the Arizona Legislature is making decisions this session on three pipeline assessment bills that will impact student funding for public schools.
The valuation of Transwestern Pipeline Company is important to rural and remote Arizona school districts outside of Maricopa and Pima counties and in western Arizona because it is a source of local property taxes for schools, said Chris kotterman, director of government relations for Arizona School Boards Association.
Since pipelines are centrally valued assets, the Department of Revenue sets the formula for valuing them at the state level. Next, Arizona counties assess pipelines within their boundaries and collect local property taxes on them, a portion of which goes to public schools, Kotterman said.
In Arizona, local funding for schools – including local property taxes, obligations and exemptions – represent 45 percent, the majority of public school funding, since 2018.
#Legitatif Législatif: Pipelines and student financing
Video edited by Jacquelyn Gonzales / AZEdNews
Transwestern Pipeline Company challenged the Arizona Department of Revenue, a court has ruled in the company’s favor, which allows the pipeline company to collect a refund from the tax authorities, Kotterman said.
“Sometimes that doesn’t happen until years later, when the money has already been spent. You can see how this is not only a problem for school districts, but also for cities, towns, counties and more, ”Kotterman said.
The current law allows school districts to ask the Arizona Department of Education to adjust their public funding if this happens as a result of a lawsuit, Kotterman said.
Since the pipeline company’s repayment affects previous year and current year funding for public schools, Arizona lawmakers introduced three bills this session to help school districts address this issue. funding.
Senate Bill 1449, Sponsored by Senator Sine Kerr, would allow the Superintendent of Public Instruction at adjust state aid for a school district in the current year if the management board requests the recalculation of state aid for a previous year due to a change in the assessed assessment which has occurred as a result of a court decision in accordance with in article 42-16213, a decision of a county equalization council in accordance with article 42-16108, or a decision of the state equalization council in accordance with article 42-16162.
“Senate Bill 1449 just passed through the Senate this week, so he’s on his way to the House, ”said Leigh jensen, government relations officer for Arizona School Boards Association.
“What he does is have the superintendent of public education adjust state base aid for a school district during the current year if the governing board (of the school district ) is asking for a recalculation, due to a judgment from a previous year that changed the valuation of a centrally assessed property and changed their tax rate, ”Jensen said.
“The important part about this is that if this is your situation, this bill would require you to ask the (Arizona) Department of Education to look into this for you,” Jensen said.
“If you are in this situation and you are a watching board member, watch this one and you will have the opportunity to let the ministry know that you would like to be readjusted for this and make up for the loss (of funding ), ”Jensen said.
“Going forward, it will also add the decisions of the County Equalization Board and the State Equalization Board, which is good,” Kotterman said.
“The current law allows it for the current year for legal actions, so if you are in that situation you can go ahead and do it now, but the bill would also make it retroactive,” Kotterman said.
The next bill will minimize that problem going forward, Kotterman said.
Bill 2316, Sponsored by House Majority Leader Representative Ben Toma, which would amend Section 42-14204 of the Revised Arizona Bylaws by adding a section relating to pipelines has already been approved by the Arizona Legislature and was signed by Governor Doug Ducey on February 18, 2021.
Bill 2316 adds a section to the revised Arizona laws that indicates adjustments to the base value used to determine the total cash surrender value of the pipeline property when there is a final court ruling that the total cash surrender value is greater than market value using standard valuation methods, there is an agreement between a pipeline company and the ministry resulting from a pending tax appeal, and there is an agreement between the pipeline company and the ministry to correct an error in the calculation of the total cash surrender value of the system installation in service.
“What it does is it helps reset the base value of a centrally appraised property – if it is challenged in court,” said Rico yanez, intern in government relations for Arizona School Boards Association. “It just makes sure the formula doesn’t rock one way or another. This sort of stabilizes the full cash value of what those factories in the system are worth when they value them. “
“The crux of this question is whether the pipeline’s total cash value is proportional to its actual value,” Kotterman said. “Basically, the company maintains that the pipeline is regularly overvalued and therefore subject to higher taxes.”
“This creates a process where if there’s a court ruling on it, which it was, then you can reset the base value – and that’s the value that’s used so we don’t have to. not arguing over value, ”Kotterman said. .
That fixes the stability problem, but we still have this tax overpayment problem and that’s where the next bill comes in, Kotterman said.
Senate Bill 1603, Sponsored by Senator David Gowan, which would allocate $ 16.1 million from the general state fund during fiscal year 2021-2022 to the Ministry of Administration to pay to political subdivisions of that state that paid the refunds ordered in the Transwestern Pipeline Company v. Arizona Dept. of Revenue litigation, received a formal recommendation for passage by the Senate Democratic Caucus and Senate Republican Caucus on February 16, 2021.
“Senate Bill 1603 addresses some of these past issues and it allocates $ 16 million from the state general fund to political subdivisions that paid property tax refunds to Transwestern Pipeline Company in 2016, ”said Sarah jedlowski, intern in government relations for Arizona School Boards Association.
“Retroactive from 2016 to now,” Kotterman said. “It’s literally the school districts’ money bill. “
If you are in a small district, “who had to make these payments and was not able to do other things, because you had to do them, it will earn you a lot of money to be reimbursed”, Kotterman said.
“I hope that this set (of bills) will allow us to put this problem behind us for a little while anyway and allow our smaller districts to move forward and not have to sit back. worry about their budgets versus tax judgments, ”Kotterman said.