Chapter 0267 - 451R - H Ver of SB1518

 -----------------------------
  House Engrossed Senate Bill
 -----------------------------
  State of Arizona
  Senate
  Forty-fifth Legislature
  First Regular Session
  2001
 -----------------------------
        CHAPTER 267
 -----------------------------
      SENATE BILL 1518
 -----------------------------

AN ACT

AMENDING SECTION 15-1461.01, ARIZONA REVISED STATUTES; AMENDING TITLE 41, CHAPTER 7, ARTICLE 12, ARIZONA REVISED STATUTES, BY ADDING SECTION 41-1292; PROVIDING FOR THE DELAYED REPEAL OF SECTION 41-1292, ARIZONA REVISED STATUTES; AMENDING SECTIONS 42-11127, 42-12004, 42-12007, 42-12151, 42-12157, 42-13054, 42-13055, 42-13302, 42-13304, 42-14003, 42-14054, 42-14103, 42-14104, 42-14153, 42-14203, 42-14204, 42-14253, 42-14254, 42-14306, 42-14307, 42-14355, 42-14357, 42-14404, 42-14503, 42-15053, 42-15102, 42-15152 AND 42-15153, ARIZONA REVISED STATUTES; REPEALING SECTION 42-15154, ARIZONA REVISED STATUTES; AMENDING SECTIONS 42-15155, 42-16108, 42-16155, 42-16165, 42-16166, 42-17003, 42-17004 AND 42-17005, ARIZONA REVISED STATUTES; AMENDING SECTION 42-17052, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 2000, CHAPTER 390, SECTION 21; AMENDING SECTIONS 42-17054, 42-17107, 42-17153 AND 42-18106, ARIZONA REVISED STATUTES; CHANGING THE DESIGNATION OF TITLE 42, CHAPTER 15, ARTICLE 4, ARIZONA REVISED STATUTES, TO "REAL AND PERSONAL PROPERTY ASSESSMENT ROLL"; CHANGING THE DESIGNATION OF TITLE 42, CHAPTER 18, ARTICLE 9, ARIZONA REVISED STATUTES, TO "SEIZURE AND SALE OF PERSONAL PROPERTY FOR DELINQUENT TAXES"; CHANGING THE DESIGNATION OF TITLE 42, CHAPTER 19, ARIZONA REVISED STATUTES, TO "PERSONAL PROPERTY"; CHANGING THE DESIGNATION OF TITLE 42, CHAPTER 19, ARTICLE 2, ARIZONA REVISED STATUTES, TO "PERSONAL PROPERTY TAX APPEALS"; RELATING TO REAL AND PERSONAL PROPERTY TAX.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 15-1461.01, Arizona Revised Statutes, is amended to read:

15-1461.01. Truth in taxation notice and hearing; roll call vote on tax increase; definition

A. On or before July 1, the county assessor shall transmit to the district an estimate of the total net assessed valuation of the district, including an estimate of new property that has been added to the tax roll since the previous levy of property taxes in the district. ON OR BEFORE FEBRUARY 10 OF THE TAX YEAR, THE COUNTY ASSESSOR SHALL TRANSMIT AND CERTIFY TO THE PROPERTY TAX OVERSIGHT COMMISSION AND TO THE DISTRICT GOVERNING BOARD THE TOTAL NET PRIMARY ASSESSED VALUES THAT ARE REQUIRED TO COMPUTE THE LEVY LIMIT PRESCRIBED BY SECTION 42-17051. If the proposed primary property tax levy, excluding amounts that are attributable to new construction, is greater than the amount levied in the preceding tax year by the district:

1. The district governing board shall publish a notice that meets the following requirements:

(a) The notice shall be published twice in a newspaper of general circulation in the district. The first publication shall be at least fourteen but not more than twenty days before the date of the hearing. The second publication shall be at least seven but not more than ten days before the date of the hearing.

(b) The notice shall be published in a location other than the classified or legal advertising section of the newspaper in which it is published.

(c) The notice shall be at least one-fourth page in size and shall be surrounded by a solid black border at least one-eighth inch in width.

(d) The notice shall be in the following form, with the "truth in taxation hearing - notice of tax increase" headline in at least eighteen point type:

Truth in Taxation Hearing

Notice of Tax Increase

In compliance with section 15-1461.01, Arizona Revised Statutes, __________ community college district is notifying its property taxpayers of __________ community college district's intention to raise its primary property taxes over last year's level. The __________ community college district is proposing an increase in primary property taxes of $__________ or _____%.

For example, the proposed tax increase will cause __________ community college district's primary property taxes on a $100,000 home to increase from $__________ (total taxes that would be owed without the proposed tax increase) to $__________ (total proposed taxes including the tax increase).

This proposed increase is exclusive of increased primary property taxes received from new construction. The increase is also exclusive of any changes that may occur from property tax levies for voter approved bonded indebtedness or budget and tax overrides.

All interested citizens are invited to attend the public hearing on the tax increase that is scheduled to be held __________ (date and time) at __________ (location).

2. In lieu of publishing the truth in taxation notice, the district board may mail the truth in taxation notice prescribed by paragraph 1, subdivision (d) to all registered voters in the district at least ten but not more than twenty days before the date of the hearing.

3. In addition to publishing the truth in taxation notice under paragraph 1 or mailing the notice under paragraph 2, the district governing board shall issue a press release containing the truth in taxation notice to all newspapers of general circulation in the district.

4. The district board shall consider a motion to levy the increased property taxes by roll call vote.

5. Within three days after the hearing, the district board shall mail a copy of the truth in taxation notice, a statement of its publication or mailing and the result of the district board's vote under paragraph 4 to the property tax oversight commission established by section 42-17002.

6. The district board shall hold the truth in taxation hearing on or before the adoption of the county, city or town budget under section 42-17105.

B. For purposes of this section, "amount attributable to new construction" means the net assessed valuation of property added to the tax roll since the previous year multiplied by a property tax rate computed by dividing the district's primary property tax levy in the preceding year by the estimate of the district's total net assessed valuation for the current year, excluding the net assessed valuation attributable to new construction.

Sec. 2. Title 41, chapter 7, article 12, Arizona Revised Statutes, is amended by adding section 41-1292, to read:

41-1292. Joint legislative oversight committee on property tax assessment and appeals

A. THE JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON PROPERTY TAX ASSESSMENT AND APPEALS IS ESTABLISHED TO MONITOR AND EVALUATE THE SYSTEM OF ASSESSMENT AND APPEALS OF PROPERTY TAX ASSESSMENTS ESTABLISHED BY TITLE 42. THE COMMITTEE CONSISTS OF:

1. SIX LEGISLATORS, THREE EACH APPOINTED BY THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, INCLUDING THE CHAIRMEN OF THE SENATE FINANCE COMMITTEE AND THE HOUSE OF REPRESENTATIVES WAYS AND MEANS COMMITTEE WHO SHALL SERVE AS COCHAIRMEN OF THE OVERSIGHT COMMITTEE. NO MORE THAN TWO MEMBERS FROM EACH HOUSE MAY BE MEMBERS OF THE SAME POLITICAL PARTY.

2. TWO COUNTY ASSESSORS, ONE EACH APPOINTED BY THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

3. TWO COUNTY TREASURERS, ONE EACH APPOINTED BY THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

4. FOUR PUBLIC MEMBERS, WHO MAY INCLUDE PROPERTY TAX PRACTITIONERS, ACCOUNTANTS AND MEMBERS OF THE STATE BAR OF ARIZONA, TWO EACH APPOINTED BY THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.

5. THE DIRECTOR OF THE DEPARTMENT OF REVENUE, OR THE DIRECTOR'S DESIGNEE.

B. MEMBERS OF THE COMMITTEE ARE NOT ELIGIBLE TO RECEIVE COMPENSATION FOR SERVICES OR FOR REIMBURSEMENT OF EXPENSES. THE LEGISLATURE SHALL PROVIDE STAFF SUPPORT AND MEETING ACCOMMODATIONS FOR THE COMMITTEE. MEMBERS SERVE AT THE PLEASURE OF THE APPOINTING OFFICER AND, IN THE CASE OF ELECTED OFFICIALS, UNTIL THEIR ELECTIVE TERM OF OFFICE EXPIRES.

C. THE COMMITTEE SHALL MEET PERIODICALLY TO REVIEW THE PROCEDURES AND ADMINISTRATIVE STRUCTURE FOR TAX ASSESSMENTS AND APPEALS AND IDENTIFY ANY AREAS OF AMBIGUITY, PROBLEMS AND NEEDED CHANGES AND IMPROVEMENTS. THE COMMITTEE MAY RECOMMEND LEGISLATION FOR CONSIDERATION BY THE LEGISLATURE.

D. EACH COUNTY ASSESSOR SHALL KEEP A RECORD OF THE FOLLOWING INFORMATION TO REPORT TO THE OVERSIGHT COMMITTEE:

1. THE DATE THE ASSESSMENT NOTICES ARE MAILED TO PROPERTY OWNERS.

2. THE DATE AND NUMBER OF APPEALS FILED BY CLASS OF PROPERTY AND THE BASIS OF THE APPEALS, CATEGORIZED BY VALUATION METHOD.

3. THE NUMBER OF ASSESSOR MEETINGS REQUESTED, NUMBER OF MEETINGS HELD AND THE DATES AND RESULTS OF THE MEETINGS.

4. THE NUMBER OF WRITTEN APPEALS WITHOUT A MEETING BEING REQUESTED, THE DATES THEY WERE RECEIVED AND THE OUTCOME OF THE APPEALS WITH THE ASSESSOR.

E. THE STATE AND COUNTY BOARD OF EQUALIZATION SHALL KEEP A RECORD, FOR THE PURPOSE OF REPORTING TO THE OVERSIGHT COMMITTEE, OF THE NUMBER OF APPEALS, THE DATES RECEIVED, THE PARTIES ATTENDING AND THE OUTCOME OF EACH APPEAL BY TYPE OF PROPERTY.

F. THE STATE BOARD OF TAX APPEALS SHALL MAINTAIN A RECORD, FOR THE PURPOSE OF REPORTING TO THE OVERSIGHT COMMITTEE, OF THE NUMBER OF REQUESTS FOR REVIEW ON THE RECORD, THE PARTY REQUESTING THE REVIEW, THE COUNTY OF RECORD AND THE OUTCOME OF THE REVIEW BY TYPE OF PROPERTY.

Sec. 3. Delayed repeal

Section 41-1292, Arizona Revised Statutes, is repealed from and after December 31, 2007.

Sec. 4. Section 42-11127, Arizona Revised Statutes, is amended to read:

42-11127. Exemption for commercial and agricultural personal property; definition

A. Pursuant to article IX, section 2, subsection (6), Constitution of Arizona, personal property that is class two property pursuant to section 42-12002, paragraph 2, subdivisions (a) and (b) used for agricultural purposes ~~as described by section 42-12002, paragraph 2~~ or that is class one property pursuant to section 42-12001~~, paragraph 13~~ used in a trade or business as described by section 42-12001, paragraphs 8, 9, 10, ~~and~~ 12 AND 13 is exempt from taxation up to a maximum amount of fifty thousand dollars of full cash value of each assessment account.

B. The exemption under subsection A of this section is allowed for all of the following one time each year, regardless of the number of business locations or places where the person is leasing the property:

1. A person who owns business or agricultural personal property and who is in the business of leasing the personal property in more than one location in this state.

2. A person whose business personal property is valued by the department and is classified as class one property as described by section 42-12001, paragraph 13 11.

3. Businesses that report equipment for which the leasing activity is incidental to their primary business.

C. On or before December 31 of each year, the department shall increase the maximum amount of the exemption for the following tax year based on the average annual percentage increase, if any, in the GDP price deflator for the two most recent complete state fiscal years.

D. For purposes of this section and article IX, section 2, subsection (6), Constitution of Arizona, an assessment account is considered to be a taxpayer.

E. In this section, "GDP price deflator" means the average of the four implicit price deflators for the gross domestic product reported by the United States department of commerce or its successor for the four quarters of the state fiscal year.

Sec. 5. Section 42-12004, Arizona Revised Statutes, is amended to read:

42-12004. Class four property

A. For purposes of taxation, class four is established consisting of:

1. Real and personal property and improvements to the property that are used solely as leased or rented property for residential purposes, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value.

2. Child care facilities that are licensed under title 36, chapter 7.1 and that are valued at full cash value.

3. Real and personal property and improvements to property that are used to operate nonprofit residential housing facilities that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value.

4. Real and personal property and improvements that are used to operate licensed residential care institutions or licensed nursing care institutions that provide medical services, nursing services or health related services and that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value.

5. Real and personal property consisting of no more than four rooms of owner-occupied residential property that are leased or rented to transient lodgers at no more than a fifty per cent average annual occupancy rate, together with furnishing no more than a breakfast meal, by the owner of the property and that is valued at full cash value.

6. Real and personal property consisting of residential dwellings that are maintained for occupancy by agricultural employees as a condition of employment or as a convenience to the employer, that is not included in class three and that is valued at full cash value. The land associated with these dwellings shall be valued as agricultural land pursuant to chapter 13, article 3 of this title.

7. Real property and improvements to property constituting common areas that are valued pursuant to chapter 13, article 8 9 of this title.

B. Subsection A, paragraphs 3 and 4 of this section shall not be construed to limit eligibility for exemption from taxation under chapter 11, article 3 of this title.

Sec. 6. Section 42-12007, Arizona Revised Statutes, is amended to read:

42-12007. Class seven property

For purposes of taxation, class seven is established consisting of real and personal property and improvements that meet the criteria for property included in class one, paragraphs ~~11 and~~ 12 AND 13 and also the criteria for commercial historic property as defined in section 42-12101.

Sec. 7. Section 42-12151, Arizona Revised Statutes, is amended to read:

42-12151. Definition of agricultural real property

In this article, unless the context otherwise requires, "agricultural ~~land~~ REAL PROPERTY" means ~~land~~ REAL PROPERTY that is one or more of the following:

1. Cropland in the aggregate of at least twenty gross acres.

2. An aggregate ten or more gross acres of permanent crops.

3. Grazing land with a minimum carrying capacity of forty animal units and containing an economically feasible number of animal units.

4. Land and improvements devoted to high density use for producing commodities.

5. Land and improvements devoted to use in processing cotton necessary for marketing.

6. Land and improvements devoted to use in processing wine grapes for marketing.

7. Land and improvements devoted to use in processing citrus for marketing.

8. Land and improvements devoted to use as fruit or vegetable commodity packing plants and that do not cut or otherwise physically alter the produce.

9. Land and improvements owned by a dairy cooperative devoted to high density use in producing, transporting, receiving, processing, storing, marketing and selling milk and manufactured milk products without the presence of any animal units on the land.

Sec. 8. Section 42-12157, Arizona Revised Statutes, is amended to read:

42-12157. Recapture and penalty for false information or failure to notify of change in use

If an owner of property or the owner's agent intentionally provides false information on an application form, or fails to provide the notice required under section 42-12156:

1. The property shall be reclassified immediately as being used for a nonagricultural use and shall be valued at its nonagricultural full cash value.

2. The owner is liable for the additional taxes on the difference between the nonagricultural full cash value and the full cash value of the property for all of the tax years in which the property was classified based on the false information.

3. The owner shall also pay a penalty equal to twenty-five per cent of the additional taxes computed under paragraph 2 of this section. The ~~department~~ ASSESSOR may abate this penalty for good cause. Twenty per cent of the penalty shall be deposited in the state general fund, and eighty per cent of the penalty shall be deposited with the county treasurer to be used by the county assessor's office.

Sec. 9. Section 42-13054, Arizona Revised Statutes, is amended to read:

42-13054. Taxable value of personal property; depreciated values of personal property in class one and class two (P)

A. The taxable value of personal property THAT IS VALUED BY THE COUNTY ASSESSOR is the result of acquisition cost less any appropriate depreciation as prescribed by tables adopted by the department. The taxable value shall not exceed the market value.

B. Except as provided in subsection C of this section and notwithstanding any other statute, the assessor shall adjust the depreciation schedules prescribed by the department as follows to determine the valuation of personal property that is initially classified during or after tax year 1994 as class one, paragraph 8, 9, 10 or 13 pursuant to section 42-12001 and personal property that is initially classified during or after tax year 1995 as class two (P) pursuant to section 42-12002:

1. For the first tax year of assessment, the assessor shall use thirty-five per cent of the scheduled depreciated value.

2. For the second tax year of assessment, the assessor shall use fifty-one per cent of the scheduled depreciated value.

3. For the third tax year of assessment, the assessor shall use sixty-seven per cent of the scheduled depreciated value.

4. For the fourth tax year of assessment, the assessor shall use eighty-three per cent of the scheduled depreciated value.

5. For the fifth and subsequent tax years of assessment, the assessor shall use the scheduled depreciated value as prescribed in the department's guidelines.

C. The additional depreciation prescribed in subsection B of this section:

1. Does not apply to any property valued by the department.

2. Shall not reduce the valuation below the minimum value prescribed by the department for property in use.

Sec. 10. Section 42-13055, Arizona Revised Statutes, is amended to read:

42-13055. Reducing minimum value for property in use

A. Beginning in valuation year 2000, the department shall reduce the minimum value prescribed for class one, paragraphs 8, 9, 10~~, 12~~ and 13 and class two (P) valued by the assessor by 2.5 per cent good each year.

B. This section does not require the department to reduce the minimum value for any property in use below 2.5 per cent good.

Sec. 11. Section 42-13302, Arizona Revised Statutes, is amended to read:

42-13302. Determining limited value in cases of omissions and changes

A. In the following circumstances the limited property value shall be established at a level or percentage of full cash value that is comparable to that of other properties of the same or similar use or classification:

1. Land or improvements that were erroneously totally omitted from the property tax rolls in the preceding tax year.

2. Property for which a change in use has occurred since the preceding tax year.

3. Property that has been modified by construction, destruction or demolition since the preceding valuation year.

4. PROPERTY THAT HAS BEEN SPLIT, SUBDIVIDED OR CONSOLIDATED BETWEEN JANUARY 1 THROUGH SEPTEMBER 30 OF THE VALUATION YEAR.

B. In the case of property that is split or consolidated after September 30 through December 31 of the valuation year, the TOTAL limited property value of the new parcel or parcels shall be THE SAME AS THE TOTAL LIMITED PROPERTY VALUE OF THE ORIGINAL PARCEL OR PARCELS. FOR THE FOLLOWING VALUATION YEAR, THE LIMITED PROPERTY VALUE SHALL BE established at ~~the same~~ A level or percentage of full cash value THAT IS COMPARABLE TO THAT OF OTHER PROPERTIES OF THE SAME OR SIMILAR USE OR CLASSIFICATION. The new parcel or parcels shall retain the same value-adding characteristics that applied to the original parcel before being split or consolidated, except as provided in subsection A, paragraph 3 of this section.

C. If it is determined that a parcel of property's value-adding characteristics or attributes that were in existence in a preceding valuation year have been previously partially omitted from or erroneously stated on the tax rolls to exempt the property from section 42-13301, the county assessor shall prepare a written statement of the full details relating to the property, the omitted or erroneously stated characteristics, the difference in value that should be added to or subtracted from the limited property value and any other relevant information that the assessor may provide.

D. If a parcel of real property has multiple improvements and in tax year 1979 the assessor's records recorded more or less than all of the improvements, then on determining that the improvement exists the assessor shall treat the property as missed parcels in subsection A of this section and the entire parcel with all improvements is subject to revaluation pursuant to subsection A of this section.

Sec. 12. Section 42-13304, Arizona Revised Statutes, is amended to read:

42-13304. Exemptions from limitation

A. The limitations prescribed by this article do not apply to:

1. Personal property, other than permanently affixed mobile homes that are subject to chapter 15, article 5 of this title. The full cash value of personal property, other than permanently affixed mobile homes, shall be used for all purposes in lieu of limited property value.

2. Property included in property class one, paragraphs 1 through 7 AND 13 under section 42-12001. The full cash value of that property shall be used for all purposes in lieu of limited property value.

B. This section does not restrict the determination of full cash value of all parcels or items or property in this state pursuant to article 2 of this chapter for purposes of levying a tax rate for secondary property tax purposes and for all other lawful purposes.

Sec. 13. Section 42-14003, Arizona Revised Statutes, is amended to read:

42-14003. Information considered in determining valuation; notice of determination

A. In determining valuation under this chapter the department shall consider all additional information including information that is presented in an appeal and information that is otherwise available.

B. The department shall notify the property owner of ~~its decision regarding an appeal~~ THE FINAL FULL CASH VALUE on or before August 31.

Sec. 14. Section 42-14054, Arizona Revised Statutes, is amended to read:

42-14054. Determining and reporting valuation of closed mines

A. On or before August 31 of each year the department shall:

1. find ~~in each taxing district in this state~~ the full cash value of all patented and unpatented mines that were producing mines on the first Monday in January of any of the three preceding years but that are no longer producing mines.

2. B. ON OR BEFORE NOVEMBER 30 OF EACH YEAR THE DEPARTMENT SHALL transmit the valuation of these properties in each taxing district to the several boards of supervisors.

B. C. The valuation required by this section is the value determined as of January 1 of the valuation year.

C. D. The department shall value nonproducing mines for a period of three ~~tax~~ VALUATION years after the ~~tax year in which production terminated~~ LAST VALUATION YEAR IN WHICH IT WAS VALUED AS A PRODUCING MINE.

Sec. 15. Section 42-14103, Arizona Revised Statutes, is amended to read:

42-14103. Annual report for determining valuation; violation; classification

A. On or before ~~the last day of February~~ APRIL 1 of each year each producer shall make and file with the department a return showing the producer's gross production and gross yield from each of the producer's producing properties for the immediately preceding calendar year. On request and for good cause the department may grant a thirty day extension of time for filing the report.

B. The report shall show the county in which the production took place and the description of the property from which the oil, gas or geothermal resource was produced.

C. The producer or the producer's authorized representative shall verify the report.

D. A producer who knowingly fails to file the report prescribed by this section or who knowingly files a false report is guilty of a class 2 misdemeanor.

Sec. 16. Section 42-14104, Arizona Revised Statutes, is amended to read:

42-14104. Determining and reporting valuation

A. On or before ~~August 31~~ NOVEMBER 30 OF EACH YEAR the department shall transmit to the respective county ~~board of supervisors~~ ASSESSORS the valuation of the oil, gas or geothermal resource interests of each producer for each of the producer's properties in the county as of January 1 of the ~~tax~~ VALUATION year.

B. The valuation required by this section is the value determined as of January 1 of ~~the year in which~~ the valuation ~~is made~~ YEAR.

C. After determining the valuation of any producing oil, gas or geothermal resource interest and before certifying the valuation to the county, the department, on the producer's application or on its own motion, may change the valuation to properly reflect the gross yield from the oil, gas or geothermal resource interest.

Sec. 17. Section 42-14153, Arizona Revised Statutes, is amended to read:

42-14153. Determining and reporting valuation

A. On or before August 31 OF EACH YEAR the department shall:

1. find the full cash value of the property of each property THAT IS listed in section 42-14151 and that operates in this state ~~and identify the taxing jurisdictions in which each property is located~~.

2. B. ON OR BEFORE NOVEMBER 30 THE DEPARTMENT SHALL transmit to the respective ~~boards of supervisors~~ COUNTY ASSESSORS:

~~(a)~~ 1. The valuations of these properties in each taxing district.

~~(b)~~ 2. An estimate of the net valuation of properties that are subject to voluntary contributions pursuant to section 48-242. The taxing jurisdiction shall use the estimate to estimate the amount of voluntary contributions to be received for the purpose of finalizing budget and property tax levies pursuant to chapter 17 of this title.

B. C. The valuations required by this section are the values determined as of January 1 of the valuation year.

Sec. 18. Section 42-14203, Arizona Revised Statutes, is amended to read:

42-14203. Determining and reporting valuation

A. On or before August 31 OF EACH YEAR the department shall find the location and full cash value of the property of each pipeline that operates in this state ~~and shall identify the taxing jurisdictions in which it is located~~.

B. The valuation required by this section is the value determined as of January 1 of the valuation year.

C. On or before ~~August 31~~ NOVEMBER 30 the department shall transmit the locations, descriptions and valuations to the respective county ~~boards of supervisors~~ ASSESSORS.

Sec. 19. Section 42-14204, Arizona Revised Statutes, is amended to read:

42-14204. Computing valuation of pipelines; definitions

A. The valuation of pipeline property that is subject to valuation for tax purposes shall be determined in the manner prescribed by this section.

B. The value of construction work in progress equals eighty-five per cent of the amount spent and entered on the taxpayer's accounting records as of December 31 of the preceding calendar year as construction work in progress.

C. The value of materials and supplies equals the total cost of materials and supplies as of December 31 of the preceding calendar year.

D. The value of gas stored underground equals the total cost of gas stored underground as of December 31 of the preceding calendar year.

E. The value of noncapitalized leased operating property shall be determined by applying to the original cost of the noncapitalized leased operating property the ratio derived from dividing the preliminary system value by the original cost of the plant.

F. The department shall determine the valuation of a pipeline as follows:

1. Determine the base value.

2. Compute the value change factor.

3. Multiply the values in paragraphs 1 and 2 of this subsection to compute the preliminary system value. If the value change factor does not apply, the preliminary system value is the system net book value of plant in service as of December 31 immediately preceding the current year.

4. Add the value of construction work in progress, materials and supplies, noncapitalized leased operating property and gas stored underground to the preliminary system value.

5. Compute the allocation factor.

6. Multiply the sum computed pursuant to paragraph 4 of this subsection by the allocation factor.

G. All terms and applications of terms shall be interpreted as nearly as possible, under the circumstances, according to the federal energy regulatory commission uniform system of accounts for pipelines in effect on January 1, 1989.

H. In this section, unless the context otherwise requires:

1. "Allocation factor" means the factor used to assign a portion of the system value to this state and is computed by dividing the total Arizona original cost of plant in service, materials and supplies, construction work in progress, noncapitalized leased operating property and gas stored underground as of December 31 of the preceding calendar year by the corresponding total system original cost as of December 31 of the preceding calendar year.

2. The "asset change factor" is computed by dividing the system net book value of plant in service as of December 31 immediately preceding the current ~~tax~~ VALUATION year by the system net book value of plant in service as of December 31 immediately preceding the prior ~~tax~~ VALUATION year. If the denominator is zero, the asset change factor does not apply.

3. The "base value" is the final full cash value of the system plant in service in the preceding ~~tax~~ VALUATION year. If the property was not subject to property valuation in this state in the preceding ~~tax~~ VALUATION year, the value is the net book value of plant in service plus the value of construction work in progress, materials and supplies, noncapitalized leased operating property and gas stored underground. If ownership changes, the base value shall be transferred to the new owner.

4. The "capitalization rate" is the sum of the year-end thirty year treasury bond rate plus 6.8 per cent.

5. The "change in capitalization rate" is computed by dividing the current year capitalization rate by the previous year capitalization rate.

6. The "change in earnings before interest and taxes" is computed by dividing the average earnings before interest and income taxes for the three years immediately preceding the current ~~tax~~ VALUATION year by the average earnings before interest and income taxes for the three years immediately preceding the previous ~~tax~~ VALUATION year. If less than four years of earnings data are available, this factor does not apply. If four years of earnings data are available and a major plant addition or retirement occurs, for the ~~tax~~ VALUATION year after the addition or retirement occurs, this ratio shall be derived by dividing the earnings before interest and income taxes for the year immediately preceding the current ~~tax~~ VALUATION year by the earnings before interest and income taxes for the year immediately preceding the previous ~~tax~~ VALUATION year.

7. "Construction work in progress" means the total of the balances of work orders for plant in process of construction on the last day of the preceding calendar year.

8. "Gas stored underground" means the noncurrent portion of the cost of recoverable gas that is purchased or produced by the utility, that is stored in depleted or partially depleted gas or oil fields or other underground reservoirs and that is not held to meet the service requirements of the utility's customers.

9. The "income change factor" is computed by dividing the change in earnings before interest and taxes by the change in the capitalization rate. If the change in earnings before interest and taxes does not apply, the income change factor does not apply.

10. "Major plant addition or retirement" means an addition or retirement of plant in the year preceding the current ~~tax~~ VALUATION year that results in an increase or decrease of at least twenty per cent of the original cost of plant in service.

11. "Noncapitalized leased operating property" means property that is subject to an agreement that transfers the use of property to the lessee during the term of the lease and that is not capitalized on the lessee's balance sheet.

12. "Preliminary system value" means the base value multiplied by the value change factor.

13. "System net book value of plant" means the original cost of the system plant in service less the related accumulated provision for depreciation.

14. "System value" means the sum of the system value of plant in service, construction work in progress, materials and supplies, noncapitalized leased property and gas stored underground.

15. The "value change factor" is the average of the income change factor and the asset change factor. If the income change factor does not apply, the value change factor is the asset change factor. If the asset change factor does not apply, the value change factor does not apply.

Sec. 20. Section 42-14253, Arizona Revised Statutes, is amended to read:

42-14253. Annual report for purposes of determining valuation; failure to file; penalty; forfeiture of appeal rights

A. On or before April 1 of each year each company that operates in air commerce in this state shall file a report with the department under oath stating specifically the information prescribed by the department to allow it to determine the valuation required by this article. The department shall consider the information in the report in determining the valuation under this article, but that information is not conclusive.

B. On written request and for good cause shown, the director may extend the time for filing the report required by this section.

C. If a company that operates in air commerce fails to file the report on or before April 1 of the ~~tax~~ VALUATION year, or the extended due date if an extension is granted, the department shall:

1. Estimate the value of the property based on one hundred five per cent of the preceding year's full cash value or on any information that is available to the department.

2. Also assess a penalty in the amount of the lesser of:

(a) One-half of one per cent of the value that is estimated by the department.

(b) One hundred dollars per day for each day the company fails to file the report beyond the due date.

D. If the report is not filed by May 20 of the ~~tax~~ VALUATION year, the company forfeits its right to appeal the valuation and classification pursuant to section 42-14005.

Sec. 21. Section 42-14254, Arizona Revised Statutes, is amended to read:

42-14254. Determination of value

A. On or before August 31 the department shall determine the full cash value of all flight property that is operated in this state in air commerce by each airline company. The full cash value is the value determined as of January 1 of the valuation year.

B. The department shall:

1. Determine the valuation of flight property by fleet type.

2. Determine the valuation of each fleet type by the original cost less depreciation.

3. Compute depreciation using fifteen year straight line depreciation to salvage value. Salvage value is:

(a) Ten per cent of original cost of aircraft that are out of production.

(b) Twenty-five per cent of original cost of aircraft that are being manufactured as of January of the ~~tax~~ VALUATION year.

4. Allow additional obsolescence if supported by market evidence.

C. Small flight property that is operated in this state in air commerce shall be valued at thirty per cent of its original cost less depreciation and additional allowed obsolescence.

D. The department shall determine the valuation that is apportioned to this state of each fleet type as the proportion of the total valuation determined on the basis of the total of the following percentages:

1. Fifty per cent of the percentage that the total state ground time during the preceding calendar year is of the total system ground time during the preceding calendar year.

2. Fifty per cent of the percentage that the total mileage scheduled within this state of the fleet type on flights operated in this state during the preceding calendar year is of the total mileage scheduled within and without this state of the fleet type during the preceding calendar year.

Sec. 22. Section 42-14306, Arizona Revised Statutes, is amended to read:

42-14306. Administrative review of valuation

A. On or before July 10 15 a private car company may request in writing that the department review its valuation. The department shall rule on any review of valuation on or before August 31 and shall notify the private car company of its ruling by mail.

B. Representing a taxpayer before the department or appearing on a taxpayer's behalf is not considered to be the practice of law.

Sec. 23. Section 42-14307, Arizona Revised Statutes, is amended to read:

42-14307. Appeals

A. On or before ~~September 15~~ OCTOBER 1 a private car company may appeal the department's valuation of its property to the state board of equalization as provided by section 42-16158. The state board shall immediately notify the department of the appeal.

B. The state board shall decide all private car company appeals on or before October 31.

C. A private car company may also apply for administrative review and appeal of any determination under this article pursuant to article 1 of this chapter.

Sec. 24. Section 42-14355, Arizona Revised Statutes, is amended to read:

42-14355. Computing valuation; definitions

A. The department shall determine the valuation of a railroad as follows:

1. Determine the base value.

2. Compute the value change factor.

3. Compute the current year system full cash value by multiplying the base value determined under paragraph 1 of this subsection by the value change factor determined under paragraph 2 of this subsection.

4. Compute the allocation factor.

5. Multiply the current year system full cash value determined under paragraph 3 of this subsection by the allocation factor determined under paragraph 4 of this subsection.

6. Compute the Arizona full cash value by subtracting the Arizona licensed transportation equipment value from the value determined under paragraph 5 of this subsection.

B. For purposes of computing the valuation under this section:

1. The "allocation factor", used to assign a portion of the system value to this state, is computed by adding:

(a) The property factor, weighted by forty-seven per cent.

(b) The line haul factor, weighted by forty-four per cent.

2. The "Arizona licensed transportation equipment value" is computed as follows:

(a) Subtract the system accumulated depreciation of motor vehicles that are subject to a license tax in lieu of an ad valorem property tax pursuant to article IX, section 11, Constitution of Arizona, from the system original cost of those vehicles.

(b) Divide the current year system full cash value, determined under subsection A, paragraph 3, by net operating property.

(d) Multiply the value determined in subdivision (c) of this paragraph by the allocation factor.

3. The "base value" is the final full cash value of the system in the preceding ~~tax~~ CALENDAR year. If the system was not subject to valuation in this state in the preceding ~~tax~~ CALENDAR year, the base value is the acquisition cost. If the system's ownership changes, the base value is unaffected and shall be transferred to the new owner.

4. The "capitalization rate" is the rate determined and reported by the interstate commerce commission in its annual cost of capital report.

5. The "change in capitalization rate" is computed by dividing the current year capitalization rate by the preceding year capitalization rate.

6. The "change in earnings" is computed by dividing the average earnings for the five years immediately preceding the current ~~tax~~ VALUATION year by the average earnings for the five years immediately preceding the previous ~~tax~~ VALUATION year. If three or more years of data are available, those data should be used, but if only one or two years of data are available, the change in earnings shall not be considered in computations under this section.

7. The "current gross profit margin" is computed by dividing the average earnings for the five years immediately preceding the current ~~tax~~ VALUATION year by the average gross revenues for the five years immediately preceding the current ~~tax~~ VALUATION year.

8. The "current return on investment" is computed by dividing the average earnings for the five years immediately preceding the current ~~tax~~ VALUATION year by the average net operating property for the five years immediately preceding the current ~~tax~~ VALUATION year.

9. The "current year efficiency" is computed by dividing the average earnings for the two years immediately preceding the current ~~tax~~ VALUATION year by the average gross revenues for the two years immediately preceding the current ~~tax~~ VALUATION year.

10. "Earnings" means the income realized before deducting interest, taxes, depreciation and lease expenses.

11. The "efficiency change factor" is computed by dividing the current year's efficiency factor by the previous year's efficiency factor.

12. The "efficiency factor" is computed by dividing earnings by gross revenues.

13. The "gross profit margin factor" is computed by dividing the current gross profit margin by the previous gross profit margin.

14. "Gross revenues" means total revenues from operations.

15. The "income change factor" is computed by dividing the change in earnings by the change in capitalization rate.

16. "Leased property" means noncapitalized leased operating property that is subject to an agreement that transfers the use of the property to the lessee during the term of the lease and that is not capitalized on the lessee's balance sheet.

17. The "line haul factor" is computed by dividing total revenue ton miles in this state by the total system revenue ton miles.

18. The "net operating property" is computed by subtracting accumulated depreciation and amortization including leased property from system cost.

19. "Operating property" means real or personal property that is owned or leased and used in operating the railroad, including land, track, right-of-way, buildings and structures, equipment, materials, tools and rolling stock.

20. The "previous gross profit margin" is computed by dividing the average earnings for the five years preceding the previous ~~tax~~ VALUATION year by the average gross revenues for the five years preceding the previous ~~tax~~ VALUATION year.

21. The "previous return on investment" is computed by dividing the average earnings for the five years preceding the previous ~~tax~~ VALUATION year by the average net operating property for the five years preceding the previous ~~tax~~ VALUATION year.

22. The "previous year efficiency" is computed by dividing the average earnings for the two years preceding the previous ~~tax~~ VALUATION year by the average gross revenues for the two years preceding the previous ~~tax~~ VALUATION year.

23. "Profitability change factor" means the average of the gross profit margin factor and the return on investment factor. If three or more years of data are available, those data should be used, but if only one or two years of data are available, the profitability change factor shall not be considered in computations under this section.

24. The "property change factor" is computed by dividing the ~~current year~~ system cost AS OF DECEMBER 31 IMMEDIATELY PRECEDING THE CURRENT VALUATION YEAR by the ~~preceding year~~ system cost AS OF DECEMBER 31 IMMEDIATELY PRECEDING THE PREVIOUS VALUATION YEAR.

25. The "property factor" is computed by dividing the total original cost of operating property in this state, including leased property, by the system cost.

26. The "return on investment factor" is computed by dividing the current return on investment by the previous return on investment.

27. "Revenue ton mile" means the amount of revenue derived from the number of tons hauled over a distance of one mile.

28. "System cost" means the total original cost of all operating property, including leased property, in and outside this state.

29. The "terminal factor" is computed by dividing the sum of tons originating, terminating, received and delivered in this state by the sum of tons originating, terminating, received and delivered in the system.

30. The "value change factor" is computed by adding:

(a) The income change factor, weighted by fifty per cent.

(b) The profitability change factor, weighted by twenty per cent.

(d) The property change factor, weighted by fifteen per cent, except that if the income change factor, efficiency change factor and profitability change factor do not apply, the property change factor is equivalent to the value change factor and is weighted at one hundred per cent.

Sec. 25. Section 42-14357, Arizona Revised Statutes, is amended to read:

42-14357. Transmitting valuation to taxing jurisdictions; apportionment

A. On or before ~~August 31~~ NOVEMBER 30 of each year the department shall transmit to the ~~board of supervisors~~ COUNTY ASSESSORS of each county through or into which a railroad runs a statement showing:

1. The valuation of the property for each taxing jurisdiction as determined by a pro rata distribution of the valuation of the whole property specified in this article.

2. A description of the whole of the assessed property in the county, city, town, school districts and special districts by metes and bounds or other description sufficient for identification.

B. The assessment and pro rata distribution shall be made with reference to the value of the property belonging to the company or corporation that owns the railroad located in each county, city, town, school district and special district through which the railroad extends.

C. If the railroad company lies in several counties:

1. Its rolling stock shall be apportioned among them so that a portion of the rolling stock may be assessed in each county.

2. Each county's portion shall bear to the whole rolling stock the same ratio that the number of miles in that county bears to the whole number of miles located in this state.

Sec. 26. Section 42-14404, Arizona Revised Statutes, is amended to read:

42-14404. Apportionment of valuation

A. On or before ~~August 31~~ NOVEMBER 30 OF EACH YEAR, the department shall:

1. Apportion the valuation among the several counties, cities, towns and special taxing districts through which the company's lines run.

2. Transmit a statement to the officers of the counties, cities, towns and districts who are in charge of valuations to be entered on the rolls as the taxable values of the company.

B. The counties, municipalities and districts shall tax the company as railroad companies are taxed under article 8 of this chapter.

Sec. 27. Section 42-14503, Arizona Revised Statutes, is amended to read:

42-14503. Computing valuation of airport fuel delivery company property; definitions

A. The department shall determine the valuation of all real and personal property of an airport fuel delivery company as follows:

1. Determine the base value.

2. Compute the asset change factor.

3. Multiply the base value by the asset change factor to compute the preliminary system value. If the asset change factor does not apply, the preliminary system value is the system net book value of plant in service as of December 31 immediately preceding the current ~~tax~~ VALUATION year.

4. Add the value of construction work in progress, materials and supplies and noncapitalized leased operating property to the preliminary system value.

5. Compute the allocation factor.

6. Multiply the sum computed pursuant to paragraph 4 of this subsection by the allocation factor.

B. In this section, unless the context otherwise requires:

1. "Allocation factor" means the factor used to assign part of the system value to this state and is computed by dividing the total Arizona original cost of plant in service, materials and supplies, construction work in progress and noncapitalized leased operating property as of December 31 of the preceding calendar year by the corresponding total system original cost as of December 31 of the preceding calendar year.

2. "Asset change factor" means the ratio derived from dividing the system net book value of plant in service as of December 31 immediately preceding the current ~~tax~~ VALUATION year by the system net book value of plant in service as of December 31 immediately preceding the prior ~~tax~~ VALUATION year. If the denominator is zero, the asset change factor does not apply.

3. "Base value" means the final full cash value of the system plant in service in the previous ~~tax~~ VALUATION year. If the property was not subject to property valuation in this state in the previous ~~tax~~ VALUATION year, the value is the system net book value of plant in service plus the value of construction work in progress, materials and supplies and noncapitalized leased operating property. If ownership changes, the base value shall be transferred to the new owner.

4. "Construction work in progress" means eighty-five per cent of the total of the value of the balances of work orders for plant in process of construction on the last day of the preceding calendar year.

5. "Noncapitalized leased operating property" means property subject to an agreement that transfers the use of property to the lessee during the term of the lease and that is not capitalized on the lessee's balance sheet.

6. "Preliminary system value" means the base value multiplied by the asset change factor.

7. "System net book value of plant" means the original cost of the system plant in service less the related accumulated provision for depreciation.

8. "System value" means the sum of the system value of plant in service, construction work in progress, materials and supplies and noncapitalized leased operating property.

Sec. 28. Section 42-15053, Arizona Revised Statutes, is amended to read:

42-15053. Duty to report personal property; confidentiality

A. On or before February 1 of each year, the assessor shall mail a form, notice or demand to each person who owns or has charge or control of taxable personal property in the state. Each person shall prepare and deliver to the assessor a correct report of property on or before April 1 of each year, except for property that is not required to be reported as provided by subsection C of this section. On written request and for good cause shown, the assessor may extend for up to thirty days the time for filing the report.

B. The duty to report taxable property pursuant to this section applies regardless of whether the person or entity that owns or has charge or control of the personal property also owns real property in the county with a value of two hundred dollars or more.

C. The assessor shall require a person to prepare a report of the person's property to be valued under chapter 19 of this title. The person shall file the report within forty-five days after receiving the form, notice or demand. For purposes of this subsection:

1. C. The assessor shall not require a report of:

1. The breed, number, age or location of livestock on hand from individuals, corporations, partnerships or any other business if the livestock is exempt from taxation pursuant to article IX, section 13, Constitution of Arizona.

2. ~~The assessor shall not require a report of~~ The personal property that is class four property used for agricultural purposes or that is class three property used in a trade or business that is exempt from taxation pursuant to article IX, section 2, subsection (6), Constitution of Arizona.

D. Every assessment made against property subject to taxation is valid whether or not the form, notice or demand was sent or received.

E. The department shall prescribe in detail the contents of property reports including the specific wording to be used by county assessors and the method of reporting property. The report shall not include any question that is not germane to the valuation function.

F. A report that is furnished under this section:

1. Is not open to public inspection, but the report may be used as evidence in any prosecution brought under section 42-15055.

2. May be subject to audit. On completing an audit or on discovering property that has not been reported, any property that was found to have escaped taxation is liable for the amount of taxes due determined under chapter 16, article 6 of this title, plus a penalty equal to ten per cent of that amount.

Sec. 29. Section 42-15102, Arizona Revised Statutes, is amended to read:

42-15102. Notice information entered by assessor

A. The assessor shall include in the assessment notice:

1. The full cash value found by the assessor for the property for the preceding valuation year.

2. The classification of the property pursuant to chapter 12 of this title.

3. The mailing date of the notice.

4. The last date on which the owner may file an appeal from the valuation or classification assigned to the property.

B. Except for property that is listed as class three property under section 42-12003 AND SINGLE FAMILY RENTED RESIDENTIAL PROPERTY THAT IS LISTED AS CLASS FOUR PROPERTY UNDER SECTION 42-12004, SUBSECTION A, PARAGRAPH 1, the notice shall separately list the full cash value of the land and the full cash value of the improvement or improvements associated with the land.

Sec. 30. Section 42-15152, Arizona Revised Statutes, is amended to read:

42-15152. Inclusion of all property on the roll

A. In addition to all other property that is required by law to be placed on the roll, all real property that is subject to the jurisdiction of this state, regardless of ownership or by whom it is claimed, possessed or controlled, and regardless of whether it is exempt from taxation by law or by the Constitution of Arizona, shall be listed on the roll in the manner prescribed by this article. This subsection does not alter any statute or constitutional provision relating to property that is exempt from taxation.

B. The roll shall also include ~~an estimate of~~ the total personal property tax roll as provided in section 42-17053.

Sec. 31. Section 42-15153, Arizona Revised Statutes, is amended to read:

42-15153. Completion and delivery of property lists and assessment roll; use of lists by administrative appeals bodies

A. On or before December 1 20 of each year, the county assessor shall complete the assessment roll and attach the assessor's certificate to the roll with a cross-index of all property listed in the roll, showing the ownership of the property and all assessment lists from which the roll was compiled.

B. The assessor shall deliver the lists and certified roll to the clerk of the board of supervisors who shall file them in the clerk's office.

C. The county board of equalization and the state board of equalization may use the lists for any lawful purpose.

Sec. 32. Repeal

Section 42-15154, Arizona Revised Statutes, is repealed.

Sec. 33. Section 42-15155, Arizona Revised Statutes, is amended to read:

42-15155. Abstract of assessment roll; contents; distribution

A. ~~Within thirty days after the county board of supervisors adopts the final roll under section 42-15154,~~ ON OR BEFORE JANUARY 20 OF EACH YEAR, the clerk of the board of supervisors shall make an abstract of the roll containing the valuations by taxing jurisdictions of all property in the county including:

1. ~~An estimate of~~ The total personal property tax roll as provided by section 42-17053.

2. Such other information as prescribed by the department.

B. The clerk shall file one copy of the abstract in the office of the board of supervisors and shall transmit additional copies to the state or county board of equalization, as appropriate, and to the department.

Sec. 34. Section 42-16108, Arizona Revised Statutes, is amended to read:

42-16108. Decision

A. Except as provided in subsection B of this section, the county board shall either grant or refuse the request of the petitioner, in whole or in part, as it considers just and proper within ten days after the date of the hearing, and in any event not later than October 15.

B. In the case of an appeal under section 42-16105, subsection C, the county board shall complete the hearing and issue a decision on or before the third Friday in November of the calendar year preceding the year in which the taxes are levied.

C. Within ten days after its decision the county board shall mail a copy of the decision TO THE COUNTY ASSESSOR AND to the petitioner at the address shown on the petition.

Sec. 35. Section 42-16155, Arizona Revised Statutes, is amended to read:

42-16155. Hearing officers and employees

A. The state board of equalization may employ one or more hearing officers who must meet the same qualifications prescribed for THE members of THE board by section 42-16153.

B. Any training activity for hearing officers shall be held in public with notice as prescribed by title 38, chapter 3, article 3.1.

C. A hearing officer is eligible to receive UP TO one hundred fifty dollars per day for time spent in performing official duties.

D. The state board may appoint a clerk and any other employees that it considers to be necessary to carry out its duties.

Sec. 36. Section 42-16165, Arizona Revised Statutes, is amended to read:

42-16165. Deadlines for issuing decisions

The state board shall complete all hearings and issue all decisions under this article on or before October 15 of each year, except for:

1. Cases involving property valued by the department, in which case the decisions shall be issued on or before November 15.

2. An appeal under section 42-16157, subsection C ~~or D~~, which shall be completed on or before the third Friday in November of the calendar year preceding the year in which the taxes are levied.

Sec. 37. Section 42-16166, Arizona Revised Statutes, is amended to read:

42-16166. Transmitting changes in valuations

On or before the fourth Friday in November of each year the state board shall transmit to:

1. The ~~board of supervisors~~ ASSESSOR of each county a statement of changes, if any, that it has made in the valuation of any property in the county that is valued by the county assessor.

2. The department a statement of changes, if any, that it has made in the valuation of:

(a) Any property that is valued by the department.

(b) Property of taxpayers who pay their taxes to the department, except that in the case of private car companies, the statement shall be transmitted on or before October 31.

Sec. 38. Section 42-17003, Arizona Revised Statutes, is amended to read:

42-17003. Duties

A. The commission shall:

1. Establish procedures for deriving the information required by SECTIONS 15-1461.01 AND 42-17107 AND article 2 of this chapter.

2. Review the primary property tax levy of each political subdivision to determine violations of article 2 of this chapter.

3. Review the reports made by the department concerning valuation accuracy.

4. Hold hearings to determine the adequacy of compliance with articles 2 and 3 of this chapter.

5. UPON THE REQUEST OF A COUNTY, CITY, TOWN OR COMMUNITY COLLEGE DISTRICT, HOLD HEARINGS AS PRESCRIBED IN SECTION 42-17004 REGARDING THE CALCULATION OF THE MAXIMUM ALLOWABLE PRIMARY PROPERTY TAX LEVY LIMITS PRESCRIBED IN SECTION 42-17051, SUBSECTION A.

B. If the commission determines that a political subdivision has violated SECTION 15-1461.01 OR 42-17107 OR article 2 of this chapter, then on or before September 15 the commission shall notify the political subdivision and the county board of supervisors, in writing, of:

1. The nature of the violation.

2. The necessary adjustment to the primary property tax levy and tax rate to comply with SECTION 15-1461.01 OR 42-17107 OR article 2 of this chapter.

Sec. 39. Section 42-17004, Arizona Revised Statutes, is amended to read:

42-17004. Hearing and appeals of commission findings

A. If the commission notifies a political subdivision of a violation of SECTION 15-1461.01 OR 42-17107 OR article 2 of this chapter, and the political subdivision disputes the commission's findings, then on or before October 1 the political subdivision may request a hearing before the commission to attempt to resolve the dispute.

B. A GOVERNING BOARD OF A COUNTY, CITY, TOWN OR COMMUNITY COLLEGE DISTRICT MAY REQUEST A HEARING BEFORE THE COMMISSION REGARDING THE CALCULATION OF THE MAXIMUM ALLOWABLE PRIMARY PROPERTY TAX LEVY LIMITS PRESCRIBED IN SECTION 42-17051. THE COMMISSION MAY RESOLVE ANY DISPUTES.

B. C. The commission shall conduct the hearing as prescribed in title 41, chapter 6, article 10.

C. D. If the dispute is resolved at the hearing, the commission shall immediately notify the county board of supervisors of the proper primary tax levy and tax rate.

D. E. If a political subdivision continues to dispute the commission's findings after the hearing under this section, the political subdivision may:

1. Appeal the matter to tax court within thirty days after the commission renders the decision.

2. Levy primary property taxes in the amount that the political subdivision considers to be proper, pending the outcome of the appeal.

Sec. 40. Section 42-17005, Arizona Revised Statutes, is amended to read:

42-17005. Adjustments to levy

A. If a governing body of a political subdivision receives written notice of a violation of its allowable levy LIMIT OR TRUTH IN TAXATION limit under section 42-17003, and has not appealed the commission's decision pursuant to section 42-17004, the governing body shall correct its primary property tax levy and tax rate to properly reflect the allowable levy for the current year. The county board of supervisors shall make the necessary adjustments to the political subdivision's primary property tax levy and tax rate to ensure that the corrected information is contained in the assessment and tax roll that is transmitted to the county treasurer pursuant to section 42-18003. If the governing body receives the notice after it is too late to correct the levy in the current year, the difference between the amount actually levied and the allowable primary property tax levy shall be set aside in a special fund and used to reduce the primary property taxes levied in the following year.

B. IF, AFTER A HEARING UNDER SECTION 42-17004, THE COMMISSION DETERMINES THAT ERRORS WERE MADE IN THE CALCULATION OF THE MAXIMUM ALLOWABLE PRIMARY PROPERTY TAX LEVY LIMIT PURSUANT TO SECTION 42-17051, SUBSECTION A, THE COMMISSION SHALL HAVE FIVE DAYS TO NOTIFY THE GOVERNING BOARD OF A COUNTY, CITY, TOWN OR COMMUNITY COLLEGE DISTRICT OF THE CORRECTED LEVY LIMIT. THE COMMISSION SHALL ALSO NOTIFY THE COUNTY BOARD OF SUPERVISORS WITHIN FIVE DAYS. THE CORRECTED MAXIMUM ALLOWABLE PRIMARY PROPERTY TAX LEVY SHALL BE USED IN SECTION 42-17051, SUBSECTION A, PARAGRAPH 1 IN DETERMINING THE FOLLOWING YEAR'S LEVY LIMIT.

B. C. If, after a hearing under section 42-17004, it is impossible for the board of supervisors to correct a property tax levy in the current year, the political subdivision shall hold the difference between the amount the political subdivision actually levied and the allowable primary property tax levy prescribed by the commission in a separate fund to be used to reduce the primary property taxes levied by the political subdivision in the following year.

C. D. If the commission discovers that it has made an error in computing the levy limit after September 15, it shall notify the political subdivision's governing body about the error. The error shall be corrected as prescribed in subsection A of this section. If the error results in the maximum allowable primary property tax levy being raised, the corrected maximum allowable primary property tax levy shall be used in section 42-17051, subsection A, paragraph 1 in determining the following year's levy limit.

D. E. If, on appeal under section 42-17004, subsection D E, the ruling of the court provides for a primary property tax levy in an amount that is less than the amount levied by the political subdivision, the political subdivision shall hold the difference between the amounts in a separate fund to be used to reduce the primary property taxes levied by the political subdivision in the following year.

Sec. 41. Section 42-17052, Arizona Revised Statutes, as amended by Laws 2000, chapter 390, section 21, is amended to read:

42-17052. Values furnished by county assessor

A. On or before February 10 of the tax year, the county assessor shall transmit and certify to the property tax oversight commission and to the governing body of the political subdivision or district in the county the values that are required to compute the levy limit prescribed by section 42-17051. These values shall include:

1. The finally equalized valuation of all property, less estimated exemptions, appearing on the tax roll for the current tax year to be used to fix, levy and assess the political subdivision's taxes.

2. ~~An estimate~~ THE VALUE of the PROPERTY ON THE personal property tax roll determined pursuant to section 42-17053.

B. On or before February 10 of the tax year, the county assessor shall determine the limited property value for the current tax year of each school district in the county and shall transmit the values to the county school superintendent to assist the superintendent in computing equalization assistance for education as provided in section 15-991.

C. On or before February 10 of the tax year, the county assessor shall transmit to the staff of the joint legislative budget committee and to the governor's office of strategic planning and budgeting the values that are required to compute the truth in taxation rates prescribed by section ~~41-1324~~ 41-1276.

Sec. 42. Section 42-17054, Arizona Revised Statutes, is amended to read:

42-17054. Levy limit worksheet

A. When the county assessor transmits valuations under section 42-17052, the assessor shall prepare and transmit a final levy limit worksheet to each city, town and community college district that imposes a primary property tax and to the property tax oversight commission.

B. Each city, town and community college district shall notify the property tax oversight commission in writing within ~~three~~ TEN days of its agreement or disagreement with the final levy limit worksheet.

Sec. 43. Section 42-17107, Arizona Revised Statutes, is amended to read:

42-17107. Truth in taxation notice and hearing; roll call vote on tax increase; definition

A. On or before July 1, the county assessor shall transmit to the county, city or town an estimate of the total net assessed valuation of the county, city or town, including an estimate of new property that has been added to the tax roll since the previous levy of property taxes in the county, city or town. ON OR BEFORE FEBRUARY 10 OF THE TAX YEAR, THE COUNTY ASSESSOR SHALL TRANSMIT AND CERTIFY TO THE PROPERTY TAX OVERSIGHT COMMISSION AND TO THE GOVERNING BODY OF THE COUNTY, CITY OR TOWN THE TOTAL NET PRIMARY ASSESSED VALUES THAT ARE REQUIRED TO COMPUTE THE LEVY LIMIT PRESCRIBED BY SECTION 42-17051. If the proposed primary property tax levy, excluding amounts that are attributable to new construction, is greater than the amount levied by the county, city or town in the preceding tax year in the county, city or town:

1. The governing body shall publish a notice that meets the following requirements:

(a) The notice shall be published twice in a newspaper of general circulation in the county, city or town. The first publication shall be at least fourteen but not more than twenty days before the date of the hearing. The second publication shall be at least seven but not more than ten days before the date of the hearing.

(b) The notice shall be published in a location other than the classified or legal advertising section of the newspaper in which it is published.

(c) The notice shall be at least one-fourth page in size and shall be surrounded by a solid black border at least one-eighth inch in width.

(d) The notice shall be in the following form, with the "truth in taxation hearing - notice of tax increase" headline in at least eighteen point type:

Truth in Taxation Hearing

Notice of Tax Increase

In compliance with section 42-17107, Arizona Revised Statutes, __________ (name of county, city or town) is notifying its property taxpayers of __________'s (name of county, city or town) intention to raise its primary property taxes over last year's level. __________ (name of county, city or town) is proposing an increase in primary property taxes of $__________ or _____%.

For example, the proposed tax increase will cause __________'s (name of county, city or town) primary property taxes on a $100,000 home to increase from $__________ (total taxes that would be owed without the proposed tax increase) to $__________ (total proposed taxes including the tax increase).

All interested citizens are invited to attend the public hearing on the tax increase that is scheduled to be held __________ (date and time) at __________ (location).

2. In lieu of publishing the truth in taxation notice, the governing body may mail the truth in taxation notice prescribed by paragraph 1, subdivision (d) to all registered voters in the county, city or town at least ten but not more than twenty days before the date of the hearing on the estimates pursuant to section 42-17104.

3. In addition to publishing the truth in taxation notice under paragraph 1 or mailing the notice under paragraph 2, the governing body shall issue a press release containing the truth in taxation notice.

4. The governing body shall consider a motion to levy the increased property taxes by roll call vote.

5. Within three days after the hearing, the governing body shall mail a copy of the truth in taxation notice, a statement of its publication or mailing and the result of the governing body's vote under paragraph 4 to the property tax oversight commission.

6. The governing body shall hold the truth in taxation hearing on or before the adoption of the county, city or town budget under section 42-17105.

B. For purposes of this section, "amount attributable to new construction" means the net assessed valuation of property added to the tax roll since the previous year multiplied by a property tax rate computed by dividing the primary property tax levy of the county, city or town in the preceding year by the estimate of the total net assessed valuation of the county, city or town for the current year, excluding the net assessed valuation attributable to new construction.

Sec. 44. Section 42-17153, Arizona Revised Statutes, is amended to read:

42-17153. Lien for taxes; time lien attaches; priority

A. Except as provided in subsection B of this section, a tax that is levied on real or personal property is a lien on the assessed property.

B. A tax that is levied against personal property of a person who owns real property of a value of less than two hundred dollars in the county is a personal liability of the property owner, in addition to being a lien against the property.

C. The lien:

1. Attaches on January 1 of ~~each~~ THE TAX year.

2. Is not satisfied or removed until one of the following occurs:

(a) The taxes, penalties, charges and interest are paid.

(b) Title to the property has finally vested in a purchaser under a sale for taxes.

3. Is prior and superior to all other liens and encumbrances on the property, except liens or encumbrances held by this state.

D. If a political subdivision of this state acquires title to property after December 31, 1998, any lien for delinquent taxes on the property:

1. Is not abated, extinguished, discharged or merged in the title to the property unless approved by the county board of supervisors.

2. Is enforceable in the same manner as other delinquent tax liens.

Sec. 45. Section 42-18106, Arizona Revised Statutes, is amended to read:

42-18106. Delinquent tax list and notice of sale

A. On or before December 31 of each year the county treasurer shall prepare:

1. A list of all real property on which the taxes for prior tax years are unpaid and delinquent, describing the property as it is described on the tax roll.

2. An accompanying notice stating that the treasurer will sell a tax lien on each parcel of real property at public auction for:

~~(a)~~ taxes, penalties, interest and charges on the real property.

~~(b) Taxes, penalties, interest and charges assessed against the owner for personal property.~~

B. The notice shall include:

1. The name of the owner.

2. The legal description and parcel number of the property.

3. The tax years for which taxes are delinquent.

4. The taxes, penalties, interest and charges assessed.

C. If the board of supervisors by resolution elects to pursue any other remedy provided by law, the board may dispense with the notice under this section, but that action does not affect the provisions of sections 42-18109 and 42-18110.

Sec. 46. Heading changes

A. The article heading of title 42, chapter 15, article 4, Arizona Revised Statutes, is changed from "REAL AND SECURED PERSONAL PROPERTY ASSESSMENT ROLL" to "REAL AND PERSONAL PROPERTY ASSESSMENT ROLL".

B. The article heading of title 42, chapter 18, article 9, Arizona Revised Statutes, is changed from "SEIZURE AND SALE OF SECURED PERSONAL PROPERTY FOR DELINQUENT TAXES" to "SEIZURE AND SALE OF PERSONAL PROPERTY FOR DELINQUENT TAXES".

C. The chapter heading of title 42, chapter 19, Arizona Revised Statutes, is changed from "UNSECURED PERSONAL PROPERTY" to "PERSONAL PROPERTY".

D. The article heading of title 42, chapter 19, article 2, Arizona Revised Statutes, is changed from "UNSECURED PERSONAL PROPERTY TAX APPEALS" to "PERSONAL PROPERTY TAX APPEALS".

APPROVED BY THE GOVERNOR APRIL 30, 2001.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 30, 2001.