Prop 208 challenge to hit state Supreme Court

The voter-approved measure to raise the income tax on high earners to pay for education goes before the state Supreme Court on April 20.

But is it too soon? That’s the argument of supporters of the funding measure, known as Proposition 208. They contend the objections raised by critics are premature, because there is no evidence the measure would create the harm critics claim. The tax won’t be collected until next year.

Opponents of Proposition 208, led by a handful of state Republican lawmakers, dismiss that argument. They want the measure blocked immediately, arguing it violates constitutional provisions on tax increases and spending limits.

The court’s decision could shape the future of school funding. Proposition 208 increased the rate on income a single filer earned above $250,000 by 3.5 percentage points, for a top rate of 8 percent. For a married couple, the higher rate kicks in for any income earned above $500,000. It passed with 51.7% of the vote.

The measure was controversial from the beginning: Opponents sued unsuccessfully to knock it off the November ballot. Weeks after voter approval, opponents went to court to block it from taking effect.

A decision by a Maricopa County Superior Court judge to deny that request for an injunction laid the foun

dation for Tuesday’s challenge to the Supreme Court.

The argument to block Proposition 208

Attorneys representing the GOP lawmakers and the Free Enterprise Club, among others, want the high court to direct the Superior Court judge to impose the injunction and declare Proposition 208 unconstitutional.

They lay out two reasons:

● The money raised by the tax increase would exceed the spending cap in the Arizona Constitution.

● The tax increase needed the support of two-thirds of voters, not the simple majority that approved it in November.

On the first point, they argue that the “grants” Proposition 208 would award to schools count toward the spending cap, despite the ballot measure wording that exempted these expenditures from applying to the cap. The spending limit for schools for the coming year is not yet set. It is expected to be in the area of $6 billion — a decline from the current school year because of lower enrollment.

On the second point, they cite a voter-approved measure from 1992 that required approval from a supermajority of the Legislature in order to raise taxes. In this case, the voters, standing in for the Legislature, are subject to the same supermajority requirement, they argue.

If school advocates wanted to win with a simple majority, they should have filed an initiative that would have amended the state Constitution, the attorneys wrote. Since Proposition 208 sought to change state laws, not the constitution, its passage requires a twothirds vote.

The argument to uphold Proposition 208

Attorneys for the measure’s proponents, primarily the Arizona Education Association and the nonprofit Stand for Children, dispute the constitutional arguments. But more immediately, they say, it’s too soon to challenge the measure.

That’s because no money has been collected or distributed under Proposition 208. The income tax affects 2021 earnings, and taxes are not due until 2022.

There is no evidence that Proposition 208’s revenue would cause schools to exceed the constitutional spending cap, they argue in court documents.

For example, declining school enrollments, as Arizona has seen this year, have reduced school expenditures subject to the cap by $238 million, according to the state Department of Education.

In another example, the attorneys note a bill in the state Legislature would cut millions of dollars from Proposition 208’s anticipated revenue by creating a new tax classification for small businesses that would not be subject to Proposition 208. That, too, could bring the money spent on education under the spending cap.

The defendants challenge the constitutional argument about the size of the vote needed to enact Proposition 208, even as they contend it’s too soon to get into that issue.

They point to a conclusion from Maricopa County Superior Court Judge John Hannah Jr., the lower-court judge who handled a Proposition 208 challenge soon after it passed. Late last year, Hannah called the argument around the simple majority vs. supermajority issue “too weak to even raise ‘serious questions’” about the matter.

The proponents’ attorneys point out the supermajority requirement applies to state lawmakers, not to decisions made by voters.

Who’s backing who

The high-stakes lawsuit has drawn supporters on both sides.

Republican Gov. Doug Ducey and his budget office have filed a friend-of-thecourt brief, arguing a quick resolution is necessary to avoid complicating state budget planning. Ducey warned the ongoing controversy has added a “high degree of uncertainty” into budget decisions this year.

Other amicus briefs have come from the Arizona Chamber of Commerce, a coalition of business owners, the Arizona Farm Bureau, the Arizona Small Business Coalition, the Alliance Defending Freedom and the Center for Arizona Policy, among others.

The Invest in Education Committee, which brought the measure to the ballot, has its own lineup of supporters. They include the Arizona School Boards Association, state Schools Superintendent Kathy Hoffman, the Democratic leaders in the state Legislature and the Save Our Schools Arizona coalition.

Save Our Schools Arizona created the Red for Ed movement, which in 2018 prompted a teacher walkout over complaints of inadequate school funding.

Save Our Schools joined with the New Jersey-based Education Law Center and the Southern Poverty Law Center in a brief that argues that blocking Proposition 208 would deprive the 1.1 million children in Arizona’s public schools from the financial investment they argue is needed to improve the state’s educational performance.

On Tuesday, the seven Supreme Court justices will hear arguments from both sides. At the conclusion of the hearing, the justices will give some indication of when to expect a ruling, but they never give a precise date.

In-person attendance is limited due to COVID-19 precautions, but the public can watch the proceedings on a livestream at www.azcourts.gov/ AZ-Supreme-Court/Live-ArchivedVideo. Refresh the link shortly before the scheduled 9:30 a.m. start of the hearing, look for “view oral argument” and click on that link.