Judge rules car-rental tax for Cardinals stadium unconstitutional, could cost state $200m

University of Phoenix Stadium, which isn’t named after a university in Phoenix (its namesake is a for-profit online college that bought naming rights) and isn’t in Phoenix (it’s in Glendale) but does host the Arizona Cardinals, is having its $455 million construction cost paid off mostly with money from a 3.25% rental-car tax and a 1% hotel room tax passed by Maricopa County voters in 2000. That worked out fine until yesterday, when:

Maricopa County Superior Court Judge Dean Fink ruled on Tuesday that a rental-car tax passed by voters in 2000 and targeted at tourists violated the state Constitution because the revenue was being used for the wrong purpose…

Fink’s ruling is tied to a constitutional provision that requires the state to spend money raised from vehicle taxes on related issues like highways.

“You can’t have highway-related taxes and spend it on stadiums,” [rental-car company attorney Shawn] Aiken said.

This is a smidge of a problem, as:

  • The Arizona Sports and Tourism Authority relies on the car-rental tax money not just to pay off the Cardinals’ stadium, but to help fund Cactus League spring-training facilities as well. Without it, somebody would need to come up with a whole lot of cash, and quick.
  • Aiken is demanding that the state refund to the car-rental companies as much as $200 million in taxes already collected, on the grounds that the tax was illegal. (Yes, it would make more sense to refund the money to the actual people who rented cars and paid the tax. No, that is not going to happen, though I suppose if anyone out there who rented a car in Maricopa County wants to file a class-action suit, knock yourself out.)

This is a giant mess, and if the ruling is upheld on appeal (there will absolutely be an appeal), and if there’s no way to funnel the car tax money to roads and divert other road money to the stadium authority, it’s likely to provoke one of those “What would happen if we just stopped paying the bills for that stadium?” discussion that is all the rage these days.

The most entertaining part of all this, meanwhile, is that another part of the legal challenge apparently was rejected because the county’s attempt to levy the added car-rental fees only on out-of-towners utterly failed:

The lawsuit’s main argument was that it violated federal interstate commerce laws by attempting to assess a tax against visitors to Arizona, while not charging the tax against local residents who happen to rent cars.

Fink found that while the law meant to be discriminatory, it wasn’t discriminatory in practice. Rental companies were just assessing it against everybody. The paperwork for determining who should be assessed the tax and who shouldn’t was just too complicated for them.

So what was sold to voters as a car-rental tax only on tourists that would fund sports facilities in fact may turn out to be a car-rental tax on everybody that will fund car-rental companies. I believe that’s what the kids today call a fail.

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3 comments on “Judge rules car-rental tax for Cardinals stadium unconstitutional, could cost state $200m

  1. The funniest bit was in the Republic’s editorial on the subject, in which they describe the stadium as a “valuable community asset.” Thanks in large part to its many Valuable Community Assets, Glendale is kinda broke.

  2. I don’t think it’s idiotic at all, BFR. Car taxes should go to transportation-related expenses.

    Same with fees paid to cities for parking. You can’t build libraries with it. Or arenas.

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