SCOTTSDALE, AZ — A group of Scottsdale residents has filed a lawsuit against the city over a sales tax initiative going on the November ballot.
The lawsuit isn't over the proposed city sales tax itself, but rather, the language the group feels the city has been using to promote it.
They feel the city is billing it as a tax cut, but they believe that's misleading, and that the change would actually be a tax hike if voters approve it.
Scott Freeman with the Goldwater Institute in Phoenix is a senior counsel on the case.
"The city of Scottsdale is telling its residents that if they approve this new sales tax measure, that their tax rates will be reduced, but the opposite is true. Tax rates will increase," Freeman said.
Scottsdale is putting this in the hands of voters come November.
It's a 0.15% sales tax that would go into effect July 1, 2025, for 30 years.
It would fund improvements and maintenance at aging city parks and recreational facilities, including the McDowell Sonoran Preserve and WestWorld of Scottsdale.
In an online Q&A document, the city connects the sales tax to an existing 0.20% sales tax.
That expiring tax will sunset on June 30, 2025, the day before the new tax would go into effect.
However, that expiring tax had to do with land acquisition, not maintenance, and voters approved it back in 1995.
"The old tax was designed to raise money to allow the city to acquire land, land they ultimately put into the [McDowell Sonoran] Preserve," Freeman said. "The new tax has nothing to do with land acquisition. It has to do with providing city services, services that the city already provides. So, it is a tax increase to allow the city to bring in more money to provide those services."
The Protect and Preserve Scottsdale Task Force recommended to the city council that the expiring 0.20% tax be "replaced and reduced" to 0.15% to solely fund improvements and maintenance for citywide parks and recreational facilities (including WestWorld), maintenance and protection for the McDowell Sonoran Preserve, and increase police and fire resources for citywide parks and the Preserve.
The city council accepted that recommendation and placed this proposal on the ballot for voter consideration.
The city estimates the 0.15% tax would cost the average household $3.71 per month, compared to $4.95 per month with the current expiring 0.20% tax.
But, Freeman's clients believe the city is using the expiration of the old tax to pitch this new one to voters as a tax "cut."
"The lawsuit is not about whether there should be a tax, what the tax rate should be, what money should be spent on," Freeman said. "A tax measure like this should not be put on the ballot in the form of a sales pitch. It should just relate to voters factually what has occurred."
If voters were to say yes in November, the city sales tax rate in Scottsdale would go from 1.75% to 1.70% by next July. That includes the 0.15% that would be restricted to the aforementioned parks and recreation improvements and upkeep.
If voters were to say no, the city sales tax would go from 1.75% to 1.55% by the end of next June, but the parks and recreation projects would have to compete with other high-priority projects in the city's General Fund, instead of getting money specifically from a dedicated sales tax.
Freeman believes there won't be a vote at all.
"We believe a judge will take a look at this - it will happen fairly quickly because the election is upon us - and determine that the language is misleading, that it does engage in a bait and switch and disqualify, he said. "That will mean that it's not on the November ballot."
ABC15 reached out to the city of Scottsdale officials and the mayor's office about the lawsuit, but they would not comment in detail since it's going through the court process.
A city official sent the following statement:
"The city is confident that the voters will fully understand the ballot measure as written."
The next hearing for the case is set for July 18.
