Goldwater Institute challenging Gilbert tax proposals
Special for Independent Newsmedia/Arianna Grainey
Gilbert is considering increasing its sales and bed taxes and instituting a use tax to help pay for what it considers priority capital projects for police, fire and parks and recreation.
The Goldwater Institute has sent a letter to Gilbert Town Council, urging council not to approve its proposed sales, use and bed taxes as it considers them illegal under the Arizona Constitution.
The conservative think tank also questioned in an accompanying press release the value of what the taxes would fund under a headline of “Don’t invent illegal taxes to pay for pickleball.”
Gilbert Town Council is set consider on Oct. 22 increases in the town’s sales tax and bed taxes and instituting a use tax on purchases made online with vendors who do less than $100,000 of sales in Arizona per year.
The taxes are meant to help pay for more than $700 million in priority police, fire and parks and recreation projects as the town heads toward buildout but also grapples with other aging or outgrown infrastructure.
The institute argues in its letter and release that what Gilbert is considering would violate Article 9, Section 25 of the Arizona Constitution, which prohibits state and local governments from enacting new taxes or increasing tax rates in effect on Dec. 31, 2017, on services performed in Arizona.
The section came into effect Jan. 1, 2018, after voters approved Proposition 126 on the November 2018 ballot by a 64%-36% margin.
Gilbert is proposing a 0.5% increase on its sales tax, from 1.5% to 2%, and a 2.2% increase on the bed tax from 2.8% to 5%. The proposed new use tax would be 2%. Gilbert officials argue those rates are similar to what other Valley communities charge.
“All of these taxes encompass services, and the state constitution does not allow, as we write in our letter, any new taxes or tax increases on services,” Goldwater Institute spokesperson Joe Setyon said.
“I think what we're being pretty clear in the letter, what we're just saying is, look, the Arizona Constitution is clear about new taxes or tax increases, and this encompasses a lot of things that are services, not tangible goods, like hospitality businesses and stuff like that.”
However, Gilbert officials said in a statement the Goldwater Institute’s claims are misleading and the proposed taxes are in compliance with the state constitution and law.
“The assertion that these taxes are illegal is unfounded and misrepresents the legal framework governing municipal taxation,” the statement read. “For example, Goldwater Institute’s claim that the proposed increase for sales tax on goods and use tax on the purchase of goods made online somehow constitutes an unconstitutional tax on a service is plainly wrong.”
It also challenged the Goldwater Institute’s claim on the bed tax as misconstruing the Arizona Constitution’s prohibition on tax increases for services.
In its release, Goldwater questioned whether the projects truly were critical in nature as portrayed by the town, noting the project list included pickleball courts, splash pads and a “statement” bridge, noting the burden for the taxes will fall heaviest on Gilbert residents and businesses.
“Local municipalities continue to trample on individuals’ rights with no regard for the effects their actions will have on taxpayers,” Goldwater Institute staff attorney Stacy Skankey wrote. “But local government officials are public servants who ought to represent the interests of the community — not violate their rights.”
But the town in its statement also pushed back on that characterization while asserting its first responsibility is to meet the needs of its residents and businesses. It called the tax adjustments “essential” to meeting the needs of a rapidly growing community.
“These funds would support projects that protect the quality of life for all Gilbert residents, including necessary and vital improvements to police, fire, parks and recreational facilities,” the statement read. “The types of projects that would be funded by these tax increases are listed on the town’s website and do not include funding for a “statement” bridge, as asserted by the Goldwater Institute.”
Among the police and fire projects being funded through the taxes are a victims advocacy center, a crime lab, expansion of the San Tan Police Substation and expansion/remodeling of most fire stations.
The parks and recreation projects are meant to address the town’s oversubscribed recreation programming and lack of park space and amenities compared with other municipalities, according to town presentations. Residents in record numbers participated in surveys and feedback events to identify what they wanted in parks.
“It is also important to note that the proposed tax increases are designed to distribute the financial burden equitably,” Gilbert’s statement read. “By increasing the use tax for online vendors and increasing the bed tax for visitors, we aim to reduce the impact on local residents and businesses.”
Setyon said the institute will consider all options if Gilbert passes the taxes.
“We definitely just want to make sure we're protecting taxpayers and protecting the constitution,” he said.
We would like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org. Tom Blodgett can be reached by email at tblodgett@iniusa.org or follow him @sp_blodgett on X.
Meet Tom Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.
Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.
Education: Arizona State University with a BS in Journalism.
Random Fact: He lived in Belgium during his freshman year of high school.
Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).
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