PHOENIX — The Arizona Court of Appeals found the Pinal Regional Transportation Authority and Proposition 417 tax to be valid in a decision released Jan. 16, but that decision is now moving before the state Supreme Court.
The Goldwater Institute appealed the ruling Thursday.
“We’re sorry that the court disagreed, and we will be asking the Arizona Supreme Court to step in to protect taxpayers and business owners in the state’s most overtaxed county against these illegal actions,” said Goldwater Vice President for Litigation Timothy Sandefur in an email statement to PinalCentral in January.
Wednesday, Sandefur said, “Both taxpayers and the Arizona Department of Revenue filed a petition asking the Arizona Supreme Court to take up the case against Pinal County’s illegal tax. It’s pretty unusual that we’d agree with the state’s taxing agency — but what Pinal County officials did here is so contrary to state law that it’s put us on the same side.”
The case, Vangilder v. Pinal County, challenges Prop. 417, an extra half-cent sales tax to improve Pinal County roadways.
Prop. 417 was approved by voters in November 2017 by a narrow margin.
Sandefur said the case was a “rare one in which taxpayers and the state Department of Revenue agree: Pinal County broke the law by inventing a new kind of tax not authorized by the legislature — in fact, which the legislature expressly refused to allow two years ago when the county asked it to.”
In 2017, Pinal County voters simultaneously approved Proposition 416 to adopt a regional transportation plan and Proposition 417 to enact an excise tax to fund the plan.
Harold Vangilder, a Casa Grande resident, teamed up with the Goldwater Institute to file a lawsuit against the proposition soon after it passed, alleging it was invalid and unconstitutional.
In September 2019, lawyers from the RTA, the Goldwater Institute and the Arizona Department of Revenue squared off before the Arizona Court of Appeals Division 1 in Phoenix. The RTA had lost an earlier ruling in Maricopa County Superior Court.
On Nov. 15, 2018, Maricopa County Superior Court Judge Christopher Whitten ruled the proposition was “void and unenforceable.”
In its decision, the Court of Appeals wrote, “Like the tax court, we decline to consider whether Harold Vangilder, as a consumer of goods and services, has standing to challenge the validity of the tax, because the other plaintiffs who joined him in filing the complaint operate businesses clearly subject to the TPT. ... We disagree with both the factual premise and the legal import of Vangilder’s argument.”
Among the infrastructure improvements outlined by the RTA plan is a north-south freeway connecting U.S. 60 in Apache Junction with Interstate 10 near Eloy. The plan also includes widening State Route 347 north of Maricopa and other roads around the county. In the Casa Grande area it would mean an east/west corridor connecting Maricopa to Casa Grande, an interchange with I-10 at Kortsen Road and the widening of Thornton Road.
The RTA has been allowed to collect the tax while the legal challenges made their way through the court system. The money is held in escrow. The account was filled with $33.4 million at the end of February.
RTA taxes collected in Pinal County are substantial. In FY 2018-19, more than $17 million was collected and an additional $18 million is expected in the current fiscal year. Over a five-year period, the RTA expects to collect $97.5 million with the excise tax.