Repeal the Bales-Ducey car tax

Next time you register a vehicle, you will pay $32 for what will be called a “public-safety fee.” It ought to be called the Bales-Ducey car tax, after Arizona Supreme Court Chief Justice Scott Bales and Gov. Doug Ducey.

The fee is new and will raise an estimated $185 million a year. In 1992, voters adopted a state constitutional amendment, Proposition 108, requiring that any law that increased state revenue be approved by a two-thirds vote of both chambers of the Legislature. That included any new administratively set fee.

The “public-safety fee” didn’t get that many votes. But it was crafted to fit what I’ve called the Bales loophole to the two-thirds requirement.

As part of Medicaid expansion, the Legislature approved a new assessment on hospitals to help pay the state’s cost. Again, it failed to secure the necessary two-thirds vote. Dissenting legislators sued.

Bales wrote the court’s opinion nevertheless upholding the assessment. He spun a novel interpretation. If the Legislature granted an administrator the power to impose a new fee with limitations, that requires a two-thirds vote. But if the Legislature granted an administrator the power to impose a new fee without limitation, that could be done with just a simple majority.

According to Bales, that wouldn’t produce absurd results, even though it is self-evidently absurd in its own right.

As a reaction to the recession, the cost of paying for the highway patrol was shifted from the state’s general fund to the highway user revenue fund, which goes to pay for roads. Some rural Republican legislators wanted to eliminate this drain on the highway user revenue fund.

So, they came up with the “publicsafety fee” idea and marched it directly through the Bales loophole. The fee would be set by the director of the Arizona Department of Transportation without being subject to any legislative limits.

They could not, however, persuade their urban Republican colleagues to go along. But no-tax-increase Ducey decided it was a good idea. So, it was passed mainly with Democratic votes. Most Republicans voted against it. Ducey signed it. And even though it didn’t get two-thirds approval, Arizonans now have to pay the Bales-Ducey car tax.

It’s worth reflecting on what monumentally bad governance this represents.

There is no separate highway patrol budget set by the Legislature. It’s part of the operations of the Department of Public Safety.

Nevertheless, the head of a completely separate state agency — the Department of Transportation — sets a fee supposedly to cover the cost of patrolling state highways. There is no limit on what the fee can be.

In the event, the fee turned out to be greater than lawmakers, even those supporting it, anticipated. They were expecting a fee in the range of $20 a vehicle, not the $32 that has been set.

So, there is legislative buyer’s remorse and disgruntlement. And here is another twist on the absurdity of the Bales loophole: The Legislature can now impose limits on the fee by majority vote, even though, according to Bales’ construction, it would have required a two-thirds vote to impose the same limits when the fee was first authorized.

I think it was regrettable that there wasn’t a Proposition 108 legal challenge to the public-safety fee. It made the absurdity of the Bales loophole abundantly clear.

In the Medicaid hospital assessment case, there were traumatic consequences to finding it unconstitutionally enacted. The health insurance of hundreds of thousands of Arizonans would have been put at risk.

There are no such traumatic consequences at stake with the public safety fee. It’s just a matter of which state government purse is going to pay for the highway patrol.

I think there would have been a good chance that the court would have found a way to limit, if not eliminate, the reach of the Bales loophole and restore a measure of integrity to Proposition 108.

There can be an honest debate about how best to fund the highway patrol. But the enactment of the public-safety fee was an underhanded maneuver around Proposition 108 and results in very bad governance.

State revenue growth is strong. Repeal of the Bales-Ducey car tax should be on the legislative agenda this January.