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Legislature & Ducey's cartoonish scheme to hike TUSD taxes tossed over cliff by judge

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What the Devil won't tell you

Legislature & Ducey's cartoonish scheme to hike TUSD taxes tossed over cliff by judge

Speed kills another Wile E. Coyote-level effort to raise taxes and thwart Az Constitution

  • An Arizona Tax Court judge smacked down a tax hike on Tucson Unified School District property owners, thwarting another 11th-hour effort by the Legislature to end tax subsidy for education.
    Paul Hayton/FlickrAn Arizona Tax Court judge smacked down a tax hike on Tucson Unified School District property owners, thwarting another 11th-hour effort by the Legislature to end tax subsidy for education.

In a move as predictable as the anvil missing the Road Runner on a Saturday morning, the state of Arizona was foiled in a second effort in four years to rid itself of a school tax subsidy of their own design that got enshrined in the state Constitution because of their own lack of forethought.

The Legislature punctuated its 2018 session with a behind-the-back tax hike on a good chunk of Tucson that took less than 96 hours from introduction to Gov. Doug Ducey’s signature.

Arizona Tax Court Judge Christopher Whitten just knocked that law down, flatly declaring it unconstitutional. It happened almost like I told you it would. And the state of Arizona owes Tucson Unified School District about $17 million. TUSD homeowners won't be directly charged and the county won't have to collect it, which is why they were suing.

I’ve written about this a lot, because it’s so precious how the Republicans in the Legislature and the tax-haters who love them find themselves constantly targeted by their own rogue torpedo. I've whittled down to a tight two paragraphs the explanation of how successive tax revolts crashed into each other and made a mess:

In 1980, Arizona voters approved a 1 percent constitutional primary (remember “primary”) property tax limit on owner occupied homes. It was part of the tax revolt at that time that led to President Ronald Reagan’s election the same year. The plan threw a pair of channel locks into the delicate redesign of school funding so the Legislature approved A.R.S. 15-972, which required the state to pay the freight on all property taxes above 1 percent of the assessed value of a home. Home owners in TUSD today receive this subsidy.

Then in 1992, another taxpayer revolt prompted voters to approve a second constitutional amendment, which forbids all tax increases without a two-thirds supermajority vote in both houses of the Legislature. In crafting this amendment, tax-a-phobes forgot about the subsidy. 

So they can’t cut the subsidy without a supermajority vote. 

That’s the One Percent Rule in a nutshell. No matter how much the Legislature hates the current manner of law, it can't just wish it away. There are no such Wonder Twin powers.

Lordy, they do try, though.

In 2015, they tried to wiggle out of it by handing the bulk of the cost to the counties, but the courts struck down the law as unconstitutional. 

So obviously, they gave it another whack in May 2018.

Immediately, I told my devilish readers that the tax wouldn’t fly in the courts because it flew in the face of the supermajority requirement.

A complicated scheme and quick work

Allow me to mix animation studio metaphors.

The county and TUSD first settled on a Scooby-Doo-style strategy, as if they were trying to trap the Night Phantom in a washing machine. The county would pretend the bill was never passed and continue to collect the money under the primary tax rate, sending the state the bill for the rest. Then when the state refused to pay because of SB 1529, TUSD wouldn’t have the money, see. It seemed sorta complicated until the Pima County Attorney’s Office asked, “Why not yank the mask off the groundskeeper?”

So the county sued in Tax Court and argued the deseg money doesn’t fit the definition of permissible expenses for secondary tax revenues. Turned out, the law was crafted even dumber than I had realized.

Judge Whitten agreed with the county and punched the state’s argument straight in the throat before the litigators could say “good morning, your honor.”

He just quoted the part in state law restricting the secondary property tax  “to pay the principal of and the interest and redemption charges on any bonded indebtedness or other lawful long-term obligation issued or incurred for a specific purpose by a school district or a community college district and amounts levied pursuant to an election to exceed a budget, expenditure or tax limitation.”

Voters – not the Legislature — approve secondary property taxes for debts or starting enterprises like a fire district. 

Primary taxes pay for daily operations, which include functions like desegregation. And primary property taxes greater than 1 percent the value of a home are paid by the state.

Desegregation can’t be charged to the secondary property taxes. As no “tertiary tax” exists, the cost must be born by the primary property tax revenues. 

Give the Legislature credit for ballsiness though.

SB 1529 included language declaring: “Secondary property taxes levied pursuant to this subsection do not require voter approval, but shall be separately delineated on a property owner's property tax statement.

Whitten all but laughed off this provision, basically saying “Dudes, you can’t just change the labels on ketchup and proclaim that it’s caviar.” The state can’t get around the primary property tax subsidy by telling school districts to move money for certain programs into the secondary property tax column.

It’s like telling the state trooper who pulls you over “Yeah, officer, I changed the speed limit to 108. Gotta run.”

In a cloud of dust

The Legislature often runs into legal and constitutional problems because they take zero time to consider ideas like the ones enshrined in SB 1529.

Such a tax move on the local level would only follow a public hearing, before a preliminary budget is approved. Then a final budget vote would follow. State law requires the public be given proper notice about how taxes are collected and spent. 

The Legislature sees no need that its own actions be subject to the light of day and due public consideration.

SB 1529 was introduced on April 30, 2018, cleared the Senate Appropriation Committee on May 1. It received Rules Committee approval on May 2 – and the Rules Committee is supposed to establish the process for how the Senate will consider a bill – before being voted out of the Senate later that day. By close of business May 3, Ducey had signed the bill into law.

It was introduced on a Monday and signed on Thursday. The Legislature adjourned the session on Friday.

Far be it for me to suggest what may have prompted the Legislature to move so fast. 

I mean, I’m not saying ... 

I’m just saying … 

Legislators in Arizona are paid a per diem for the first 120 days of the Legislative session, which includes weekends. Lawmakers from outside Maricopa County receive $60 per day. They adjourned 117 days after the start of the session. Had they stuck around to the following Tuesday, they would be working unreimbursed.

I’m not saying that’s what motivated their urgency. It’s just as possible lawmakers like the power associated with acting without any fuss and muss of a democratic process. How are lawmakers supposed to bend unsuspecting voters to their will the public is allowed to duly consider and provide public comment on Legislation?

There’s a reason lawmakers should consider public input. Someone from outside their Republican caucus might have said “yeah, you can’t do what you want to do without the court smacking you down.”

In fact, Whitten hinted in his opinion that maybe – just maybe – if they changed other parts of state law, then maybe they would be on firmer ground. Closer inspection and further examination might have bolstered their grip on constitutionality.

Instead, it's become a grand tradition for the Legislature to just slam through laws that fail to meet constitutional muster and they do it right at the end of the session without much forethought. From the heady days of incorporation through the current school finance folly, the Legislature has a grand tradition of decisive, end-of-session action that goes awry.

Anyone remember alt-fuels? The Court of Public Opinion has decreed it's illegal to type that term in Arizona without following it with "fiasco."  That scheme was a perfectly constitutional way to blow a $200 million hole in the state budget.

Allowing the public to give laws a look-see might just enlist necessary wisdom, no matter how elitist and well-informed.

Instead, Arizona is typically left watching a dazed coyote, a "beep, beep" and a cloud of dust.

Blake Morlock is an award-winning columnist who worked in daily journalism for nearly 20 years and is a former communications director for the Pima County Democratic Party. Now he’s telling you things the Devil won’t.

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