Newspaper article THE JOURNAL RECORD

Supreme Court to Rule on Property Tax Issue

Newspaper article THE JOURNAL RECORD

Supreme Court to Rule on Property Tax Issue

Article excerpt

The Oklahoma Supreme Court will decide whether to assume jurisdiction over a property tax squabble between energy pipeline companies and the State Board of Equalization based on arguments heard Thursday.

A Supreme Court referee heard arguments by attorneys for both sides, and will make a recommendation to the full court.

The issue has been festering for several years. Its roots were in House Bill 1947, enacted in 1990 by the Oklahoma Legislature to conform with federal law. It effectively created a sub-classification for airlines and railroads within the public service corporation ad valorem tax class, whereby they had an assessment ratio lower than other public service corporations, such as pipelines.

The law sparked property tax protests by a number of pipeline companies. After a legislative task force studied the issue, lawmakers in 1992 enacted Senate Bill 866, which stated the intent that the Equalization Board should lower assessments on public service property until it was within the range of ratios applied to other classes of property _ "in essence, to address the disparity in the ratios," said William Elias, attorney for some of the pipeline companies.

The adjustment was to be done in a revenue-neutral manner, and the ratios were duly lowered in 1992 and 1993, he said.

But when the board this summer considered the assessment ratio on public service corporations, members voted to hold the ratio at the current 22.85 percent rate. The rate for airlines and railroads is 12.08 percent.

Gov. David Walters, who serves on the Equalization Board, issued a press release saying reduction of assessment ratios on pipeline and utility company properties had bled the budgets of education and county governments by about $70 million in four years.

Walters said the "practice of reducing the ratios to placate those companies and avoid a (tax protest) lawsuit reduces the pressure to reach a permanent solution and, in essence, establishes a protective class of corporate taxpayers whose taxes never rise. …

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