Assigned to FIN                                                                                                                      FOR COMMITTEE

 


 

 

 


ARIZONA STATE SENATE

Fifty-Fifth Legislature, First Regular Session

 

FACT SHEET FOR S.B. 1309

 

property classification; gasoline manufacturing equipment

Purpose

            Classifies, retroactive to taxable years beginning January 1, 2021, real and personal property and improvements that are used to manufacture zero-sulfur gasoline from natural gas as class 6 property.

Background

            Class 6 property includes noncommercial historic property and real and personal properties: 1) of a foreign trade zone or subzone; 2) of a military reuse zone; 3) comprising an environmental technology manufacturing, producing or processing facility; 4) used for remediation of the environment; 5) used for harvesting, transporting or processing qualifying forest products; 6) used to manufacture biodiesel fuel; and 7) used for renewable energy manufacturing or headquarters operations (A.R.S. § 42-12006).

            The assessed valuation of class 6 property is five percent of the full cash value or limited valuation, as applicable (A.R.S. § 42-15006).

            Statute outlines an accelerated depreciation schedule for certain class 1, class 2 and class 6 properties. Accelerated depreciation refers to a method by which a fixed asset depreciates at an advanced rate so that the amount of depreciation is higher in earlier years and lower in later years of the asset's life. The current schedule allows certain class 6 property to be valued at: 1) 25 percent of the depreciated value in the first year of assessment; 2) 41 percent of the depreciated value in the second year; 3) 57 percent of the depreciated value in the third year; 4) 73 percent of the depreciated value in the fourth year; and 5) 89 percent of the depreciated value in the fifth year (A.R.S. § 42-13054).

If real and personal property and improvements used to manufacture zero-sulfur gasoline from natural gas are deemed class 6 property, there may be a fiscal impact to the state General Fund.

Provisions

1.   Classifies, as class 6 property, real and personal property and improvements that are specifically and solely used to manufacture zero-sulfur gasoline from natural gas, from January 1, 2021 through December 31, 2051, and that are valued at full cash value.

2.   Adds personal property solely used to manufacture zero-sulfur gasoline from natural gas to the accelerated depreciation schedule used to determine a property's valuation.

3.   Applies the property classification only to the portion of the property that is used specifically for manufacturing, processing and storing zero-sulfur gasoline and liquid petroleum gases made from natural gas feedstock obtained from off-site sources.

4.   Disqualifies the entire property from the class 6 property classification if there is any commercial or industrial use that is not associated with manufacturing zero-sulfur gasoline and liquid petroleum gases.

5.   Defines zero-sulfur gasoline as gasoline and natural gas liquids made from natural gas that contain less than one part per million of sulfur on an annual basis at the facility gate, excluding sulfur contained in additives that comply with federal or state law.

6.   Makes technical changes.

7.   Becomes effective on the general effective date, retroactive to taxable years beginning January 1, 2021.

Prepared by Senate Research

February 1, 2021

MG/ML/gs