Ariz. schools file suit saying state owes billions

GLENDALE — Calling the governor’s $17 million offer of capital funds “trivial,” the lead attorney for school districts said Monday it will take a court order to force the state to live up to its constitutional obligations to build and repair schools.

Tim Hogan said the state Supreme Court made very clear in rulings in 1994, 1997 and again in 1998 that these burdens cannot be borne solely by local taxpayers.

“The state has to provide the funding for school buildings and equipment to meet the minimum adequacy standards,” he said. “And they’re not doing that.”

Hogan, in filing suit against the state, pegged those obligations at close to $300 million a year; with prior years’ shortfalls, he said the lost dollars now total about $2 billion.

Gov. Doug Ducey, speaking separately to reporters, defended his budget proposal.

The governor said the state was running a $1 billion a year deficit when he took office in January 2015. He said the state is doing the best it can to fund not only education but all its needs.

Hogan sniffed at that explanation, noting that the Republican-controlled legislature in 2011 cut corporate tax rates by close to 30 percent and set up a system under which some multistate corporations owe no taxes at all.

These were approved even while the state was running a deficit. And while Ducey was not goveror at the time, he has made no effort to delay their implementation.

The net result is that corporate tax collections, which were $663 million in 2015, will drop to $263 million by 2020.

Hogan rejected Ducey’s contention the state is putting as much money into K-12 education at is possible. More to the point, Hogan said the Supreme Court made it clear in its prior rulings that capital funding isn’t a discretionary item that lawmakers can fund only when they say they have sufficient dollars.

“And if you need to generate additional revenue to comply with the constitution, then that’s what you need to do,” he said.

Hogan conceded the Supreme Court does not have the power to order lawmakers either to raise taxes or rescind prior tax cuts. But he said justices do have a way to enforce their orders if they conclude lawmakers are not following the constitution.

That’s what happened in 1998.

Hogan, involved in that lawsuit, said he asked for — and the justices finally set — a deadline, giving lawmakers 60 days to bring the school finance system into compliance with what the constitution requires. More to the point, the justices told lawmakers unless they come up with an acceptable plan, they would block the state treasurer from distributing funds to schools, effectively shutting them down.

It worked: Lawmakers enacted formulas for ensuring new schools were build when needed and providing a regular flow of dollars for maintenance — the formulas they have since repealed and refused to fund.

“And if that’s really what legislators and the state want, I suppose that’s what the courts would have to go through again,” Hogan said.

Ducey said questions about that $400 million a year in tax cuts are missing the point.

“The state is also one of the fastest-growing states in the country,” he said.

“We’ve got net in-migration, we’re standing in the fastest-growing county in the country,” Ducey continued. “So we’ve got a lot of positives going for us.”

And he said the final budget, expected to be adopted this week, will be “a home run for education,” even if it has nowhere close to the amount the schools contend the state is required to provide.

Ducey also insisted the $400 million in annual tax cuts was not a mistake.

The governor said he met with CEOs and business owners who were in Arizona for Super Bowl, the NCAA Final Four and other sports events.