Republican Arizona Lawmakers, Goldwater Institute File Lawsuit Against Proposition 208

By Rocio Hernandez, Lauren Gilger
Howard Fischer, Capitol Media Services
Published: Monday, November 30, 2020 - 7:35pm
Updated: Tuesday, December 1, 2020 - 12:26pm

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Top Republican legislative leaders filed suit Monday to block implementation of the voter-approved tax on the income of the wealthiest Arizonans.

Legal papers filed in Maricopa County Superior Court contends that the Arizona Constitution allows only the Legislature to impose a new tax and then only with a two-thirds vote.

"Because Proposition 208 did not meet either requirement, its new tax was not constitutionally enacted,'' the lawsuit reads.

The lawsuit also points out that the measure, approved by voters by a margin of 51.7% to 48.3%, seeks to exempt the money raised from the constitutional cap on how much schools can spend. The attorneys say a statute — even one approved by voters — cannot override what is in the Arizona Constitution.

Attorneys for the challengers also say that the amount of spending the Invest in Ed initiative would require exceeds the amount of revenues that would be raised by the new 3.5% surcharge on incomes above $250,000 for individuals and $500,000 for married couples filing jointly.

Finally, the claim says it illegally ties the hands of state lawmakers by telling them they cannot use the new revenues that would be raised — about $940 million a year — to reduce education spending elsewhere.

That provision in particular gets the attention of the lawmakers who agreed to sign on to the lawsuit filed by the Goldwater Institute, including House Speaker Rusty Bowers and Senate President Karen Fann.

"Proposition 208 restricts their ability to appropriate funds for other legislative priorities,'' wrote attorneys in the case.

Signs against and for Arizona Proposition 208
Rocio Hernandez and Sky Schaudt/KJZZ
Signs against and for Arizona Proposition 208.

"These legislative leaders further understand that despite the authorities vested in their offices and position, they are powerless under Proposition 208 to divert funds from the general fund, each with a supermajority,'' he said. And that, the lawyers said, limits their ability not just to reduce state taxes but also respond to emergencies and "eliminate educational programs that are no longer necessary or are deemed ineffective.''

The bottom line is that the litigation seeks an injunction order barring any implementation or enforcement of the ballot measure until there can be a full-blown hearing.

A separate lawsuit also was filed Monday by Ann Siner, founder of My Sister's Closet, and retired Maricopa County Superior Court Judge John Buttrick.

Backers of the measure are expected to fight both lawsuits.

Attorney Roopali Desai who represents the Invest in Ed initiative said what's lost in all this is that the Arizona Constitution makes the people co-equal with the Legislature when creating law. And that, she said, means they have the same powers as lawmakers, even if the elected legislators disagree.

In fact, in some ways the powers of the people are superior. That's because a constitutional provision bars lawmakers from repealing what voters have enacted. And they can make only changes that "further the purpose'' of the voter-approved measure, and only with a three-fourths vote of both the House and Senate.

While Jon Riches, the Goldwater Institute's director of national litigation, recognizes that voters have the power to propose their own laws, he said "no legislation whether its passed through the initiative process or whether it's passed by the Legislature can override the constitution."

"This expressly tries to do that," Riches said, who joined KJZZ's The Show on Tuesday to talk about the merits of the suit.

The measure, put on the ballot with a petition gathering process, was pushed by the Arizona Education Association and allied groups seeking to restore cuts that have been made to K-12 funding in the past decade. They say that per-student aid has not kept pace with inflation and student growth.

Half of the funds are earmarked for schools to hire teachers and classroom support personnel, such as librarians, nurses, counselors and coaches. The dollars also could be used for raises.

Another quarter is for support services personnel, including classroom aides, security personnel, food service and transportation.

There's also 12% for grants for career and technical education programs, 10% for mentoring and retaining new teachers in the classroom, and 3% for the Arizona Teachers Academy to provide tuition grants for those who go into education.

Foes, led by the Arizona Chamber of Commerce and Industry, argued there was no guarantee that the cash would go to teachers and salaries.

They also pointed out that it would raise the state's top income tax rate, now 4.5%, to 8%, which they said would be one of the highest in the nation. And that, they argued, would be a damper on economic development.

But David Lujan, director of the Arizona Center for Economic Progress, pointed out that the only people affected would be those whose taxable income — after all deductions and credits — would be above $250,000 for individuals and $500,000 for couples.

Foes also questioned how much of the cash would wind up in the classroom.

They pointed out that the most recent report by Auditor General Lindsey Perry said just 54.7 cents of every dollar goes into direct classroom expenses.

But as Perry's report pointed out, there is more to that story.

One is that figure does not include other necessary instructional support like librarians and teacher training, nor guidance counselors, nurses, speech pathologists and social workers. And Perry said that, on average, Arizona schools spend less on administrative expenses than the rest of the country.

Other challengers in the suit brought on behalf of Fann and Bowers include other Republican lawmakers and the owners of three businesses who say their income exceeds that $500,000 threshold and would be affected by the new law.

No date has been set for a hearing.

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