Money from a car rental tax has helped pay for maintaining Pima County’s Kino Sports Complex.

PHOENIX β€” There’s nothing illegal about taxing tourists renting cars in Arizona to pay for sports facilities in Pima and Maricopa counties, the state Supreme Court ruled Monday.

All seven justices agreed with the state Department of Revenue that it’s legally irrelevant that the majority of the tax is paid by out-of-state visitors. They said that does not make it illegally discriminatory.

But the justices were more divided on the issue of whether it’s legal to use a tax on the rent of vehicles to pay for things like stadiums.

Justice Ann Scott Timmer, writing for the majority, acknowledged that a provision of the Arizona Constitution approved by voters in 1952 spells out that any tax proceeds or other funds relating to the β€œoperation, or use of vehicles on the public highways” must be used solely to build and repair roads.

But Timmer said it’s a stretch to say that a tax on renting a car translates out to a levy to use Arizona roads. She said car rental agencies β€œmerely benefit from the existence of roads.”

Monday’s decision is a crucial victory for the state Sports and Tourism Authority as the car-rental tax generates more than $14 million of its more than $55 million annual budget.

Nearly $22 million of the authority’s budget goes to paying off the debt on the construction of the Glendale stadium for the Arizona Cardinals. But it also provides $8.3 million for tourism promotion, almost $5 million to promote the Cactus League and another $1.1 million for youth and amateur sports.

In Pima County, the levy generates $1.5 million a year, which has paid for construction of the Kino Sports Complex.

County officials say those funds maintain the stadium and baseball fields which, while there is no longer any Cactus League play there, are used for spring training for teams from Korea and Mexico. At other times, they say, the stadium and fields can be used by other teams, including youth sports, and for special events.

At issue is a law designed to help counties attract and retain sports teams and spring training by building facilities.

The chosen method in Maricopa County was a 3.5 percent surcharge on car-rental contracts, paid by the car-rental companies; Pima County put in a flat $3.50 per rental charge.

Shawn Aiken, representing Saban Rent-A-Car, challenged the levy as illegal.

In 2014, Maricopa County Superior Court Judge Dean fink ruled the Arizona Constitution limits any taxes levied on the use of vehicles on public streets to be used solely to fund road construction and maintenance and related purposes. Fink said the tax on car rentals clearly falls outside that purpose. But Timmer said there are a whole host of reasons why the levies are legal, even though the funds do not go for roads.

She said this can’t be interpreted as a road-user tax because it is a β€œspecial tax not levied generally on all businesses.” And Timmer said that there is nothing to indicate that those who crafted the 1952 constitutional amendment limiting the use of certain taxes for roads or those who voted for it ever intended to include car rentals in its scope.

Justice Clint Bolick, in his lone dissent, said his colleagues were essentially reading the Arizona Constitution the way they want, not the way it’s worded.


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