HAROLD VANGILDER, et al., Plaintiffs/Appellees/Cross-Appellants,
ARIZONA DEPARTMENT OF REVENUE, Defendant/Appellee/Cross-Appellee, PINAL COUNTY, et al., Defendants/Appellants/Cross-Appellees.
from the Arizona Tax Court No. TX2017-000663 The Honorable
Christopher T. Whitten, Judge
Goldwater Institute, Phoenix By Timothy Sandefur, Matthew
Robert Miller Co-Counsel for
Wright & Moore, P.L.L.C, Mesa By Paul J. Mooney
Co-Counsel for Plaintiffs/Appellees/Cross-Appellants
Arizona Attorney General's Office, Phoenix By Scot G.
Teasdale, Jerry A. Fries, Lisa A. Neuville Counsel for
County Attorney's Office, Florence By Christopher C.
Keller Co-Counsel for Defendant/Appellant/Cross-Appellee
Ballard Spahr L.L.P., Phoenix By Joseph A. Kanefield, Brian
Schulman, Chase Bales Co-Counsel for
Defendants/Appellants/Cross-Appellees Pinal County and Pinal
Regional Transportation Authority
Fennemore Craig, P.C., Phoenix By Patrick Irvine, Taylor
Burgoon Co-Counsel for Defendants/Appellants/Cross-Appellees
Pinal County and Pinal Regional Transportation Authority
Mackin, Ltd., Phoenix By William J. Sims Co-Counsel for
Defendant/Appellant/Cross-Appellee Pinal Regional
Law Group, P.C., Scottsdale By Evan Bolick, Johathan Udell
Amicus Curiae for Pinal Partnership Inc.
Dickson Wright P.L.L.C., Phoenix By Scott A. Holcomb, Vail C.
Cloar Amicus Curiae for Town of Queen Creek
Fitzgibbons Law Office, P.L.C., Casa Grande By Denis M.
Fitzgibbons Amicus Curiae for City of Maricopa and City of
Florence Town Attorney's Office, Florence By Clifford L.
Mattice Amicus Curiae for Town of Florence
Cavanagh Law Firm, P.A., Phoenix By James G. Busby, Jr.,
Karen C. Stafford Amicus Curiae for Arizona Tax Research
Association and The Arizona Free Enterprise Club
Presiding Judge Kenton D. Jones delivered the Opinion of the
Court, in which Judge James B. Morse Jr. and Judge Diane M.
In 2017, Pinal County voters simultaneously approved
Proposition 416 (Prop 416) to adopt a regional transportation
plan and Proposition 417 (Prop 417) to enact an excise tax to
fund the plan. In this appeal, Appellants, Pinal County (the
County) and the Pinal Regional Transportation Authority (the
RTA), appeal from the tax court's order invalidating the
excise tax, and Cross-Appellants (collectively, Vangilder)
challenge the court's order denying their request for an
award of attorneys' fees. The Arizona Department of
Revenue (ADOR) joins Vangilder in asserting the tax is
invalid but joins Appellants in defending Prop 417's
constitutionality and opposing Vangilder's claim for
We find the Prop 417 tax to be valid. The RTA's
authorizing resolution does not change the substance of the
question posed to and approved by the voters; the tax, by its
terms, applies across all transaction privilege tax (TPT)
classifications; and the tax includes a valid, constitutional
modified rate as applied to the retail sales classification.
Accordingly, we reverse the order invalidating the tax.
Because Vangilder is no longer the successful party in the
tax court, we affirm the denial of his request for
AND PROCEDURAL HISTORY
The RTA is a public improvement and taxing subdivision of the
State of Arizona established by the Pinal County Board of
Supervisors (the Board) in 2015 to coordinate
multi-jurisdictional transportation planning, improvements,
and funding. See Ariz. Rev. Stat. (A.R.S.) §
48-5302 (governing the establishment of a regional
transportation authority). Arizona law authorizes the RTA to
formulate a plan for transportation projects and propose an
excise tax to pay for them. See generally A.R.S.
§§ 48-5309, -5314. By statute, a county
transportation excise tax must be "approved by the
qualified electors voting at a countywide election."
A.R.S. § 42-6106(A); see also A.R.S. §
In June 2017, the RTA adopted the Pinal County Regional
Transportation Plan (the Plan), which identifies key roadway
and transportation projects to be developed over the next
twenty years. In the same resolution (the June Resolution),
the RTA asked the County to schedule a special election on
the Plan and on "the issue of levying a
transportation excise tax at a rate equal to one-half percent
(0.005%) [sic] of the gross income from the business activity
upon every person engaging or continuing in the business of
selling tangible personal property at retail . . . needed to
fund the Plan." The June Resolution further stated that
the tax rate upon retail sales would be a "variable or
modified rate," in that the tax would apply only to the
first $10, 000 in gross income from the sale of any single
item of tangible personal property, effectively capping the
tax at $50 per item.
Before the election, and as directed by A.R.S. §
48-5314(C), the Board printed a publicity pamphlet describing
Prop 416 and Prop 417 (the Pamphlet). The RTA "ratified,
confirmed, approved and adopted [the Pamphlet] in the form
presented" in October 2017 (the October Resolution). The
Pamphlet detailed the planned transportation projects and
explained that they could be completed only if voters
approved the excise tax in Prop 417. As relevant here, the
Pamphlet further explained:
If Proposition 417 is approved by the voters, the
Transportation Excise Tax would . . . be assessed on the same
business transactions that are subject to the State of
Arizona transaction privilege (sales) tax [(TPT)], but at a
rate equal to 10% of the State tax . . . . [T]he
Transportation Excise Tax rate will generally be 0.5% or 1
cent on each $2 o[f] State taxable items.
Pamphlet identified each of the sixteen business
classifications subject to the TPT and detailed the rates at
which the transportation excise tax would apply to each
class. See A.R.S. §§ 42-5061
to -5076. With respect to the retail sales classification,
the Pamphlet described the same two-tiered structure outlined
in the June Resolution. The Pamphlet estimated that revenues
from the tax across all business classifications would total
approximately $640 million over twenty years - the precise
amount needed to fund the projects detailed within the Plan.
The question ultimately posed to the voters was stated in
both the Pamphlet and official ballot:
to County Transportation ...