City of Prescott v. Town of Chino Valley

In City of Prescott v. Town of Chino Valley, 163 Ariz. 608, 790 P.2d 263 (App. 1989), affirmed in part and vacated in part on other grounds, 166 Ariz. 480, 803 P.2d 891 (1990) the City of Prescott operated a water pipeline within the Chino Valley town limits. 163 Ariz. at 610, 790 P.2d at 265. Chino Valley imposed a one percent transaction privilege tax on Prescott's gross receipts from transporting water through the pipeline to all points within or outside the town limits. Id. at 611, 790 P.2d at 266. Although only two miles of the seventeen-mile pipeline between the two municipalities were in Chino Valley, id. at 610, 790 P.2d at 265, Chino Valley determined administratively that a full eight-tenths of one percent of the gross sales receipts from water transported for consumption outside Chino Valley would be taxed. Id. at 618, 790 P.2d at 273. On appeal from a judgment sustaining the tax, Prescott argued that the Chino Valley tax was unconstitutionally applied "because it has not been apportioned, or reasonably apportioned." 163 Ariz. at 618, 790 P.2d at 273. The court agreed with Prescott.