Vangilder v. Pinal County

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

HAROLD VANGILDER, et al., Plaintiffs/Appellees/Cross-Appellants,

v.

ARIZONA DEPARTMENT OF REVENUE, Defendant/Appellee/Cross-
Appellee,

PINAL COUNTY, et al., Defendants/Appellants/Cross-Appellees.

No. 1 CA-TX 19-0001
FILED 1-16-2020

Appeal from the Arizona Tax Court
No. TX2017-000663
The Honorable Christopher T. Whitten, Judge

REVERSED IN PART; AFFIRMED IN PART

COUNSEL

Goldwater Institute, Phoenix
By Timothy Sandefur, Matthew Robert Miller
Co-Counsel for Plaintiffs/Appellees/Cross-Appellants

Mooney 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 Defendant/Appellee/Cross-Appellee
 VANGILDER, et al. v. PINAL COUNTY, et al.
Opinion of the Court

Pinal County Attorney’s Office, Florence
By Christopher C. Keller
Co-Counsel for Defendant/Appellant/Cross-Appellee Pinal County

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

Sims Mackin, Ltd., Phoenix
By William J. Sims
Co-Counsel for Defendant/Appellant/Cross-Appellee Pinal Regional
Transportation Authority

Rose 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 Coolidge

Florence Town Attorney’s Office, Florence
By Clifford L. Mattice
Amicus Curiae for Town of Florence

The 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

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 VANGILDER, et al. v. PINAL COUNTY, et al.
Opinion of the Court

OPINION

Presiding Judge Kenton D. Jones delivered the Opinion of the Court, in
which Judge James B. Morse Jr. and Judge Diane M. Johnsen joined.

J O N E S, Judge:

¶1 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 fees.

¶2 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 attorneys’ fees.

FACTS AND PROCEDURAL HISTORY

¶3 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-
53021 (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

1 Absent material changes from the relevant date, we cite a statute’s
current version.

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“approved by the qualified electors voting at a countywide election.”
A.R.S. § 42-6106(A); see also A.R.S. § 48-5314(F).

¶4 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.

¶5 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.

The 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.2 See A.R.S. §§ 42-5061 to -5076. With respect to

2 The TPT is a tax “on the privilege or right to engage in an occupation
or business in the State of Arizona” and applies at varying rates to “the
gross receipts of the seller’s business activities.” CCI Europe, Inc. v. ADOR,
237 Ariz. 50, 52, ¶ 9 (App. 2015) (citations omitted); see also A.R.S. § 42-
5008(A) (levying a privilege tax “for the purpose of raising public money”
that is “measured by the amount or volume of business transacted by

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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.

¶6 The question ultimately posed to the voters was stated in both
the Pamphlet and official ballot:

PROPOSITION 417
(Relating to County Transportation Excise (Sales) Taxes)

Do you favor the levy of a transportation excise (sales) tax
including at a rate equal to one-half percent (0.5%) of the gross
income from the business activity upon every person
engaging or continuing in the business of selling tangible
personal property at retail; provided that such rate shall
become a variable or modified rate such that when applied in
any case when the gross income from the sale of a single item
of tangible personal property exceeds ten thousand dollars
($10,000), the one-half percent (0.5%) tax rate shall apply to
the first ten thousand dollars ($10,000), and above ten
thousand dollars ($10,000), the measure of tax shall be a rate
of zero percent (0.0%), in Pinal County for twenty (20) years
to provide funding for the transportation elements contained
in the Pinal Regional Transportation Plan?

Do you favor the levy of a transaction privilege (sales) tax for
regional transportation purposes, including at a variable or
modified rate, in Pinal County?

YES _____

NO _____

(A “YES” vote has the effect of imposing a transaction
privilege (sales) tax in Pinal County, including at a variable or
modified rate, for twenty (20) years to provide funding for the

persons on account of their business activities, and in the amounts to be
determined by the application of rates against values, gross proceeds of
sales or gross income, as the case may be, as prescribed by [Arizona
statutes]”).

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transportation projects contained in the Regional
Transportation Plan.)

(A “NO” vote has the effect of rejecting the transaction
privilege (sales) tax for transportation purposes in Pinal
County.)

In November 2017, Pinal County voters approved both the regional
transportation plan set out in Prop 416 and the transportation excise tax set
out in Prop 417.

¶7 The following month Vangilder filed a complaint to enjoin
ADOR, the County, and the RTA from collecting and/or enforcing the tax,
alleging it was invalid and unconstitutional.3 The tax court resolved
competing motions for summary judgment in Vangilder’s favor but denied
his request for an award of attorneys’ fees under the private attorney
general doctrine. The parties timely appealed, and we have jurisdiction
pursuant to A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

I. The Prop 417 Tax is Valid.

¶8 Resolution of this appeal requires us to determine the scope
and legality of the tax enacted by the voters via Prop 417. The interpretation
and application of a voter-approved measure present questions of law we
review de novo. See Ariz. Citizens Clean Elections Comm’n v. Brain, 234 Ariz.
322, 325, ¶ 11 (2014).

A. The Authorizing Resolution Does Not Invalidate the Tax.

¶9 Vangilder first contends the tax is invalid because the June
Resolution described a tax on “the gross income from the business activity
upon every person engaging or continuing in the business of selling
tangible personal property at retail.” See supra ¶ 4. Thus, Vangilder

3 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. See Karbal v. ADOR, 215 Ariz.
114, 116-18, ¶¶ 11, 16-17 (App. 2007) (holding a customer lacked standing
to challenge an excise tax because “[t]he legal incidence of the transaction
privilege tax is on the seller”) (citing J. C. Penney Co. v. ADOR, 125 Ariz. 469,
472 (App. 1980)).

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contends “voters were asked to approve a tax that applied solely to retail
sales” in violation of A.R.S. § 42-6106(B), which requires the county
transportation excise tax be imposed upon all TPT classifications. We
disagree with both the factual premise and the legal import of Vangilder’s
argument.

¶10 First, A.R.S. § 48-5314(A) required the RTA to adopt a twenty-
year regional transportation plan and then “[r]equest by resolution certified
to the county board of supervisors that the issue of levying a transportation
excise tax . . . be submitted to the qualified electors at a countywide special
election or placed on the ballot at a countywide general election.” The RTA
is not authorized to enact a tax and the June Resolution did not purport to
do so. Nor did the June Resolution ask the voters to enact the tax. It simply
asked the Board to put a transportation excise tax on the County ballot.
Thus, “[t]he most that can be said for” the June Resolution is that it
“demand[ed] an election . . . at which the electorate would be asked to
decide whether [the tax should be enacted].” See Saggio v. Connelly, 147
Ariz. 240, 241 (1985).

¶11 Second, although Vangilder relies on Braden v. Yuma County
Board of Supervisors, 161 Ariz. 199 (App. 1989), to argue the RTA’s failure to
properly describe the tax in the June Resolution invalidates the tax, Braden
does not apply. There, a county board of supervisors attempted to levy an
assessment to build a bridge within a flood control improvement district.
Id. at 200. The relevant statute “required as a prerequisite” that the board
first adopt a resolution specifying its intention to undertake a flood control
project before imposing an assessment for the project. Id. at 203-04. The
board had not enacted such a resolution before it approved the bridge and
the related assessment, and thus, had not given the required notice of its
intentions. Id. at 204. Accordingly, the Braden court invalidated the
assessment because the board’s failure to comply with the statute did not
“afford[] the landowner an opportunity to be heard on the necessity and
wisdom of the proposed improvement.” Id.; see also Henningson, Durham &
Richardson v. Prochnow, 13 Ariz. App. 411, 416 (1970). By contrast, nothing
in the statutory scheme at issue here, governing passage of a county
transportation excise tax, suggests the RTA’s resolution was required to or
intended to provide the public with notice of the details of the proposed
tax. See generally A.R.S. § 48-5314(A)(2) (describing the process for referring
a transportation excise tax to the voters).

¶12 In fact, A.R.S. § 48-5314(A)(2) only required the authorizing
resolution to be sent to the Board — not that it be posted, distributed to the
voters, or otherwise publicized. Unlike the statute in Braden, the statute

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applicable to the county transportation excise tax contemplates that the full
and final details of a proposed tax — including “the rate of the
transportation excise tax” — will be contained within a publicity pamphlet
that is mailed to voters before the election. A.R.S. § 48-5314(C). The Board
did just that here; the Pamphlet containing the details of the tax, along with
the form of the proposal to be stated on the ballot, gave the public proper
notice of the particulars of the Prop 417 tax, and governs the scope and
content of the tax.

B. The Prop 417 Tax Applies to All TPT Classifications.

¶13 Vangilder and ADOR argue that the tax is invalid because
they read Prop 417 to describe a tax that applies only to retail sales in
violation of A.R.S. § 42-6106(B)(1). We again disagree.

¶14 When construing a voter-approved measure, “[o]ur primary
objective . . . is to place a reasonable interpretation on ‘the intent of the
electorate that adopted it.’” State v. Estrada, 201 Ariz. 247, 250, ¶ 15 (2001)
(quoting Foster v. Irwin, 196 Ariz. 230, 231, ¶ 3 (2000)). We begin by
examining the plain language of the measure, see Am. Bus Lines, Inc. v. Ariz.
Corp. Comm’n, 129 Ariz. 595, 598 (1981), “giv[ing] the words used ‘their
natural, obvious and ordinary meaning’ unless the context suggests
otherwise,” Ariz. Chamber of Commerce & Indus. v. Kiley, 242 Ariz. 533, 537,
¶ 9 (2017) (quoting Brewer v. Burns, 222 Ariz. 234, 239, ¶ 26 (2009)); see also
A.R.S. § 1-213 (“Words and phrases shall be construed according to the
common and approved use of the language.”). If the measure is subject to
only one reasonable meaning, “[w]e apply the provision as written.” Kiley,
242 Ariz. at 537, ¶ 9 (citing Ariz. Early Childhood Dev. & Health Bd. v. Brewer,
221 Ariz. 467, 470, ¶ 10 (2009)).

¶15 The Prop 417 Pamphlet and ballot asked Pinal County voters:

Do you favor the levy of a transportation excise (sales) tax
including at a rate equal to one-half percent (0.5%) of the
gross income from the business activity upon every person
engaging or continuing in the business of selling tangible
personal property at retail; provided that such rate shall
become a variable or modified rate such that when applied in
any case when the gross income from the sale of a single item
of tangible personal property exceeds ten thousand dollars
($10,000), the one-half percent (0.5%) tax rate shall apply to
the first ten thousand dollars ($10,000), and above ten
thousand dollars ($10,000), the measure of tax shall be a rate

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of zero percent (0.0%), in Pinal County for twenty (20) years
to provide funding for the transportation elements contained
in the Pinal Regional Transportation Plan?

Do you favor the levy of a transaction privilege (sales) tax for
regional transportation purposes, including at a variable or
modified rate, in Pinal County?

(Emphasis added.). Voters were then advised: “A ‘YES’ vote has the effect
of imposing a transaction privilege (sales) tax in Pinal County, including at
a variable or modified rate, for twenty (20) years to provide funding for the
transportation projects contained in the Regional Transportation Plan.”

¶16 Vangilder argues the phrase “including at a rate,”
emphasized in the quoted language above, established and limited the
scope of the tax to “person[s] engaging or continuing in the business of
selling tangible personal property at retail” only. Under this interpretation,
however, the descriptive phrase “including at a rate” could be deleted
entirely from the proposal, such that the voters were said to be asked: “Do
you favor the levy of a transportation excise (sales) tax [] equal to one-half
percent (0.5%) of the gross income from the business activity upon every
person engaging or continuing in the business of selling tangible personal
property at retail?” While Vangilder’s interpretation is not entirely
untenable, it renders the phrase “including at a rate” meaningless, in
contravention to the general rule of construction that “each word, phrase,
clause and sentence must be given meaning so that no part will be void,
inert, redundant or trivial.” Adams v. Bolin, 74 Ariz. 269, 276 (1952) (citing
City of Phx. v. Yates, 69 Ariz. 68, 72 (1949)).

¶17 The entire sentence can be given meaning if we read the
question as: “Do you favor the levy of a transportation privilege (sales) tax
. . . in Pinal County?” Under this interpretation, the phrase that begins with
the word “including” and continues through the explanation of the tiered-
rate structure for the retail sales classification provides one example of what
the proposed tax would include. This interpretation aligns with the
phrasing of the ballot question and the Pamphlet’s explanation of the effect
of a “YES” vote — both of which use commas to set off the phrase
“including at a variable or modified rate [as applied to retail sales].” See
supra ¶ 15. Adding a comma before the word “including” in the body of
the initial long paragraph on the ballot would more clearly demonstrate an
intent to set that phrase apart, but we have long held “that strict rules of
technical grammar will not be resorted to to defeat the plain purpose of the
statute.” Adams, 74 Ariz. at 276 (citing Mahoney v. Maricopa Cty., 49 Ariz.

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479, 492 (1937)); cf. City of Phx. v. Butler, 110 Ariz. 160, 162 (1973) (explaining
that the average voter may still be able to understand the intended meaning
of words even if “[t]he choice of words to be used on a ballot might be
clearer”).

¶18 Reading all portions of the initiative together, cf. Indus.
Comm’n v. C & D Pipeline, Inc., 125 Ariz. 64, 67-68 (App. 1979) (“[I]t is a
fundamental principle of statutory construction that a statute should be
considered as a whole.”) (citations omitted), there is but one reasonable
interpretation of Prop 417 as it appeared on the ballot. We thus conclude
that “including” modifies “transportation excise (sales) tax,” and the
remainder of the phrase describes the retail-sales component of a broader
tax.

¶19 Vangilder correctly observes the ballot did not identify any of
the other fifteen business classifications to which the tax would apply. But
generally applicable tax rates — that is, those not variable or modified —
are not required to be specified on the ballot itself. See A.R.S. § 48-5314
(detailing ballot requirements for a regional transportation excise tax).
And, pursuant to statute, a “transportation excise (sales) tax” is a tax that
applies across all TPT classifications. See A.R.S. § 42-6106(B) (describing the
conditions under which the transportation excise tax “shall be levied and
collected”).

¶20 Additionally, the Pamphlet the Board sent to voters before the
election clearly advised that the “transportation excise tax” would “be
assessed on the same business transactions that are subject to the State of
Arizona transaction privilege (sales) tax.” The Pamphlet specifically
identified each of the business classifications subject to the TPT and then
specified the rate that would apply to each classification, including the
tiered-rate structure proposed for retail sales. Thus, even if the scope of the
tax was not clear from the ballot alone, secondary principles of construction
support the conclusion that the tax was to apply to all business
classifications. See Jett v. City of Tucson, 180 Ariz. 115, 119-20 (1994)
(recognizing the value of “a publicity pamphlet to apprise the voters of the
purpose and intent behind the [ballot proposition]” in ascertaining its
intended effect); accord Calik v. Kongable, 195 Ariz. 496, 500, ¶ 16 (1999); Laos
v. Arnold, 141 Ariz. 46, 48 (1984).

¶21 For these reasons, we reject Vangilder’s suggestion that
construing the proposition to apply to TPT classifications other than retail
sales would extend the tax to “something not specifically covered by the
language” of the proposition, Corp. Comm’n v. Equitable Life Assurance Soc’y

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of U.S., 73 Ariz. 171, 178 (1951), and “gather new objects of taxation by
strained construction or implication,” Ariz. State Tax. Comm’n v. Staggs
Realty Corp., 85 Ariz. 294, 297 (1959). There is nothing strained in the
application of the ordinary meaning of the word “including” to signal that
the description of the retail-sales component that followed was merely part
of a non-exhaustive list of business classifications to which the proposed
tax would apply. See A.R.S. § 1-215(14) (“‘Includes’ or ‘including’ means
not limited to and is not a term of exclusion.”); Fed. Land Bank of St. Paul v.
Bismarck Lumber Co., 314 U.S. 95, 100 (1941) (“[T]he term ‘including’ is not
one of all-embracing definition, but connotes simply an illustrative
application of the general principle.”); accord United States v. Wyatt, 408 F.3d
1257, 1261 (9th Cir. 2005); and P.R. Maritime Shipping Auth. v. Interstate
Commerce Comm’n, 645 F.2d 1102, 1112 n.26 (D.C. Cir. 1981).

¶22 “[T]he courts will not strain, stretch and struggle to uncover
hidden taxable items,” State Tax Comm’n v. Miami Copper Co., 74 Ariz. 234,
243 (1952) (citing Alvord v. State Tax Comm’n, 69 Ariz. 287, 292 (1950)), but
such efforts are not required here. When considered as a whole, Prop 417
can only be reasonably read to have proposed a transportation excise tax
across all TPT classifications, in accordance with A.R.S. § 42-6106(B).

C. The Tiered-Rate Structure for Retail Sales is a Permissible
“Modified Rate” Within the Meaning of A.R.S. § 42-6106(C).

¶23 Vangilder and ADOR argue the Prop 417 tax’s tiered-rate
structure for retail sales is not a permissible “variable or modified rate”
within the meaning of A.R.S. § 42-6106(C). That section directs ADOR to
“collect the tax at a variable rate if the variable rate is specified in the ballot
proposition [and] at a modified rate if approved by a majority of the
qualified electors voting.” Id.

¶24 Vangilder contends that a modified rate is one that changes
an existing rate, but he cites no authority supporting this contention.
Because the term “modified rate” appears nowhere else in Arizona’s tax
code, we will apply the “natural, obvious, and ordinary meaning as
understood and used by the people.” Circle K Stores, Inc. v. Apache Cty., 199
Ariz. 402, 406, ¶ 11 (App. 2001) (citing Airport Props. v. Maricopa Cty., 195
Ariz. 89, 99, ¶ 35 (App. 1999)). “[R]eference to established, respected
dictionaries is appropriate in determining the commonly accepted meaning
of words.” Sierra Tucson, Inc. v. Pima Cty., 178 Ariz. 215, 220 (App. 1994)
(citing State v. Wise, 137 Ariz. 468, 470 (1983)).

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¶25 The New Oxford American Dictionary 1124 (3d ed. 2010) defines
“modified” as the adjective form of the verb “modify,” to “make partial or
minor changes to (something), typically so as to improve it or to make it
less extreme.” Black’s Law Dictionary (11th ed. 2019) likewise defines modify
as “[t]o make somewhat different; to make small changes to (something) by
way of improvement, suitability, or effectiveness[;] . . . [t]o make more
moderate or less sweeping; to reduce in degree or extent; to limit, qualify,
or moderate.” These definitions are broad in scope and, as applied to
“rate,” would include almost any type of change to the rate but particularly
one that, as here, lessens its burden upon the taxpayer.

¶26 Further support for a broad construction of the term
“modified” can be found in the legislative history of the transportation
excise tax scheme. When the legislature chose to allow the creation of
regional transportation authorities, it acknowledged that counties the size
of Pinal County “possess unique characteristics,” including “[u]nique
transportation related funding needs generated by the area’s land use,
topography and environmental quality . . . unmet by any existing
transportation-specific funding mechanisms.” 1990 Ariz. Sess. Laws, ch.
380, § 1 (2nd Reg. Sess.). The legislature then determined these needs could
be met only through “certain unique strategies,” id., including imposition
of an excise tax at a variable or modified rate, see A.R.S. § 42-6106(C) — an
option not specified for any other type of county excise tax, see A.R.S. §§ 42-
6103 (general excise tax), -6105 (transportation excise tax in counties with a
population of 1.2 million persons or more), -6107 (transportation excise tax
for roads), -6108 (hotel tax), -6109 (jail facilities excise tax), -6110 (electricity
tax), -6111 (capital projects tax), -6112 (judgment bonds tax).

¶27 Vangilder and ADOR nonetheless suggest that the Prop 417
tax’s tiered-rate structure is invalid because the County lacks the power “to
modify the legislatively defined tax base in any particular classification.”
See Maricopa Cty. v. S. Pac. Co., 63 Ariz. 342, 347 (1945) (“The authority to
levy a tax must be derived from a statutory grant of power.”). They argue
a county that chooses to enact an excise tax must impose the same tax rate
on all income earned within any particular business classification, and the
decision to impose a zero percent rate upon retail sales of a single item of
personal property over $10,000 effectively created an impermissible tax
classification. They cite no authority to support their assertion, and nothing
in the plain language of A.R.S. § 42-6106 or the legislative history supports
such a limitation.4 In fact, as ADOR acknowledges, the law governing

4 We are aware the legislature considered but did not pass a bill that
would have expressly approved the tiered-rate structure Pinal County

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Arizona’s TPT contains countless deductions, exemptions, and exclusions,
and none of them are treated as creating a new TPT classification. Nor is
the use of the singular term “rate” within A.R.S. § 42-6106 (directing the
transportation excise tax be collected “[a]t a rate”) determinative; when
interpreting statutes, “[w]ords in the singular number include the plural”
and vice versa. A.R.S. § 1-214(B).

¶28 ADOR next argues that the tax rate on income above $10,000
from the retail sale of any one item is effectively zero, and “is not a tax at
all, because zero is not a rate.” Thus, ADOR contends the Prop 417 tax
violates the statutory mandate that a transportation excise tax “shall be
levied and collected” across all business classifications. A.R.S. § 42-6106(B)
(emphasis added). ADOR again cites no authority to support this assertion.
Moreover, its position is inconsistent with the legislature’s decision to
impose a zero percent tax rate upon the commercial lease classification — a
tax that has been in effect for more than twenty years. See 1997 Ariz. Sess.
Laws, ch. 150, § 75 (1st Reg. Sess.) (adopting a zero percent rate for
commercial lease classification, now codified at A.R.S. § 42-5010(A)(4)). If
the legislature sought to prohibit the voters from approving certain types
or levels of modification to the county transportation excise tax rate, the
legislature could and should have done so.

¶29 Finally, ADOR, which collects all TPTs imposed by the cities,
towns and counties in Arizona, argues the tiered-rate structure is confusing
and will create “administrative chaos” in implementation. ADOR’s fear of
imminent havoc is unpersuasive. More than twenty Arizona cities and
towns, including Phoenix and Glendale, have adopted the Model City Tax
Code, which allows for an identical tiered-rate structure for retail sales.5 See

voters passed. “[L]egislative history and historical background of an
enacted statute provides guidance in ascertaining the intent of the
legislature[, but] this principal has no application to proposed, but
unenacted, legislation.” City of Flagstaff v. Mangum, 164 Ariz. 395, 401 (1990)
(citing Dupnik v. MacDougall, 136 Ariz. 39, 42 (1983), and State v. Barnard,
126 Ariz. 110, 112 (App. 1980)) (emphasis in original). Therefore, “[w]e will
not speculate on the intent of the legislature in failing or refusing to adopt
clarifying amendments.” Id.

5 The Arizona cities that have adopted a tiered-rate structure for retail
sales include: Apache Junction, Avondale, Benson, Casa Grande, Coolidge,
Douglas, Eagar, Eloy, Glendale, Globe, Goodyear, Page, Phoenix, Pinetop-
Lakeside, Quartzsite, Safford, San Luis, Superior, Thatcher, Tolleson,
Wickenburg, Willcox, and Yuma. See City Profile, Model City Tax Code,

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Opinion of the Court

Ariz. Model City Tax Code § 460(d),
http://www.modelcitytaxcode.az.gov/articles/S4_460.htm. Moreover, a
constitutional tax must be applied as written regardless of the difficulties
ADOR may encounter in its administration. See ADOR v. Ormond Builders,
Inc., 216 Ariz. 379, 389, ¶¶ 44-45 (App. 2007).

¶30 Accordingly, we conclude that the tiered rate within the
transportation excise tax approved via Prop 417 does not violate A.R.S. § 42-
6106(C) and does not render the tax invalid.6

D. The Modified Rate Does Not Violate the U.S. or Arizona
Constitutions.

¶31 Vangilder argues the tiered-rate structure for retail sales in
the Prop 417 tax violates constitutional equal protection guarantees and
constitutes an illegal special law. We review constitutional challenges de
novo. See Gallardo v. State, 236 Ariz. 84, 87, ¶ 8 (2014). In doing so, we
presume a measure is constitutional unless proven otherwise beyond a
reasonable doubt. See J. C. Penney, 125 Ariz. at 472 (citing Shaw v. State, 8
Ariz. App. 447, 452 (1968)).

¶32 The U.S. and Arizona Constitutions guarantee equal
protection of the law. See U.S. Const. amend. XIV, § 1 (“No state shall . . .
deny to any person within its jurisdiction the equal protection of the
laws.”); Ariz. Const. art. 2, § 13 (“No law shall be enacted granting to any
citizen, class of citizens, or corporation other than municipal, privileges or
immunities which, upon the same terms, shall not equally belong to all
citizens or corporations.”). “[F]or all practical purposes,” the equal
protection analysis is the same under the Arizona and U.S. Constitutions.
Valley Nat’l Bank of Phx. v. Glover, 62 Ariz. 538, 554 (1945).

¶33 A tax statute is not unconstitutional simply because it does
not impose an identical burden on all taxpayers; “if there is a rational basis
for the classification, there is no constitutional infirmity.” State v. Levy’s,
119 Ariz. 191, 192 (1978). “In determining whether a statute meets the

(Nov. 18, 2019), https://www.modelcitytaxcode.az.gov/City_profiles/
City_profiles.htm.

6 Because we conclude the tiered-rate structure for retail sales is a
modified rate authorized within A.R.S. § 42-6106(C), we need not and do
not address the parties’ arguments regarding the meaning of “variable
rate.”

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 VANGILDER, et al. v. PINAL COUNTY, et al.
Opinion of the Court

rational basis standard, [courts] must first ascertain whether the challenged
legislation has a legitimate purpose and then determine if it is reasonable
to believe that the classification will promote that purpose.” Big D Constr.
Corp. v. Court of Appeals, 163 Ariz. 560, 566 (1990) (citations omitted).
Rational basis review “is especially deferential in the context of
classifications made by complex tax laws.” Nordlinger v. Hahn, 505 U.S. 1,
11 (1992); accord City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976).

¶34 Vangilder asserts the County proposed the tiered-rate
structure for retail sales at the urging of businesses that sell high-priced
retail items, such as cars, farming equipment, and recreational vehicles,
who feared the transportation excise tax would drive buyers to neighboring
counties to make their high-dollar purchases.7 The County, however, has a
legitimate interest in encouraging sales and other economic activity within
its jurisdiction. See State ex rel. ADOR v. Dillon, 170 Ariz. 560, 569 (App.
1991) (recognizing a “legitimate governmental interest in raising
revenues”); cf. Flagstaff Vending Co. v. City of Flagstaff, 118 Ariz. 556, 560
(1978) (“[A] government may validly ‘foster what it conceives to be a
beneficent enterprise.’”) (quoting Carmichael v. S. Coal & Coke Co., 301 U.S.
495, 512 (1937)). A partial reduction in the tax rate upon certain business
transactions is a rational way to encourage sales and promote economic
activity. See Levy’s, 119 Ariz. at 191-92 (finding no equal protection violation
in a statute exempting TPT upon sales under $1,000 to Mexican residents
with proper documentation within thirty miles of the Mexican border
where its purpose was to “bring back business to the areas”); see also
Minneapolis Star & Tribune Co. v. Minn. Comm’r of Revenue, 460 U.S. 575, 581-
82 (1977) (noting a use tax “eliminat[es] the incentive to make major
purchases in [s]tates with lower sales taxes”).

¶35 For example, without the tiered-rate structure, an Apache
Junction resident in the market for a $500,000 motor home could avoid
paying $2,500 in Pinal County TPT by driving a short distance to buy the
same motor home in the Phoenix metropolitan area. The County could
reasonably believe that this resident is unlikely to spend the time, gas, and

7 Vangilder asserts that the Prop 417 tax grants consumers purchasing
single high-dollar items a benefit not available to those buying lower-cost
items. But “[t]he legal incidence of the transaction privilege tax is on the
seller.” J. C. Penney, 125 Ariz. at 472. The retailer may choose to pass the
cost on to consumers, see Ariz. State Tax Comm’n v. Garrett Corp., 79 Ariz.
389, 393 (1955), but that choice confers no legal rights on the consumer,
Karbal, 215 Ariz. at 118, ¶ 18. Therefore, we only consider the application
of the Prop 417 tax on retailers.

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 VANGILDER, et al. v. PINAL COUNTY, et al.
Opinion of the Court

energy to travel out-of-county, however, if the tax applies only to the first
$10,000 of the sale and totals only $50. In addition, retailers who lose high-
dollar sales to neighboring counties might decide to relocate outside the
County, causing a further decrease in revenue. Moreover, the tiered-rate
tax does not differentiate between the locations of business or types of
tangible property offered for sale; it applies equally to all retailers. See Gila
Meat Co. v. State, 35 Ariz. 194, 202 (1929) (invalidating tax upon
slaughterhouses that varied by location because the tax was not equal and
uniform). Accordingly, we conclude the tiered-rate structure for retail sales
adopted within Prop 417 is rationally related to a legitimate government
purpose and does not violate equal protection.8

¶36 The Arizona Constitution also prohibits enactment of any
“local or special laws [regarding the] . . . [a]ssessment and collection of
taxes.” Ariz. Const. art. 4, pt. 2, § 9. A statute is a not a special law if:
“(1) there is a rational basis for the classification; (2) the classification is
legitimate, encompassing all members of the relevant class; and (3) the class
is flexible, allowing members to move into and out of the class.” State Comp.
Fund v. Symington, 174 Ariz. 188, 193 (1993) (citing Republic Inv. Fund I v.
Town of Surprise, 166 Ariz. 143, 148-49 (1990), and Ariz. Downs v. Ariz.
Horsemen’s Found., 130 Ariz. 550, 557-58 (1981)). “If one of these three
requirements is not met, the legislation is invalid.” Id. (citing Republic Inv.,
166 Ariz. at 149).

¶37 The first prong of the special-law test “is identical to that
required for equal protection analysis.” Gallardo, 236 Ariz. at 88, ¶ 12. We
have already determined that the County had a rational basis to treat sales
of high-priced retail items differently. See supra ¶ 34. The Arizona
Constitution also requires the classification be legitimate and flexible.
Republic Inv., 166 Ariz. at 148, 150. Vangilder concedes these points through
his silence. Moreover, the tiered-rate structure applies equally to all
retailers selling single items of tangible personal property over $10,000, and

8 Although Vangilder contends the tiered-rate structure was in fact
proposed “to avoid political opposition from powerful businesses,” he fails
to meet his burden, as “the one attacking tax legislation[,] to negate every
conceivable basis which supports it.” Tucson Newspapers, Inc. v. City of
Tucson, 172 Ariz. 378, 384 (App. 1992) (quotation omitted).

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Opinion of the Court

there is no restriction on who can join or leave the class. 9 Therefore, Prop
417 is not an unconstitutional special law.

II. Vangilder is Not Entitled to an Award of Attorneys’ Fees.

¶38 In his cross-appeal, Vangilder argues the tax court abused its
discretion in denying his request for an award of attorneys’ fees under the
private attorney general doctrine. See Cave Creek Unified Sch. Dist. v. Ducey,
231 Ariz. 342, 353, ¶ 34 (App. 2013) (explaining the private attorney general
doctrine permits a discretionary award of fees to a party that has vindicated
an important public right) (citing Arnold v. Ariz. Dep’t of Health Servs., 160
Ariz. 593, 609 (1989)). Because we reverse the court’s order granting relief
to Vangilder, he is not eligible for an award of fees. Therefore, the order
denying fees is affirmed.

9 Vangilder raises several arguments for the first time in his reply brief
that need not be considered. See Deutsche Bank Nat’l Tr. Co. v. Pheasant Grove
L.L.C., 245 Ariz. 325, 330, ¶ 17 n.5 (App. 2018) (citing Tucson Estates Prop.
Owners Ass’n v. McGovern, 239 Ariz. 52, 55, ¶ 11 n.4 (App. 2016)).
Nonetheless, he cites no authority to support his suggestion that we should
compare the effects of the tax on retailers to its effects on businesses that are
not similarly situated — i.e., those subject to tax under a different
classification. Nor are we persuaded that the $10,000 single-item cap is
arbitrary. As detailed in ¶ 35, the $10,000 limit is designed to result in a $50
maximum tax — an amount deemed de minimis enough to discourage
purchasers of high-dollar items from leaving the County to avoid the tax.
Finally, that the County could have crafted the excise tax to encompass
other high-dollar transactions, such as those involving multiple items
totaling $10,000, to a similar end, is immaterial; the County is not required
to choose the most effective means of achieving its goals so long as the
means it chooses has some conceivable rational basis. See State v.
Hammonds, 192 Ariz. 528, 532, ¶ 15 (App. 1998) (citing Ohio Bureau of Emp’t
Servs. v. Hodory, 431 U.S. 471, 491 (1977)).

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CONCLUSION

¶39 The tax court’s order invalidating the Prop 417 tax is reversed,
and its order denying Vangilder’s request for attorneys’ fees and costs is
affirmed.

AMY M. WOOD • Clerk of the Court
FILED: AA

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