Highlights
- Between $45 million and $50 million in illegally collected Pinal County sales taxes sits unrefunded after the Senate adjourned without voting on a rebate plan.
- A House-passed bill by Rep. Justin Olson would have sent $300 checks to qualifying Pinal County residents; it stalled before a Senate vote.
- A budget provision keeps the money in escrow rather than letting it flow to the state general fund, giving the 2027 Legislature a second shot.
- The dispute traces to the Arizona Supreme Court's 2022 ruling that voided Pinal County's half-cent sales tax as an illegal two-tiered system.
Between $45 million and $50 million in sales-tax revenue that the Arizona Supreme Court declared illegally collected from Pinal County residents is sitting in the state treasury with no clear path back to taxpayers, after the Senate adjourned this month without voting on a rebate plan.
The money traces to Propositions 416 and 417, which Pinal County voters approved in 2017. Proposition 416 was a regional transportation plan; Proposition 417 was the half-cent sales tax to fund it, passing with 51% of the vote. The Arizona Supreme Court voided the tax in 2022, ruling it an illegal two-tiered system because it taxed only the first $10,000 of any purchase with no levy above that threshold. Under normal circumstances, that ruling would have triggered refunds of the more than $80 million collected. But Arizona does not impose a conventional sales tax paid by buyers; it levies a transaction privilege tax on merchants. The state therefore offered refunds only to the businesses that remitted the tax between April 2018 and March 2022. The deadline for those claims was April 9, 2026, and many businesses never filed, leaving the $45 million to $50 million balance unrefunded.
Rep. Justin Olson, a Mesa Republican who chairs the House Ways and Means Committee, rewrote a competing bill by Rep. Martinez, a Casa Grande Republican, to replace her road-project approach with direct payments. His version would have sent $300 checks to anyone whose primary residence was in Pinal County from 2018 through 2024 and who files an income tax return in 2026, with surviving spouses or estates collecting on behalf of deceased taxpayers. The House passed Olson's bill unanimously. The Senate did not take it up before adjournment.
Olson rejected Martinez's proposal to steer the funds into 12 Pinal County road projects, arguing that approach rewarded a government for collecting an unconstitutional tax. "That's essentially the same as being convicted for robbing a bank and the court slapping you on the wrist and saying, 'Have fun and don't spend it all in one place,'" he said. "You don't get to keep the proceeds of ill-gotten gains."
Martinez, for her part, said the budget provision keeping the money in escrow was preferable to losing it entirely to the general fund. She described the outcome as buying the Legislature one more year to resolve the dispute. Both lawmakers are running for reelection.
As the Tucson Star reported, the Senate tucked a budget provision directing the remaining illegally collected taxes to stay in an escrow account pending future legislative action. The 2027 Legislature will decide whether to issue rebates, fund road projects, or pursue another resolution.
The session reconvenes in January 2027.
Sources
Every factual claim in this article traces to one of the sources below. See how we work for the editorial process.
- azcapitoltimes.com retrieved 22/06/2026 20:25
Authored by The Scottsdale Signal. Drafted by AI from primary-source material under our beat-specific editorial guides; reviewed by humans before publish under our five-gate process. Sources retrieved at 22/06/2026 20:25. Every claim traces to a source.
