Even as Arizonans struggle with the rising cost of living, government officials in Gilbert have put a tax on their citizens to fund everything from pickleball courts to splash pads.
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It’s not just unfair, it’s illegal. Today, the Goldwater Institute sued Gilbert, on behalf of the Home Builders Association of Central Arizona and a local property owner, for brushing aside the Arizona Constitution to take more of taxpayers’ hard-earned money.
In October 2024, the Gilbert Town Council voted to raise the sales tax for all goods and services sold in Gilbert; hike the bed tax for all hotel, motel, and short-term rental properties; and add a brand-new use tax for online vendors who do less than $100,000 of sales in Arizona each year.
Officials claimed “time is of the essence” to impose these new taxes, which will fund “critical infrastructure projects” including pickleball courts, splash pads, a ropes course, and a “statement” bridge. But the burden of these increased taxes will ultimately fall hardest on Gilbert businesses and consumers, raising the prices of services like construction contracting and lodging. The hospitality industry will be hit hardest, with both the sales and bed tax meaning prices will rise for hotels and residential short-term rentals.
“This tax hike makes it all the more difficult to make ends meet in Gilbert,” says Jonathan Barth, a teacher and father of five who earns supplemental income by renting out a private bungalow attached to his home for short-term stays.
It’s also illegal. 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 homebuilding, among others. “The Arizona Constitution bans tax hikes on services for a reason – why are our own leaders ignoring the law?” Jonathan says.
Gilbert’s new taxes will also cause a rise in construction costs, according to the Home Builders Association of Central Arizona (HBACA). “Gilbert officials are trampling on their own constituents’ rights with no regard for the consequences their illegal actions will have on taxpayers and homebuyers,” HBACA CEO Jackson Moll says. “The Arizona Constitution is clear: increasing taxes on services, including on construction contracting, is unlawful.”
Gilbert is far from alone when it comes to local government operating outside the boundaries law to harm taxpayers. But the Goldwater Institute is holding local governments across the state accountable when they overstep their authority. Recently in Phoenix, Tucson, and Tempe, Goldwater was able to halt restrictive “prevailing wage” mandates that force regulations and bureaucratic red tape down businesses’ throats. Goldwater also filed a lawsuit against the town of Payson to hold officials accountable for bypassing democratic accountability when they abused their emergency powers to take on $70 million of debt without giving the people a say.
Local government officials are public servants who ought to represent the interests of the community—not violate their rights. The Goldwater Institute will continue to hold local governments accountable to the public they serve and ensure officials act within their proper constitutional bounds.
You can read our complaint here, and find out more about the case here.
Author: Stacy Skankey is a Staff Attorney at the Goldwater Institute.
