Roads Tax Suit Has No Merit

Pinal County and the Regional Transportation Authority respond to Goldwater Institute lawsuit

By Dana Trumbull

Responding to the Goldwater Institute’s recent lawsuit challenging the voter-approved transportation sales tax (Proposition 417), Pinal County and the Regional Transportation Authority (RTA) filed a motion on Monday, March 19, 2018, asserting that the lawsuit is “untimely and without merit.”

The transportation excise (sales) tax approved by voters after a widely-publicized and debated Special Election on November 7, 2017, is intended to fund the transportation plan (Proposition 416), which also passed in the November election. The paired set is intended to meet the critical infrastructure needs created by the region’s rapid economic growth and development.

The rates and methods for applying the tax were described in the promotional materials (pamphlet) sent to voters before the election.

A statement released this week by Pinal County and the RTA rebuts the Goldwater Institute’s Request for Injunction, saying that, “Days before its effective date (April 1, 2018), the Goldwater Institute seeks to stop the collection of this voter-approved tax. The lawsuit wants to halt all necessary infrastructure improvements, based on unsubstantiated claims of voter confusion during the election and legally weak arguments regarding the constitutionality of Proposition 417… As indicated in the filing submitted by Pinal County and the RTA, these arguments not only should have been raised before the election, but also lack merit and undermine the voters’ voice when enacting Proposition 417.”

State law requires that anyone wishing to contest election results must file within five days after the election. In the case of Propositions 416 and 417, voter approval was accomplished on Election Day, November 7, 2017, and the canvass was held on November 15, 2017. The deadline to file an election contest, therefore, expired on November 20, 2017, five days after the canvass. The county argues that, for this reason alone, the injunction filed by the Goldwater Institute should be dismissed; however, they also believe that the issues cited by the Institute are unfounded.

According to the motion filed by Pinal County and the RTA, “The Plaintiffs argue that the Tax applies only to sales of tangible personal property at retail and, therefore, impermissibly creates a new classification. In making this argument, the Plaintiffs insist the ‘full text’ of Proposition 417 and the text of the Pamphlet are inconsistent. Plaintiffs are wrong.”

Lawyers for the county assert that the only specific requirement concerning the ballot language with respect to the tax rate is that any variable rate must be specified in the ballot proposition and approved by the voters. “There is no other provision that requires any other aspect of the Tax to be described in the measure itself. To the contrary, the ballot question need only inform voters that a ‘yes’ or ‘no’ vote will indicate the voters’ approval or disapproval of ‘a transaction privilege (sales) tax for regional transportation purposes.’ This explains why the ballot language references the variable rate on retail sales but leaves the description of the other privilege tax classifications to the Pamphlet, in accordance with A.R.S. § 48-5314(C)(3).”

In other words, contrary to the Institute’s allegations, the measure and ballot question did not need to contain a complete recitation of the tax. “There is simply not enough room on the ballot to do so. That is why the voters are provided with the Pamphlet, which contains these details.”

As far as the variable rate is concerned, County Supervisors believe that the $10,000 threshold on sales of tangible personal property at retail helps to ensure that consumers will continue to purchase expensive items in Pinal County. “Specifically,” they say, “if the threshold did not exist, consumers would likely go to neighboring Maricopa and Pima counties to purchase expensive items, thereby decreasing the overall tax revenue.” Also, “Without the threshold, manufacturers and retailers of retail items sold for $10,000 or more would be more likely to leave Pinal County to avoid the tax, thereby decreasing the overall tax revenue to the county.”

“This lawsuit is nothing more than a post-election attack by those who failed to convince voters to oppose the transportation tax at the election,” said Board of Supervisors Chairman Todd House. “The voters spoke clearly about the need for improved transportation infrastructure in the Pinal region last November, while also expressing their willingness to pay an additional sales tax that amounts to about $7.33 per month per household.”

RTA Member and Supervisors Vice-Chairman Pete Rios commented, “We cannot move forward with the transportation improvement until this lawsuit is over and will urge the court to dismiss the suit as quickly as possible.”

Although the proper steps have been taken for the Department of Revenue to begin collecting the transportation excise tax on April, 1, Pinal County administrators have agreed to hold all money collected pursuant to Proposition 417 in escrow pending the resolution of the lawsuit.

The case is pending before Judge Chris Whitten in the Maricopa County Superior Court.

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