Debate continues over Arizona education tax measure

Posted 8/11/20

PHOENIX — A judge has slapped back a bid by a Republican-dominated legislative panel to give voters what he concluded was a biased description of a proposed tax to fund education.

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Debate continues over Arizona education tax measure


PHOENIX — A judge has slapped back a bid by a Republican-dominated legislative panel to give voters what he concluded was a biased description of a proposed tax to fund education.

Maricopa County Superior Court Judge Randall Warner said much of what is in the explanation crafted by the Legislative Council is factually accurate. He said it does describe the tax increase on those earning more than $250,000 a year for individuals — double that for couples — and spells out who would be affected.

But the judge said that several of the provisions have a “misleading tendency” and can add “partisan coloring” to what is being told to voters.

Nothing in Mr. Warner’s ruling disturbs the fact that a different judge ruled that the Invest in Education measure cannot be on the ballot because the description of the initiative provided by proponents left out key information. In fact, Mr. Warner’s ruling of what is misleading is, in places, directly contrary to the conclusions reached by Maricopa County Superior Court Judge Christopher Coury.

But Mr. Coury’s ruling is going to be reviewed by the Arizona Supreme Court. And if the justices decide Mr. Coury was wrong, the measure will be on the November ballot — and what Mr. Warner ruled is wrong with the Legislative Council verbiage will become crucial.

At the heart of the battle is the plan to impose a 3.5% surcharge on state income taxes for earnings about that $250,000/$500,000 threshold. The money raised — about $940 million according to proponents — would fund K-12 education.

Under Arizona law, the Legislative Council made up of lawmakers from both chambers and both parties is required to craft an “impartial analysis” of the provisions of all ballot measures. That analysis goes into brochures mailed to the homes of all voters.

Mr. Warner said that, in general, courts defer to the decisions of members of the council. But he found flaws in some of what the Republican members of the panel, who make up the majority, decided that voters should be told.

For example, Mr. Warner said there’s nothing wrong with saying that the affected income includes not just wages and salaries but also income from so-called “pass-through” businesses, where owners pay taxes not at the corporate level but on their personal income.

“But the phrase ‘from typically small businesses’ is impermissible advocacy,” he wrote, calling it “misleading.”

He said nothing in Arizona law says that only small businesses are formed in this way, saying it also can affect medium- and large-sized businesses. More to the point, Mr. Warner said the statement “unduly emphasizes the proposition’s impact on small business.”

The judge called that “a rhetorical strategy that tinges the analysis with partisan coloring.”

He also said it was wrong for the council to add parenthetical language describing the proposed tax hike as an “increase of 77.7 percent.” Mr. Warner pointed out the explanation already says the initiative’s 3.5% surcharge would be on top of the current 4.5% tax rate for incomes in that range.

Mr. Warner said that 77.7% figure only muddies the understanding.

“The fact that the analysis is clearer without the parenthetical suggests its function is advocacy,” the judge wrote, saying it “has a misleading tendency and adds partisan coloring to the description of the tax increase.”

And he specifically faulting language demanded by House Speaker Rusty Bowers that voters be told that if they approve the measure the only it can be altered by lawmakers is with a three-fourths vote of both the House and Senate, and only if the changes “further the purpose” of the initiative.

That’s true, Mr. Warner said. But it’s also “incomplete,” he said, because it ignores that the initiative also can be amended or repealed if lawmakers refer it back to the ballot, or voters themselves craft a new initiative.

The ruling comes as backers hope to get the Supreme Court to overturn Mr. Coury’s ruling which knocked the initiative off the ballot over what he said were a series of misleading or missing pieces of information.

One of those was that 77.7% issue which Mr. Coury said should have been included in the 100-word description of the measure that has to be printed on all petitions. He also found flaws in the way would-be signers were told about the effect of the proposal on business taxes.

That appeal has brought out supporters and foes of the measure, each seeking to sway the justices on whether they should allow the issue on the ballot.

State schools chief Kathy Hoffman argued that interpreting what’s required in that 100-word brief the way that Mr. Coury contends would effectively kill future ballot proposals. Ms. Hoffman, along with former Attorney General Terry Goddard and Kris Mayes, a former member of the Arizona Corporation Commission, said the trial judge’s ruling creates “an unprecedented and impossible standard divorced from reality” that is so broad that “no initiative could qualify for the ballot.”

On the other side, the Goldwater Institute, the Free Enterprise Club and the Arizona Tax Research Association are urging the justices to uphold Mr. Coury’s ruling, not just on its merits but because it is “dangerous” to have funding priorities such as this would do for K-12 education set by voters at the ballot box.