By Mary Jo Pitzl | Arizona Republic
(Disclosure: Rose Law Group represents Ann Siner of My Sister’s Closet and Judge John Buttrick in their litigation efforts against 208.)
Maricopa County Superior Court Judge John Hannah on Monday rejected appeals from state officials for an immediate ruling on the constitutionality of Proposition 208, a tax increase that GOP lawmakers say must be resolved before they decide whether to lift a spending cap and spare deep cuts to school budgets.
Hannah noted he has 60 days from Jan. 10 to decide the matter, setting his deadline at March 10. However, the state Constitution requires a March 1 decision by the Legislature to waive the spending cap, or else school boards must cut their budgets for this year by 16% as early as next month.
Monday’s status conference added to the drama swirling around the school spending issue. School officials and advocates have said without a waiver, the 16% cuts could lead to teacher furloughs, larger class sizes and most likely an early end to the school year, which usually concludes in late May.
But GOP lawmakers have balked at a decision until Proposition 208 is ruled unconstitutional, a finding that many agree is highly probable. They are concerned that if they lift the spending limit for schools, the judge could reason that a similar waiver could be made for the grants Proposition 208 makes to schools.
The Supreme Court last August ruled that the grants are not exempt from the constitutional spending cap. But the high court left the decision to Hannah on when such spending would hit the point of exceeding the aggregate education limit.
On Monday, Hannah said he could not pinpoint when he would rule.
“There are no ulterior motives,” he said, noting he has other pending cases before him.
“I get the decision out when I get it out,” he said. “I hope the policymakers can figure out how to work around what I’m doing. My point is to give the case due consideration and decide it as best I can.”
The governor’s budget director, Matt Gress, has said that budget work cannot proceed until the matter is resolved, attorney Brett Johnson said. He said lawmakers need clarity on whether they must set aside money to refund tax payments if Proposition 208 is determined unconstitutional.
Attorneys for the state also pointed to the holdup on the spending limit decision.
Both arguments were disputed by attorney Danny Adelman, who is representing the Invest in Arizona coalition, which sponsored Proposition 208.
He called the arguments “a non sequitur” and noted that Proposition 208 revenues have no impact on the current spending-limit debate because they don’t affect the current year’s budgets. That’s something that all parties in the case agreed on late last year, he noted.
Voters approved Proposition 208 in November 2020, putting in place a 3.5% surcharge on any income earned above $250,000 for individuals or $500,000 for couples filing jointly. That raised the top income-tax rate to 8%, with the money dedicated to education.
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Legislative leaders have been fighting the measure ever since, arguing it’s an inequitable tax increase that will penalize high-income earners and hobble Arizona’s economic competitiveness.
By linking the court decision to a vote on raising the school spending cap, they have increased the angst over how schools will finish out the academic year. If the cap is not waived, districts cannot spend any money above their individual limit. And county school superintendents, who disburse state funds to districts on a monthly basis, cannot continue to send out any amounts above the cap.
