IN THE



## A RIZONA 

## C OURT OF 

## A PPEALS

D IVISION O NE

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

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 Plaintiff

s /Appell ees/Cross

-

Appellants

Mooney Wright & Moore, P.L.L.C
, Mesa By Paul J. Mooney Co

- Counsel for Plaintiff

s /Appell ees/Cross

-

Appellants

Arizona Attorney General’s Office
, Phoenix By Sc ot G. Teasdale, Jerry A. Fries, Lisa A. Neuville Counsel for Defendant/Appellee/Cross

- Appellee FILED 1-16-2020VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

2 Pinal County Attorney’s Office
, Florence By Christopher C. Keller Co

- Counsel for Defendant/ Appel lant/Cross

-

Appellee Pinal County

Ballard Spahr L.L.P.
, Phoenix By Joseph A. Kanefield, Brian Schulman, Chase Bales Co

- Counsel for Defendants/ Appel lants/Cross

-

Appellees Pinal County and Pinal Regi o nal Transportation Authority

Fennemore Craig, P.C.
, Phoenix By Patrick Irvine, Taylor Burgoon Co

- Counsel for Defendants/ Appel lants/Cross

-

Appellees Pinal County and Pinal Regi o nal Transportation Authority

Sims Mackin, L td

. , Phoenix By William J. Sims Co

- Counsel for Defendant/ Appel lant/Cross

-

A ppellee Pinal Regi o nal 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 ClubVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

3 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), ap peal 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

asse rting 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 t o 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

- 5302 1 (governing the establishment of a regional tr ansportation authority). Arizona law authorizes the RTA to formulate a plan for transportation projects and propose a n 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.VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

4 “approved b y the qualified electors voting at a countywide election.” A.R.S. § 42

- 6106(A); see also A.R.S. § 4 8

- 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 ele ction , and as directed by A.R.S. § 48

- 5314(C) , the Board printed a publicity pamphlet describing Prop 416 and Prop 417 (the Pamphlet) . T he RTA “ratified, confirmed, approved and adopted [the Pamphlet] in the form presented” in October 2017 (the October Re solution). 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, t he Pamphlet further explained:
If Proposition 417 is approved by the vo ters, 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 Exci se 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 clas s. 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. 201 5) (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 byVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

5 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 classificat ions 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 w as 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

en gaging 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 perso nal 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]”).VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

6 transportatio n 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 c ollecting and/or enforcing the tax, alleging it wa s 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 genera l 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 question s 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.” S ee 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) (holdin g 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. 46 9
, 472 (App. 1980)).VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

7 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 u pon 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 certifie d 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 t o 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 J une 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 buil d 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, n othing 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 th e 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

- 5 3 14(A)(2) only require d the authorizing resolution to be sent to the Board

— not th at it be posted, distributed to the
voters , or otherwise publicized. Unlike the statute in Braden , the statuteVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

8 applicable to the county transportation excise tax contemplates that the full and final details of a proposed tax

— including “the rate of the
t ransportation excise tax”

— will be contained within a publicity pamphlet that is mailed to voters before the election

. A.R.S. § 48

- 5314(C). T he Board did just that here ; t he 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 ar gue that the tax is invalid because they read Prop 417 to describ e a tax that applie s 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 re asonable 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) (quotin g Brewer v. Burns , 222 Ariz. 234, 239, ¶ 26 (200 9 )); 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 thousa nd dollars ($10,000), and above ten thousand dollars ($10,000), the measure of tax shall be a rateVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

9 of zero percent (0.0%), in Pinal County for twenty (20) years to provide funding for the transportation elements contained in the Pinal Regional Transportati on 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
, establish e d and limit e d the scope of the tax to “person[s] engaging or continuing in the business of selling tangible personal property at retail” only

. U nder 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 A riz. 269, 276 (1952) (citing City of Phx

. v. Yates , 69 Ariz. 68 , 72 (1949)).

¶17 T he 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 interpret ation, t he phrase that begins with the word “including” and continu es 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 ¶ 1 5 . 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 purpos e of the statute.” Adams , 74 Ariz. at 276 (citing Mahoney v. Maricopa Cty. , 49 Ariz.VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

10 479, 492 (1937)) ; cf. City of Phx. v. Butler , 110 Ariz. 160, 162 (1973) ( explain ing 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

. S ee A.R.S. § 48

- 5314 (detailing ballot requirements for a regional transportation excise tax)

. A nd , pursuant to statute, a “transportation excise (sales) tax” is a tax that applies across all TPT classifications

. S ee 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 s ame 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 classi fication, including the tiered

- rate structure proposed for retail sales. Thus, even if the scope of the
tax w as not clear from the ballot alone, secondary principles of construction support the conclusion that the tax was to apply to all business classifi cations. 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. Kongab le , 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 Assur ance Soc’yVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

11 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 Rea lty 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 busine ss 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 ‘i ncluding’ 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 (9 th Cir. 2005); and P

. R

. Maritime Shipping Auth. v. I nterstate C ommerce C omm’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 change s an existing rate , but he cite s no authority supporting th is 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) (ci ting 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 (Ap p. 1994) (citing State v. Wise , 137 Ariz. 468, 470 (1983)).VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

12 ¶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 le ss 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 th e 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 acknow ledged 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

- speci fic funding mechanisms.” 1990 Ariz. Sess. Laws
, c h. 380, § 1 (2nd Reg. Sess.)

. The legislature then determined these needs could be met only through “ certain unique strategies ,” id.
, including imposition of a n 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
, s ee A.R.S. §§ 42

- 6103 (general excise tax),

- 6105 (transportation excise tax in counties with a population of 1.2 million person s 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 bond s 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 create d a n 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 CountyVANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

13 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 violat es the statutory mandate that a transpor tation 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. S ee 1997 Ariz. Sess. Laws, c h. 150, § 75 (1st Reg. Sess.) (adopting a zero percent rate for commercial lease classificat ion , 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 hav oc 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 pr incipal 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, Quartz s ite, Safford, San Luis, Superior, Thatcher, Tolleson, Wickenburg, Willcox, and Yuma. See City Profile , Model City Tax Code
,VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

14 A riz . M odel C ity T ax C ode § 460(d), http://ww w.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 with in the transportation excise tax approved via Prop 417 d oes 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 Constituti ons 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. Constitution s

. 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 classifica tion, 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’ a rguments regarding the meaning of “variable rate.”VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

15 rational basis standard, [courts] must first ascertain whether the challenged legislation has a legitimate purpose and th en 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 cla ssifications 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 propos ed 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 legitimat e interest in encouraging sales and other economic activity within its jurisdiction. S ee State ex rel. ADOR v. Dillon , 170 Ariz. 560, 5 69 (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 busine ss transactions is a rational way to encourage sales and promote economic activity. See Levy’s , 119 Ariz. at 19 1

- 9 2 (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 incent ive 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 t hat th is 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 priv ilege 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.VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

16 energy to travel out

- of

- county , however, if the tax applies only to the first $10,000 of the sale a nd totals only $50. In addition, r etailers who lose high

dollar sales to neighboring counties might decide to relocate outside the County , causing a further decrease in revenue. Moreover, t he tiered

- rate tax does not differentiate between the locations o f 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 a ll 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 Rep ublic 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 Rep ublic Inv. , 166 Ariz. at 149).

¶37 The first prong of the s pecial

- 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 sin gle items of tangible personal property over $10,000, and

8 Although Vangilder contends the tiered

- rate structure was in fact
propos ed “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).VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

17 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

- appe al, 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 p rivate 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 reli ef 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 und er a different classification. Nor are we persuaded that the $10,000 single

- item cap is arbitrary. As detailed in ¶ 3 5 , the $10,000 limit is designed to result in a $50 maximum tax

— an amount deemed de minimis enough to discourage purchasers of high

- dol lar 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 Count y 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)).VANGILDER, et al. v. PINAL COUNTY, et al. Opinion of the Court

18 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.