Politics
Elections, local government, and the decisions that shape our community.
Can a City Raise Taxes Without a Vote of the People?
As conversations around Proposition 495 and the possible incorporation of San Tan Valley continue, one belief keeps surfacing:
"The new town can't raise our taxes without a public vote."
But that's not how most city budgets function in Arizona.
While property taxes do require voter approval, most other taxes and fees do not — and they make up the majority of a city's revenue.
Where City Money Comes FromOnce incorporated, an Arizona city or town can collect revenue from three primary sources:
- State-Shared Revenue – collected by the State of Arizona (from taxes paid statewide) and redistributed to all incorporated cities, towns, and counties based on population.
- Property Taxes – primary (operations) and secondary (bond repayment)
- Local Taxes and Fees – imposed and adjusted by the city council, no vote required
- Primary Property Tax – used for city operations
- Secondary Property Tax – used to repay bonds; once voters approve a bond, the town can add a property tax to repay it — no separate vote is required.
City and town councils can impose or raise these at any time without putting it on a ballot:
- City Sales tax (TPT) — including groceries
- Construction/contracting tax
- Business license and regulatory fees
- Commercial rental tax
- Utility franchise fees
- Development impact fees and building permits
- and more
These local taxes and fees make up the largest share of most city budgets — not the state money or voter-approved property taxes.
While incorporation supporters often point to state-shared revenue as a reason to incorporate, in reality it accounts for only a small portion of most city budgets. The vast majority of revenue comes from taxes and fees a town council can impose and increase without a vote.
Let's look at real examples from cities with similar population sizes:
🔸 Queen Creek, AZ (~84,000 residents)- FY 2025–26 Total Budget: $682.7 million
- State-Shared Revenue: 4.1% ($28.1 million)
- City Property Tax: 2.5% (voter approved)
- Local Taxes & Fees (council controlled): 15.6%
- FY 2025–26 Total Budget: $2.46 billion
- State-Shared Revenue: 5.8% ($143.1 million)
- City Property Tax: 4.2%
- Local Taxes & Fees: 9.8%
- FY 2025–26 Total Budget: $387 million
- State-Shared Revenue: 7.1% ($27.6 million)
- City Property Tax: 2.2%
- Local Taxes & Fees: 14.1%
- FY 2025–26 Total Budget: $163.9 million
- State-Shared Revenue: 10.9% ($17.8 million)
- City Property Tax: 0%
- Local Taxes & Fees: 18.2%
While proponents claim incorporation won't raise taxes, here's the reality:
- Most of a city's budget comes from local taxes and fees set by council — not the state
- Only a small fraction comes from state-shared revenue
- Only property taxes require a public vote
- Every other source of revenue — including sales tax, grocery tax, business and permit fees, utility franchise fees, and more — can be imposed or increased by council vote alone.
- In most cities, less than 1 out of every 5 dollars comes from the state. The rest is raised locally — through taxes and fees set by the town council.
That means a newly formed town will be looking to cover operational costs through tools already used by cities across Arizona: local sales taxes (including on groceries), franchise fees on utilities (which show up on your bill), construction taxes, licensing, permits, and service fees — all of which can be imposed or increased by a simple vote of the town council.
If San Tan Valley incorporates, a town council could immediately begin implementing new fees and taxes to cover operational costs — and none of them would need to go to a vote.
State-shared revenue may sound like a bonus — but it only makes up 4% to 11% of a typical city budget — not nearly enough to fund basic operations — and San Tan Valley residents already pay into that fund. Incorporating won't change that.
📖 Learn more about how state-shared revenue actually works here.
Incorporation doesn't just create a town.
It creates the legal authority to generate revenue without voter approval — and history shows that's exactly how most cities operate.
Understanding how city finances work cuts through the promises and gets to the real concern: Does incorporation open the door to new taxes and fees? Yes — and most of them don't require voter approval.
EXPLORE
GET INVOLVED
ABOUT & CONNECT
SanTanValley.com, a partner of the San Tan Valley Alliance (501(c)(3)). All rights reserved. Content on this site, including articles, images, and downloadable files, may not be reproduced or republished without written permission from SanTanValley.com representatives. Opinions and comments posted by visitors do not reflect the views of SanTanValley.com.
Comments