The Arizona Supreme Court met to hear Karen Fann v. State of Arizona on Tuesday, regarding the constitutionality of Proposition 208, a ballot initiative passed in the 2020 General Election.
Prop. 208 is a ballot measure that increases the highest income tax rate in the state of Arizona by 3.5%, and intends to put the revenue toward state education.
CHECK OUT: Prop. 208 promises more money for schools from tax dollars. Here’s what you need to know/
Invest in Education, a key proponent of the Prop. 208 campaign, estimated that hundreds of billions of dollars could be raised for K-12 education in Arizona if the initiative passed.
However, there are concerns that an expenditure cap may render a large sum of the collected revenue unpurposed, and that the initiative may have required a ⅔ vote in both chambers due to the tax increase, meaning that the ballot initiative may have been unconstitutional.
The plaintiffs calling into question the constitutionality of Prop. 208 are Sen. Karen Fann, Rep. Russell “Rusty” Bowers, Sen. David Gowan, Sen. Venden Leach, Dr. Representative Regina Cobb, Rep. John Kavanaugh, Lee Farms Produce owner Montie Lee, former Rep. Steve Pierce, cardiologist Dr. Francis Surdakowski M.D., the No On 208 campaign, and the Arizona Free Enterprise Club.
The defendants, defending the constitutionality of Prop. 208, are the State of Arizona, Arizona State Treasurer Kimberly Yee and the Arizona Department of Revenue.
Dominic Draye, the attorney representing the plaintiffs, opened his remarks by stating that “proposition 208 is a statutory initiative that needed to be a constitutional amendment.”
Article 9, section 21 of the Arizona Constitution outlines expenditure limits for school districts. The plaintiffs believe that with the revenue collected by Prop. 208, the funds will exceed the expenditure cap, which could potentially render tens of millions of taxpayer dollars purposeless and unable to be used for educational purposes.
Additionally, the plaintiffs are calling into question the legality of the tax increase without a supermajority vote in both houses of the legislature.
Furthermore, they believe that if large sums of money collected by the tax increase cannot be spent on K-12 education, the proposition may fail to fulfill its promise to Arizona voters.
The opponents of the act also focused on Prop. 208’s possible reliance on the gift-grant exemption, for which it may not apply.
The gift-grant exemption states that the expenditure limitations do not apply to “amounts received directly or indirectly in lieu of taxes received directly or indirectly from any private agency or organization, or any individual.”
The plaintiffs argued that if the court rules that revenue raised via income tax does not qualify as a grant, millions may be rendered unspendable.
Andy Gaona, the attorney representing the State of Arizona, argued that the intent of the ballot initiative would not be compromised, even if the expenditure cap were necessary.
“There is no question that Prop. 208, even if the expenditure cap applies, will raise additional funding for schools,” Gaona said during the hearing.
Gaona also insisted that the expenditure cap that could affect Prop. 208 revenue is not that of 2021 or 2022, but 2023. He argued that it may simply be too early to determine how much revenue would actually be impacted by the expenditure cap.
Additionally, when Draye initially referred to the expenditure cap in his opening arguments, Justice Ann Timmer noted that the Arizona Supreme Court has allowed an override of the expenditure cap two times in previous court history.
Ultimately, Gaona urged that the court respect the will of the people and uphold Prop. 208, for which 1.7 million Arizonans voted in favor.
The case is now under advisement and the court will issue a ruling in the future regarding the outcome.
Contact the reporter at clparri2@asu.edu.
Cami is Downtown Devil's co-executive editor. Cami is a third-year student studying print journalism and political science. When she's not writing or editing, she enjoys hosting radio shows, playing piano and bass, and teaching art classes at a local art studio.
