Goldwater Institute Answers Pro-Tax Arguments in Proposition 208 Case

March 31, 2021
By Timothy Sandefur

Lawyers representing taxpayers and legislators challenging the constitutionality of Proposition 208 responded late Monday to a group of arguments that the tax’s supporters filed in friend-of-the-court briefs before the Arizona Supreme Court days ago. These arguments, filed by Superintendent of Instruction Kathy Hoffman, Senate Minority Leader Rebecca Rios, House Minority Leader Reginald Bolding, the Southern Poverty Law Center, and others urge the court to uphold Proposition 208, despite the fact that it seeks to evade the state Constitution’s limits on taxes and spending. After receiving these briefs, the Court allowed the plaintiffs to file this response.

Superintendent Hoffman’s brief argues that a ruling that finds Proposition 208 unconstitutional “would tell our children’s teachers that they are not going to get the compensation that Arizona voters decided is needed to attract and retain quality teachers.” Of course, this argument assumes that Arizona teachers are underpaid or that the state spends too little on schools, which is simply not true. As Goldwater Institute Director of Education Policy Matt Beienburg explained in a detailed report in September, spending on schools in Arizona is at an all-time high, with each student receiving an average of $11,600 in taxpayer funding. And only about 13% of Prop. 208’s revenues will actually go to classroom teachers. Of course, teachers already got a 20% pay increase just a few years ago.

The Hoffman brief also argues that the money from the Prop. 208 tax is exempt from the state Constitution’s rules for spending because the Constitution includes an exemption for “grants,” and that the new spending that Prop. 208 mandates qualifies as a “grant.” This argument—which is echoed in a brief filed by the Arizona School Boards Association—is one that the initiative’s proponents devised after the lawsuit began as a way of evading the spending limitations that voters added to the state Constitution by ballot initiative in 1980. The problem is that Prop. 208 doesn’t amend the Constitution at all—it’s just an ordinary law, so it must obey the Constitution.

With that in mind, Superintendent Hoffman promises that “the Department would treat Proposition 208 revenues as grants.” But in their response, the taxpayers point out that this isn’t a question the Department gets to decide. The word “grants” doesn’t refer to the kind of spending that Proposition 208 requires. It refers to voluntary giving by private entities, like charities or foundations. If the word “grant” could be applied to the spending of tax dollars, then lawmakers would label every dollar they spend a “grant,” and the Constitution’s restriction on spending would mean nothing. Although courts sometimes defer to the decisions of agencies like the Department of Education, they don’t do that when the case involves the definition of a legal term, as in this case. And as the taxpayers note in their brief, if anyone deserves deference, it’s the Arizona Auditor General, not the Department of Education. The Auditor General has the legal authority to define “grants”—and it says Prop. 208 money is not a “grant.”

The brief filed by the Southern Poverty Law Center and Save Our Schools makes little effort at a legal argument—instead, it cites public opinion polls showing that voters think government should spend more on education, and it argues that funding for schools is “woefully inadequate.” But of course, public opinion cannot override the Constitution. Voters have the power to amend the Constitution if they want to—and nobody disputes that if Prop. 208 had been a constitutional amendment, it would have been legal. But instead of amending the Constitution’s rules regarding taxes and spending, Proposition 208 is an regular law, and its advocates are trying to ignore these constitutional limitations. Moreover, as Beienburg’s report notes, “Arizona students receive more money today than any year in state history, except a handful of years in the run-up to the Great Recession.”

Legislators Rios and Bolding argue in their brief that Proposition 208 doesn’t actually make it more difficult for the state legislature to make budget decisions. But that argument is belied by resolutions recently passed in both houses of the legislature that endorse the lawsuit challenging Proposition 208. In fact, Rios and Bolding argue that there’s no need for the court to act because the state’s Office of Strategic Planning and Budgeting can help navigate the budget-making process—yet the Office actually asked the Arizona Supreme Court to take up this lawsuit on an emergency schedule precisely to avoid the kinds of delays that Rios and Bolding say aren’t a problem!

Tax law professor Erin Scharff filed a brief arguing that for technical reasons, the courts can’t issue an injunction to bar the collection of a tax—a rule called the Anti-Injunction Act. But as the taxpayers explain in their reply, that Act only applies to property taxes, and Prop. 208 imposes an income tax. Arizona courts long ago held that the Act doesn’t apply to cases like this.

Finally, a number of groups that are in the business of getting ballot initiatives passed filed a brief arguing that the plaintiffs in this case are contradicting the will of the voters and trespassing on Arizona’s tradition of direct democracy. “No principle provides greater security of individual rights,” they claim, “than the tools of direct democracy enshrined in the Constitution.”

But the Arizona Constitution contains an important limitation on direct democracy: Article XXII section 14, which says “any law which may not be enacted by the Legislature under this Constitution shall not be enacted by the people.” No other Constitution in the United States contains this language—which stands as a reminder that the voters are limited by the Constitution just like the legislature is. That means Proposition 208—which tries to disregard both the Constitution’s limits on spending and its restrictions on tax increases—is unconstitutional and cannot stand. And those limits on spending and taxes were themselves adopted by ballot initiatives (both confusingly called Proposition 108, one in 1980 and one in 1992). That means it’s the plaintiffs in this case who, by seeking enforcement of those constitutional provisions, are asking the court to enforce the will of the voters—and respect the fruits of direct democracy.

Timothy Sandefur is the Vice President for Litigation at the Goldwater Institute.