DeWit laments Prop. 123’s ‘heaping mess’

Treasurer opposed ed-funding plan backed by Ducey

Treasurer Jeff DeWit said Tuesday that a federal judge’s decision that Proposition 123 violates the law is a sad situation that leaves a “burning, heaping pile of trash” for the state to sort out.

DeWit lamented that the 2016 settlement approved by voters to deal with a school-funding lawsuit won’t be resolved before he leaves April 3 to become the chief financial officer for NASA.

DeWit was the only statewide elected official who publicly opposed the proposal, which was a marquee initiative from Gov. Doug Ducey.

“It’s a really sad situation,” DeWit said at a Tuesday press conference.

DeWit compared the status of Prop. 123 to telling a person who was handbuilding an airplane that the plane will crash, and then watching that person crash the plane shortly after takeoff.

“You can’t really do a victory lap because there is a big burning, heaping mess there, and that’s kind of how Prop. 123 is now,” DeWit said.

A spokesman for the Governor’s Office disputed DeWit’s comments and said there was no problem with the proposition, despite the judge’s ruling.

“Proposition 123 is a settled issue,” Ducey spokesman Daniel Scarpinato said following DeWit’s Tuesday remarks.

A federal judge ruled Monday that Prop.123 violated federal law because it needed approval from Congress.

The decision throws into question whether the state will have to repay $344 million or more taken from the state land trust to fund education since the proposition passed.

Prop. 123 increased funding for school districts that could be used for teacher salaries by taking more money out of the state land trust.

Prop. 123 was pitched as a settlement to a long-standing lawsuit, allowing the state to pay schools about 70 percent of what schools were owed from underfunding of voter-mandated inflation increases during the Great Recession.

Ducey, state lawmakers, school organizations and business leaders backed the plan, and invested millions of dollars in a campaign to ensure its success.

U.S. District Judge Neil Wake ruled Monday that Prop. 123’s payouts needed prior congressional approval. Congress gave that approval in an omnibus bill passed last week, three days before the ruling, he found.

That settles part of the problem from future years, but Wake also found that another ballot measure — Proposition 118 passed in 2012 — has similar problems that weren’t addressed by Congress.

Scarpinato disputes the judge’s finding on that point as well. Ducey was a principal backer of Prop. 118 as state treasurer.

DeWit said he thinks the omnibus bill might settle the Prop. 123 issue going forward, but it leaves in doubt the money already paid out by the settlement. He said his legal understanding of the issue is that to continue the increased payments, the issue must go back to voters.

“Now it is a big mess,” he said. “You are not going to go to teachers and say give us back the money you were paid, right?”

In addition, property taxes increased because of the proposition.

“Are you going to go back to those taxpayers and give them a refund on taxes?” DeWit said.

Ducey’s office disagrees with that assessment.

“It has been approved by all three branches of Arizona government, including Arizona courts. It has been approved by the voters. It has even now been approved by both houses of the United States Congress and signed by the president of the United States,” Scarpinato said.

Ducey’s attorney Michael Liburdi told the Associated Press on Monday that the bill passed by Congress last week settles the matter.

“So I think if the judge goes back and reads what the Congress consented to it is patently obvious that this is a backward looking act of Congress that was signed by the president and there’s no need for any further litigation,” Liburdi told the Associated Press.

Scarpinato said the Governor’s Office did not believe the congressional approval was needed.

“However, out of an abundance of caution and to avoid prolonged frivolous litigation, we have sought and received congressional consent for every word of the specific language approved by voters in May 2016,” Scarpinato said. “The case is closed on Proposition 123.”

Wake must still determine how to remedy the issue, though the Governor’s Office disputes that there is an issue to remedy.

DeWit said he anticipated further litigation over the proposition and that he was hopeful that opposing parties will come together and settle the issue to avoid that.

Dewit also said the governor promised to replace him with someone who would not run for treasurer in November to ensure theat the office is held by a professional, not a politician.

He has endorsed state Sen. Kimberly Yee, R-Phoenix, for the election.

DeWit said he was delaying his new job at NASA to help transition to new leadership at the Treasurer’s Office.

Scarpinato declined to comment on the appointment.

DeWit got teary eyed thanking the staff. He said he could not pass up the opportunity to join NASA, which he said would include getting to witness rocket launches, something he’s been interested in since childhood.

“When the president calls and asks you to do something really as cool as that, with my term being up soon anyways, it seemed like the right time to make the move,” DeWit said.