Regular Fire Board Meeting - February 24, 2021

Assigned to APPROP

FOR COMMITTEE

ARIZONA STATE SENATE Fifty-Fifth Legislature, First Regular Session

FACT SHEET FOR S.B. 1603

appropriation; refunds; Transwestern Pipeline litigation

Purpose

Appropriates $16,100,000 from the state General Fund (state GF) in FY 2022 to the Arizona Department of Administration (ADOA) to disburse to political subdivisions that paid property tax refunds ordered in the Transwestern Pipeline Co. v. Arizona Department of Revenue litigation.

Background

In 2016, the Transwestern Pipeline Company sued the Arizona Department of Revenue (ADOR) for miscalculation of the full cash value of the company's property. The Maricopa County Superior Tax Court (Tax Court) ruled that ADOR's proposed error corrected valuations overvalued the plaintiff's property and the state's motion for partial summary judgment regarding the error corrected valuations was denied (Ariz. Super Ct. May 11, 2018). In 2020, the Arizona Court of Appeals affirmed the Tax Court's calculation of Transwestern's income for use in the income methods and vacated the Tax Court's findings regarding the company-specific risk premium. The Arizona Court of Appeals remanded the judgement and instructed the Tax Court to determine whether the error-corrected full cash values exceed the market values. If necessary, the Tax Court must determine the market value of the property for 2016 and 2017 consistent with Arizona Court of Appeals decision and without the inclusion of a company-specific risk premium (Transwestern Pipeline Co. v. Arizona Dep't of Revenue, 1 CA-TX 19-0006, 2020 WL 4529622 (App. Aug. 6, 2020)).

S.B. 1603 appropriates $16,100,000 from the state GF in FY 2022 to ADOA to disburse to Arizona political subdivisions.

Provisions

1. Appropriates $16,100,000 from the state GF in FY 2022 to ADOA to disburse to political subdivisions in Arizona that paid refunds ordered in the Transwestern Pipeline Co. v. Arizona Department of Revenue litigation.

2. Exempts the appropriation from lapsing.

3. Becomes effective on the general effective date.

Prepared by Senate Research February 5, 2021 LMM/DH/kja