State High Court Nixes Education Tax Ballot Measure - SanTan Sun News SanTan Sun News

State High Court Nixes Education Tax Ballot Measure

September 18th, 2018 SanTan Sun News
State High Court Nixes Education Tax Ballot Measure

By Howard Fischer, Capitol Media Services

Arizonans will not get a chance to decide whether to hike taxes on the rich to generate more money for education or to decide if so-called “dark money” should be banned from political campaigns.

The Arizona Supreme Court shot down the tax referendum, stating that petition signers were not informed that the measure would do more than increase the tax rate on those earning more than $250,000 a year. It also would eliminate the indexing of income tax brackets to account for inflation.

Chief Justice Scott Bales, writing for the court, said a majority concluded that omission “creates a significant danger of confusion or unfairness.’’

The ruling is a significant setback for the education community, and not just because it means there will not be a dedicated revenue stream for public education. There were hopes that having this measure on the ballot, coupled with Proposition 305 which is a referendum already on the ballot over expansion of vouchers, would bring out voters who also would support candidates willing to put more money into public schools.

Mesa Public Schools high school teacher Josh Buckley, co-chair of the Invest in Ed campaign and president of the Mesa Education Association, said, “We are a little shocked by the judgment. The Supreme Court has often sided with the people of Arizona and allowed them to have a say.’’

“Even though the initiative is off the ballot, the needs of our students are not off the ballot,’’ Buckley said. “I think education will be front and center in this election. Parents, no matter who they are, they want the best education for their children.’’

The ruling is a victory for the Arizona Chamber of Commerce and Industry which led and financed the legal fight to block a public vote.

Organization president Glenn Hamer argued that hiking income taxes on the wealthiest Arizonans “would just create a drag on the state’s overall economy.’’ And he said that if the state targets the rich, many would just choose to move elsewhere.

That question is now academic.

There is no dispute that the main provision of the measure would have imposed an 8 percent state income tax on earnings of more than $250,000 for individuals and $500,000 for couples. That compares with the current 4.54 percent rate.

And there would be a 9 percent tax rate on anything over $500,000 for individuals and $1 million for married couples filing jointly.

Proponents estimated that the additional revenues would generate about $690 million a year for public education.

In crafting the language for those new tax brackets, the initiative spelled out the rates for all of the brackets. That’s where the problem arose.

In doing so, it reset the cut points between brackets to where they were in 2014. That before the Republican-controlled legislature voted to index the brackets each year, a move designed to ensure that those whose income went up no faster than inflation did not end up in higher tax brackets.

Attorney Jim Barton argued, unsuccessfully, that the wording of the initiative would leave indexing in place.

That paved the way for the Supreme Court to take a closer look at how the initiative was described to the approximately 270,000 people who signed the petitions to put the issue on the ballot.

Bales pointed out that the change in indexing was never mentioned in the legally required 100-word description that must accompany each petition.

“The description is inadequate under the statute,’’ the chief justice wrote.

The justices also rejected an initiative that would have asked voters to overturn existing laws that allow groups established under the Internal Revenue Code as “social welfare organizations’’ to spend money to influence state and local races without disclosing the source of their donors.

Instead, any individual that put in at least $2,500 would have to be named.

That leaves in place not only the state law shielding donors who give to organizations seeking to affect state and legislative elections.

Chief Justice Scott Bales, in writing the order keeping the measure off the ballot, said there were an insufficient number of legitimate signatures to qualify the measure for the ballot.