Arizona Court of Appeals: Scottsdale’s Voter-Approved Tax Increase Was Not a “Referendum” Subject to the 60% Supermajority Requirement

By Joseph Kanefield and Eric Spencer¹

On October 23, 2026, in Stamper v. City of Scottsdale, No. 2 CA-CV 2025-0449, Division Two of the Arizona Court of Appeals affirmed the dismissal of a challenge to Proposition 490, a voter-approved increase to Scottsdale’s transaction-privilege and use tax.

The measure was plainly a tax. Even so, the appellate court held that because the City Council put the measure on the ballot under statutory authority, the election was not a referendum and the Arizona Constitution’s 60% threshold for referred tax measures therefore did not apply.

In 2024, the City Council adopted a resolution asking voters to approve a higher tax rate. Prop. 490 passed in November 2024 with 58.25% of the vote, and the tax took effect July 1, 2025. The plaintiffs argued that the tax needed 60% approval under Ariz. Const. art. IV, pt. 1, § 1(5).

Before addressing the parties’ arguments, the Court of Appeals independently assessed whether the trial court had jurisdiction over the matter based on failure to hear the case in Arizona tax court. But the tax court is simply an administrative department of the superior court, not a separate court unto itself, and it was not clear that this election case was even subject to the tax court’s jurisdiction under A.R.S. § 12-163(A).

The Court of Appeals also held that even if the case should have been administratively assigned to the tax court, none of the parties requested such assignment nor raised the issue on appeal and therefore the court deemed any error related to the lack of the assignment to the tax court waived.

The appellate court also dispensed with the defendants’ arguments that taxpayers must exhaust their administrative remedies before the Arizona Department of Revenue prior to filing suit. The Department of Revenue did not have authority to resolve this constitutional matter, and therefore the exhaustion of remedies doctrine had no application.

On the merits, however, the appellate court explained that a referendum is, by its nature, a check on legislation already passed. Arizona’s referendum process starts only after a council adopts an ordinance. Unlike the Legislature, Arizona law does not allow a city council to send an unadopted measure to voters as a referendum.

Scottsdale instead acted under A.R.S. § 42-6006, which lets a city submit “any issue relating to” a transaction-privilege or use tax to its voters without enacting the measure first. Relying on City of Scottsdale v. Superior Court (1968), among another, the court agreed that the election “was not an exercise of the referendum power and therefore not subject to all the restrictions of referenda.” Scottsdale’s charter authority to submit matters voluntarily did not change that result.