Summary:

 Senate Bill 445 (SB 445) removes the six-year limitation on the imposition of the Water and Sanitation Gross Receipts Tax for ordinances imposing the tax that are approved by voters on or after July 1, 2025. Under current law, the tax is imposed for a period of six years before requiring reauthorization. The bill eliminates this limitation, allowing the tax to remain in effect indefinitely unless repealed by future voter action. SB 445 takes effect on July 1, 2025.
 

Legislation Overview:

 Senate Bill 445 (SB 445) amends Section 7-20E-26 NMSA 1978, which authorizes counties to impose the Water and Sanitation Gross Receipts Tax upon voter approval. The tax is imposed at a rate of 0.25% on businesses operating within the boundaries of a water and sanitation district, with revenue dedicated exclusively to supporting the operation of that district. Current law limits the imposition of this tax to a six-year period from its effective date, requiring reauthorization through a subsequent election for continuation. SB 445 removes this six-year sunset provision for ordinances imposing the tax that are approved by voters on or after July 1, 2025, effectively making the tax permanent unless repealed through future voter action. The bill retains all other provisions regarding the administration, collection, and use of the tax.

Implications
The removal of the six-year limitation on the Water and Sanitation Gross Receipts Tax could provide greater financial stability for water and sanitation districts, ensuring a consistent revenue stream without requiring periodic voter reauthorization. This change may enhance long-term planning and infrastructure investment for water and sanitation services in counties that impose the tax. However, the measure also reduces direct voter oversight by eliminating the requirement for periodic approval. While voters can still repeal the tax through future elections, the removal of the automatic expiration date may result in less frequent public review of the tax’s necessity and effectiveness. The fiscal impact will vary by county, but in jurisdictions where the tax is imposed, revenue projections may improve due to the elimination of uncertainty surrounding reauthorization. 

Current Law:

 Under current law, counties may impose the Water and Sanitation Gross Receipts Tax at a rate of 0.25% within a water and sanitation district, but only if approved by a majority of voters. The tax is limited to six years from its effective date, requiring subsequent voter approval for reauthorization. Revenue from the tax must be used exclusively for operating the water and sanitation district.