2009 SESSION
09/10
HOUSE BILL 397-FN-A-LOCAL
AN ACT establishing a property tax relief program.
SPONSORS: Rep. Kurk, Hills 7; Rep. Tupper, Merr 6
COMMITTEE: Local and Regulated Revenues
This bill establishes a property tax relief program based on taxpayer income and to be administered by the department of revenue administration. Participation in such program is optional for a municipality and may be authorized by a majority vote of its legislative body.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0105
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT establishing a property tax relief program.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Property Tax Relief Program. Amend RSA by inserting after chapter 76 the following new chapter:
CHAPTER 76-A
PROPERTY TAX RELIEF PROGRAM
76-A:1 Definitions. In this chapter:
I.(a) “Applicant” means a person who:
(1) Has filed a loan application under this chapter and resides in a municipality adopting the provisions of this chapter pursuant to RSA 76-A:13; and
(2) During the 5 calendar years preceding the year in which the person files a claim for relief under this chapter:
(A) Had an ownership interest in a homestead in the municipality in which the applicant resides, including an ownership interest in a homestead held in a trust, and was domiciled in the homestead upon which the property taxes have accrued and for which the person is making a loan application for property tax relief in this state; and
(B) Was not a full-time student claimed as a dependent by any taxpayer under the United States Internal Revenue Code of 1986, as amended.
(b) A person shall not be considered an applicant under this chapter if household income exceeds the median household income for the state of New Hampshire as determined on April 1 of each year by the department of revenue administration. When 2 or more individuals of a household are able to meet the qualifications for an applicant, they shall determine among themselves who the applicant shall be.
II. “Department” means the department of revenue administration.
III. “Homestead” means the dwelling which is owned by an applicant, and all of the land owned by the applicant surrounding the dwelling, which dwelling is occupied as the applicant’s principal place of residence for not less than 240 days in a calendar year. A homestead may consist of a part of a multi-dwelling and its proportionate share of the land upon which it is built and other common facilities. 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. It shall not include personal property such as furniture, furnishings, or appliances, but manufactured housing may be a homestead.
IV. “Household” means an applicant and all other adults who make the homestead their principal place of residence, as residence is defined in RSA 21:6-a. The adults in a household do not need to be related to one another or to the applicant by blood or marriage in order to be considered members of a household for the purposes of this paragraph.
V. “Household income” means all income received by all persons of a household in a fiscal year while members of the household.
VI.(a) “Income” means the sum of federal adjusted gross income as defined in the United States Internal Revenue Code of 1986, as amended, plus the following sums to the extent that they are not already included in a household’s adjusted gross income: the amount of capital gains excluded from adjusted gross income, alimony, support money, cash public assistance and relief, not including relief under this chapter, nontaxable strike benefits, the gross amount of any pension or annuity, including railroad retirement benefits and veterans disability pensions, amounts deducted for individual retirement accounts (IRAs), Keogh retirement plans, and self-employment pension (SEP) contributions, all compensation received under the Social Security Act and state unemployment laws, nontaxable interest received from the federal government or any of its instrumentalities, interest received from any state or subdivision thereof, workers’ compensation, and the gross amount of “loss of time” insurance.
(b) “Income” shall include only amounts received on and after January 1, 2009.
VII. “Property taxes” means property taxes, assessed by the state under RSA 76:3, or by any county, municipality, or school district, based on assessed valuation after the deduction of allowable exemptions or credits to which an applicant may be entitled under RSA 72 and exclusive of special assessments, delinquent interest, and charges for service, assessed as of April 1 on an applicant’s homestead in this state. If a homestead is owned by 2 or more persons or entities as joint tenants or tenants in common, and one or more persons or entities are not members of the applicant’s household, “property taxes” means that part of property taxes levied on the homestead which reflects the ownership percentage of the applicant and the applicant’s household. If a homestead is an integral part of a larger unit such as a multi-dwelling building, the property taxes means that percentage of the total property taxes accrued as the total inhabitable area of the applicant’s dwelling is of the total inhabitable area of the building. In this paragraph, “unit” refers to the parcel of property covered by a single tax statement of which the homestead is a part.
76-A:2 Administration. This chapter shall be administered and enforced by the department.
76-A:3 Applications for Property Tax Relief Loans.
I. An applicant may file an application with the department for a property tax relief loan within 10 calendar days of receiving his or her property tax bill.
II. If the applicant has previously received more than 5 loans under this chapter, the applicant shall provide with his or her application evidence to the satisfaction of the department that the amount of his or her equity in the homestead is equal to at least twice the amount of all outstanding loans and the proposed loan.
III. An applicant shall not be eligible to receive a property tax relief loan for property taxes which accrued prior to January 1, 2009.
IV. An applicant who is eligible to receive a loan under this chapter shall also be eligible to receive any of the exemptions or credits to which the applicant may be entitled under RSA 72.
76-A:4 Payment and Conditions of Loans.
I. Within 10 business days of receipt of an applicant’s application, the department shall determine the applicant’s eligibility for the loan and the amount of the loan and make a payment in that amount to the appropriate municipal tax collector. If the department reasonably requires additional information in order to determine whether the applicant is entitled to relief, the payment date shall be extended accordingly and the applicant so informed. The department shall notify the applicant of the amount of the loan granted, the amount of interest which shall accrue, and the payment terms of the loan.
II. Interest shall accrue on the principal amount of the loan at an amount computed by the department in the same manner as described in RSA 21-J:28 for interest computed on taxes.
III. The amount of the loan shall not exceed the total property taxes owed by the applicant in the year of application for such loan.
IV.(a) Except as provided in subparagraph (b), the applicant shall repay the principal and interest on the loan upon the transfer or sale of the property or upon the death of the applicant, whichever occurs earlier.
(b) Upon the applicant’s death, a person who is married to an applicant or who has entered a civil union with the applicant may assume the obligation for repayment of the principal and interest on the loan until such person transfers or sells the property or upon the death of such person, whichever occurs earlier.
(c) The applicant or person assuming the obligation of the applicant under subparagraph (b) may repay the principal and interest on the loan in full or in part at any time prior to the transfer or sale of the property or the death of the applicant.
V. All payments of principal and interest shall be deposited by the state treasurer in the property tax relief revolving loan fund established in RSA 76-A:6.
76-A:5 Liens. All loans awarded to an applicant under this chapter shall be secured by a single lien on the applicant’s homestead. The lien shall be for the amount of principal and interest on all loans to be repaid by the applicant under this chapter. The lien shall be recorded in the registry of deeds of the county or counties in which the homestead is situated and shall have the same priority as liens in favor of the state for unpaid taxes. However, the lien shall not supercede any pre-existing lien created by a mortgage affecting such homestead. The lien shall expire only when the loan or loans have been fully repaid.
76-A:6 Property Tax Relief Revolving Loan Fund.
I. There is hereby established in the office of the state treasurer a fund to be known as the property tax relief revolving loan fund which shall be kept separate and distinct from other funds. Moneys in the fund shall be nonlapsing and shall be continually appropriated to the department of revenue administration for the purpose of providing property tax relief loans under this chapter.
II. To provide funds for the revolving loan fund established pursuant to this section, the state treasurer, as may be requested from time to time by the commissioner of revenue administration, is authorized to borrow from time to time upon the credit of the state such amounts so that the total state obligation shall at no time exceed $10,000,000 and for said purposes may issue bonds and notes at such time in the name and on behalf of the state of New Hampshire in accordance with the provisions of RSA 6-A. The department shall request and the treasurer shall issue bonds only for such amounts from time to time as are required for the purposes of this chapter and provided that the principal and interest payments can be satisfied from sums in the fund established in paragraph I.
III. The payments of principal and interest on the bonds issued under paragraph II shall be made when due from the special fund established by paragraph I.
76-A:7 One Applicant Per Household. Only one applicant per household per year shall be entitled to loans under this chapter.
76-A:8 Right to File Loan Application. The right to file a loan application under this chapter shall be personal to the applicant. The right to file an application under this chapter shall survive the applicant’s death to the extent that this right may be exercised on behalf of an applicant by a legal guardian, attorney, spouse, or another person who could have qualified as the applicant had the decedent not filed.
76-A:9 Loan Application Forms. The commissioner of revenue administration shall make available suitable loan application forms with instructions for applicants. Such forms may require applicants to provide all information reasonably necessary to determining the accuracy of loan applications, including, but not limited to, property taxes accrued, changes of homestead, household membership, household income, and size and nature of property claimed as the homestead.
76-A:10 Audit of Loan Application. If, upon audit of any loan application filed under this chapter, the department determines the loan amount to have been incorrectly determined, the department shall recalculate the loan amount and assess and collect any excess amount in accordance with RSA 80.
76-A:11 Fraudulent Applications; Penalty.
I. If, after hearing, the department determines that a loan is excessive and that the loan application was filed with fraudulent intent, the excess amount shall be assessed and collected in accordance with RSA 80.
II. The applicant in such case, and any person who, with fraudulent intent, assisted in the preparation or filing of the loan application or supplied information upon which the loan was awarded shall be guilty of a misdemeanor.
76-A:12 Appeals. Any person aggrieved by the denial in whole or in part of a loan application under this chapter, except when the denial is based upon late filing of the application, may appeal the denial to the superior court in the county in which the person resides by filing a petition within 30 days after such denial.
76-A:13 Local Approval Required.
I. A municipality may participate in the property tax relief program under this chapter only if its participation is approved in the following manner:
(a) In a town, other than a town that has adopted a charter pursuant to RSA 49-D, the question shall be placed on the warrant of a special or annual town meeting, by the governing body or by petition pursuant to RSA 39:3.
(b) In a city or town that has adopted a charter pursuant to RSA 49-C or RSA 49-D, the legislative body may consider and act upon the question in accordance with its normal procedures for passage of resolutions, ordinances, and other legislation. In the alternative, the legislative body of such municipality may vote to place the question on the official ballot for any regular municipal election.
II. If a majority of those voting on the question vote “yes,” the municipality shall begin participation in the property tax relief program under this chapter in the tax year beginning April 1 following its adoption.
III. A municipality may rescind its vote to participate in the property tax relief program under this chapter in the manner described in this section.
2 New Subparagraph; Special Fund. Amend RSA 6:12, I(b) by inserting after subparagraph (276) the following new subparagraph:
(277) Moneys deposited in the property tax relief revolving loan fund established in RSA 76-A:6.
3 Effective Date. This act shall take effect April 1, 2010.
LBAO
09-0105
12/17/08
HB 397-FN-A-LOCAL - FISCAL NOTE
AN ACT establishing a property tax relief program.
FISCAL IMPACT:
The Department of Revenue Administration, the Judicial Branch, the Judicial Council, the Department of Justice, and the New Hampshire Association of Counties state this bill may increase state and county expenditures by an indeterminable amount in FY 2010 and each year thereafter. The Treasury Department states this bill may have an indeterminable fiscal impact on state general fund expenditures and revenue. There will be no fiscal impact on local expenditures or county and local revenue.
METHODOLOGY:
The Department of Revenue Administration states this bill establishes a property tax relief program. The bill also establishes the Property Tax Relief Revolving Loan Fund to be funded by requests from the commissioner to borrow upon the credit of the state such amounts so that the total state obligation shall at no time exceed $10,000,000. The Department of Revenue Administration states this bill will increase state general fund expenditures by an indeterminable amount. The Department is unable to determine the fiscal impact of this bill because it does not know how many municipalities will choose to participate in the program, the number of eligible applicants, or the amount of property tax an applicant would want to take a loan for at the interest rate set in RSA 21-J:28. However, the Department does state this bill will necessitate the creation of a loan/banking division within the Department.
The Treasury Department states if it is requested to issue bonds for the amount of loans made, the State would incur debt service payable for a number of future years. The Department states if the total interest due on loans made to and paid by applicants exceeded the total debt service paid on the State bonds, there would be a net revenue impact. If the total interest paid on the State bonds exceeded the total interest on the loans to and paid by applicants, there would be a net cost impact. Additionally, an applicant would need to demonstrate the equity in a homestead is at least twice the amount of all outstanding loans, but only when applying for the sixth such loan. Therefore, the possibility exists that the value of the first five loans, plus accrued interest on such loans could exceed the equity in the homestead at the point the
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property is sold or transferred or upon the death of an applicant. The Department states the fiscal impact is indeterminable.
The Judicial Branch states this bill establishes a property tax relief program containing a misdemeanor charge for fraudulent activity associated with applying for or assisting one applying for a loan under the program and allows applicants for loans to appeal denials to the Superior Court. The Branch states the cost of an unspecified misdemeanor case in the District Court is $35.75 in FY 2010 and each year thereafter. The Branch states an appeal of a loan denial petition brought to the Superior Court is treated as a routine equity case. The Branch states the cost of a routine equity case in the Superior court is $184.21 in FY 2010 and each year thereafter. The Branch has no information to estimate how many charges would be brought to District Court or appealed to the Superior Court as a result of the changes contained in the bill to determine the fiscal impact on expenditures. However, if a single case were to be appealed to the New Hampshire Supreme Court, the fiscal impact would be in excess of $10,000.
The Judicial Council states this bill may result in an indeterminable increase in general fund expenditures. The Council states if an individual is found to be indigent, the flat fee of $275 per misdemeanor is charged by a public defender or contract attorney. If an assigned counsel attorney is used the fee is $60 per hour with a cap of $1,400 for a misdemeanor charge. The Council also states additional costs could be incurred if an appeal is filed. The public defender, contract attorney and assigned counsel rates for Supreme Court appeals is $2,000 per case, with many assigned counsel attorneys seeking permission to exceed the fee cap. However, such motions to exceed the fee cap are seldom granted. Finally, expenditures would increase if services other than counsel are requested and approved by the court during the defense of a case or during an appeal.
The Department of Justice states this bill may increase state general fund expenditures by an indeterminable amount. The Department would have increased expenditures when it initiates a prosecution under this bill or when an appeal of the criminal offense is taken by the New Hampshire Supreme Court. Additionally, the Department would have increased costs if there is an appeal to the Superior Court of a Department of Revenue Administration’s decision. The
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Department is unable to estimate how many cases would be prosecuted by the Department or appealed.
The New Hampshire Association of Counties states to the extent an individual is prosecuted, convicted, and sentenced to incarceration, the counties may have increased expenditures. The Association is unable to determine the number of individuals who might be detained or incarcerated as a result of this bill. The average cost to incarcerate an individual in a county facility is $30,165 a year.