Phoenix–Intel and other semiconductor manufacturers won the first round last week in a property tax dispute which could have cost them more than $80 million. But the issue is not yet resolved. The outcome could have an impact on the policies of other states with high concentrations of electronics companies.

The Finance Committee of the Arizona Senate last week accepted legislation designed to make semiconductor cleanrooms personal property, instead of real property, for tax purposes.

Like many states, Arizona has used lower taxes to induce semiconductor makers and other high-tech manufacturers to build factories here. One inducement has been to assess cleanrooms as personal property rather than real property. The result can be a savings of as much as 72 percent in the first year’s property taxes.

In what seemed a drastic change in policy, the tax assessor of Maricopa County (which includes the Phoenix metropolitan area) told Intel the cleanroom in its Fab 12 in Chandler would be reclassified as real property. It meant Intel would be hit with a substantial property tax increase.

Intel protested and went to the State Board of Equalization, which ruled against the county assessor. However, the basis of the decision is not clear. The assessor’s office described the ruling as based on a “technicality” in the law. It plans to appeal the issue.

Whatever the ultimate outcome, the dispute led the Arizona Association of Industries (AAI) to take action. Its tax committee co-chair, Barb Dickerson, Arthur Andersen’s director of Arizona tax practice, complained, “Clearly, Maricopa County is shifting the tax burden to business taxpayers.” She added, “Business taxpayers already pay a heavier burden than residential taxpayers.”

That burden would be expensive. If the average cleanroom was taxed as real property, Ms. Dickerson said, it would mean a $3.3 million tax increase over a five-year depreciation period. Among the largest semiconductor companies, there are 33 cleanrooms in Maricopa County. “Over the five-year period,” she said, “that would be almost $81 million. That doesn’t include the smaller semiconductor manufacturers.”