Assigned to FIN AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Phoenix, Arizona
FINAL REVISED

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. Appropriates $217,000 to the Department of Revenue for the costs incurred to enact this change.

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 a new class 1. This bill would not affect the current assessment ratios, but only rename the property tax classifications.

An appropriation of $217,000 will be made to the Department of Revenue for the costs incurred to enforce this change.

Provisions

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

2. Establishes 13 subclasses within class one consisting of the real and personal property of mines, standing timber, utilities, airport fuel delivery companies, geothermal resource interests, pipeline companies, shopping centers, golf courses, manufacturers, commercial interests and telecommunications companies .

3. Includes residential common areas as class four property, which has a ten percent assessment ratio.

4. Prescribes a special valuation method for the real and personal property of assemblers, manufacturers or fabricators, including "clean rooms," that are classified under class one, paragraph 10.

FACT SHEET H.B. 2634 - Final Revised Page

5. Specifies that property within the same property class does not have to be valued using the same method.

6. Appropriates $217,000 to the Department of Revenue computer programming and implementation.

7. Makes technical and conforming changes.

8. Contains a delayed effective date beginning with the 2000 valuation year.

Amendments Adopted by Finance Committee

1. Makes numerous technical and conforming changes.

2. Specifies that property included within the same property class does not have to be valued using the same method.

3. Appropriates $217,000 to the Department of Revenue for implementation.

Amendments Adopted by the Committee of the Whole

1. Provides that property in different subclasses may have different valuation methods.

2. Preserves the $50,000 exemption for agricultural personal property and business personal property.

Amendments Adopted by the Conference Committee

1. Changes the lettering system back to a numbering system.

2. Adds telecommunications property as a subclass to class one property.

3. Prescribes a special valuation method for the real and personal property of assemblers, manufacturers or fabricators, including "clean rooms," that are classified under class one, paragraph 10.

4. Strikes the nonseverability clause.

5. Makes technical and conforming changes.

House Action Senate Action

WM 2/16/99 DPA 11-0-0-1 FIN 3/22/99 DPA 6-1-0-0

APPROP 3/2/99 DP 8-1-1-3-0 3rd Read 4/28/99 23-7-0-0

3rd Read 3/11/99 56-0-4-0 Final Read 5/6/99 24-5-1-0

Final Read 5/6/99 53-2-5-0

Signed by the Governor 5/19/99

Chapter 344

Prepared by Senate Staff

May 27, 1999

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