Senate approves bill to free up protested public service tax funds

Journal Record, The (Oklahoma City), Apr 9, 1997 by Marie Price Oklahoma Business News

A measure which would release to local schools property tax funds paid under protest by railroads, air carriers and public service corporations was approved by the Senate Tuesday.

The vote on House Bill 1338 was unanimous, 48-0.

The bill would also revise the procedure for handling property tax protests by railroads, air carriers and public service corporations. Sen. Darryl Roberts, D-Ardmore, said the bill would increase from 20 to 30 days the amount of time such firms have to file a tax protest with the Court of Tax Review. If a written complaint is not filed during the 30-day period, the assessed valuation in the company's tax notice would become final without further action by the State Board of Equalization. The burden of proof would be on the state board. The bill is authored in the House by Rep. Jack Begley, D-Goodwell. Under the bill, taxes paid under protest by these businesses would be remitted to the Oklahoma Tax Commission. The commission in turn would deposit them in the protested ad valorem tax escrow fund created by the bill. The tax commission would then determine the amount of protested taxes that would have otherwise been apportioned to each school and vo-tech district. Each district would be reimbursed from an education cash-flow fund. If a railroad, air carrier or public service corporation ultimately wins its protest case, the difference between the amount paid and the proper amount owed would be refunded to the taxpayer. Under current law, protested property taxes are withheld from school districts and placed in escrow until a case is settled. Although the taxes are "charged" against a district for funding purposes, they are not actually received by the district until the protest is finalized. Sen. Charles Ford, R-Tulsa, amended the bill to provide that the assessed property valuation in a school district would not include property on which taxes have been protested, until the year when the district actually receives the tax proceeds. "They won't be charged until the school district gets the money," said Ford. Ford said a tax protest by Kimberly-Clark held up some $200,000 in tax funds for the local school district in his area. The bill was also amended by Sen. Kevin Easley, D-Tulsa. His language adds to the definition of "public service corporation" any firm operating a pipeline or natural gas gathering system regulated by the Federal Energy Regulatory Commission. Easley told senators that this amendment would prevent companies which own, lease or operate such systems from saying they are actually transmission systems rather than gathering systems. As the former, they would be locally assessed at a lower rate than that set by the state equalization board. Roberts said language in the bill regarding which court handles tax protest cases will probably be rewritten. The title has been removed from the bill, assuring that its final form will be drafted by a joint conference committee.