1998 Legislation
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HOUSE BILL NO. 752, As Amended – Utilities, operating property, tax

HOUSE BILL NO. 752, As Amended

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H0752aaH............................................by REVENUE AND TAXATION
UTILITIES - OPERATING PROPERTY - Amends existing law relating to evaluation
and assessment of public utility property to exclude franchises and
rights-of-way from the definition of operating property, to specify
additional intangible personal properties which are exempt from taxation
and to authorize the State Tax Commission to promulgate rules to exclude
intangible personal property from the taxable value of operating property.

02/19    House intro - 1st rdg - to printing
02/20    Rpt prt - to Rev/Tax
03/10    Rpt out - to Gen Ord
03/10    Rpt out amen - to engros
    Rpt engros - 1st rdg - to 2nd rdg as amen
03/11    2nd rdg - to 3rd rdg as amen
03/11    Rls susp - PASSED - 47-12-11
      AYES -- Barraclough, Barrett, Bell, Bivens, Black(15), Bruneel,
      Callister, Campbell, Clark, Crane, Deal, Denney, Ellsworth,
      Field(13), Field(20), Gagner, Gould, Hadley, Hansen, Hornbeck,
      Jaquet, Jones(9), Jones(22), Jones(20), Judd, Kellogg, Kendell,
      Kjellander, Lake, Loertscher, McKague, Meyer, Miller, Mortensen,
      Newcomb, Reynolds, Richman, Schaefer, Stevenson, Stone, Taylor,
      Tilman, Tippets, Trail, Wheeler, Zimmermann, Mr Speaker
      NAYS -- Bieter, Black(23), Boe, Chase, Henbest, Kunz, Marley,
      Pomeroy, Ridinger, Robison, Stoicheff, Watson
      Absent and excused -- Alltus, Crow, Cuddy, Geddes, Kempton, Linford,
      Mader, Pischner, Sali, Stubbs, Wood
    Floor Sponsor - Jones(9)
    Title apvd - to Senate
03/12    Senate intro - 1st rdg as amen - to Loc Gov
03/19    Rpt out - rec d/p - to 2nd rdg as amen
03/20    2nd rdg - to 3rd rdg as amen
03/20    3rd rdg as amen - PASSED - 31-3-1
      AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Crow, Darrington, Frasure, Geddes, Hansen, Hawkins, Ingram, Ipsen,
      Keough, King, Lee, McLaughlin, Noh, Parry, Richardson, Riggs, Risch,
      Sandy, Schroeder, Sorensen, Stennett, Sweeney, Thorne, Twiggs,
      NAYS--Deide, Dunklin, Whitworth
      Absent and excused--Danielson
    Floor Sponsor - Thorne
    Title apvd - to House
03/23    To enrol - rpt enrol - Sp signed
03/24    Pres signed - to Governor
03/25    Governor signed
         Session Law Chapter 400
         Effective: 01/01/99

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998

                             IN THE HOUSE OF REPRESENTATIVES

                              HOUSE BILL NO. 752, As Amended

                            BY REVENUE AND TAXATION COMMITTEE

 1                                        AN ACT

13    Be It Enacted by the Legislature of the State of Idaho:

14        SECTION  1.  That  Section  63-201, Idaho Code, be, and the same is hereby
15    amended to read as follows:

16        63-201.  DEFINITIONS. As used for property tax purposes in title 63, chap-
17    ters 1 through 23, Idaho Code, the terms defined in this  section  shall  have
18    the following meanings, unless the context clearly indicates another meaning:
19        (1)  "Appraisal" means an estimate of property value for property tax pur-
20    poses.
21        (a)  For the purpose of estimated property value to place the value on any
22        assessment  roll,  the  value estimation must be made by the assessor or a
23        certified property tax appraiser.
24        (b)  For the purpose of estimating property value to present for an appeal
25        filed pursuant to sections 63-501A, 63-407 and  63-409,  Idaho  Code,  the
26        value  estimation  may  be  made by the assessor, a certified property tax
27        appraiser, a licensed appraiser, or a certified appraiser or any party  as
28        specified by law.
29        (2)  "Bargeline"  means  those  water  transportation tugs, boats, barges,
30    lighters and other equipment and property used in conjunction  with  waterways
31    for bulk transportation of freight or ship assist.
32        (3)  "Cogenerators"  means  facilities  which produce electric energy, and
33    steam or forms of useful energy which are  used  for  industrial,  commercial,
34    heating or cooling purposes.
35        (4)  "Collection  costs"  are  amounts authorized by law to be added after
36    the date of delinquency and collected in the same manner as property tax.
37        (5)  "Delinquency" means any property tax, special assessment,  fee,  col-
38    lection cost, or charge collected in the same manner as property tax, that has
39    not been paid in the manner and within the time limits provided by law.
40        (6)  "Improvements"  means  all buildings, structures, fixtures and fences
41    erected upon or affixed to the land, and all fruit, nut-bearing and ornamental
42    trees or vines not of natural growth, growing upon the  land,  except  nursery
43    stock.


 1        (7)  "Late charge" means a charge of two percent (2%) of the delinquency.
 2        (8)  "Lawful  money  of  the United States" means currency and coin of the
 3    United States at par value and checks and drafts which are payable in  dollars
 4    of the United States at par value, payable upon demand or presentment.
 5        (9)  "Manufactured  home" means a structure defined as a manufactured home
 6    in section 39-4105, Idaho Code.
 7        (10) "Market value" means the amount of United States dollars  or  equiva-
 8    lent  for which, in all probability, a property would exchange hands between a
 9    willing seller, under no compulsion to sell, and an informed,  capable  buyer,
10    with a reasonable time allowed to consummate the sale, substantiated by a rea-
11    sonable down or full cash payment.
12        (11) "Operating property" means all  franchises;  rights-of-way
13      accompanied  by title ; roadbed s ; tracks; pipelines;
14    bargelines; equipment and docks; terminals; rolling  stock;  equipment;  power
15    stations;  power  sites;  lands;  reservoirs,  generating plants, transmission
16    lines, distribution lines and substations; and all immovable or movable  prop-
17    erty  operated  in  connection  with  any  public utility, railroad or private
18    railcar fleet, wholly or partly within this state, and necessary to the  main-
19    tenance and operation of such road or line, or in conducting its business, and
20    shall  include  all  title  and interest in such property, as owner, lessee or
21    otherwise.  The term does not include personal property exempt from taxa-
22    tion pursuant to section 63-602L, Idaho Code. 
23        (12) "Party in interest" means a person  who  holds  a  properly  recorded
24    mortgage, deed of trust or security interest.
25        (13) "Person"  means  any  entity,  individual,  corporation, partnership,
26    firm, association, limited liability company,   limited liability  partnership
27    or other such entities as recognized by the state of Idaho.
28        (14) "Personal  property"  includes all goods, chattels, stocks and bonds,
29    equities in state lands, easements, reservations,  leasehold  real  properties
30    and  all  other  property  which the law defines, or the courts may interpret,
31    declare and hold to be personal property under the letter, spirit, intent  and
32    meaning of the law, for the purposes of property taxation. For the purposes of
33    payment  and  collection  of  property  taxes pursuant to chapter 9, title 63,
34    Idaho Code, collection of delinquency pursuant to chapter 10, title 63,  Idaho
35    Code,  and seizure and sale of personal property for taxes pursuant to chapter
36    11, title 63, Idaho Code, personal property includes  manufactured  homes  not
37    declared as real property pursuant to section 63-304, Idaho Code.
38        (15) "Private  railcar fleet" means railroad cars or locomotives owned by,
39    leased to, occupied by or franchised to any person other than a railroad  com-
40    pany  operating  a  line  of  railroad in Idaho or any company classified as a
41    railroad by the interstate commerce commission and entitled  to  possess  such
42    railroad cars and locomotives except those possessed solely for the purpose of
43    repair,  rehabilitation  or  remanufacturing  of  such locomotives or railroad
44    cars.
45        (16) "Public utility" means electrical companies,   telephone  compa-
46    nies,   pipeline companies, natural gas distribution companies, or power
47    producers included within federal law,  telecommunications companies pro-
48    viding intercounty or interstate service or charging their users a  separately
49    stated fee for the use of its services,  bargelines, and water companies
50    which  are  under  the  jurisdiction of the Idaho public utilities commission.
51     The term also includes telephone corporations, as that term  is  defined
52    in  section 62-603, Idaho Code, except as hereinafter provided, whether or not
53    such telephone corporation has been issued a certificate  of  convenience  and
54    necessity by the Idaho public utilities commission. 
55        This  term does not include cogenerators, mobile telephone service or com-


 1    panies, nor does it include pager service or companies, except when such  ser-
 2    vices are an integral part of services provided by a certificated utility com-
 3    pany  nor  does the term "public utility" include companies or persons engaged
 4    in the business of providing solely on a resale basis, any telephone or  tele-
 5    communication  service which is purchased from a telephone corporation or com-
 6    pany.
 7        (17) "Railroad" means every kind of railway, whether its line of rails  or
 8    tracks  be  at, above or below the surface of the earth, and without regard to
 9    the kind of  power used in moving its rolling stock, and shall  be  considered
10    to  include every kind of street railway, suburban railway or interurban rail-
11    way excepting facilities established solely for maintenance and rebuilding  of
12    railroad cars or locomotives.
13        (18) "Real  property" means land, and all standing timber thereon, includ-
14    ing standing timber owned separately from the  ownership  of   the  land  upon
15    which  the  same  may stand, except as modified in chapter 17, title 63, Idaho
16    Code, and all buildings, structures and improvements,  or  other  fixtures  of
17    whatsoever kind on land, including water ditches constructed for mining, manu-
18    facturing or irrigation purposes, water and gas mains, wagon and turnpike toll
19    roads,  and  toll bridges, and all rights and privileges thereto belonging, or
20    any way appertaining, all quarries and fossils in and under the land, and  all
21    other property which the law defines, or the courts may interpret, declare and
22    hold  to  be real property under the letter, spirit, intent and meaning of the
23    law, for the purposes of property taxation. Manufactured homes constitute real
24    property when located on taxable land, and after  a  statement  of  intent  to
25    declare  as  real  property has been recorded, provided said statement has not
26    been revoked. Timber, forest,  forest  land,  and  forest  products  shall  be
27    defined as provided in chapter 17, title 63, Idaho Code.
28        (19) "Record owner" means the person or persons in whose name or names the
29    property  stands  upon  the records of the county recorder's office. Where the
30    record owners are husband and wife at the time of notice of pending  issue  of
31    tax deed, notice to one (1) shall be deemed and imputed as notice to the other
32    spouse.
33        (20) "Special  assessment" means a charge imposed upon property for a spe-
34    cific purpose, collected and enforced in the same manner as property taxes.
35        (21) "System value" means the market value for assessment purposes of  the
36    operating property when considered as a unit.
37        (22) "Tax  code area" means a geographical area made up of one (1) or more
38    taxing districts with one (1) total levy within the geographic area, except as
39    otherwise provided by law.
40        (23) "Taxing district" means any entity or unit with the statutory author-
41    ity to levy a property tax.
42        (24) "Taxable value" means market  value  for  assessment  purposes,  less
43    applicable exemptions or other statutory provisions.
44        (25) "Transient personal property" is personal property, specifically such
45    construction, logging or mining machinery and equipment  which is kept, moved,
46    transported,  shipped,  hauled  into or remaining for periods of not less than
47    thirty (30) days, in more than one (1) county in the  state  during  the  same
48    year.
49        (26) "Warrant  of  distraint" means a warrant ordering the seizure of per-
50    sonal property  to  enforce  payment  of  property  tax,  special  assessment,
51    expense,  fee,  collection cost or charge collected in the same manner as per-
52    sonal property tax.

53        SECTION 2.  That Section 63-401, Idaho Code, be, and the  same  is  hereby
54    amended to read as follows:


 2    property, completed or under construction,  and the franchises of persons
 3    operating a public utility, railroad or private railcar fleet  shall  be
 4    assessed by the state tax commission.

 5        SECTION  3.  That  Section  63-405, Idaho Code, be, and the same is hereby
 6    amended to read as follows:

 7        63-405.  ASSESSMENT OF OPERATING PROPERTY. (1) The  state  tax  commission
 8    must assess all operating property at a meeting of the commission convening on
 9    the  second Monday of August in each year, and must complete the assessment of
10    such property on the fourth Monday in August.
11        (2)  The state tax commission shall determine the system value and  calcu-
12    late  the  allocation  and apportionment of the system value for all operating
13    property and specifically determine:
14        (a)  The number of miles and the value per mile of each  railroad  in  the
15        state and for each taxing district in which such railroad may exist.
16        (b)  The  number  of  miles and the value per mile of each telephone 
17        company   corporation  in the state and for  each  taxing
18        district  in  which  such telephone  company   corporation
19         may exist.
20        (c)  The number of miles and the value per mile of each  pipeline  in  the
21        state and for each taxing district in which such pipeline may exist.
22        (d)  The  number  of  miles  and  the value per mile of each water company
23        under the jurisdiction of the public utilities commission  in  the  state,
24        and  for  each  taxing district in which such water company may exist. The
25        value per mile of any line included in this subsection, except  railroads,
26        shall  be  determined  by dividing the total value of such line within the
27        state by the number of miles of such line within the state. The value  per
28        mile  of  railroad  line shall be determined by apportionment of the total
29        value of line within the state. The apportionment shall  be  based  twenty
30        percent (20%) on the ratio of line miles in the state to line miles in the
31        county;  forty percent (40%) on the ratio of net ton miles in the state to
32        net ton miles in the county; and forty percent (40%) on the ratio of  sta-
33        tion  revenues in the state to station revenues in the county. All operat-
34        ing property of railroads shall be apportioned to the counties as part  of
35        the  railroad  line  in the county. The apportionment for taxing districts
36        shall be the same as the apportionment among counties.
37        (e)  The system value, the number of miles and the value per mile of  each
38        electric  current transmission line and each electric current distribution
39        line in each county separately, and for each taxing district  within  said
40        county  in  which  such transmission and distribution lines may exist. The
41        value per mile of any line included in this subsection shall be determined
42        by dividing the apportioned value of such line within each county  by  the
43        number of miles of such line within said county.
44        (f)  The  system  value  of private railcar fleets entering or standing in
45        Idaho in the year preceding the constituted lien as  provided  in  section
46        63-411(3), Idaho Code.
47        (g)  The  system  value  and calculate the allocation and apportionment of
48        the system value for all other operating property.
49        (3)  If the value of property of any company assessable under this section
50    is of such a nature that it cannot reasonably be apportioned on the  basis  of
51    rail,  wire, pipeline mileage, such as microwave and radio relay stations, the
52    tax commission may adopt such other method or basis of  apportionment  to  the
53    county  and taxing districts in which the property is situate as may be feasi-


 1    ble and proper.

 2        SECTION 4.  That Section 63-602L, Idaho Code, be, and the same  is  hereby
 3    amended to read as follows:

 6    ing  intangible personal  property is exempt from taxation: capital
 7    stock ,   and   bonds  .      and  other
 8    intangible  personal  property.    The deposits in national banks, state
 9    banks, and savings and loan associations. Shares and accounts of  savings  and
10    loan  associations,  credit unions or associations organized under the laws of
11    the state of Idaho for the purpose of accumulating the savings  and  funds  of
12    their  members and lending the same to their members.  Goodwill, customer
13    lists, contracts and contract rights,  patents,  trademarks,  custom  computer
14    programs as defined in section 63-3616, Idaho Code, copyrights, trade secrets,
15    franchises, licenses, rights-of-way which are possessory only and not accompa-
16    nied by title.
17        (2)  The  commission  shall  promulgate  rules which shall provide for the
18    exclusion of exempt intangible personal property from taxable value of operat-
19    ing property. Such rules shall allow each taxpayer the right to elect one  (1)
20    of the following three (3) methods for exclusion of exempt intangible personal
21    property from its taxable value:
22        (a)  Separate  exclusion of the exempt intangible personal property at the
23        system level value; or
24        (b)  Separate exclusion of the exempt intangible personal property at  the
25        state allocated value; or
26        (c)  Exclusion  of the exempt intangible personal property by valuation of
27        only tangible personal property and nonexempt intangible personal property
28        using valuation models which do not  impound  or  include  values  of  the
29        exempt intangible personal property. 

30        SECTION  5.  This act shall be in full force and effect on and after Janu-
31    ary 1, 1999.

Statement of Purpose / Fiscal Impact


                           STATEMENT OF PURPOSE
    The purpose of the proposed legislation is to clarify 
    existing law with reference to the taxation of intangible 
    personal property held by a public utility or railroad. 
    Intangible personal property held by a business or individual 
    is clearly exempt from property taxation pursuant to section 
    63-602L, Idaho Code. However, intangible personal property 
    held by a public utility or railroad has been included as 
    part of the "operating property" of public utilities and 
    railroads, which are centrally assessed for property tax 
    purposes by the State Tax Commission.
    This proposal clarifies the definition of intangible 
    personal property, treats all entities owning intangible 
    personal property in a non-discriminatory manner, and 
    provides tax equity among property taxpayers.
    The proposal also provides for all telephone companies, 
    with the exception of those providing mobile telephone 
    services, paging services, or resale services, to be included 
    within the definition of a "public utility" without regard to 
    the holding of a certificate of convenience and necessity 
    from the Public Utilities Commission.
                                FISCAL NOTE
    There is no fiscal impact upon state revenues. Property 
    tax on operating property constitutes approximately 6.4% of 
    the total statewide property taxes. Based on a study of 
    intangible personal property held by eleven of the largest 
    utilities and railroads in Idaho, property tax on the 
    intangible personal property constitutes less than one-third 
    of one percent (.0031) of total property taxes collected in 
    US West 
    H 752