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Tuesday, June 25, 2024 | Back issues
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Arizona proposition to tax high-income earners for educational funding deemed unconstitutional

A Republican-backed initiative to prevent a proposition that would tax earners making over $250,000, was successful after a Maricopa County judge found it violated constitutional spending limits.

PHOENIX (CN) — A Maricopa County judge declared a voter-approved income tax hike to supplement educational funds dead on Friday due to an Arizona Supreme Court decision last year deeming it unconstitutional.

The Invest in Education Act, known on the 2020 ballot as Proposition 208, proposed a tax surcharge of 3.5% on high-income earners making over $250,000 for individuals or $500,000 for couples. It passed and took effect in 2021 before a group of nonprofits and Republican lawmakers sued, arguing the tax violates constitutional spending limits.

Republicans argued only the state Legislature could override this limit, which is set annually by a state commission.

In August, the Arizona Supreme Court ruled that Proposition 208 would violate the state Constitution if the revenue exceeded the spending limit. The court then sent it to Maricopa County Superior Court Judge John Hannah to determine if spending would surpass the cap.

"This Court understands the remand order as a direction to declare Proposition 208 unconstitutional in its entirety, and to enjoin its operation permanently, if the Court finds as a fact that the annual education spending limits imposed by the Arizona Constitution will prevent Arizona’s public schools from spending a 'material' amount of Proposition 208 tax revenue in 2023," Hannah found. "On that basis, the Court is obligated to strike down Proposition 208."

One of the lawmakers who challenged the tax, state Senator Karen Fann, R-Prescott, applauded Hannah’s decision.

“Out-of-state special interests tried to deceive our voters,” Fann said in a statement. “We are thrilled that this job-killing tax hike won’t go into effect. Now the state’s leaders can pursue important education funding while we craft next year’s budget.”

The top Democrat in the Arizona House, state Representative Reginald Bolding, D-Phoenix, expressed disappointment in the ruling and blamed Republicans for their divisiveness.

“Arizona voters spoke loud and clear when they said they want significantly more investment in our chronically underfunded public schools,” Bolding said in a statement. “Running to the courts to overrule the majority of the voters on a disputed legal technicality should be nothing to celebrate. But the hostility that Arizona’s governor and the anti-public education right wing have shown for public school families, students and educators has been relentless, and is on full display in the current legislative session.”

Republicans in Arizona have historically favored expanding public money for private or voucher-based education, claiming it would give parents a choice. Hot button issues like Covid-19, masks and critical race theory in public spheres have been vital motivators for some Republicans to fight against more public funding for school districts.

Kathy Hoffman, Arizona’s superintendent of schools, said that dispute the decision, voter intent behind the proposition remains. 

“How will we ensure our students have high-quality educators at the front of the classroom?” Hoffman asked in a statement. “How will we remain competitive when our neighboring states have increased teacher pay?”

Last month, the Arizona Supreme Court denied a request by Republicans seeking to bypass the lower court. Fann and Arizona House Speaker Rusty Bowers, R-Mesa, had filed a special action with the court because they believed Hannah was stalling or taking too long to rule.

Hannah had up until Friday to file his ruling.

Backers of the proposition are expected to appeal. 

Governor Doug Ducey, a Republican, is confident Proposition 208 will continue to be struck down.

“While we expect the ruling may be appealed, we are confident the Arizona Supreme Court will find 208 unconstitutional, as they did last year,” Ducey said in a statement. “Arizona is – and will remain – a state that knows how to prioritize education while keeping taxes low and attracting jobs.”

Follow @themikemcdaniel
Categories / Education, Financial, Government

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