Scottsdale Faces New Lawsuit From Goldwater Institute Over Sales Tax Hike
By Matthew Holloway |
As the City of Scottsdale stands poised to enact a staggering $2.2 billion budget, city leaders must now contend with a new lawsuit from the Goldwater Institute challenging the city’s controversial sales tax increase.
As of the council’s June 10th meeting, the city has reportedly agreed to spend up to $90,000 in taxpayer dollars on the outside law firm Osborne Maledon to defend it.
In June 2024, the Goldwater Institute challenged the newly approved 0.15% sales tax, which was pitched to voters as a “replacement tax,” for an unrelated, expired 0.2% Land Acquisition Tax.
Goldwater won that legal battle, “forcing the city to admit that it was raising, rather than lowering taxes,” according to a press release.
Under the Arizona Constitution, such a tax hike must be approved by at least 60 percent of voters, a threshold the city did not meet in the 2024 election. Scottsdale leaders, however, have enacted the tax.
On Friday, June 3rd, the Goldwater Institute filed a lawsuit against the city, panning the tax as “unconstitutional.” It stated that, “Supermajority rules help protect minority voices, prevent special-interest-driven decisions, and force governments to clean up their budgets before reaching for more of your money. Just like any responsible household, city, county, and state officials should look at how they’re spending first—not just always demand more, regardless of what the law and economic commonsense demand.”
Scott Day Freeman, writing for Goldwater added, “Scottsdale is ignoring the state’s constitutional mandate—requiring us to go to court yet again.”
City Attorney Sherry Scott’s summary to the city council stated, “The budget implications of not defending this case are $25 million per year for the next 30 years.” The law firm, earning approximately $912 per hour at the taxpayer’s expense, is fighting the Goldwater Institute’s efforts to seek an injunction that would stop the tax from taking effect on July 1st, along with a declaratory judgment that the tax is unenforceable.
Freeman said, “Our clients seek only a declaration that the tax is unlawful and an injunction to stop it being enforced. Our clients do not seek a refund or damages.”
Scottsdale spokesman Kelly Corsette stated, “The city is confident its ballot item and election result comply with the Arizona Constitution and all applicable election laws.” He claimed that “the 60% tax approval threshold does not apply to local ballot measures: it is in a section of the constitution that regulates statewide initiatives and referendums, not in the separate section of the constitution applicable to city initiatives and referendums.”
In its press release, the Goldwater Institute maintained that, “In 2022, Arizonans strengthened those protections by amending the Constitution to require any tax passed through a citizen initiative or referendum receive at least 60 percent approval to become law—a requirement that applies not just to statewide, but also to local ballot initiatives.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.