Assigned to FIN FOR COMMITTEE

ARIZONA STATE SENATE

Phoenix, Arizona

FACT SHEET FOR H.B. 2634
consolidation of property tax classifications

Purpose

Prescribes a new nomenclature for property tax classifications by consolidating classes 1, 2 and 3 into one new class.

Background

Historically, class 1 (mining) and class 2 (utilities) property have had higher assessment ratios than has class 3 (commercial) property. For example, until 1999 class 1 and 2 properties were valued using a 30 percent assessment ratio, while class 3 properties had an assessment ratio of 25 percent.

Pursuant to Laws 1997, Chapter 150, section 172, beginning in assessment year 1999 class 1, class 2, and class 3 property are all assessed at 25 percent of their primary and secondary values. Due to the similarity of their uses and assessment ratios, H.B. 2634 proposes to consolidate class 1, 2, and 3 property classes into one new class; class A. This bill would not affect the current assessment ratios, but only rename the property tax classifications. Here are the proposed nomenclature changes and their corresponding assessment ratios:

New Class	Prior Class	Valuation Year 1999 Assessment Ratio
Class A -- Business	Class 1, Class 2, Class 3 (R) & (P)	25%
Class B -- Agriculture	Class 4 (R) & (P)	16%
Class C -- Residential	Class 5	10%
Class D -- Residential Rental	Class 6	10%
Class E -- Railroads	Class 7	22%*
Class F -- Historic Property	Class 8	5%
Class G -- Commercial Historic	Class 9	25% (A) 1% (H)
Glass H -- Commercial/Rental Historic	Class 10	10% (D) 1% (H)
Class I--Improvements to Government Property	Class 11	1%

According to the Department of Revenue, an appropriation of $217,000 would be required to enforce this change.

FACT SHEET H.B. 2634 Page

Provisions

1. Prescribes a new nomenclature for property tax classifications. Specifically, places current classes 1, 2 and 3 into the new class A and renumbers the rest of the classifications to conform.

2. Establishes a subclass within class A for the real or personal property of manufacturers, assemblers or fabricators. Creates a depreciated value schedule for the assessment of personal property valued under the new manufacturing, assembly, or fabrication subclass.

3. Establishes subclasses within class A for the valuation of the real or personal property of:

a) water, sewer and wastewater utility companies

b) pipeline companies

c) shopping centers

d) golf courses

4. Defines "clean rooms," and specifies that those used for manufacturing, processing, fabrication or research and development of semiconductor products are to be valued and assessed as tangible personal property.

5. Makes technical and conforming changes.

6. Effective from and after December 31, 1999.

House Action

WM 2/16 DPA 11-0-0-1-0

APPROP 3/2 DP 8-1-1-3-0

3rd Read 3/11 56-0-4-0

Prepared by Senate Staff

March 17, 1999

Click here to return to the A.L.I.S. Home Page.