The Arizona Supreme Court has ruled that tax cuts or increases enacted by the Legislature can never be blocked by opponents using the state constitution’s referendum power, with the rare exception of a tax that funds a completely new state department.
The written opinion released Friday explains the reasoning behind the court’s April 21 decision reinstating a massive income tax cut enacted by the Republican-controlled Legislature last year and signed by GOP Gov. Doug Ducey. The court reversed a lower court decision that said the tax cuts could be referred to the ballot because they did not appropriate money.
“A revenue measure is exempt from referendum, regardless of the increase or decrease in revenue, provided it is for the support and maintenance of existing departments of the state government and state institutions,” Justice John Lopez wrote for the five-justice majority.
Arizona’s constitution lets voters block newly enacted laws by collecting signatures from 5% of qualified voters. If they do, the law is put on hold until the next general election. But it exempts measures necessary for immediate health and safety and those that appropriate money for government operations.
Justices Bill Montgomery and James Beene dissented, saying that the constitution only exempts measures passed with an emergency clause from the referendum. They would have allowed the tax cuts to go to the ballot this November, where voters could decide whether to accept or reject the nearly $2 billion per year cut that mainly benefits the wealthy.
Lawyers for the Arizona Free Enterprise Club, a conservative pro-business group that pushes for lower taxes and regulations, argued the state constitution does not allow referrals for measures that provide for the “support and maintenance” of state government and that the tax cut bill falls into that category.
Lopez agreed, saying that the constitution’s exemption from voter referendums for legislation providing for “the support and maintenance” of government is broader than just an appropriation. And he said it is not a stretch to conclude that even a tax cut fits into the “support and maintenance” category, saying the lack of a specific definition in the constitution “perhaps reflects the founders’ wisdom.”
“Conditioning the referendum exemption on the revenue effect of a support and maintenance measure is a fool’s errand that raises myriad questions concerning the temporal scope of the inquiry and rests on the vagaries of economic projections,” Lopez wrote.
Ducey and other Republicans have argued that tax cuts boost business prospects and can lead to higher state tax revenue in the long run.
The high court has intervened repeatedly in recent years to block voters from repealing or enacting their own laws. Lopez appeared to defend the decision in his opinion, writing that the court ruling was based “on the founders’ original plain meaning, as expressed in the text, concerning the meaning and scope of the referendum power to challenge tax laws.”
He also said residents do have recourse: they can pass an initiative or elect different lawmakers. But all tax increases take a 2/3 majority to enact, and the court declared unconstitutional a tax increase on the wealthy to fund education that was approved by voters in 2020, although they left it to a lower court to officially pronounce Proposition 208 dead.
Ducey, a Republican who pushed for an expansion of the court in 2016 that has allowed him to appoint six of the seven justices, backed the massive tax cut and hailed the court’s decision when it was handed down.
Republished with the permission of The Associated Press.
