Phoenix Can’t Balance the Budget—They’re Breaking the Law to Tax You Instead

Phoenix officials are scheming to raise taxes so they can spend even more of their citizens’ hard-earned money—and they’re violating the Arizona Constitution to do it. This week, Goldwater delivered the city government a clear message: Stop violating taxpayers’ rights.

The city of Phoenix has proposed a tax increase on businesses that provide services, claiming it needs the money because of a revenue shortfall. But the burden of the new tax increase will ultimately fall hardest on Phoenix businesses and consumers, raising the prices of services like construction contracting and lodging.

Moreover, the Arizona Constitution does not allow any new taxes or tax increases on “services”—a broad term that encompasses many types of businesses that do not produce tangible goods, including hospitality, advertising, photography, utilities, and construction, among others.

This week, the Goldwater Institute sent a letter to Mayor Kate Gallego and the Phoenix City Council urging the city not to move forward with the unlawful taxes on services. After all, city governments should focus on managing their budgets, not violating taxpayer rights to compensate for their own inability to balance the budget.

Phoenix is not the only city that tries to increase its spending at the expense of taxpayers. But the Goldwater Institute is holding these local governments accountable when they overstep their authority.

Recently, the Goldwater Institute sued the town of Gilbert for enacting an unconstitutional “pickleball tax,” which is being used to fund pet projects like pickleball courts, splash pads, and a ropes course. Goldwater also previously sued the town of Payson when officials bypassed the democratic process by abusing their emergency powers to incur $70 million in debt without public consent.

Government officials are public servants who represent the interests of the community. They should be focused on finding fiscally responsible solutions rather than disregarding citizens’ rights.

The Goldwater Institute is committed to serving as a watchdog over local governments to ensure that they operate within their constitutional limits. Now, Phoenix should do the right thing and ditch this illegal tax.

You can read our letter here.

Stacy Skankey is a Staff Attorney at the Goldwater Institute.