Adam Chodorow (Arizona State; Google Scholar), Saban, Pope, and the Benefits Theory of Taxation, 57 Ariz. St. L.J. 171 (2025):

As a condition for receiving federal highway funding, Congress requires states to spend the revenues they raise from road users on the roads.  Congress justified this condition, in part, because wanted federal money to supplement—not replace—state money and, in part, on fairness grounds, essentially endorsing the benefits theory of taxation, under which taxes can be justified based on the benefits taxpayers receive.  To safeguard these federal funds and prevent legislatures from using road use revenues for other purposes, most states added anti-diversion provisions to their constitutions.  A majority specifically identified the taxes their anti-diversion provisions would cover.  However, a few—including Ohio and Arizona—adopted broad language providing that revenues from “fees, excises, or license taxes relating to registration, operation, or use of vehicles on the public highways or streets” be spent on the roads.

Despite the broad language found in Arizona’s provision, Arizona’s Supreme Court—relying in part on Ohio’s jurisprudence—narrowly construed the state’s anti-diversion provision to apply only to a narrow class of taxes.  This article considers Arizona’s jurisprudence—and in particular cases considering the rental car taxes used to fund Cardinal stadium and a rental car facility at Phoenix’s Sky Harbor airport—to show how the courts have gone astray, drifting further and further away from the provision’s underlying purpose, shortchanging drivers whose money is being spent for non-road purposes, and potentially putting Arizona’s federal highway dollars at risk.