Opinion ID: 1179917
Heading Depth: 3
Heading Rank: 1

Heading: Arizona Tax Research

Text: In Arizona Tax Research, the court of appeals concluded that when utility property which has been under construction is placed into service there is new property not subject to taxation in the prior year equal to the difference between the `CWIP' value and the `OPIS' value. 162 Ariz. at 96, 781 P.2d at 73 (emphasis added). The court reasoned that the legislature created the OPIS/CWIP distinction in recognition that a utility plant is useless until placed into service, [6] not to keep 50% of a plant's construction cost from being included as an increase in the tax base for the purpose of calculating the maximum levy. Id. The court rejected the literal interpretation of A.R.S. § 42-301(A)(3) adopted in Atty.Gen. Op. No. 187-029 (Feb. 12, 1987), which concluded that the plant was subject to taxation in the previous tax year and thus the only difference in the current tax year was that the statutory tax reduction had expired. The court explained that such a construction would defeat the constitutional policy of allowing the levy limitation to grow by net new construction. Statutes should not be so construed. Id. (citing Perez v. Maricopa County, 158 Ariz. 40, 760 P.2d 1089 (Ct.App. 1988)).