The consultant rejected the utilities' odd claim that the containment dome be classified as an environmental facility, saying its primary purpose was to protect lives in the event of an accident.

"That portion of the containment [structures] designed to prevent the release of large amounts of radiation in the event of a major accident cannot be viewed as being designed and constructed solely for environmental reasons," the Overland Consulting Company concluded.

Rather than vigorously supporting the consultant's report and going to court, if necessary, to hold the line on the nuke's environmental tax break, the revenue department once again compromised.

In a settlement signed just three months ago, the state agreed to allow 22 percent of the plant--or $1.36 billion in taxable value--to be classified as environmental.

The difference between the consultant's recommendation and the compromise DOR accepted translates into a $9.8 million annual property-tax loss to Maricopa County governments.

Murray-Leyba says the revenue department was pleased with the settlement because Palo Verde has traditionally classified 22 percent of its plant as environmental facilities. But others familiar with the negotiations say Maricopa County got the short end of the stick.

A former high-ranking revenue department official, who asked not to be identified, says the department had the documentation necessary to beat the utilities in court and bring nearly $10 million a year in new revenue to Maricopa County taxing entities.

But, the former official says, the Department of Revenue has always been afraid to challenge the utilities aggressively. "By tradition, there is an establishment of accommodation that leads to favorable treatment of the taxpayer," he says.

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