The gaming oversight authority shall not grant a license to an eligible grand hotel applicant or resort hotel applicant that does not agree to provide the minimum distribution of net machine income as provided in RSA 284-A:12. A grand hotel applicant or resort hotel applicant may increase its distribution of net machine income as part of the application to the gaming oversight authority.

III. No license shall be issued to any person under this chapter without the prior approval of the gaming oversight authority. The gaming oversight authority shall issue licenses only after completion of the investigations set forth in this chapter and the recommendation to issue such license from the pari-mutuel commission or the sweepstakes commission, as the case may be. If the pari-mutuel commission or the sweepstakes commission does not recommend that a license be issued to an applicant, such applicant may apply to the gaming oversight authority for such license.

IV. A grand hotel applicant or a resort hotel applicant shall apply directly to the gaming oversight authority.

V. In addition to the responsibilities set forth in RSA 284-A:2, II, the gaming oversight authority shall have general responsibility for the implementation of this chapter and shall adopt rules under RSA 541-A relative to:

(a) Hearing and deciding promptly and in reasonable order all license applications or recommendations for the suspension or revocation of any license issued under this chapter.

(b) Conducting all investigations required under this chapter with regard to the application of any applicant for a license.

(c) Notifying the pari-mutuel commission that it has received an application by a pari-mutuel licensee or an operator applicant for issuance of an operator license at a pari-mutuel licensee location and requiring the pari-mutuel commission to provide the gaming oversight authority with all records of the pari-mutuel commission regarding the licensing of the pari-mutuel licensee.

(d) Conducting hearings pertaining to civil violations of this chapter or rules under the provisions of this chapter and collecting all penalties under the provisions of this chapter.

(e) Establishing standards and a reasonable fee structure for the licensing and renewal of licenses for operators.

(f) Establishing standards and a reasonable fee structure for the licensing and renewal of licenses for technology providers.

(g) Establishing standards and a reasonable fee structure for the licensing and renewal of licenses for electronic games of chance employees.

(h) Establishing technical standards for approval of electronic games of chance machines, including mechanical and electrical reliability and security against tampering, as it may deem necessary to protect the public from fraud or deception and to ensure the integrity of their operation.

(i) Establishing criteria for licensing under RSA 284-A:8.

(j) Establishing standards for reviewing, altering, removing, constructing or enlarging any structure at the pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location.

(k) Such other rules as may be necessary to implement this chapter.

VI. The gaming oversight authority shall have the authority to issue subpoenas and compel the attendance of witnesses, to administer oaths, and require testimony of witnesses under oath.

VII. Pending the adoption of rules under RSA 541-A, and notwithstanding RSA 541-A:18, the gaming oversight authority shall adopt interim rules after public hearing and within 30 days after enactment of this chapter. Such interim rules shall automatically expire upon the adoption of rules under RSA 541-A.

VIII. No later than March 31 in each calendar year, the gaming oversight authority shall provide a report to the fiscal committee of the general court, regarding the operation of electronic games of chance machines. Such report shall include any recommendations for legislation.

IX. With regard to minutes and records of the gaming oversight authority:

(a) The gaming oversight authority shall cause to be made and kept a record of all proceedings of public meetings of the gaming oversight authority. A verbatim transcript of those proceedings shall be prepared by the gaming oversight authority upon the request of any member of the authority or upon the request of any other person and the payment by that person of the costs of preparation. A copy of a transcript shall be made available to any person upon request and payment of the costs of preparing the copy.

(b) The gaming oversight authority shall keep and maintain a list of all applicants for licenses it receives under this chapter together with a record of all actions taken with respect to such applicants. A file and record of the actions by the gaming oversight authority shall be open to public inspection provided, however, that the information regarding any applicant whose license or registration has been denied, revoked, or not renewed shall be removed from such list after 5 years from the date of such action.

(c) The gaming oversight authority shall maintain such other files and records as the gaming oversight authority determines is necessary.

(d) All information and data required by the gaming oversight authority to be furnished to it, or which may otherwise be obtained, shall be considered to be confidential and shall not be revealed in whole or in part except in the course of the necessary administration of this chapter, or upon the lawful order of a court of competent jurisdiction, or, with the approval of the attorney general, to a duly authorized law enforcement agency.

(e) All information and data pertaining to an applicant's criminal record, family, and background furnished to or obtained by the gaming oversight authority from any source shall be considered confidential and shall be withheld in whole or in part. Such information shall be released upon the lawful order of a court of competent jurisdiction or to a duly authorized law enforcement agency.

(f) Notice of the contents of any information or data released, except to a duly authorized law enforcement agency pursuant to subparagraphs (d) or (e) of this paragraph, shall be given to any applicant, registrant, or licensee in a manner prescribed by the rules adopted by the gaming oversight authority.

X. The gaming oversight authority may from time to time contract for and procure on a fee or independent contracting basis such financial, economic, or security consultants and any other technical and professional services as the authority deems necessary for the discharge of its duties. The cost shall be a charge against the general fund.

284-A:3 Duties of the Pari-mutuel Commission.

I. The pari-mutuel commission shall:

(a) Provide to the gaming oversight authority all records pertaining to the licensing of a pari-mutuel licensee under RSA 284 within 30 days after the pari-mutuel commission receives notice from the gaming oversight authority pursuant to RSA 284-A:2, V(c).

(b) Hear and make recommendations promptly but no later than 60 days after receipt of notice from the gaming oversight authority pursuant to RSA 284-A:2, V(c) to the gaming oversight authority and in reasonable order all license applications for a license under RSA 284-A:8, II.

II. The pari-mutuel commission shall make its recommendation to the gaming oversight authority in writing and after hearing. All hearings shall be conducted in accordance with the rules adopted by the pari-mutuel commission under RSA 284 and subject to RSA 284-A:3, III.

III. With regard to minutes and records of the pari-mutuel commission:

(a) The pari-mutuel commission shall cause to be made and kept a record of all proceedings of public meetings of the pari-mutuel commission pursuant to this chapter. A verbatim transcript of those proceedings shall be prepared by the pari-mutuel commission upon the request of any commissioner or upon the request of any other person and the payment by that person of the costs of preparation. A copy of a transcript shall be made available to any person upon request and payment of the costs of preparing the copy.

(b) The pari-mutuel commission shall keep and maintain a list of all notices it receives under RSA 284-A, together with a record of all actions taken with respect to such notices. A file and record of the pari-mutuel commission’s actions shall be open to public inspection provided, however, that the information regarding any applicant whose license or registration has been denied, revoked, or not renewed shall be removed from such list after 5 years from the date of such action.

(c) The pari-mutuel commission shall maintain such other files and records as the pari-mutuel commission determines is necessary.

(d) All information and data required by the pari-mutuel commission to be furnished to it, or which may otherwise be obtained, shall be considered to be confidential and shall not be revealed in whole or in part except in the course of the necessary administration of this chapter, or upon the lawful order of a court of competent jurisdiction, or with the approval of the attorney general, to a duly authorized law enforcement agency.

(e) All information and data pertaining to an applicant's criminal record, family, and background furnished to or obtained by the pari-mutuel commission from any source shall be considered confidential and shall be withheld in whole or in part. Such information shall be released upon the lawful order of a court of competent jurisdiction or to a duly authorized law enforcement agency.

(f) Notice of the contents of any information or data released, except to a duly authorized law enforcement agency pursuant to subparagraphs (d) or (e) of this paragraph, shall be given to any applicant, registrant, or licensee in a manner prescribed by the rules and regulations adopted by the pari-mutuel commission.

284-A:4 Duties of the Sweepstakes Commission.

I. The sweepstakes commission shall:

(a) Hear and make recommendations promptly to the gaming oversight authority and in reasonable order all license applications for technology providers.

(b) Collect all license fees imposed upon any applicant and all taxes imposed by this chapter.

(c) Adopt, pursuant to RSA 541-A, such rules as may be necessary to implement this chapter.

(d) Certify net machine income by inspecting records, conducting audits, having its agents on site, or by any other reasonable means.

(e) Establish a central computer system located at the office of the sweepstakes commission linking all electronic games of chance machines to a central mainframe located at the office of the sweepstakes commission to insure control over electronic games of chance. The sweepstakes commission shall establish a bid procedure for such contracts.

(f) Enter into lease agreements with technology providers to provide electronic games of chance machines to operator licensees. These lease agreements shall provide that each technology provider shall supply the quantity and quality of electronic games of chance machines as determined by an operator licensee in a timely and efficient manner. Each agreement shall also provide that the technology provider shall provide all maintenance and service of its electronic games of chance machines at no additional charge or fee to the state or the operator licensees.

(g) Establish technical standards for approval of electronic games of chance machines, including mechanical and electrical reliability and security against tampering, as it may deem necessary to protect the public from fraud or deception and to ensure the integrity of their operation.

(h) Subject to the provisions of RSA 284-A:8, IX, determine from time to time the number of electronic games of chance machines that any operator licensee may operate.

II. The sweepstakes commission shall have the authority to issue subpoenas and compel the attendance of witnesses, to administer oaths and to require testimony under oath.

III. No later than March 1 in each calendar year, the sweepstakes commission shall provide a report to the gaming oversight authority regarding the generation of revenues of electronic games of chance machines by pari-mutuel licensees.

IV. With regard to minutes and records of the sweepstakes commission:

(a) The sweepstakes commission shall cause to be made and kept a record of all proceedings held at public meetings of the sweepstakes commission. A verbatim transcript of those proceedings shall be prepared by the sweepstakes commission upon the request of any commissioner or upon the request of any other person and the payment by that person of the costs of preparation. A copy of the transcript shall be made available to any person upon request and payment of the costs of preparing the copy.

(b) The sweepstakes commission shall keep and maintain a list of all notices for licenses as technology providers under RSA 284-A, together with a record of all actions taken with respect to such applicants. A file and record of the actions by the sweepstakes commission shall be open to public inspection provided, however, that the information regarding any applicant whose license or registration has been denied, revoked, or not renewed shall be removed from such list after 5 years from the date of such action.

(c) The sweepstakes commission shall maintain such other files and records as the sweepstakes commission determines is necessary.

(d) All information and data required by the commission to be furnished to it, or which may otherwise be obtained, shall be considered to be confidential and shall not be revealed in whole or in part except in the course of the necessary administration of this chapter, or upon the lawful order of a court of competent jurisdiction, or with the approval of the attorney general, to a duly authorized law enforcement agency.

(e) All information and data pertaining to an applicant’s criminal record, family, and background furnished to or obtained by the sweepstakes commission from any source shall be considered confidential and shall be withheld in whole or in part. Such information shall be released upon the lawful order of a court of competent jurisdiction, or with the approval of the attorney general, to a duly authorized law enforcement agency.

(f) Notice of the contents of any information or data released, except to a duly authorized law enforcement agency pursuant to subparagraphs (d) or (e) of this paragraph, shall be given to any applicant, registrant, or licensee in a manner prescribed by the rules adopted by the sweepstakes commission.

V. Pending the adoption of rules under RSA 541-A, and notwithstanding RSA 541-A:18, the sweepstakes commission shall adopt interim rules after public hearing and within 30 days after enactment of this chapter. Such interim rules shall automatically expire in accordance with RSA 541-A:19.

284-A:5 Restrictions on Employment.

I. No person who has held an interest in or been employed by the holder of a pari-mutuel license or an operator's license or has held an interest in or been employed by a grand hotel or resort hotel shall be employed by the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division for 2 years from the expiration of such interest or employment. Excluded from this prohibition shall be employees of a pari-mutuel licensee who are employed on an emergency or temporary basis by the pari-mutuel commission for services in connection with a live race or live race meet.

II. No person who holds an interest in or is employed by the holder of a pari-mutuel license or an operator's license, or holds an interest in or is employed by a grand hotel or resort hotel, shall be employed by the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division.

III. No employee of the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division shall play an electronic games of chance machine.

IV. No employee of the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division shall directly or indirectly pay or contribute money or things of value to:

(a) Any candidate for nomination or election to any public office in this state.

(b) Any political party or any committee of any political party in this state.

(c) Any group, committee or association organized in support of any such candidate or political party.

V. No person who was employed by the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division shall hold an interest in or be employed by the holder of a pari-mutuel license or an operator's license, or hold an interest in or be employed by a grand hotel or resort hotel, for a period of 2 years from the termination of employment by the gaming oversight authority, pari-mutuel commission, the sweepstakes commission, or gaming enforcement division.

284-A:6 Authorization for Electronic Games of Chance.

I. A pari-mutuel licensee, grand hotel applicant, or resort hotel applicant shall be authorized to install, operate and conduct electronic games of chance at its pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location, subject to the provisions of this chapter.

II. A pari-mutuel licensee, grant hotel applicant, or resort hotel applicant may enter into one or more agreements to manage or participate in the operation of electronic games of chance at its pari-mutuel licensee location, grant hotel licensee location, or resort hotel licensee location; such operator applicant must be licensed under this chapter.

284-A:7 New Hampshire Electronic Gaming Areas.

I. There are established 2 New Hampshire electronic gaming areas as follows:

(a) The "White Mountain Tourist Gaming Area" which shall include those Carroll County municipalities and unincorporated towns of Chatham, Jackson, Hart’s Location, Bartlett, Hale’s Location, Conway, Albany and the Grafton County municipalities and unincorporated towns of Littleton, Bethlehem, Monroe, Lyman, Lisbon, Sugar Hill, Franconia, Bath, Landaff, Easton, Lincoln, Livermore, Haverhill, Benton, Woodstock, Thornton, Waterville, Campton, Ellsworth, Warren and Piermont.

(b) The "North Country Tourist Gaming Area" shall include all of the municipalities and unincorporated towns of Coos County.

II. The gaming oversight authority shall issue 2 operator’s licenses for each of the New Hampshire electronic gaming areas established in paragraph I, provided there are eligible applicants for such licenses.

284-A:8 Licenses, Number of Electronic Games of Chance Machines.

I. No person shall engage in the ownership, possession, transfer, maintenance, repair or operation of an electronic games of chance machine unless such person is licensed in accordance with the provisions of this chapter, local approval as provided in RSA 284-A:13 has been obtained, the gaming oversight authority has adopted temporary rules pursuant to RSA 284-A:2, VII, and the sweepstakes commission has adopted temporary rules as provided in RSA 284-A:4, V.

II. Any pari-mutuel license issued by the pari-mutuel commission following the effective date of this chapter shall not authorize the pari-mutuel licensee to install, operate or conduct electronic games of chance machines until the pari-mutuel licensee is issued an operator's license pursuant to the provisions of this chapter.

III. Any operator applicant shall be licensed as an operator licensee in accordance with the provisions of this chapter prior to engaging in any activity authorized by this chapter.

IV. Any employee of an operator licensee who is directly engaged in the installation or operation of electronic games of chance machines or in any moneys associated with the playing of electronic games of chance machines and all supervisory and managerial personnel, shall be licensed as an electronic games of chance employee in accordance with this chapter prior to engaging in any activity authorized by this chapter.

V. Any technology provider engaged in the business of providing, installing, maintaining or repairing electronic games of chance machines shall be licensed by the gaming oversight authority in accordance with the provisions of this chapter prior to engaging in any activity authorized by this chapter. No technology provider shall be entitled to operate electronic games of chance machines.

VI.(a)(1) On or prior to June 30, 2001, each operator licensee at a pari-mutuel licensee location at which live dog racing is conducted shall be limited to 750 electronic games of chance machines in operation at each such pari-mutuel licensee location.

(2) On or prior to June 30, 2001, the operator licensee at the pari-mutuel licensee location at which live thoroughbred horse racing is conducted shall be limited to 1500 electronic games of chance machines in operation at such pari-mutuel licensee location.

VII. On or prior to June 30, 2001, each operator licensee at a grand hotel licensee location or a resort hotel licensee location shall be limited to 500 electronic games of chance machines.

VIII. The gaming oversight authority shall consider the following factors prior to issuing an operator’s license to a grand hotel applicant, resort hotel applicant or applicable operator applicant:

(a) Total distribution of net machine income.

(b) A detailed economic plan for the municipality and the surrounding region where the grand hotel or resort hotel is located with supporting documentation to explain the following:

(1) Quality of jobs including, but not limited to, wages and fringe benefits.

(2) Historical unemployment in the area.

(3) Direct and indirect employment gain.

(4) Impact on the tourism-based economy.

(5) Impact on regional economic development.

(6) Historical and projected household income.

(7) Tourist trends.

(c) A business plan to support the request for electronic games of chance machines.

(d) Market demand for the electronic games of chance machines.

(e) Qualifications of those persons who own or manage the grand hotel applicant or resort hotel applicant.

(f) Regional population.

(g) Vehicle traffic.

(h) Total square footage of the grand hotel or resort hotel facility and the total land acreage of such facility.

(i) Housing availability for employees.

(j) Availability of suitable infrastructure.

(k) Evidence provided by the applicant that the applicant has received local approval as required.

(l) Other information that the authority may require.

IX. Commencing as of July 1, 2001 and thereafter, but no more frequently than at 6-month intervals thereafter, the sweepstakes commission may increase the number of electronic games of chance machines in operation by an operator licensee, subject to approval of such recommendation by the gaming oversight authority. The determination by the sweepstakes commission shall be made after due consideration of the economic conditions present at the time of the determination, including without limitation, the performance of the operator licensee in operating the then existing electronic games of chance machines, the present market conditions and market forecasts and projections, and the financial ability of the operator licensee. Prior to any determination hereunder, the sweepstakes commission shall notify each operator licensee in writing that the sweepstakes commission intends to consider an adjustment in the number of electronic games of chance machines. No such determination shall be made until after notice and a hearing by the sweepstakes commission and specific findings and rulings are made by the sweepstakes commission. The sweepstakes commission shall adopt rules under RSA 541-A, regarding the procedures under this paragraph.

X. In addition to all other enforcement powers it has, the sweepstakes commission may, after notice and hearing, reduce the number of electronic games of chance machines at a pari-mutuel licensee location, grand hotel licensee location or resort hotel licensee location for cause, including the failure to comply with the rules and regulations of the gaming oversight authority, the pari-mutuel commission or the sweepstakes commission.

XI. No pari-mutuel licensee, grand hotel applicant, resort hotel applicant or operator licensee shall alter, construct, remove, or enlarge any structure at the pari-mutuel licensee location, grand hotel licensee location or resort hotel licensee location, as applicable, without the prior approval of the gaming oversight authority, except for the winterization of structures existing as of January 1, 1998.

284-A:9 Application and License Requirement for State License for Electronic Games of Chance.

I. An applicant who has been authorized for an electronic games of chance license shall secure a state license from the gaming oversight authority. An applicant must complete and sign an application on the forms prescribed by the gaming oversight authority. The application shall include the full name, residence, date of birth, and other personal identifying information of the applicant, and if a corporation or other form of business enterprise, the same information shall be provided with respect to each partner, trustee, officer, director, and any shareholder or other holder who owns more than 10 percent of the legal or beneficial interests of such entity.

II. Whenever the gaming oversight authority shall receive an application, including any application under RSA 284-A:10, it shall refer the same to the attorney general who shall conduct an investigation. The investigation may be conducted through any appropriate state or federal law enforcement system and may seek information as to the subject's financial, criminal or business background, or any other information which the attorney general, in his or her sole discretion, may find to bear on the subject's fitness to be associated with the ownership or management of the operation of electronic games of chance machines in New Hampshire, including, but not limited to, the subject's character, personal associations, and the extent to which the subject is properly doing business in the manner in which it purports to operate. When the gaming oversight authority requests such an investigation, the attorney general shall report the results of his or her investigation to the gaming oversight authority within 90 days after the receipt of said request. Notwithstanding any other law to the contrary, the results of any such investigation shall be confidential and shall not be subject to disclosure or to public inspection, except that the attorney general, in the attorney general’s sole discretion, shall determine the extent to which and the manner in which said results may be reported to the gaming oversight authority or other state agency or official and, if reported, whether such results are to retain their confidential character; provided, however, that whenever the attorney general conducts such an investigation, the attorney general shall notify the gaming oversight authority whether or not in his or her opinion such person is fit to be associated with participation in the ownership or management of the operation of electronic games of chance machines in this state. The attorney general shall have the authority to conduct an investigation on the attorney general’s motion into the background of the license applicant or holder, or any person or entity upon whom the license applicant or holder relies for financial support.

III. In any investigation conducted pursuant to paragraph II, the attorney general or any duly authorized member of the attorney general’s staff may require by subpoena or otherwise the attendance of witnesses and the production of such correspondence, documents, books and papers as he deems advisable, and for purposes of this section, may administer oaths and take the testimony of witnesses. No person shall be excused from testifying or from producing any book or paper in any investigation conducted pursuant to paragraph II upon the ground that such testimony or documentary evidence might tend to incriminate such person; provided that if, after a claim of privilege, the attorney general, in writing, orders such person to testify or produce documentary evidence, he or she shall not be prosecuted, punished or subjected to any penalty or forfeiture for or on account of any act, transaction, matter or thing which he or she, under oath, disclosed or produced. No person so testifying shall be exempt from prosecution or punishment for any perjury committed by the person in his or her testimony.

IV. The gaming oversight authority shall charge the applicant an application fee of $100,000 which shall be used to defray the cost of processing the application. If the cost of processing the application exceeds $100,000, the applicant shall pay the difference. The attorney general shall charge the applicant an investigation fee of $50,000 which shall be used to defray the cost of the background investigation. If the cost of the background investigation exceeds $50,000, the applicant shall pay the difference.

284-A:10 Licensure Requirements.

I. No operator's license shall be issued by the gaming oversight authority unless the applicant has proven to the satisfaction of the gaming oversight authority by clear and convincing evidence:

(a) Its financial stability, integrity and responsibility, considering, without limitation, bank references, business and personal income and disbursement schedules, tax returns and other reports filed with governmental agencies, and business and personal accounting and check records and ledgers.

(b) The integrity of all financial backers, investors, mortgagees, bondholders, and holders of indentures, notes and other evidences of indebtedness of the applicant.

(c) Its good character, honesty and integrity, considering, without limitation, information pertaining to family, habits, character, reputation, criminal and arrest record, business activities, financial affairs, and business, professional and personal associates, covering at least the 10-year period immediately preceding the filing of the application.

(d) Its business ability and experience in the manufacture, installation, repair, maintenance or operation of electronic games of chance machines, as appropriate, so as to establish the likelihood of a successful and efficient operation.

II.(a) In addition, no operator's license shall be issued by the gaming oversight authority to any applicant unless the applicant has proven to the satisfaction of the gaming oversight authority by clear and convincing evidence that each director, officer or similar principal employee and each direct or indirect owner satisfies the standards for licensure contained in RSA 284-A:10, I.

(b) The gaming oversight authority may, in its discretion, waive the qualification requirement for any such person who is not significantly involved in the activities of the applicant, does not have the ability to significantly influence or control the applicant, or for other good cause.

(c) Except as provided in RSA 284-A:10, II(d), no person who owns, directly or indirectly, legally or beneficially, 10 percent or less of the equity securities or 20 percent or less of the outstanding debt securities of a publicly traded holding company of an applicant for an operator's license shall be required to be qualified pursuant to the provisions of this section prior to the issuance of such a license to the applicant.

(d) If an operator licensee has 25 or fewer holders of its equity securities, either directly or indirectly, legally or beneficially, then each such holder shall satisfy the standards of RSA 284-A:10, II(a).

III. No technology provider's license shall be issued by the gaming oversight authority after recommendation by the sweepstakes commission unless the applicant has demonstrated to the satisfaction of the gaming oversight authority by clear and convincing evidence that it satisfies the standards contained in paragraphs I and II of this section. The sweepstakes commission shall establish the form of application which must be completed by each applicant for a technology provider’s license. Each technology provider license applicant shall be subject to the investigation set forth in RSA 284-A:9 except that all investigatory reports shall be provided to the sweepstakes commission and the gaming oversight authority.

IV. No electronic games of chance employee license shall be issued by the gaming oversight authority unless the applicant has proven to the satisfaction of the gaming oversight authority by clear and convincing evidence that such person satisfies the standards contained in paragraph I of this section.

V. All information and data required by the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division to be furnished pursuant to this chapter, or which may otherwise be obtained by the gaming oversight authority, the pari-mutuel commission, the sweepstakes commission, or gaming enforcement division in the performance of their duties under this chapter, except information regarding net machine income, shall be considered to be confidential and shall not be revealed in whole or in part except in the course of the necessary administration of this chapter, upon lawful order of a court of competent jurisdiction, or with the approval of the commissioner of safety, to a duly authorized law enforcement agency.

VI. The gaming oversight authority shall charge an application fee of $50,000 which shall be used to defray the cost of processing the electronic games of chance employee licensing. If the cost of processing the application exceeds $50,000 for the electronic games of chance employee licensing, the applicant shall pay the difference.

VII. The sweepstakes commission shall charge an application fee of $50,000 which shall be used to defray the cost of processing the technology provider’s license. If the cost of processing the application exceeds $50,000 for the technology provider’s license, the applicant shall pay the difference.

VIII. In addition to all other fees, the sweepstakes commission shall collect from each pari-mutuel licensee, grand hotel applicant, resort hotel applicant, or operator licensee the annual fee of $50 for each electronic game of chance machine located at the pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location and the annual fee of $10,000 from each technology provider.

284-A:11 Exclusion of Minors.

I. No person under the age of majority shall play an electronic games of chance machine authorized by this chapter.

II. No pari-mutuel licensee or operator's licensee shall knowingly permit a minor to play or participate in any aspect of the play of an electronic games of chance machine.

III. Each violation of RSA 284-A:11, I shall be punishable by a fine of no more than $1,000 and shall be payable by such person who violates such paragraph.

IV. Each violation of RSA 284-A:11, II shall be punishable by a fine of no more than $1,000 and shall be payable by the pari-mutuel licensee or operator licensee that is found to have violated such paragraph.

284-A:12 Minimum Distribution of Net Machine Income.

I. The operator licensee at a grand hotel licensee location or a resort hotel licensee location shall, at a minimum, distribute net machine income generated by such operator licensee at a grand hotel licensee location or resort hotel licensee location as provided in paragraph II of this section excluding the payment set forth in RSA 284-A:12, II(c). All other operator licensees shall distribute net machine income as set forth in paragraph II of this section excluding the payment set forth in RSA 284-A:12, II(d).

II. Subject to the provisions of RSA 284-A:12, I, net machine income generated by an operator licensee shall be distributed and paid as follows:

(a) Sixty-two percent of net machine income shall be paid to the state from which the state shall pay for its costs of regulation and administration; the acquisition and operation of the central computer system; the lease payments due to technology providers; and the balance shall be deposited with the treasurer for funding public education.

(b) Two percent of net machine income shall be paid to the municipality in which an operator licensee operates electronic games of chance machines.

(c) Three and two tenths percent of net machine income generated by an operator licensee at a pari-mutuel licensee location shall be paid to the pari-mutuel commission which will establish a horse racing purse fund for live horse racing and the horse racing purse fund shall be disbursed as follows:

(1) The sum of $257,000 each year and adjusted annually for inflation to the Jockeys Guild Health and Welfare Trust maintained by Jockeys Guild, Inc. for the sole purpose of providing health and welfare benefits to active, disabled, and retired jockeys in accordance with eligibility criteria established by the Guild; and

(2) The balance of such fund toward purses for live horse racing conducted by the pari-mutuel licensee at such pari-mutuel licensee location.

(d) Three and two-tenths percent of net machine income generated by an operator licensee at a grand hotel licensee location or a resort hotel licensee location shall be paid and disbursed as follows:

(1) One and six-tenths percent of net machine income shall be paid to the travel and tourism joint promotional advertising fund hereby established in the office of the state treasurer, to be used by the office of travel and tourism, division of economic development, department of resources and economic development to promote travel and tourism in the state; and

(2) One and six-tenths percent shall be paid to the pari-mutuel commission which will establish a live racing purse fund for live dog racing purses for live dog racing conducted by a pari-mutuel licensee at its pari-mutuel licensee location.

(e) Thirty-two and eight-tenths percent of net machine income shall be retained by the operator licensee.

III.(a) The pari-mutuel commission shall adopt rules and regulations regarding the disbursement of moneys collected in the horse racing purse fund created in RSA 284-A:12, II(c) to the pari-mutuel licensee which conducts live horse racing for live horse racing purses.

(b) The pari-mutuel commission shall adopt rules and regulations regarding the disbursement of moneys collected in the live racing purse fund created in RSA 284-A:12, II(d)(2) to a pari-mutuel licensee which conducts live horse racing or live dog racing at its pari-mutuel licensee location for purses for such live racing.

IV. All distributions to the state, the pari-mutuel commission, the state treasurer, and the municipality shall be made by the operator licensee within 5 business days after the end of each week in which net machine income is generated. The operator licensee shall pay a fine equal to the greater of $50 for each day in which such payments are overdue in whole or in part or interest on the unpaid amount with interest calculated at the annual rate of 10 percent for each day for which the payment due is late. The late payment penalty shall be paid by the operator licensee to the sweepstakes commission. Notwithstanding the foregoing, the fine imposed in this paragraph shall not limit the gaming oversight authority from imposing further sanctions if the sweepstakes commission determines that an operator licensee habitually violates this section.

284-A:13 Procedures for Adoption by Local Community.

I. Any town or city in which a pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location is situated may adopt the provisions of RSA 284-A, to allow the operation of electronic games of chance, in the following manner:

(a) In a town, the question shall be placed on the warrant of a special or annual town meeting under the procedures set out in RSA 39:3, and shall be voted on a ballot; provided, however, if the question is placed on the warrant at a special town meeting, it shall be the only question at such special town meeting. In a city, the legislative body may vote to place the question on the official ballot for any regular municipal election, or, in the alternative, shall place the question on the official ballot for any regular municipal election upon submission to the legislative body of a petition signed by 5 percent of the registered voters.

(b) The selectmen or city council shall hold a public hearing on the question at least 15 days but not more than 30 days before the question is to be voted on. Notice of the hearing shall be posted in at least 2 public places in the municipality and published in a newspaper of general circulation at least 7 days before the hearing.

(c) The wording of the question shall be substantially as follows: "Shall we adopt the provisions of RSA 284-A, allowing the operation of electronic games of chance at the licensed pari-mutuel, grand hotel, or resort hotel facility located within the town?"

II. If a majority of those voting on the question vote "Yes," RSA 284-A shall apply within the city or town and may not be rescinded by the city or town.

III. If the question is not approved, the question may later be voted upon according to the provisions of paragraph I, provided, however, that the town may consider the question at no more than one special town meeting and the annual town meeting in the same calendar year.

284-A:14 Inspection of Machines; Penalty for Tampering or Manipulating.

I. The sweepstakes commission shall, from time to time, test electronic games of chance machines installed at a pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location. In conducting such tests, the sweepstakes commission shall use the services of an independent laboratory, the cost of which independent laboratory shall be paid by the technology provider.

II. Any person who, with the intent to manipulate the outcome, payoff or operation of an electronic games of chance machine, manipulates the outcome, payoff or operation of any electronic games of chance machine by physical, electronic or mechanical means, shall be guilty of a felony.

284-A:15 Electronic Games of Chance Machines.

I.(a) An operator licensee shall provide to the gaming oversight authority, the sweepstakes commission and, if regulated by the pari-mutual commission, to the pari-mutuel commission, by diagram a description of:

(1) The location of each electronic games of chance machine available for play by the public.

(2) The location of all areas for the storage, maintenance or repair of such machines.

(3) A description of all security measures to be taken for the safeguarding of such machines.

(4) The location and security measures taken for the safeguarding of all moneys, tokens, or other items of value utilized in the use of electronic games of chance machines.

(5) All procedures for the operation, maintenance, repair and inserting or removing of moneys, tokens, or other items of value from electronic games of chance machines.

(b) All of the above shall be approved by the gaming oversight authority prior to commencing the operation of any electronic games of chance machines.

II. No electronic games of chance machine shall be possessed, maintained, exhibited, brought into or removed from a pari-mutuel licensee location, a grand hotel licensee location, or a resort hotel location by any person unless such machine has permanently affixed to it an identification number or symbol authorized by the gaming oversight authority and prior notice of any such movement has been given to the sweepstakes commission.

III.(a) Each operator licensee shall maintain secure facilities for the counting and storage of all moneys, tokens, or other items of value utilized in the conduct of electronic games of chance machines.

(b) All drop boxes and other devices where moneys, tokens, or other items of value are deposited in electronic games of chance machines and all areas wherein such boxes and devices are kept while in use shall be equipped with 2 locking devices, one key which shall be under the exclusive control of the sweepstakes commission and the other under the exclusive control of the operator licensee. Said drop boxes and other devices shall not be brought into the pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location or removed from an electronic games of chance machine, locked or unlocked, except at such times and such places and according to such procedures as the sweepstakes commission may require to safeguard such boxes and devices and their contents.

IV.(a) No electronic games of chance machine shall be used to conduct gaming unless it is identical in all electrical, mechanical and other aspects to a model which has been specifically tested by the sweepstakes commission and licensed for use by the sweepstakes commission.

(b) The sweepstakes commission shall, by rule, establish technical standards for approval of electronic games of chance machines, including mechanical and electrical reliability and security against tampering, as it may deem necessary to protect the public from fraud or deception and to ensure the integrity of their operation.

(c) All electronic games of chance machines in operation at a pari-mutuel licensee location shall provide a pay off of at least 87 percent on an average annual basis.

(d) All tickets given as prizes or winnings from electronic games of chance machines must be redeemed for cash within one year after the date of winning. After the expiration of that one year, all such unredeemed tickets shall become property of the state of New Hampshire, notwithstanding any other law to the contrary.

V. An operator licensee who operates electronic games of chance machines shall not be restricted in the days of operation of such machines, so long as the pari-mutuel licensee has scheduled at least the number of days of racing as required by RSA 284:22-a, II(a)(3). The hours of operation on each day shall be determined by the gaming oversight authority.

VI. The sweepstakes commission shall negotiate and execute agreements with at least 3 technology providers in accordance with reasonable business terms subject to the provisions of RSA 284-A:4, (I)(f). Each operator licensee shall obtain electronic games of chance machines from such technology providers and no others, provided, that no operator licensee shall obtain more than 50 percent of its electronic games of chance machines from any one such technology provider.

VII. The operation of electronic games of chance machines at a grand hotel licensee location or resort hotel licensee location shall not be restricted in the days of operation of such machines. The hours of operation on each day shall be determined by the gaming oversight authority.

VIII. Electronic games of chance machines shall be operated only at times when the public is allowed access to the locations. They shall not be operated during private functions.

284-A:16 Term of License.

I. Any operator’s license or technology provider’s license issued pursuant to this chapter and any renewal thereof shall be valid for 2 years unless earlier suspended or revoked by the gaming oversight authority.

II. Any electronic games of chance employee license or renewal thereof issued pursuant to this chapter shall be valid for 3 years unless earlier suspended or revoked by the gaming oversight authority.

284-A:17 Presence of the Gaming Oversight Authority and Sweepstakes Commission.

I.(a) The gaming oversight authority may be present at any pari-mutuel licensee location, grand hotel licensee location, or resort hotel licensee location at which electronic games of chance machines are operated at all times when the facility is open to the public.

(b) The operator licensee may be required by the gaming oversight authority or gaming enforcement division to provide such office space and equipment which the commission shall by rule determine is reasonably necessary or proper for them to fulfill their responsibilities.

II. The sweepstakes commission may be present at any time an electronic games of chance machine is opened to remove or insert any drop box, hopper, or other mechanism containing money, tokens, or other items of value. The sweepstakes commission may be present in the count room at any time money, tokens or other items of value utilized in electronic games of chance machines are counted.

284-A:18 Sanction Powers of the Gaming Oversight Authority.

I. The gaming oversight authority shall have the sole and exclusive authority, following appropriate hearings and factual determinations, to impose sanctions against any person for any violation of this chapter or any rule of the gaming oversight authority, the sweepstakes commission, or the pari-mutuel commission adopted under the provisions of this chapter.

II. The gaming oversight authority shall have the authority to impose sanctions upon any person for any violation of this chapter or the rules of the gaming oversight authority, the pari-mutuel commission or the sweepstakes commission as follows:

(a) Revocation or suspension of a license.

(b) Civil penalties as may be necessary to punish misconduct and to deter future violations, which penalties may not exceed $20,000 for each violation.

(c) Order restitution of any moneys or property unlawfully obtained or retained by a person.

(d) Issue a cease and desist order which specifies the conduct which is to be discontinued, altered, or implemented by the person.

(e) Issue letters of reprimand or censure, which letters shall be made a permanent part of the file of each person so sanctioned.

(f) Impose any or all of the foregoing sanctions in combination with each other.

III. In determining appropriate sanctions in a particular case, the gaming oversight authority shall consider:

(a) The risk to the public and to the integrity of electronic games of chance machine operations created by the conduct of the person.

(b) The seriousness of the conduct of the person and whether the conduct was purposeful or with knowledge that it was in contravention of the provisions of this chapter or the rules of the gaming oversight authority, the pari-mutuel commission or the sweepstakes commission.

(c) Any justification or excuse for such conduct.

(d) The prior history of the person involved.

(e) The corrective action taken by the person to prevent future misconduct of a like nature from occurring.

(f) In the case of a monetary penalty, the amount of the penalty in relation to the severity of the misconduct and the financial means of the person.

(g) Notwithstanding the foregoing, in the event that a person receives 3 civil penalties each in the amount of $20,000 during the term of such person's license, the gaming oversight authority shall either revoke the license for the balance of the term of the license or suspend such license for a period of 60 days, as determined by the gaming oversight authority.

284-A:19 Declaration of Limited Exemption from Operation of Provisions of 15 U.S.C. section 1172. Pursuant to section 2 of an act of Congress of the United States entitled "An act to prohibit transportation of gambling devices in interstate and foreign commerce," approved January 2, 1951, being Chapter 1194, 64 Stat. 1134, and also designated as 15 U.S.C. sections 1171-1177, the state of New Hampshire, acting by and through the duly elected and qualified members of its legislature, does hereby, in accordance with and in compliance with the provisions of that section 2 of that act of Congress, declare and proclaim that section 2 of that act of Congress shall not apply to any gambling device in this state where the transportation of such a device is specifically authorized by and done in compliance with the provisions of this chapter and any rules adopted pursuant to it, and that any such gambling device transported in compliance with state law and rules shall be exempt from the provisions of that act of Congress.

284-A:20 Legal Shipment of Gaming Devices into New Hampshire. All shipments into this state of gaming devices, the registering, recording and labeling of which has been duly had by the manufacturer or dealer in accordance with sections 3 and 4 of an act of Congress of the United States entitled "An act to prohibit transportation of gambling devices in interstate and foreign commerce," approved January 2, 1951, being chapter 1194, 64 Stat. 1134, and also designated as 15 U.S.C. sections 1171-1172, shall be deemed legal shipments into this state.

284-A:21 Effect on Other Laws. This chapter shall take precedence over any other law, rule, ordinance or regulation of the state or its political subdivisions to the contrary.

21-P:11-a Department of Safety Gaming Enforcement Division.

I. There is established within the department a division of gaming enforcement under the supervision of the commissioner of safety. The division shall be authorized to:

(a) Investigate violations of RSA 284 or RSA 284-A and the rules adopted under the provisions of RSA 284 or RSA 284-A and initiate proceedings before the gaming oversight authority for such violations.

(b) Report the results of any investigation conducted to the pari-mutuel commission, the sweepstakes commission or the gaming oversight authority, as appropriate.

(c) Participate in any hearing conducted by the pari-mutuel commission or the sweepstakes commission.

II. The commissioner of safety shall organize the division into such units as the commissioner deems necessary. The commissioner of safety may employ such personnel as the commissioner deems necessary to fulfill the responsibilities of the division.

21-P:11-b Enforcement Expenditures. Notwithstanding any other provisions of law, the governor and council with the prior approval of the fiscal committee of the general court, upon request from the commissioner of safety may authorize the transfer of general funds to the department of safety to implement and enforce this chapter.

61 License Restricted. RSA 284:16-c is repealed and reenacted to read as follows:

284:16-c License Restricted.

I. Notwithstanding any other provision of law, the pari-mutuel commission shall not issue a license to conduct live thoroughbred horse racing or live harness horse racing pursuant to RSA 284:16 to any applicant if the place where such races or race meets are to be held is within a radius of 40 miles of the place where live thoroughbred horse races or race meets have already been licensed pursuant to RSA 284:16; provided, however, that the pari-mutuel commission may issue a license to conduct live harness racing to the holder of a license to conduct live thoroughbred racing if the live harness racing is conducted at the same place where the live thoroughbred racing is being conducted.

II. Notwithstanding any other provision of law, the pari-mutuel commission shall not issue a license to conduct live dog racing pursuant to RSA 284:16-a to any applicant if the place where the races or race meets are to be held is within a radius of 40 miles of the place where such races or race meets have already been licensed pursuant to RSA 284:16-a

62 Restriction on Gambling. RSA 284:17-c is repealed and reenacted to read as follows:

284:17-c Restriction on Gambling. Except as provided in the introductory paragraph of RSA 284:22, RSA 284:22-a, and RSA 284-A, no licensee who holds running horse races shall at the same facility hold any other kinds of races or permit any other type of gambling except harness horse races and activities licensed by the gaming oversight authority, pari-mutuel commission, or the sweepstakes commission.

63 New Subparagraphs; Grand Hotel Licensee; On-Sale Special License. Amend RSA 178:20, V by inserting after subparagraph (u) the following new subparagraphs:

(v) Grand Hotel. The commission may issue a special license to any person holding an operator’s license with respect to a grand hotel licensee location under the provisions of RSA 284-A provided the grand hotel has an existing liquor license. Such special license shall allow the sale of liquor, wine and beverages in a dining room, function room, gaming room, lounge or any other area designated by the commission, without regard to whether meals are served therein, but only during the time gaming is being conducted under RSA 284-A.

(w) Pari-Mutuel Licensee or Operator Licensee. The commission may issue a special license to a person holding a pari-mutuel license or an operator’s license at a pari-mutuel licensee location under the provisions of RSA 284-A provided the pari-mutuel licensee location has an existing liquor license. Such special license shall allow the sale of liquor, wine, and beverages within the pari-mutuel licensee location, including dining room, function room, gaming room, lounge, or any other area designated by the commission, without regard to whether meals are served therein, but only during the time gaming is being conducted under RSA 284-A.

64 New Subparagraph; Travel and Tourism Joint Promotional Advertising Fund Created. Amend RSA 6:12, I by inserting after subparagraph (vvv) the following new subparagraph:

(www) Moneys received under RSA 284-A:12, II(d), which shall be credited to the travel and tourism joint promotional advertising fund established in 284-A:12, II(d).

65 New Subparagraph; Authorized Electronic Games of Chance Machines Not Prohibited. Amend RSA 647:2, V by inserting after subparagraph (c) the following new subparagraph:

(d) Electronic games of chance machines authorized pursuant to RSA 284-A.

66 Position Established; Appropriations.

I. To carry out the financial and educational reporting requirements of this act, there are hereby established within the department of education 6 full-time permanent positions as follows:

(a) One systems development specialist IV, labor grade 25.

(b) One audit administrator, unclassified group L.

(c) Three auditors, labor grade 23.

(d) One administrative assistant, labor grade 15.

II. The sum of $600,000 is hereby appropriated to the department of education for the biennium ending June 30, 2001, to fund the positions created in paragraph I, including salary, benefits, rent, supplies, and travel. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

III. To carry out the administrative requirements of this act, there is hereby established within the department of revenue administration 2 full-time permanent positions of systems development specialist IV, labor grade 25, and a systems development specialist III, labor grade 22.

IV. The sum of $2,700,000 for the biennium ending June 30, 2001, is hereby appropriated to the department of revenue administration to fund the costs necessary to implement this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

V. The sum of $100,000 for the biennium ending June 30, 2001, is hereby appropriated to the department of education to fund the costs necessary to upgrade school districts' computer systems to carry out the reporting responsibilities of this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

67 Severability. If any provision of this act or the application thereof to any person or circumstance is deemed invalid, the invalidity does not affect the other provisions or applications of the act which can be given effect without the invalid provisions or applications and to this end the provisions of this act are severable.

68 Effective Date.

I. Sections 45-51 of this act shall take effect on April 1, 1999, and shall apply to returns and taxes and reports due on account of taxable periods beginning on or after January 1, 1999.

II. Sections 52-56 and 58-65 of this act shall take effect July 1, 1999.

III. Section 35 of this act shall take effect July 1, 1999 at 12:01 a.m.

IV. The remainder of this act shall take effect April 1, 1999.

1999-0559s

AMENDED ANALYSIS

I. This bill:

(a) Increases the rate of the tobacco tax and dedicates $3,000,000 of annual tobacco tax gross revenues to a tobacco use prevention and cessation fund.

(b) Establishes a uniform education property tax to provide funding for an adequate education.

(c) Increases the rate of the business profits tax and the business enterprise tax.

(d) Adds capital gains to the tax on interest and dividends and increases exemptions under the interest and dividends tax.

(e) Adds a tax on rental of motor vehicles to the meals and rooms tax.

(f) Designates $4,000,000 annually of tobacco settlement funds received by the state for education funding.

(g) Makes appropriations to the department of education and the department of revenue administration for the purposes of the bill.

II. This bill:

(a) Establishes an educational adequacy and education financing reform commission.

(b) Establishes a system for calculating and disbursing state grants for educational adequacy.

(c) Appropriates funds to the commission for the purposes of this bill.

(d) Provides that all expenses related to catastrophic special education are constitutionally mandated and shall be borne by the state.

III. This bill:

(a) Authorizes electronic games of chance at racetracks, grand hotels and resort hotels upon certain conditions and sets forth criteria for establishing and conducting such games of chance.

(b) Establishes requirements and guidelines for the distribution of net machine income.

(c) Establishes a gaming oversight authority and its authority and duties.

(d) Establishes a division of gaming enforcement within the department of safety.

(e) Establishes gaming areas.

(f) Establishes fee amounts for license applicants.

1999-0559s

AMENDED ANALYSIS

(g) Authorizes the issuance of special liquor licenses to electronic games of chance locations within grand hotels and pari-mutuel locations that have liquor licenses.

(h) Creates a special fund to be used by the office of travel and tourism for the promotion of travel and tourism in the state.

(i) Establishes live dog racing and horse racing purse funds administered by the pari-mutuel commission.

Senator McCarley moved to have HB 112, increasing the tobacco tax, laid on the table.

HB 112, increasing the tobacco tax.

Senator Trombly moved that the rules of the Senate be so far suspended as to allow a committee report not previously advertised in the Senate Calendar on HB 109, establishing a flat rate education income tax and a statewide education property tax to fund public education and making an appropriation therefor.

HB 109, establishing a flat rate education income tax and a statewide education property tax to fund public education and making an appropriation therefor. Finance Committee. Ought to pass. Senator Hollingworth for the committee.

Senator Below offered a floor amendment.

Sen. Hollingworth, Dist. 23

Sen. Below, Dist. 5

Sen. F. King, Dist. 1

Sen. Squires, Dist. 12

Sen. Fernald, Dist. 11

1999-0574s

04/09

Floor Amendment to HB 109-FN-A-LOCAL

Amend the title of the bill by replacing it with the following:

1 Declaration of Need and Purpose.

I. Recognizing the duty imposed by part II, article 83 of the New Hampshire constitution to ensure proper diffusion of knowledge and learning throughout the state, the general court finds that measures heretofore authorized for financing primary and secondary education inadequately comply with the mandate of the constitution. More particularly, the general court finds that reliance upon taxation of property assessed locally on differing bases and at differing rates:

(a) Fails to achieve the goal of a constitutionally adequate education for each of the state’s youth, in that expenditures for every child’s public education depend on the taxable wealth per pupil in the community where the child resides and, because of the great disparity of taxable wealth among the communities, amounts raised to meet the basic expenses of public education vary widely, thereby creating inherent inequality; and

(b) Imposes disproportionate burdens of taxation on persons having low and moderate income in each community and especially on such persons in communities having lesser amounts of taxable wealth per pupil, as in such communities heavier property tax burdens are imposed in order to raise sums sufficient to meet the costs of basic public education, against the spirit and intent of part I, article 12 and part II, articles 5, 6, and 83 of the New Hampshire constitution.

II. The purpose of this act is to more nearly satisfy the requirements of part I, article 12 and part II, articles 5, 6, and 83 of the New Hampshire constitution by establishing a system for:

(a) Financing the basic costs of public primary and secondary education sufficient to provide a constitutionally adequate education on an equal basis throughout the state, thereby redressing the presently existing inequality of educational financing and opportunity;

(b) Financing such basic costs from a source other than the local property tax alone, thereby alleviating the disproportionate burden presently borne by persons of low and moderate income; and

(c) Maintaining local control of public education by distributing adequate education funding grants to the school districts of the state.

(d) Implementing an interim plan for adequate education funding for the biennium ending June 30, 2001 that provides a transition to a more comprehensive and accurate funding plan to be established for the next biennium, with advice from the adequate education and education financing reform commission.

III. The general court finds that:

(a) The general good, benefit and welfare of the state is advanced by promoting home ownership and that a total exemption of primary residences (homesteads) from the statewide education property tax is reasonable, especially when resident homeowners will be subject to the education income tax that will become the primary source of revenue to replace the local school property tax;

(b) It is reasonable and just that renters, who do not directly pay property taxes, be allowed a renter’s credit against their education income tax liability that approximates the statewide education property tax paid by the owner of the rental dwelling unit;

(c) A uniform standard exemption of income from the education income tax for all taxpayers and dependents is a just, reasonable and proportionate means to assure that each taxpayer has the ability to earn a minimal subsistence level of income before being subject to the burden of income taxations, and that single heads of households are an appropriate class of people for whom an additional modest exemption from the education income tax is just and reasonable; and

(d) To promote industry, frugality and a positive work ethic, a modest exemption from the education income tax on income earned by dependents is just and reasonable.

2 New Chapters; Statewide Education Property Tax; Education Income Tax. Amend RSA by inserting after chapter 76 the following new chapters:

CHAPTER 76-A

STATEWIDE EDUCATION PROPERTY TAX

76-A:1 Definitions. In this chapter:

I. "Assessing official" means the assessing authority of any town, city, or unincorporated place.

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

III. "Department" means the department of revenue administration.

IV. "Dwelling" means the house or habitation for a natural person or persons consisting of a structure that provides shelter from the elements and contains at minimum a space for preparation and consumption of food and for repose on a daily basis.

V. "Education trust fund" means the education trust fund established in RSA 198:39.

VI. Equalized assessed value" or "equalized assessed valuation" means the sum of the total valuation of each class of property in a municipality reported pursuant to RSA 21-J:34 adjusted by excluding utility property, the value of property subject to tax under RSA 82 and the value of property exempted pursuant to RSA 72:37-b, 72:62, 72:66, and 72:70 and equalized by the commissioner according to the equalization method specified in RSA 21-J:9-a.

VII. "Municipality" means a city, town, or unincorporated place.

VIII. "Homestead" or "homestead property" means the dwelling owned by a claimant or in the case of a multi-unit dwelling, the portion of the dwelling, which is used as the claimant’s principal place of residence and the claimant’s domicile for purposes of RSA 654:1. "Homestead" shall not include land and buildings taxed under RSA 79-A or land and buildings or the portion of land and buildings rented or used for commercial or industrial purposes. In this paragraph the term "owned" includes a vendee in possession under a land contract and one or more joint tenants or tenants in common.

IX. "Tax" means the statewide education property tax imposed pursuant to RSA 76-A:2.

X. "Taxable real estate" means property subject to tax under RSA 72 and utility property, except property subject to tax under RSA 82 and homestead property.

XI. "Tax collector" means the appointed or elected collector of taxes for a municipality.

XII. "Taxpayer" means any person subject to tax under RSA 72 and RSA 73 owning taxable real estate.

XIII. "Tax year" means the twelve month period beginning April 1 and ending March 31 of the succeeding calendar year.

XIV. "Utility property owner" means any person, partnership, limited liability company, association, corporation or other entity, their trustees or receivers appointed by any court, owning utility property.

XV. "Utility property" means all real estate, buildings and structures, machinery, dynamos, apparatus, poles, wires, fixtures of all kinds and descriptions, and pipe lines located within New Hampshire employed in the generation, production, supply, distribution, transmission, or transportation of electric power or natural gas, crude petroleum and refined petroleum products or combinations thereof, water, or sewage subject to tax under RSA 72:6, 72:7 and 72:8; provided that no electric power fixtures which would otherwise be taxed under this chapter shall be taxed under this chapter if they are employed solely as an emergency source of electric power. "Utility property" shall not include:

(a) Water and air pollution control facilities exempt from local property taxation under RSA 72:12-a;

(b) Any other property which is not subject to local property taxation.

76-A:2 Statewide Education Property Tax Imposed. A statewide education property tax is imposed on all taxable real estate in the state as follows:

I. On the effective date of this chapter the rate of tax shall be 0.5 percent of equalized assessed valuation for the first tax year.

II. For subsequent tax years, the rate of tax shall be set through legislative action each year on or before June 30, but shall continue at the prior year’s rate if no action is taken by the legislature.

III. The commissioner shall equalize the rate of taxation determined pursuant to paragraphs I or II for each municipality by multiplying such rate by the municipality’s equalization ratio determined according to RSA 21-J:9-a, except that for municipalities which have undergone a total revaluation of taxable property within the prior year the commissioner shall use the actual value of such property as determined by such revaluation.

76-A:3 Commissioner’s Warrant.

I. The commissioner shall annually calculate the portion of tax to be raised by each municipality by multiplying the equalized rate in RSA 76-A:2, IV by the total assessed value of all taxable real estate except utility property in the municipality.

II. The commissioner shall issue a warrant under the commissioner’s hand and official seal for the amount computed in paragraph I plus any amount added pursuant to paragraph III to the selectmen or assessing officials of each municipality at the same time as tax rates are set under RSA 21-J:35 directing them to assess such sum and pay to the municipality for the use of the school district or districts or to the department for deposit in the education trust fund in RSA 198:39 such sums and at such times as may be prescribed for other taxes assessed by such selectmen or assessors of the municipality.

III. In calculating the tax to be assessed pursuant to the warrant, the commissioner may assess a sum not exceeding 5 percent more than the amount of the tax calculated in paragraph I for the purpose of answering any abatements that may be made.

IV. The commissioner shall report the total amounts assessed to each municipality to the governor, speaker of the house of representatives, president of the senate, state treasurer and department of education on or before September 30.

76-A:4 Homestead Exemptions.

I. The homesteads of qualifying taxpayers are exempt from the tax due under this chapter.

II. A qualifying taxpayer is an individual who:

(a) Is subject to the education income tax under RSA 76-B or qualifies for a local property tax exemption under RSA 72:39-a.

(b) On April 1 owns a homestead or interest in a homestead subject to the education property tax; and

(c) Files a claim certifying under the pains and penalties of perjury that such taxpayer qualifies under subparagraph (a) and (b) with the selectmen or assessing officials on or before July 30, 2000 or, in subsequent years, May 1 of the tax year for which claim is made. Claims filed after July 30, 2000 or May 1 of subsequent years shall not be considered timely for the current year, but shall be considered filed for the following tax year.

III. Upon receipt of a claim for a homestead exemption under RSA 76-A:4, the selectmen or assessing officials shall review the claim and shall grant or deny the claim in writing by September 1^st following receipt of the claim. Failure of the selectmen or assessing officials to respond shall constitute acceptance of the claim. Accepted claims shall continue from year to year without necessity for refiling unless there is a change in ownership, or use of the property. Accepted claims may at any time be revoked for any tax year or portion thereof following the occurrence of one or more of the following events:

(a) The claimant fails to file a return as required under RSA 76-B:6 within one year following the close of the tax year for which exemption is claimed; or

(b) The claimant is no longer qualified for local property tax exemption under RSA 72:39-a; or

(c) The claimant is no longer qualified under the definition of homestead in RSA 76-A:1, VII due to a change in ownership or use.

IV. Claims shall be made on forms prescribed by the commissioner and provided to each municipality.

V. The following shall apply to the determination of the amount of property value exempted relative to a homestead which is part of a single tax parcel upon which is located other dwelling units not owned or occupied by the taxpayer or other significant non-homestead property:

(a) If the tax parcel includes property used for business or other nonresidential use, the exempt homestead amount shall include in addition to the actual homestead the lesser of 1,000 square feet of floor area of such non-homestead property or $25,000 of equalized assessed valuation, except that family owned and operated farms which are not owned by a business entity or held in the name of a non-natural person shall be eligible for the full homestead exemption on all property not assessed under RSA 79-A.

(b) If the tax parcel includes other dwellings or dwelling units, the value of the homestead exemption relative to the claimed homestead shall be determined by the assessing official as follows:

(1) Divide the value of the tax parcel by the number of dwelling units; or

(2) If the square footage of each dwelling unit is known, multiply the value of the tax parcel by a fraction consisting of the square footage of the claimed homestead divided by the total square footage of all dwelling units in the parcel; or

(c) In lieu of the methods of determining the amount of homestead exemption in subparagraph (a) or (b), a taxpayer may present competent evidence of a greater proportion of exempt value to the assessing officials. In such instance the taxpayer bears the burden of proving the claimed exemption by the preponderance of the evidence.

VI. If a taxpayer purchases a homestead after April 1 for which no homestead exemption was claimed by the previous owner, the taxpayer may apply to the department for a refund of statewide education property tax previously paid on the homestead, but for which no application was made. The amount of such refund shall be apportioned according to the number of days in the tax year the taxpayer owned and occupied the homestead. Claims by taxpayers purchasing homestead property shall be filed with the inventory of property transfer required to be filed with the municipality pursuant to RSA 74:18. The selectmen or assessing officials shall, within 30 days of filing of the referral claim, accept or deny it and, if accepted, notify the department. The department shall certify the amount of such refund to the state treasurer for payment from the education trust fund created by RSA 198:39.

VII. Manufactured housing as defined in RSA 674:31 qualifying as homestead property and sited on land not owned by the claimant shall be eligible for the homestead exemption based on the value of such manufactured housing without the land.

76-A:5 Time of Assessment and Payment. Except as provided in this chapter with respect to utility property, the tax shall be deemed assessed on April 1 in each year and is payable at the same time or times as the local property tax assessed by the municipality.

76-A:6 Collection. The assessing officials for each municipality shall make a list of all taxes by them assessed against property under their hands and seals to the tax collector, directing the tax collector to collect the statewide education property taxes along with other property taxes. It shall be listed as a separate line on the municipal property tax bill. Upon application by the assessing officials, the commissioner for good cause may extend the time for delivery of the statewide education property tax warrant.

76-A:7 Remedies for Collection. The statewide education property tax may be collected by all of the means and methods provided by law for the collection of property taxes.

76-A:8 Interest and Charges for Nonpayment. Nonpayment of the tax shall incur the same charges and interest as are imposed by law for nonpayment of local property taxes. Such charges and interest shall be payable to the municipality.

76-A:9 Abatement. The tax may be abated in the same manner as provided by law for abatement of local property taxes. Municipalities shall be reimbursed for the amount of such abatements on an annual basis, or at some more frequent interval at the discretion of the commissioner. Such reimbursement shall be payable by the state treasurer from the education trust fund created by RSA 198:39 upon certification of the amount of reimbursement by the commissioner to the treasurer.

76-A:10 Liability of Cities and Towns. Each municipality shall be liable to the state for all taxes lawfully collected in such municipality.

76-A:11 Payment to State. Each municipality shall cause its tax collector to certify such information as the state treasurer shall require, and shall cause its treasurer to pay over to the state treasurer, less any payments due to the municipalities’ school district or districts from the state treasurer under RSA 198:42 and any amounts retained by the municipality under RSA 76-A:12, 25 percent of the tax assessed by the municipality on or before each of the following dates: July 1, October 1, January 1, and April 1.

76-A:12 Computation for Costs. A municipality may retain for its unrestricted use 2 percent of the amount of tax collected by it as compensation for the costs of collecting such taxes and administering homestead claims and assessments. Such amount shall not be included in the amount payable by the municipality to the state treasurer under RSA 76-A:11. In addition municipalities may keep any interest earned on taxes that are collected but not due and remitted to the state treasurer, as additional compensation for the costs of collection.

76-A:13 Extents. The state treasurer may also issue an extent for the amounts of all taxes not remitted by any municipality as provided in this chapter.

76-A:14 Supplementary Bond of Collector. Whenever the commissioner considers it necessary, a tax collector may be required to furnish a further and additional bond beyond that required by other provisions of law, with sureties, in such form and amount as the commissioner approves. The additional premium costs shall be paid by the state.

Utility Property

76-A:15 Utility Property; Persons Liable. The tax imposed by this chapter shall be assessed upon each person with an ownership interest in utility property, in the proportion that such person's ownership interest bears to the entirety of the ownership in the property.

76-A:16 Determination of Utility Property. On or before December 1 of the tax year, the commissioner shall determine the value of utility property for the purposes of this chapter by appraising such property at its full and true value. Notice of such determination shall be given to the taxpayer within 15 days of the commissioner’s determination.

76-A:17 Returns and Declarations.

I. On or before January 15 each tax year, each utility property owner shall file with the commissioner of revenue administration, on a form prescribed by the commissioner, a return based on the valuation for April 1 of the prior year. The return shall be accompanied by the payment of such amount as has not been prepaid in accordance with paragraph III of this section. If the return shows an additional amount to be due, such additional amount is due and payable at the time the return is filed. If such return shows an overpayment of the tax due, a credit against a subsequent payment or payments due, to the extent of the overpayment, shall be allowed.

II. On or before April 15 of each year, each utility property owner liable to pay the tax imposed by this chapter shall file with the department, on a form prescribed by the commissioner, a statement setting forth the amount of such person's ownership interest as of April 1. The statement shall include such additional information as the commissioner shall require and shall be signed by an authorized representative, subject to the pains and penalties of perjury.

III. At the time the statement required by paragraph II is filed, each person liable for the tax shall, in addition, file a declaration of the estimated tax to be assessed as of April 1 in the current taxable period, based on the tax assessed for the preceding taxable year, accompanied by payment of 1/4 of the estimated tax due. Additional payments of 1/4 of the estimated tax shall be made on June 15, September 15 and December 15.

IV. As of June 1 of each year the principal owner of utility property shall file a list of the changes made to the utility property since the prior April 1. This statement shall include such additional information as the commissioner shall require and shall be signed by an authorized representative, subject to the pains and penalties of perjury.

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

76-A:18 Records.

I. Every person liable for tax under this subdivision shall:

(a) Keep such records as may be necessary to determine the amount of such person's liability under this chapter.

(b) Preserve such records for the period of at least 3 years or until any litigation or prosecution under this chapter is finally determined.

(c) Make such records available for inspection by the commissioner or authorized agents, upon demand, at reasonable times during regular business hours.

II. Whoever violates any of the provisions of this section shall be subject to the penalties imposed under RSA 21-J:39.

76-A:19 Utility Property Administration.

I. The commissioner shall collect the taxes, interest, additions to tax and penalties relative to the tax on utility property owners as provided under this subdivision. The commissioner shall determine the expense of administration of this subdivision and shall certify and pay over to the state treasurer for deposit in the education trust fund established by RSA 198:39 the amount of remaining balance of the funds collected under this subdivision after the expenses of administration have been deducted.

II. The commissioner is authorized to contract for the services of utility appraisers as needed for the proper administration of this subdivision. Such contract expenses shall be deemed an expense of administration.

III. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to:

(a) The administration of the tax imposed on utility properties under RSA 76-A:2 and this subdivision;

(b) The valuation of utility property required under RSA 76-A:16; and

(c) The recovery of any tax, interest on tax, or penalties imposed on utility property under this chapter.

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

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

76-A:20 Utility Property Valuation Appeals. Utility property taxpayers aggrieved by the determination by the commissioner of the value of utility property pursuant to RSA 76-A:16 may appeal such valuation within 30 days of notification of such determination to the board of tax and land appeals or the superior court of the county in which the taxpayer resides or has a place of business. Appeals other than appeals of valuation shall be made according to the procedure and subject to the time limits provided for other taxes administered by the department under RSA 21-J.

76-A:21 Disposition of Taxes. All funds received by the state treasurer under the provisions of this chapter shall be deposited in the education trust fund established by RSA 198:39.

76-A:22 Local Property Taxes for Residual Expense of Education. Municipalities are hereby authorized to assess and collect property taxes locally, under general provisions of law, to meet budgeted expenses of education not funded through distributions from the education trust fund under RSA 198:39 or the moneys raised under this chapter.

76-A:23 Appeals of Homestead Exemptions.

I. Whenever the selectmen or assessing officials refuse to grant a taxpayer a homestead exemption, or grant an exemption less than the amount claimed by the taxpayer, or the taxpayer is aggrieved by a determination by the assessing official under this chapter, the taxpayer may appeal in writing, on or before March 1 following the date of notice of tax under RSA 72:1-d, to the board of tax and land appeals.

II. When a taxpayer appeals the denial of a claim to the board of tax and land appeals, the board may reverse or affirm, wholly or partly, or may modify the decision brought up for review when there is an error of law or when the board finds the selectmen’s or assessing official’s action to be arbitrary or unreasonable.

CHAPTER 76-B

EDUCATION INCOME TAX

76-B:1 Definitions. In this chapter:

I. "Consumer price index" means the most recent available consumer price index for all urban consumers published by the United States Department of Labor.

II. "Department" means the department of revenue administration.

III. "Education trust fund" means the education trust fund established in RSA 198:39.

IV. "Individual" means a natural person, including any individual who is a partner in a partnership as to such person’s share of the partnership income and any individual who is a sole proprietor as to such person’s income as a sole proprietor.

V. "New Hampshire modified gross income" means New Hampshire modified gross income as determined in RSA 76-B:3.

VI. "New Hampshire taxable income" means New Hampshire taxable income as determined in RSA 76-B:3.

VII. "Nonresident individual" means an individual who receives wages, self-employment, or unearned income for the taxable year from sources in this state, who maintains his or her domicile outside the state.

VIII.(a) "Resident fiduciary" means:

(1) The executor or administrator of the estate of a decedent who at death was domiciled in this state;

(2) The trustee of a trust created by will of a decedent who at death was domiciled in this state; or

(3) The trustee of a trust created by, or consisting of property of, a person domiciled in this state.

(4) The trustee of a trust the property of which includes a business organization as defined in RSA 77-A:1, with business activity in New Hampshire as defined in RSA 77-A:1.

(5) The trustee of a trust that has at least one beneficiary who is a resident individual, where, in the case of an individual, the trustee of the trust is a resident of New Hampshire or, in the case of a corporation or other business entity, has a place of business in New Hampshire.

(b) "Resident fiduciary" shall not include the trustee of any trust which is taxable as a corporation under the United States Internal Revenue Code, and shall not include a trust to the extent it is considered to be a grantor trust pursuant to sections 671-679 of the United States Internal Revenue Code.

IX. "Resident individual" means:

(a) An individual domiciled in the state; or

(b) An individual who maintains a permanent place of abode within the state and spends more than 183 days of the taxable year within the state.

X. "Taxable year" means the calendar or fiscal year or portion thereof which the taxpayer uses for federal income tax purposes under the United States Internal Revenue Code.

XI. "Taxpayer" means any individual or fiduciary subject to the provisions of this chapter.

XII. "Unearned income" means any income which is not wage or self employment income, including but not limited to capital gains, distributions from S corporations, partnerships, limited liability companies or other similar entities, dividends, interests, rents and royalties.

XIII. "United States Internal Revenue Code" means the United States Internal Revenue Code of 1986 as amended, including the United States Department of the Treasury’s regulations. The forms and procedures of the United States Internal Revenue Service may be used by the commissioner of revenue administration in formulating rules for adoption under RSA 541-A. This definition shall be operative unless and until a specific statutory exception to its adoption is provided in this chapter, or until the application of one of its provisions is held to violate the New Hampshire constitution.

76-B:2 Imposition of Tax. A tax is imposed upon every resident and nonresident individual and upon every resident fiduciary at the rate of 3.5 percent of New Hampshire taxable income as determined in RSA 76-B:3. A 60 percent majority of those present and voting of each house of the general court shall be necessary to increase the tax rate under this section above 4 percent of New Hampshire taxable income.

76-B:3 New Hampshire Taxable Income.

I. "New Hampshire taxable income" means, for any taxable year:

(a) In the case of a resident or nonresident individual, the individual’s New Hampshire modified gross income, as defined in paragraph II of this section, less the following:

(1) An additional exemption of $11,000 for the taxpayer and an additional exemption of $11,000 for the taxpayer's spouse if a joint return is made, provided that the taxpayer or spouse is not claimed as a dependent on another taxpayer’s federal income tax return or New Hampshire income tax return; and

(2) An additional exemption of $3,000 for each dependent to which the taxpayer is entitled for federal tax purposes under the United States Internal Revenue Code, provided that the dependent is not claimed as a dependent on another person’s federal income tax return or New Hampshire income tax return. A person who is claimed as a dependant under this subparagraph and who has earned income from wages, self employment income, or farm income which is taxable under this chapter, shall be entitled to an exemption of $3,000 of such earned income on that person’s New Hampshire income tax return; and

(3) An additional exemption of $3,000 for a taxpayer entitled to a head of household status for federal tax purposes under the United States Internal Revenue Code.

(b)(1) In the case of a resident fiduciary, the amount shown as total taxable income on the fiduciary's United States fiduciary income tax return:

(A) Increased by:

(i) Any interest or dividend income on obligations or securities of another state of the United States; and

(ii) Any interest or dividend income on obligations or securities of any authority, commission or instrumentality of the United States to the extent exempted from the federal income tax; and

(B) Decreased by interest on, and dividends on securities attributable to the interest on, the direct obligations of the United States government.

(2) For a resident fiduciary with at least one beneficiary that is not either a resident individual or another resident fiduciary, the amount of income derived by application of subparagraph (1) shall be multiplied by a fraction, the numerator of which is income properly accumulated for the benefit of resident individuals or resident fiduciaries and the denominator of which is all income property accumulated.

(c) The exemptions allowed under this paragraph shall be in place for the first year of the tax only. The commissioner of revenue administration shall increase the exemption allowed in each succeeding year by an amount which equals the percentage increase in the consumer price index for a prior annual period established by rule by the commissioner, and rounded to the nearest $10.

II. "New Hampshire modified gross income" means, for any taxable year, the amount of the taxpayer’s adjusted gross income for federal income tax purposes under the United States Internal Revenue Code:

(a) Decreased by:

(1) Interest on, and dividends on securities attributable to interest on, the direct obligations of the United States government; and

(2) The amount of income taxable under this chapter which is also taxed as business profits under RSA 77-A.

(b) Increased by:

(1) Any interest or dividend income on obligations or securities of any authority, commission or instrumentality of the United States to the extent exempted from the federal income tax; and

(2) Any interest or dividend income on obligations or securities of another state of the United States.

76-B:4 Tax; When Due. Subject to the provisions of this chapter concerning the withholding of tax and estimated tax declarations, the tax imposed by this chapter shall be deemed to be assessed and due and payable on the fifteenth day of the fourth month following the close of the taxpayer's taxable year.

76-B:5 Credits. The following credits are allowed against the tax due under this chapter:

I. Taxes withheld pursuant to the provisions of this chapter.

II. Estimated tax payments made pursuant to this chapter.

III. A renter’s credit of $300 on a dwelling unit subject to RSA 76-A rented by the taxpayer as his or her primary residence for the entire year prorated for each full month of residence or alternatively, a renter’s credit which is equal to the product of the local assessed value of the rented dwelling unit times the municipality’s equalization ratio determined according to RSA 21-J:9-a times the rate of taxation in RSA 76-A:2 for the concurrent tax year, provided the taxpayer presents competent evidence of such value of the dwelling unit. Taxpayers claiming the alternative renter’s credit shall bear the burden of proving the claimed value of the rented dwelling unit by the preponderance of the evidence. Such alternative credit claims shall be on forms prescribed by the commissioner. Taxpayers who reside in residential communities, group homes, nursing homes, manufactured housing or mobile home parks, or other facilities which are neither conventional homeowner or tenant situations may be allowed to claim a renter’s credit pursuant to rules adopted by the commissioner. Persons who have claimed a homestead exemption pursuant to RSA 76-A:4 may claim a renter’s credit during the same year only if the exempt homestead is sold during the tax year, in which case the renter’s credit may be claimed for the period rent is paid after the date of sale of the exempt homestead. The renter’s credit shall not exceed the tax due under this chapter.

IV. In the case of a resident individual, a credit calculated by:

(a) Calculating the wages, self-employment income and unearned income of the individual earned or derived from sources in another state and subject to income tax or a tax measured by income in that state;

(b) Reducing the amount calculated in subparagraph (a) by the portion of the taxpayer’s claimed exemptions which bears the same relationship to the taxpayer’s total claimed exemptions, as the amount calculated in subparagraph (a) bears to the taxpayer’s New Hampshire modified gross income; and

(c) Multiplying the amount calculated in subparagraph (a), as reduced in subparagraph (b), by the rate of tax provided in RSA 76-B:2.

V. In the case of a nonresident individual, a credit calculated by:

(a) Reducing the taxpayer’s New Hampshire modified gross income by the amount of wages and self-employment income earned by the taxpayer in New Hampshire and the amount of unearned income from New Hampshire sources;

(b) Reducing the amount calculated in subparagraph (a) by the portion of the taxpayer’s claimed exemptions which bears the same relationship to the taxpayer’s total claimed exemptions, as the amount calculated in subparagraph (a) bears to the taxpayer’s New Hampshire modified gross income; and

(c) Multiplying the amount calculated in subparagraph (a), as reduced in subparagraph (b), by the rate of tax provided in RSA 76-B:2.

Returns

76-B:6 Returns.

I. Every resident individual and nonresident individual having New Hampshire modified gross income greater than the exemption amounts provided in RSA 76-B:3, I and every resident fiduciary shall make a return to the department of revenue administration under such rules and in such form or manner as the commissioner may prescribe, on or before the due date of the tax as provided in RSA 76-B:4.

II. A husband and wife who are both residents or who both earn wages or self employment income from sources within New Hampshire shall file a joint return for any taxable year for which such a joint return is filed for United States income tax purposes.

III. Whenever any return shows that overpayment allowable to the taxpayer exceed the amount of tax due, the department shall certify the amount of overpayment to the state treasurer for refund from the education trust fund created by RSA 198:39 or shall allow the taxpayer a credit against taxes due for a subsequent year, to the extent of the overpayment, at the taxpayer's option.

76-B:7 Information Returns. Each individual, partnership, limited liability partnership corporation, limited liability corporation, proprietorship, joint stock company, association, insurance company, business trust, real estate trust, or other form of organization, organized for gain or profit, being a resident or having a place of business in this state or being a nonresident having income derived from sources subject to tax under this chapter, in whatever capacity acting, including lessors or mortgagors of personal property, fiduciaries, employers and all officers and employees of the state or of any political subdivision of the state, having the control, receipt, custody, disposal or payment of salaries, wages, rentals or other compensation or income subject to the provisions of this chapter paid or payable during any year to any taxpayer subject to a tax under this chapter shall on such date or dates as the department shall from time to time designate, make complete return thereof to the department, in such form as the department may prescribe.

Withholding of Tax

76-B:8 Who Must Withhold. Every employer as defined by section 3401(d) of the United States Internal Revenue Code of 1986, as amended, employing any person within this state shall deduct and withhold upon wages paid to said employee, a tax equal to 4 percent of such wages less claimed exemptions, subject, however, to the provisions of RSA 76-B:11.

79-B:9 Time for Payment of Withheld Taxes and Filing Withheld Taxes Returns.

I. Every employer required to deduct and withhold any tax under RSA 76-B:8 shall make a quarterly return thereof to the department on or before the 15^th of the first calendar month following the calendar quarter for which the return is made. However, a return may be filed on or before the last day of the first calendar month following such quarter if timely deposits have been made in full payment of such taxes due for the quarter.

II. Every employer shall pay over to the department, or to a depository designated by the department, the taxes so required to be deducted and withheld at the same time that such employer is required, under federal income tax law and regulations, to pay over federal taxes that are required to be deducted and withheld from wages to employees.

III. The department may, if such action is necessary in any emergency where collection of the tax may be in jeopardy, require such employer to make such return and pay such tax at any time, or from time to time.

76-B:10 Employer's Liability.

I. Each employer required to deduct and withhold tax under this chapter shall be liable for such tax. In the event an employer fails to withhold and pay over to the department any amount required to be withheld under RSA 76-B:8, the department shall assess such amount against the employer.

II. The amount of tax required to be deducted and withheld and paid over to the department under this chapter, when so deducted and withheld, shall be held to be a special fund in trust for the state. No employee or other person shall have any right of action against the employer in respect to any moneys deducted and withheld from wages and paid over to the department in compliance or in intended compliance with this chapter.

76-B:11 Use of Withholding Tables. At the election of the employer, the employer may deduct and withhold a tax determined on the basis of tables to be prepared and furnished by the department, which tax shall be substantially equivalent to the tax provided in RSA 76-B:8 and which shall be in lieu of the tax required in such section.

Estimated Tax Declarations

76-B:12 Filing of Declarations.

I. On the fifteenth day of the fourth month of the current taxable year every resident individual, nonresident individual, and resident fiduciary, except as provided in paragraph II, shall furnish the department with an estimate of such portion of such person’s New Hampshire taxable income for the current taxable year as will not be subject to the withholding provisions of this chapter.

II. The provisions of paragraph I are not applicable to resident individuals and nonresident individuals who reasonably anticipate receiving less than $11,000 of New Hampshire taxable income which will not be subject to withholding during the current taxable year, or to taxpayers receiving their income from farming as defined by the United State Internal Revenue Code of 1986, as amended. The provisions of paragraph I are not applicable to resident fiduciaries who reasonably anticipate having a tax obligation under this chapter of less than $440.

76-B:13 Payment of Estimated Tax. Each taxpayer required to file an estimated tax declaration shall include with the declaration of estimated income, payment of not less than 25 percent of the tax due thereon. Thereafter, on the fifteenth day of the sixth and ninth months of the taxable year, the taxpayer shall pay not less than 25 percent of the tax due upon said estimated income or any revised estimate thereof. The fourth installment of estimated tax shall be paid on the fifteenth day of the first month following the close of the taxable year for which the estimate was made.

Miscellaneous Provisions

76-B:14 Extension of Time for Returns. For good cause, the department may extend the time within which a taxpayer is required to file a return or declaration and if such return or declaration is filed during the period of extension no penalty or late payment charge may be imposed for failure to file the return at the time required by this chapter, but the taxpayer shall be liable for interest and late payment charges as prescribed in RSA 21-J:28 and RSA 21-J:33. Failure to file the return during the period of the extension shall void the extension.

76-B:15 Administration.

I. This chapter shall be administered and enforced by the commissioner of revenue administration. The commissioner shall adopt rules, under RSA 541-A, necessary to insure the proper administration of this chapter which shall be consistent with the provisions of RSA 21-J:13.

II. The commissioner shall appoint such additional technical, clerical, and other personnel as the commissioner shall deem necessary to carry out the provisions of this chapter.

III. The department of revenue administration shall collect the taxes, interest, and penalties imposed under this chapter and RSA 21-J and shall pay them to the state treasurer less the administrative and enforcement costs of this chapter. The state treasurer shall deposit the remaining amount in the education trust fund established in RSA 198:39.

IV. The commissioner may institute actions in the name of the state to recover any tax, interest on tax, or the penalties imposed by this chapter and RSA 21-J, as part of the commissioner’s authority to administer this chapter and to administer and enforce the tax laws of this state generally under RSA 21-J.

V. In the collection of taxes imposed by this chapter, the department may use all of the powers granted to tax collectors under RSA 80 for the collection of taxes, and it has all of the duties imposed upon the tax collectors by RSA 80 including the optional tax sale procedure under RSA 80:58-86. The following shall also apply:

(a) The provisions of RSA 80:26 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.

(b) 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.

VI. The commissioner shall have the authority to subpoena witnesses, records, and documents, as needed, and to administer oaths to those testifying at hearings. The department and the taxpayer may take the depositions of witnesses residing within and without the state pertaining to a matter under this chapter, in the same way as depositions are taken in civil actions in the superior court.

76-B:16 Fees. Fees of witnesses shall be the same as those allowed to witnesses in the superior court. In the case of witnesses summoned by the commissioner, it shall be considered as an expense of administration of this chapter.

76-B:17 Notice. Any notice required by this chapter to be given by the department to a taxpayer shall be made by mail to the last known address of the taxpayer and in the case of hearings shall be given at least 10 days before the date thereof.

76-B:18 Preference. The taxes and interest imposed by this chapter have preference in any distribution of the assets of the taxpayer, whether in insolvency or otherwise.

76-B:19 Dissolutions, Withdrawals, and Statements of Good Standing.

I.(a) No employer organized under any law of this state may transfer property to its shareholders pursuant to RSA 293-A:14.05(a) or to its members sand managers pursuant to RSA 304-C:58 until all taxes required to be withheld by the employer under this chapter, and any interest and penalties that related thereto, have been fully paid and a certificate of dissolution shall have been obtained from the commissioner of revenue administration that no returns, tax required to be withheld, tax interest, or penalties for taxes administered by the department are due and unpaid.

(b) In order to transfer property to its shareholders pursuant to RSA 293-A:14.05(a) or its members or managers pursuant to RSA 304-C:58, an employer shall submit a written request containing the complete corporate or limited liability company name and identification number and accompanied by a non-refundable fee of $30 to the commissioner of revenue administration. This fee shall be deposited into the general fund. If, after reviewing the employer’s records, the commissioner determines that no returns, tax required to be withheld, interest, or penalties for taxes administered by the department are due and unpaid, the commissioner shall prepare a certificate in accordance with subparagraph (a).

II. In order to obtain a statement for withdrawal, in accordance with RSA 293-A:15.20(b)(6) or RSA 304-C:68, an employer shall submit a written request containing the complete employer name and identification number and accompanied by a non-refundable fee of $30 to the commissioner of revenue administration. This fee shall be deposited into the general fund. If, after reviewing the employer’s records, the commissioner determines that no returns, tax required to be withheld, interest, or penalties for taxes administered by the department are due and unpaid, the commissioner shall prepare a statement for withdrawal for the purposes required under RSA 293-A:15.20(b)(6) or RSA 304-C:68.

III. In order to obtain a statement that it is in good standing with the department of revenue administration, an employer shall submit a written request containing the complete employer name and identification number and accompanied by a non-refundable fee of $30 to the commissioner of revenue administration. This fee shall be deposited into the general fund. If, after reviewing the employer’s records, the commissioner determines that no returns, tax required to be withheld, interest, or penalties for taxes administered by the department are due and unpaid, the commissioner shall prepare a statement of good standing.

76-B:20 Liens for Tax.

I. If any employer required to deduct and withhold a tax under this chapter neglects or refuses to pay the same after demand, the unpaid amount, including any late payment charge and interest together with any costs that may accrue in addition thereto, shall be a lien in favor of the state upon all property and rights to property, whether real or personal, belonging to such employer. Such liens shall arise at the time assessment and demand is made by the department and shall continue until the liability for the full amount of the lien is satisfied or becomes unenforceable. Such lien against personal property shall be valid as against any subsequent mortgagee, pledgee, purchaser or judgment creditor when notice of such lien and the sum due has been placed on record by the department with the secretary of state and in the office of the town clerk where the taxpayer resides. Such lien against real property shall be valid as against any subsequent mortgagee, pledgee, purchaser or judgement creditor when notice of such lien and the sum due has been placed on record by the department with the register of deeds for the county in which the property subject to the lien is situated. In the case of any prior mortgage on real or personal property so written as to secure a present debt plus future advances by the mortgagee to the mortgagor, the lien herein provided, when notice thereof has been properly recorded, shall be subject to such prior mortgage unless the department also notifies the mortgagee in writing of the recording of such lien, in which case any indebtedness thereafter created from mortgagor to mortgagee shall be junior to the lien herein provided for.

II. The lien created by paragraph I shall be released upon satisfaction of the amount of the lien or upon a finding by the commissioner that the lien has become unenforceable, or if there is furnished to the department a bond with surety approved by the department in a penal sum sufficient to equal the amount of the lien, said bond to be conditioned upon the payment of the amount of the lien upon a final determination or adjudication of the employer's liability therefor.

III. The lien created by paragraph I may be foreclosed in the case of real estate agreeably with the provisions of law relating to foreclosure of mortgages on real estate, and in the case of personal property agreeably with the provisions of law relating to the foreclosure of security interests in personal property.

IV. To secure payment of the taxes, fees, charges and interest imposed by this chapter and RSA 21-J, the department may avail itself of any other provision of law relating to liens for taxes.

76-B:21 Additional Returns. When the commissioner has reason to believe that a taxpayer has failed to file a return or to include any part of New Hampshire modified gross income in a filed return, the commissioner may require the taxpayer to file a return or a supplementary return showing such additional information as the commissioner prescribes. Upon the receipt of the supplementary return, or if none is received, within the time set by the commissioner, the commissioner may find and assess the amount due upon the information that is available. The making of such additional return does not relieve the taxpayer of any penalty for failure to make a correct original return or relieve the taxpayer from liability for interest imposed under RSA 21-J:28 or any other 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.

76-B:22 Corrections. Each taxpayer shall report to the commissioner of any change in the amount of the taxpayer’s New Hampshire modified gross income as finally determined by the United States Internal Revenue Service with respect to any previous year for which the taxpayer has made a return under this chapter. Such a report shall be made not later than 6 months after the taxpayer has received notice that such change has finally been determined. Notwithstanding any other provision of law, a taxpayer reporting a correction pursuant to this section shall be given notice by the department of any adjustment to the tax due with respect to such correction within 6 months of the filing of the report.

76-B:23 Taxpayer Records. Every taxpayer shall:

I. Keep such records as may be necessary to determine the amount of the taxpayer’s liability under this chapter;

II. Preserve such records for the period of 3 years or until any litigation or prosecution hereunder is finally determined;

III. Make such records available for inspection by the commissioner or authorized agents, upon demand, at reasonable times. Whoever violates the provisions of this section shall be subject to the penalties imposed under RSA 21-J:39.

76-B:24 Severability. If any provision or provisions of this chapter, is or are declared unconstitutional or inoperative by a final judgment, order or decree of the supreme court of the United States or of the supreme court of New Hampshire, the remaining provisions of said chapter shall not be affected thereby.

3 New Subdivisions; State Aid for Educational Adequacy; Education Trust Fund; Commission. Amend RSA 198 by inserting after section 37 the following new subdivisions:

State Aid for Educational Adequacy; Education Trust Fund

198:38 Definitions. In this subdivision:

I. "Municipality" means a city, town, or unincorporated place.

II. "School district" means school district as defined in RSA 194:1 or RSA 195:1.

III. "Elementary school" means a school with any of the grades kindergarten through 8.

IV. "High school" means a school with any of the grades 9 through 12.

V. "Base expenditure per pupil" means the amounts calculated in accordance with RSA 198:39, II.

VI. "Average base cost per pupil of an adequate education" means the amount as calculated in accordance with RSA 198:40.

VII. "Weighted pupils" means resident pupils who have been assigned to one or more of the following classifications:

(a) An elementary pupil, which shall include kindergarten pupils, 1.0.

(b) A high school pupil, 1.2.

(c) An elementary pupil who is eligible to receive a free or reduced-priced meal shall receive an additional weight of .14.

VIII. "Educationally disabled child" means an educationally disabled child as defined in RSA 186-C:2, I.

IX. "Consumer price index" means the consumer price index for all items for urban consumers for the United States published by the United States Department of Labor.

X. "Special education costs" means the cost of special education and educationally related services provided to educationally disabled children reported by school districts on the MS-25 form less any federal IDEA funds, state special education catastrophic aid, and special education medicaid reimbursement received by the districts.

XI. "Average daily membership in attendance" means average daily membership in attendance as defined in RSA 189:1-d, III.

XII. "Average daily membership in residence" and "resident pupils" mean the average daily membership in residence as defined in RSA 189:1-d, IV.

XIII. "Transportation costs" means the costs of transporting pupils to and from school and other school activities reported by school districts on the MS-25 form.

198:39 Education Trust Fund Created.

I. The 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, make catastrophic aid payments under RSA 186-C:18, III, make school building aid payments pursuant to RSA 198:15-b, fund skill center tuition and transportation costs, reimburse municipalities for costs of collection and administration under RSA 76-A, and make taxpayer refunds under RSA 76-A:4 and RSA 76-B:6, III, and for such other educational appropriations, as the legislature may from time to time designate. The state treasurer shall deposit into this fund immediately upon receipt:

(a) The full amount of the statewide education property tax payments from municipalities pursuant to RSA 76-A:11.

(b) The full amount of the education income tax payments from the department of revenue administration pursuant to RSA 76-B:15.

(c) All moneys due the fund in accordance with RSA 284:21-j.

(d) All moneys in the local education betterment fund established in 1998, 389:16.

(e) Any other moneys appropriated from the general fund.

II. The education trust fund shall be nonlapsing. The state treasurer shall invest that part of the fund which is not needed for immediate distribution in short-term interest-bearing investments. The income from these investments shall be returned to the fund.

198:40 Methodology for Calculating the Cost of an Adequate Education.

I. For the fiscal year beginning July 1, 2000, the average base per pupil cost of an elementary school pupil shall be $2,700.

II. For the biennium beginning July 1, 2001, and every biennium thereafter, the average base per pupil cost of an elementary school pupil shall be established by the general court.

III. The weighted average daily membership in residence for each district shall be calculated by combining the district’s elementary average daily membership in residence with its weighted high school average daily membership in residence and the district’s additional average daily membership in residence resulting from elementary pupils eligible to receive a free or reduced-priced meal. The statewide weighted average daily membership in residence of pupils shall be calculated by combining the weighted average daily membership in residence of each school district in the state.

IV. For each fiscal year, the statewide cost of an adequate education for all pupils shall be calculated by multiplying the average base per pupil cost of an adequate education by the statewide weighted average daily membership in residence of pupils and then adding 99.5 percent of total statewide special education costs plus 50 percent of total statewide district transportation costs.

198:41 Determination of Adequate Education Grants.

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

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

(b) Add to the product of subparagraph (a), 50 percent of the municipality’s apportioned transportation cost;

(c) Add to the sum of subparagraph (b), 99.5 percent of the municipality’s apportioned special education cost;

(d) Subtract from the sum of subparagraph (c) the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76-A:3, II for the next tax year.

II. For municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of revenue administration shall determine the amount of the adequate education grant for each municipality as the lesser of the following 2 calculations:

(a) The amount calculated in accordance with paragraph I of this section; or

(b) The total amount paid for items of current education expense as determined by the department of education minus the amount of the education property tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76-A:3, IV for the next tax year.

198:42 Distribution Schedule of Adequate Education Grant.

I. Beginning with the fiscal year ending June 30, 2001 and for each fiscal year thereafter, the adequate education grant determined in RSA 198:41 shall be distributed to each municipality’s school district or school districts from the education trust fund as follows:

(a) Payment of 1/6 of the grant on or before August 1; and

(b) Payment of 1/12 of the grant on or before the first of each other month except June.

II. The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated the funds necessary to make the payments required under RSA 198:41. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

III. The department of revenue administration shall certify the amount of each grant to the state treasurer and direct the payment thereof to the school district or districts. When a payment of a grant is made to a school district, the municipality on whose behalf the payment is made, shall receive notification from the state treasurer of the amount of the payment made to its school district or districts.

198:43 Additional Education Expenditures. Nothing in this subdivision shall prevent the assessment and collection of property taxes locally, under general provisions of law, to meet budgeted expenses of education not funded through distributions from the education trust fund under RSA 198:42.

198:44 Use of Funds for Education Purposes.

I. Annually, each school district shall appropriate an amount that equals or exceeds the amount necessary to fund an adequate education for the pupils in that district. Notwithstanding any other provision of law, in the event a school district fails to appropriate at least the required amount, that amount shall be assessed and collected by the municipality, appropriated to the school district, and expended for educational purposes in accordance with paragraph IV without a vote of the school district.

II. On or before June 30 of each year, the individual with fiscal responsibility in each municipality shall submit a statement to the commissioner of revenue administration that the funds collected by the municipality pursuant to RSA 76:8 have been paid over to the school district or districts to be expended for educational purposes in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

III. If a municipality uses any part of the funds collected pursuant to RSA 76:8 for non-educational purposes, the municipality shall pay to the school district an amount equal to the portion of funds used for such non-educational purposes.

IV. The funds collected by municipalities pursuant to RSA 76:8 and the funds received from the state pursuant to RSA 198:42 shall be appropriated by a school district only for current education expenses or transfers to reserves or trusts funds and shall not be used for any other purpose. When setting any local property tax rates pursuant to RSA 21-J:35, the commissioner shall treat any adequate education funding received or to be received by a school district during each fiscal year, whether pursuant to RSA 76-A:3 or RSA 198:42, as revenue to the district to fund officially approved appropriations certified under RSA 21-J:34, II and RSA 198:4-a.

V. On or before June 30 of each year, the individual with fiscal responsibility in each school district shall submit a statement to the commissioner of revenue administration that an amount of money that equals the amount necessary to fund an adequate education for the pupils in that district was used in accordance with paragraph IV. The statement shall include the following: "I certify, under the pains and penalties of perjury, that all of the information contained in this document is true, accurate, and complete."

198:45 Duties of the Department of Education and the Board of Education.

I. The department of education shall, on or before September 30 of each year, collect from the school districts final data concerning all aspects of student attendance for the school year ending June 30 of that year necessary to establish the average daily membership, average daily membership in residence, and weighted average daily membership in residence, including the municipality of residence for each pupil for that year. The department of education shall submit a report by December 31 to the speaker of the house of representatives and the senate president to be used for purposes of determination by the legislature of the appropriation to the education trust fund. A copy of such report shall, at the same time, be given to the department of revenue administration.

II. The board of education shall adopt rules pursuant to RSA 541-A necessary to the proper administration of this subdivision.

Adequate Education and Education

Financing Reform Commission

198:46 Adequate Education and Education Financing Reform Commission Established; Membership.

I. There is hereby established an adequate education and education financing reform commission which shall be composed of 22 members as follows:

(a) Three house members, including one member of the education committee, one member of the finance committee, and one member of the minority party, appointed by the speaker of the house.

(b) Three senators, including one member of the education committee, one member of the finance committee, and one member of the minority party, appointed by the senate president.

(c) Four members appointed by the governor, one of whom shall be an elementary or secondary special education teacher, one of whom shall be a primary teacher who does not teach special education, and one of whom shall be a member of the business community.

(d) The commissioner of the department of education, or designee.

(e) The chancellor of the university system of New Hampshire or designee.

(f) The commissioner of the regional community-technical college system.

(g) One member from the state board of education, appointed by the chairperson of the state board of education.

(h) One member from a special education advocacy organization, appointed by such organization; and

(i) Seven members who shall be agreed to and jointly appointed by the governor, the president of the senate, and the speaker of the house consisting of the following:

(1) One local school board member, recommended by the New Hampshire School Boards Association.

(2) One school administrator, recommended by the New Hampshire School Administrators Association.

(3) One special education administrator at the elementary or secondary school level, recommended by the New Hampshire Association of Special Education Administrators.

(4) Two parents of school-age children, one of whom shall be the parent of a child with an educational disability.

(5) One member from the business community, who shall be associated with the School to Work Initiative.

(6) One school business official, recommended by the New Hampshire Association of School Business Officials.

II. The commission shall elect a chairperson from among its membership and shall form subcommittees necessary to perform its duties. The chairperson shall determine the frequency of meetings at its first meeting.

III. The members of the commission shall serve without compensation, provided that legislative members of the commission shall receive mileage at the legislative rate while attending to the duties of the commission, and provided that the parent members of the commission shall be reimbursed for travel expenses associated with their duties on the commission.

IV. In order to ensure that all students are provided an adequate education, the duties of the commission shall be as follows:

(a) Determine and recommend the costs of an adequate education for all students in New Hampshire by determining and calculating adjustments for individual school districts based on yearly inflation, cost of living variances, diseconomies of scale, transportation variability, demographics, including for school districts with a disproportionate number of students who are economically disadvantaged or have educational disabilities, and such other factors as deemed relevant.

(b) Determine and recommend the amount of state aid, including building aid, to be distributed to cities and towns based upon the cost of an adequate education as set forth in subparagraph (a) and the method for distributing the state aid.

(c) Recommend changes in policy and procedure in the areas of educational improvement and accountability.

(d) Recommend interim and permanent processes to ensure adequate planning and implementation at the local and state level of special education and educationally related services, including planning for and development, on an interagency basis, of local school based options for pupils who have been placed in alternative or separate schools who could be placed in appropriate less restrictive options if available.

V. The commission shall be divided into the following policy subcommittees: adequacy and cost, educational improvement and accountability, and special education funding.

VI. The commission shall report its findings and recommendations no later than December 1, 2000. The report shall include, for each recommendation, proposed implementation schedules with timelines, specific steps, agencies and persons responsible, and resources needed. Where feasible, all plans, measures and initiatives shall be proposed as legislation or regulation so that they will have the force of law. All recommendations and plans shall be designed to be fully implemented no later than September 1, 2004.

VII. The department of justice, department of revenue administration, department of education, and department of health and human services shall provide the commission with assistance.

4 New Subparagraphs; Special Education; Catastrophic Aid Payments Constitutionally Obligated. Amend RSA 186-C:18, III by inserting after subparagraph (c) the following new subparagraphs:

(d) For each fiscal year beginning with the fiscal year ending June 30, 2000, 0.5 percent of the total statewide special education costs as defined in RSA 198:38, IX shall be appropriated from the education trust fund established in RSA 198:39 to the department of education to assist those school districts which, under rules adopted by the state board of education, qualify for emergency assistance in meeting special education catastrophic costs pursuant to this section.

(e) The general court is constitutionally obligated to fund the cost of an adequate education, and there are hereby appropriated for the biennium ending June 30, 2001, the funds necessary to make the payments required in this section. The governor is authorized to draw a warrant for such sums out of any money in the treasury not otherwise appropriated.

5 Appropriation. The sum of $150,000 for the fiscal year ending June 30, 2000, is hereby appropriated for the purposes of the commission established in RSA 198:46 as inserted by section 3 of this act. This sum shall be nonlapsing until June 30, 2001. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

6 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:7, I to read as follows:

I. If a cooperative school district was organized prior to July 1, 1963, during the first 5 years after the formation of a cooperative school district each preexisting district shall pay its share of all capital outlay costs and all operational costs in excess of the amount determined necessary to provide an adequate education under RSA 198:40 in accordance with either one of the following formulas as determined by a majority vote of the cooperative district meeting:

7 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:14, I(b) to read as follow:

(b) The commissioner of revenue administration shall examine such certificates and delete any appropriations which appear not made in accordance with the law, and adjust any sum, in accordance with RSA 21-J:35, which may be used as a setoff against the amount appropriated when it appears to the commissioner of revenue administration such adjustment is in the best public interest. The commissioner of revenue administration shall apply the total amount of all adequate education grants received pursuant to RSA 198:42.

8 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:18, III(e) to read as follows:

(e) The method of apportioning [the] all operating expenses in excess of the amount determined necessary to provide an adequate education under RSA 198:40, of the cooperative school district among the several preexisting districts and the time and manner of payment of such shares. Home education pupils who do not receive services from the cooperative school district, except an evaluation pursuant to RSA 193-A:6, II, shall not be included in the average daily membership relative to apportionment formulas.

9 Cooperative School Districts; Adequate Education Grants. Amend RSA 195:18, IX to read as follows:

IX. The organization meeting of a cooperative school district shall be called to order by the chairperson of the cooperative school district planning board, or by the clerk-treasurer thereof, who shall serve as temporary chairperson for the first order of business which shall be the election of a moderator and of a temporary clerk, by ballot, who shall be qualified voters of the district. From and after the issuance of the certificate of formation by the board to the date of operating responsibility of the cooperative school district, such district shall have all the authority and powers of a regular school district for the purposes of incurring indebtedness, for the construction of school facilities and for such other functions as are necessary to obtain proper facilities for a complete program of education. When necessary in such interim, the school board of the cooperative school district is authorized to prepare a budget and call a special meeting of the voters of the district, which meeting shall have the same authority as an annual meeting, for the purpose of adopting the budget, making necessary appropriations, and borrowing money. Whenever the organization meeting is held on or before April 20 in any calendar year, no annual meeting need be held in such calendar year. Sums of money raised and appropriated at the organization meeting or any interim meeting prior to the first annual meeting shall be forthwith certified to the commissioner of revenue administration and the state department of education upon blanks prescribed and provided by the commissioner of revenue administration for the purpose, together with a certificate of estimated revenues, so far as known, and such other information as the commissioner of revenue administration may require. The commissioner of revenue administration shall examine such certificates and delete any appropriations which appear not made in accordance with the law, and adjust any sum which may be used as a setoff against the amount appropriated when it appears to the commissioner such adjustment is in the best public interest. The commissioner of revenue administration shall apply the total amount of all adequate education grants received pursuant to RSA 198:40 as a setoff against the amount appropriated. The commissioner of revenue administration shall certify to the state department of education the total amount of taxes to be raised for said cooperative school district and the state department of education shall determine the proportional share of said taxes to be borne by each preexisting school district and notify the commissioner of revenue administration of its determination. Upon certification by the commissioner of revenue administration the selectmen of each town shall seasonably assess the taxes as provided by law. The selectmen shall pay over to the treasurer of the cooperative district such portion of the sums so raised as may reasonably be required according to a schedule of payments needed for the year as prepared by the treasurer and approved by the cooperative school board, but no such payment shall be greater in percentage to the total sum to be raised by one local district than that of any other local district comprising such cooperative school district.

10 New Paragraph; Rulemaking; State Treasurer. Amend RSA 6:3-a by inserting after paragraph VII the following new paragraph:

VIII. Administrative functions under RSA 198:39 and RSA 76-B.

11 New Subparagraph; Education Trust Fund. Amend RSA 6:12, I by inserting after subparagraph (www) the following new subparagraph:

(xxx) Money received under RSA 76-A, RSA 76-B, and from the sweepstakes fund, which shall be credited to the education trust fund under RSA 198:39.

12 Gender Reference Change. Amend the introductory paragraph of RSA 21-J:3 to read as follows:

In addition to the powers, duties, and functions otherwise vested by law, including RSA 21-G, in the commissioner of the department of revenue administration, [he] the commissioner shall:

13 Duties of Commissioner. Amend RSA 21-J:3, XIII to read as follows:

XIII. Equalize annually the valuation of the property in the several towns, cities, and unincorporated places in the state by adding to or deducting from the aggregate valuation of the property [as assessed] in towns, cities, and unincorporated places such sums as will bring such valuations to the true and market value of the property, including the equalized value of property formerly taxed pursuant to the provisions of RSA 72:7; 72:15, I, V, VII, VIII, IX, X, and XI; 72:16; 72:17; 73:26; 73:27; and 73:11 through 16 inclusive, which were relieved from taxation by the laws of 1970, 5:3; 5:8; 57:12; and 57:15, the equalized valuation of which is to be determined by the amount of revenue returned in such year in accordance with RSA 31-A, and by making such adjustments in the value of other property from which the towns, cities, and unincorporated places receive taxes or payments in lieu of taxes as may be equitable and just, so that any public taxes that may be apportioned among them shall be equal and just. In carrying out the duty to equalize the valuation of property, the commissioner shall follow the procedures set forth in RSA 21-J:9-a.

14 Duties of Commissioner; Electronic Funds Transfer. RSA 21-J:3, XXI is repealed and reenacted to read as follows:

XXI. Except as provided in RSA 78-A:8, have authority to require the payment of any tax, interest, or penalty, or the refund or abatement thereof by electronic funds transfer.

15 New Paragraphs; Duties of Commissioner. Amend RSA 21-J:3 by inserting after paragraph XXIV the following new paragraphs:

XXV. Petition the board of tax and land appeals to issue an order for reassessment of property pursuant to the board's powers under RSA 71-B:16 - 19 whenever, the valuation of property for equalization purposes in a particular city, town, or unincorporated place is disproportional to the valuation for equalization purposes in other cities, towns, or unincorporated places in the state.

XXVI. Have authority subject to appropriation to establish the filing of any return or document by electronic data submission and to enter into contractual agreements with vendors to provide the means by which such electronic data is submitted to the department. The commissioner may by rule or otherwise establish procedures necessary to implement this section.

16 Division of Property Appraisal; Department of Revenue Administration. RSA 21-J:9 is repealed and reenacted to read as follows:

21-J:9 Division of Property Appraisal. There is established within the department the division of property appraisal, under the supervision of a classified director of property appraisal who shall be responsible for the following functions, in accordance with applicable laws:

I. Assisting and supervising municipalities and appraisers in appraisals and valuations as provided in RSA 21-J:10 and RSA 21-J:11.

II. Appraising state-owned forest and recreation land under RSA 227-H and RSA 216-A.

III. Annually determining the total equalized valuation of properties in the cities and towns and unincorporated places according to the requirements of RSA 21-J:9-a.

IV. Preparing a standard appraisal manual which may be used by assessing officials, and holding meetings throughout the state with such officials to instruct them in appraising property.

17 New Section; Equalization Procedure. Amend RSA 21-J by inserting after section 9 the following new section:

21-J:9-a Equalization Procedure. The following procedures shall apply in determining the equalization of property within the cities, towns, and unincorporated places as required by RSA 21-J:3, XIII:

I. The commissioner shall annually conduct a sales-assessment ratio study which shall include arm’s length sales or transfers of property that occurred 6 months prior to and 6 months following April 1 of the tax year for which such equalization is made.

II. In determining the arm's length sales or transfers that are included in the sales-assessment ratio study, the commissioner may use a randomly selected sample of such sales and transfers the size of which shall be determined by the total taxable parcels in the city, town, or unincorporated place.

III. If less than 2 percent of the total taxable parcels in a city, town, or unincorporated place has been transferred by an arm's length sale or transfer during the 6 months prior to and 6 months following April 1 of the tax year for which such equalization is made or the commissioner determines the sales are unrepresentative of the property within the municipality, the commissioner may choose one or more of the following options:

(a) Include appraisals of any of the taxable property of such city, town, or unincorporated place in the sales-assessment ratio study. Such appraisals shall be based on full and true market value pursuant to RSA 75:1 and shall be performed by department appraisers. The property to be appraised shall be selected by the commissioner.

(b) Consider recent equalization ratio activity in adjoining cities, towns, or unincorporated places.

(c) Include arm's length sales or transfers in the city, town, or unincorporated place, within 2-1/2 years preceding April 1 of the year preceding the tax year for which such equalization is made.

IV. The commissioner shall use the inventory of property transfers authorized by RSA 74:18 in determining the equalized value of property and may consider such other evidence as may be available to the commissioner on or before the time the final equalized value is determined.

18 Appraisals of Property for Ad Valorem Tax Purposes. RSA 21-J:11 is repealed and reenacted to read as follows:

21-J:11 Appraisals of Property For Ad Valorem Tax Purposes.

I. Every person, firm, or corporation intending to engage in the business of making appraisals on behalf of a municipality for tax assessment purposes in this state shall notify the commissioner of that intent in writing. No person, firm, or corporation engaged in the business of making appraisals of taxable property for municipalities and taxing districts shall enter into any contract or agreement with any town, city, or other governmental division without first submitting the proposed contract or agreement to the commissioner for examination and approval and submitting to the commissioner evidence of financial responsibility and professional capability of personnel to be employed under the contract.

II. The commissioner, at no expense to the municipality, shall monitor appraisals of property and supervise appraisers as follows:

(a) Assure that appraisals comply with all applicable statutes and rules;

(b) Assure that appraisers are complying with the terms of any appraisal contract;

(c) Review the accuracy of appraisals by inspection, evaluation, and testing, in whole or in part, of data collected by the appraisers; and

(d) Report to the governing body on the progress and quality of the municipality’s appraisal process.

III. The commissioner shall adopt rules under RSA 541-A relative to the provisions required of all contracts for appraisal services and the methodology for inspection, evaluation, and testing of data for the purposes of appraisal monitoring.

19 Exemption from Rulemaking; Interest and Dividends Tax Deleted; Education Income Tax Added. Amend RSA 21-J:13-a to read as follows:

21-J:13-a Exemption From Rulemaking Requirement. The commissioner shall be exempt from adopting, as rules pursuant to RSA 541-A, the requirements on the department's tax filing forms for the business profits tax, business enterprise tax, and [interest and dividends] education income tax.

20 Distraint; Taxes Collected or Withheld. Amend RSA 21-J:28-d to read as follows:

21-J:28-d Distraint. Upon neglect or refusal of any person or corporation to pay the taxes assessed upon them or taxes collected or withheld by them, the department may distrain the goods, chattels, personal estate, property interest, right or credit of such person or corporation.

21 Income Tax; Penalty for Failure to File. Amend RSA 21-J:31 to read as follows:

21-J:31 Penalty for Failure to File. Any taxpayer who fails to file a return when due, unless an extension has been granted by the department, shall pay a penalty equal to 5 percent of the amount of the tax due or $10, whichever is greater, for each month or part of a month during which the return remains unfilled. The total amount of any penalty shall not, however, exceed 25 percent of the amount of the tax due or $50, whichever is greater. This penalty shall not be applied in any case in which a return is filed within the extended filing period as provided in RSA 76-B:12, [RSA 77:18-b,] RSA 77-A:9, RSA 77-E:8, RSA 83-C:6, RSA 83-E:5 or RSA 84-A:7, or the failure to file was due to reasonable cause and not willful neglect of the taxpayer. The amount of the penalty is determined by applying the percentages specified to the net amount of any tax due after crediting any timely payments made through estimating or other means.

22 Income Tax; Substantial Understatement Penalty. Amend RSA 21-J:33-a, I to read as follows:

I. If there is a substantial understatement of tax imposed under RSA 76-B, [RSA 77,] RSA 77-A, RSA 77-E, RSA 78-A, RSA 78-C, RSA 82-A, RSA 83-C, or RSA 83-E, for any taxable period, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement.

23 Reports Required. Amend the introductory paragraph of RSA 21-J:34 to read as follows:

The governing body of each city, town, unincorporated town, unorganized place, school district, and village district, and the clerk of each county convention shall submit to the commissioner of revenue administration the following reports necessary to compute and establish the statewide education tax rate and the tax rate for each city, town, unincorporated town, unorganized place, school district, village district, and county. The commissioner shall adopt rules under RSA 541-A establishing the form and content of these reports:

24 New Paragraph; Reports Required. Amend RSA 21-J:34 by inserting after paragraph XIV the following new paragraph:

XV. A report filed by the assessing officials of each city, town, and unincorporated place shall certify sales-assessment information necessary for the department to conduct the annual sales-assessment ratio study required by RSA 21-J:9-a. This report shall be filed within 45 days after receipt from the department.

25 Board of Tax and Land Appeals; Authority. Amend RSA 71-B:5, II to read as follows:

II. To hear and determine [any] appeals by towns relating to the [equalization of valuation performed] equalized valuation of property determined by the commissioner of revenue administration pursuant to RSA 21-J:3, XIII. Any town aggrieved by [an] its equalized valuation as determined by the commissioner of revenue administration must appeal to the board in writing within 30 days of [the town's notification] notice of [the] its final equalized valuation by the commissioner. The board shall hear and make a final ruling on such appeal within 45 days of its receipt by the board. The board’s decision on such appeal shall be final and not appealable. For the purposes of the statewide education property tax only, the board’s decision on equalized valuation may be appealed to the supreme court. Such appeal shall be filed with the clerk of the supreme court within 10 days after the date the decision is mailed by the board to the town. The supreme court shall give the appeal priority on the court calendar and may hold a special session to consider such appeal if it considers such action necessary. Decisions issued by the supreme court prior to September 30 shall be effective immediately and shall be used by the commissioner in determining the tax to be raised by each municipality under RSA 76-A:3. The supreme court may adopt rules relative to this appeal process.

26 New Paragraph; Order for Reassessment. Amend RSA 71-B:16, IV to read as follows:

IV. When a complaint is filed with the board alleging that all of the taxable real estate or taxable property in a taxing district should be reassessed or newly assessed for any reason, provided that such complaint must be signed by at least 50 property taxpayers or 1/3 of the property taxpayers in the taxing district, whichever is less[.]; or

V. When the commissioner of revenue administration files a petition with it pursuant to RSA 21-J:3, XXV.

27 Reference to Interest and Dividend Tax Deleted; Education Income Tax Added. Amend RSA 72:34, II to read as follows:

II. For those exemptions having income or asset limitations, the assessing officials may request true copies of any of the following, as needed to verify eligibility. Any documents submitted shall be considered confidential, handled so as to protect the privacy of the applicant, and returned to the applicant at the time a decision is made on the application. The documents are:

(a) Federal income tax form; and

(b) [State interest and dividends tax form; and

(c)] Property tax inventory form filed in any other town; and

(c) Education income tax form.

RSA 359-C shall not apply to the documents requested for verification under this section.

28 New Section; Inventory of Property Transfers. Amend RSA 74 by inserting after section 17 to following new section:

74:18 Inventory of Property Transfers.

I. In order to properly equalize the value of property under RSA 21-J:3, XIII, an inventory of property transfers shall be filed with the department of revenue administration and with the municipality where the property is located for each transfer of real estate or interest in real estate. Each form may include the following information:

(a) The buyer and seller's names and post transaction addresses and the name and address of a contact person if the buyer or seller is a trust or corporation.

(b) A description of the exact location of the property by town, street, and the assessor’s map, lot, and block number.

(c) The acreage included in the sale.

(d) An accurate description of the property included in the sale, the neighborhood where the property is located, and the type and style of the property sold.

(e) The buyer's ownership interest in the property.

(f) The sale price, date of transfer, and the amount mortgaged.

(g) The description of the type of transfer that has taken place.

(h) The amount of personal property included in the sale price.

(i) Whether the property was previously occupied and by whom, whether the property will serve as the buyer's primary residence, and whether the buyer claims a homestead exemption pursuant to RSA 76-A:4.

(j) The financing arrangements made to purchase the property to be answered at the option of the buyer.

(k) Whether any concessions were made in the sale.

(l) Whether the property was in current use.

(m) Whether land use taxes were considered in the sale.

(n) The buyer’s dated signature certifying that the information indicated on the form is true.

II. The inventory of property transfers required by this section shall be filed with the department of revenue administration and with the municipality where the property is located by the purchaser, grantee, assignee, or transferee, no later than 30 days from the recording of the deed at the register of deeds or transfer of real estate, whichever is later. Persons required to file the inventory of property transfers who willfully fail to file or willfully make false statements on the forms shall be guilty of a violation.

III. No deed, recording a transfer of real estate or any interest in real estate, executed before October 1, 1995, shall be required to comply with this section.

IV. Failure to comply with this section shall not be construed to cloud title.

V. Any information provided to the department pursuant to this section shall be exempt from the right-to-know law, RSA 91-A.

29 Distraint; Taxes Collected or Withheld. Amend RSA 80:8 to read as follows:

80:8 Distraint. Upon neglect or refusal of any person or corporation to pay the taxes assessed upon them or taxes collected or withheld by them, the collector may distrain the goods, chattels, personal estate, property interest, right, or credit of such person or corporation.

30 Reference Change. Amend RSA 193:1, I(c) to read as follows:

(c) The relevant school district superintendent has excused a child from attendance because the child is physically or mentally unable to attend school, or has been temporarily excused upon the request of the parent for purposes agreed upon by the school authorities and the parent. Such excused absences shall not be permitted if they cause a serious adverse effect upon the student's educational progress. Students excused for such temporary absences may be claimed as full-time pupils for purposes of calculating state aid under RSA 186-C:18 and [RSA 198:27-37] adequate education grants under RSA 198:41.

31 Reimbursement Anticipation Notes; Version Effective Until July 1, 1999. Amend RSA 198:20-d to read as follows:

198:20-d Reimbursement Anticipation Notes. Notwithstanding any other provision of law to the contrary, a school district may incur debt in anticipation of reimbursement under RSA 186-C:18 and under RSA 198:42. The governing body, after receiving authorization for borrowing from the legislative body, may elect to recognize the proceeds of the borrowing as revenue for property tax rate setting purposes by providing written notification, prior to September 1, to the commissioner of the department of revenue administration stating the specific amount of borrowing to be recognized as revenue.

32 Reimbursement Anticipation Notes; July 1, 1999 Version. Amend RSA 198:20-d to read as follows:

198:20-d Reimbursement Anticipation Notes. Notwithstanding any other provision of law to the contrary, a school district may incur debt in anticipation of reimbursement under RSA 186-C:18 and under RSA 198:42. The governing body, after notice and public hearing, may elect to borrow such funds and to recognize the proceeds of the borrowing as revenue for property tax rate setting purposes by providing written notification to the commissioner of the department of revenue administration stating the specific amount of borrowing to be recognized as revenue. Any borrowing under this section shall be exempt from the provisions of RSA 33, relative to debt limits.

33 Sweepstakes. RSA 284:21-j is repealed and reenacted to read as follows:

284:21-j Establishment. The state treasurer shall credit all moneys received from the sweepstakes commission, and interest received on such moneys, to a special fund from which the treasurer shall pay all expenses of the commission incident to the administration of this subdivision and RSA 287-E. Any balance left in such fund after such expenses are paid shall be deposited in the education trust fund established under RSA 198:39.

34 Transition. As of July 1, 1999, all funds, from any source derived, which would be distributed as foundation aid shall be deposited in the education trust fund under RSA 198:39, including the $62,000,000 appropriated under 1998, 389:16, II.

35 Removing Reference to Foundation Aid. Amend RSA 198:21, V to read as follows:

V. No pupil counted by any school district for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purposes of grants pursuant to RSA 198:22.

36 Removing Reference to Foundation Aid. Amend RSA 198:22, V to read as follows:

V. No pupil counted by any school for the purpose of calculating the amount of a grant to be paid pursuant to this section shall for the same school year by the same district be [included in average daily membership for the purposes of foundation aid or] counted for the purpose of grants pursuant to RSA 198:21.

37 Bond. To provide initial funding for start-up costs including equipment and computer purchases and other administrative and enforcement costs under RSA 76-B:15, the state treasurer is hereby authorized to borrow upon the credit of the state not exceeding an amount certified by the commissioner of revenue administration and for said purposes may issue bonds and notes in the name of and on behalf of the state of New Hampshire in accordance with RSA 6-A. Payments of principal and interest of the bonds and notes shall be made from the education trust fund established in RSA 198:39. The bonds shall be 5-year bonds.

38 First Taxable Year of Income Tax. The first taxable period under RSA 76-B, as inserted by section 2 of this act, begins January 1, 2000, and ends December 31, 2000. Persons liable for a tax during the first taxable period and who do not report the payment of federal income taxes on a calendar year basis are entitled to such proportion of the exemptions allowed in RSA 76-B as the period bears to their taxable year. The determination of the tax shall be made under rules adopted by the commissioner of revenue administration under RSA 541-A, consistent with the general purposes and provisions of RSA 76-B. Persons required to make information returns for the first taxable period shall make them on a proportional basis in such form as the commissioner requires. For such first taxable period under RSA 76-B, all penalties, but not interest, shall be waived for underpayment of estimated taxes and insufficient withholding for calendar year 2000.

39 Returns for Certain Taxes.

I. All persons who are liable for a tax under RSA 77 as of December 31, 1999, who thereafter are no longer liable for a tax under RSA 77 because of the passage of this act shall make a return of such taxes due the commissioner of revenue administration in such manner and on such forms as the commissioner shall prescribe in rules adopted under RSA 541-A. The administrative provisions of RSA 77 shall remain in effect to permit the collection of taxes upon income taxable under RSA 77 which is received by persons subject to taxation under that chapter through December 31, 1999, and to permit the distribution of that revenue. Persons who are liable for a tax under RSA 77 who do not report the payment of federal income taxes on a calendar year basis are entitled to such proportion of the exemptions allowed in RSA 77 as the reporting period bears to their taxable year.

II. An amount equal to the difference between the official estimate for interest and dividends for fiscal year 2000 and the commissioner of revenue administration’s best estimate of actual interest and dividend’s revenue collections for fiscal year 2000 shall be withdrawn from the education trust fund and deposited into the general fund on June 30, 2000.

40 Temporary Rules. The commissioner of revenue administration shall adopt temporary rules without regard to RSA 541-A for the first year of implementation of this act.

41 Transition Year Education Funding; District Foundation Aid Increased. In order to provide sufficient time to implement the provisions of this act and to assure adequate educational funding on as equal and equitable basis as is practicable during the transition period preceding full implementation of the provisions of this act, therefore, notwithstanding the provisions of RSA 198:36, IV, for the fiscal year beginning July 1, 1999 the foundation amount shall be $5,708 per weighted pupil.

42 Special Rate for Property Tax Payments; Tax Year April 1, 2000. Notwithstanding the provisions of RSA 76:15-a and RSA 76:15-b for the tax year beginning April 1, 2000, the partial payment of taxes assessed shall be computed by taking the prior year’s assessed valuation times ½ of the previous year’s municipal tax rate; ½ of the previous year’s county tax rate; and ½ of the previous year’s local school tax rate as adjusted by the commissioner of revenue administration by deducting therefrom the amount of ½ of the estimated reduction in local school tax rate, if resulting from the implementation of this act and adding thereto ½ of the statewide education property tax rate for the taxable year; provided, however, that whenever it shall appear to the selectmen or assessors that certain individual properties have physically changed in valuation, they may use the current year’s appraisal in place of the prior year’s valuation to compute the partial payment.

43 Tax Equity and Efficiency Commission Established.

I. There is established a tax equity and efficiency commission to study issues relating to tax fairness and administrative implementation arising from the passage of this act which may be appropriate for further legislative action.

II. The commission shall consist of the following members:

(a) Eight house members, including the chairperson or vice-chairperson of the finance committee, the chairperson or vice-chairperson of the education committee, and at least 3 members of the minority party, appointed by the speaker of the house.

(b) Five senators, including the chairperson or vice-chairperson of the finance committee, the chairperson or vice-chairperson of the ways and means committee, the chairperson or vice-chairperson of the education committee, and at least 2 members of the minority party, appointed by the senate president.

(c) The governor or designee.

(d) The commissioner of the department of revenue administration or designee.

(e) The commissioner of the department of education or designee.

(f) The state treasurer or designee.

(g) One representative appointed by the New Hampshire Municipal Association.

(h) One representative appointed by the School Administrators Association.

(i) One representative appointed by Claremont Lawsuit Coalition.

(j) One representative appointed by the New Hampshire Society of Certified Public Accountants.

(k) One public member, appointed by the governor.

III. The commission shall study issues arising under this act relating to tax fairness and administrative implementation which may be appropriate for further legislative action. As part of its study, the commission shall consider:

(a) The most appropriate means for evaluating the following types of property for taxation purposes:

(1) Utility property.

(2) Railroad property.

(3) Nuclear station property.

(b) The fairness of the renters credit under the income tax.

(c) The determination of the homestead exemption for owners of multi-unit dwellings or parcels with mixed uses.

(d) Whether a resident fiduciary responsible for payment of property taxes should qualify for the homestead exemption.

(e) The income tax treatment of pension payments received in lieu of social security payments or pension payments from pensions to which the taxpayer’s contributions to the pension were previously taxed.

(f) The proper income tax treatment of military personnel on active duty residing out-of-state.

(g) The property tax treatment of non-conventional single owner or unusual residential situations such as nursing homes, dormitories, group homes, residential communities, condominiums and cooperatives.

IV. The members of the commission shall elect a chairperson from among the members. The first meeting of the committee shall be called by the first named senate member and shall be held within 30 days of the effective date of this section.

V. The commission shall report its findings and any recommendations for proposed legislation to the speaker of the house of representatives, the senate president, the house clerk, the senate clerk, the governor, and the state library on or before September 15, 1999 and on or before December 31, 1999.

44 Position Established; Appropriations.

I. To carry out the financial and educational reporting requirements of this act, there is hereby established within the department of education a full-time temporary position of systems development specialist IV, labor grade 25, for the 15 month period ending June 30, 2000.

II. The sum of $69,500 is hereby appropriated to the department of education to fund the position created in paragraph I, including salary, benefits, rent, supplies, and travel. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

III. The sum of $100,000 for the biennium ending June 30, 2001 is hereby appropriated to the department of education to fund the costs necessary to upgrade school districts’ computer systems to carry out the reporting responsibilities of this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

IV. The sum of $1,000,000 for the biennium ending June 30, 2001, is hereby appropriated to the department of revenue administration to fund the costs necessary to upgrade municipalities’ computer systems to carry out the financial purposes of this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

V. The sum of $9,000,000 for the fiscal year ending June 30, 2000 and $5,695,000 for fiscal year ending June 30, 2001 is hereby appropriated to the department of revenue administration to fund the costs necessary to implement this act. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

VI. The sum of $500,000 for the biennium ending June 30, 2001 is hereby appropriated to the department of revenue administration to fund the costs of establishing a personal and business income tax forecasting and policy analysis unit to provide information to the tax equity and efficiency commission, the governor and the legislature. The governor is authorized to draw a warrant for said sum out of any money in the treasury not otherwise appropriated.

VI. The sum of $253,700,000 is hereby appropriated from the education trust fund created under RSA 198:39 to the department of education for the fiscal year ending June 30, 2000 for the purpose of funding the requirements of RSA 198:27-37.

45 Returns for Certain Taxes. All business enterprises liable for taxes under RSA 77-E as of December 31, 1999, who thereafter become exempt from taxes under RSA 77-E because of the repeal of RSA 77-E in section 46 of this act shall make a return of such taxes due in such manner and on such forms as the commissioner shall prescribe.

46 Repeal. The following are repealed:

I. RSA 9:13-g, relative to educational funding commitments to local communities.

II. RSA 76:3, relative to a state property tax.

III. RSA 77, relative to the taxation of income.

IV. RSA 77-A:4, I, relative to an adjustment to business profits.

V. RSA 77-B, relative to the commuter income tax.

VI. RSA 77-E, relative to a business enterprise tax.

VII. RSA 78:20, relative to the applicability of the tobacco tax.

VIII. RSA 83-D, relative to the nuclear station property tax.

IX. RSA 198:1-3, relative to school district taxes.

X. RSA 198:15-i-15-p, relative to the kindergarten incentive program, kindergarten aid program and alternative kindergarten programs.

XI. RSA 198:21, V, relative to the applicability of foundation aid and child benefit service grant recipients in the calculation of average daily membership.

XII. RSA 198:22, V, relative to the applicability of foundation aid and dual enrollment grant recipients in the calculation of average daily membership.

XIII. RSA 198:27-37, relative to foundation aid and alternative foundation aid.

XIV. RSA 261:52-a, relative to notice that the interest and dividends tax may be due.

XV. RSA 391:3, relative to the taxation of common trust funds under RSA 77.

XVI. 1998, 389:15, 16 and 17 relative to educational funding commitments and funding for local education betterment.

47 Effective Date.

I. RSA 76-A, as inserted by section 2 of this act shall take effect April 1, 2000.

II. Section 32 of this act shall take effect July 1, 1999 at 12:01 a.m.

III. Paragraph VI of section 46 of this act shall take effect July 1, 1999 and shall apply to returns and taxes and reports due on account of taxable periods beginning on or after June 30, 1999.

IV. Paragraph XIII of section 46 of this act shall take effect January 1, 2000.

V. The remainder of this act shall take effect July 1, 1999.

1999-0574s

AMENDED ANALYSIS

I. The bill establishes a flat rate education income tax and a statewide property tax to fund public education.

(a) Establishes an educational adequacy and education financing reform commission.

(b) Establishes a system for calculating and disbursing state grants for educational adequacy.

(c) Appropriates funds to the commission for the purposes of this bill.

(d) Provides that all expenses related to catastrophic special education are constitutionally mandated and shall be borne by the state.

III. The bill repeals the business enterprise tax.

IV. The bill also makes appropriations to the department of education and the department of revenue administration for the purposes of the bill.

Senator Cohen moved that the Senate now adjourn from the early session, that the business of the late session be in order and that the bills ordered to third reading be read a third time by this resolution and all titles be the same as adopted and that they be passed at the present time and that when we adjourn, we adjourn until Tuesday, March 30, 1999 at 10:00 a.m.

SB 64, relative to powers of appointment.

HB 93, permitting a dam to be constructed on Rand Pond in Goshen.

SB 109, deleting the witnessing requirement for notices of lease.

HB 109, establishing a flat rate education income tax and a statewide education property tax to fund public education and making an appropriation therefor.

SB 111, relative to requirements for acknowledgements and jurats by justices of the peace.

SB 112, relative to the guardianship of minors.

SB 124, establishing a committee to study the integration of technology at the state and municipal level.

SB 125, placing restrictions on name changes for certain felons.

SB 130, establishing a committee to study issues regarding procedures and standards for selection and supervision of court-appointed guardians ad litem.

SB 150, making certain reference changes to the department of youth development services.

SB 164, relative to persons exempted from the registration of ophthalmic dispensers.

HB 207-FN-A, directing the office of state planning to conduct a study of the effects of sprawl in the state and making an appropriation therefor.

SB 222-FN-A-L, relative to guarantee of loans to local development organizations.

HB 248, relative to the Monadnock advisory commission.

SJR 1, supporting the reduction of the sulfur content of gasoline.

Senator Johnson moved that the business of the day being completed that the Senate now adjourn until Tuesday, March 30 at 10:00 a.m.