State lawmakers and Gov. Jan Brewer were legally wrong in refusing to fully increase state aid to schools to account for inflation, the Arizona Court of Appeals ruled Tuesday.
The judges rejected arguments by attorneys for the Legislature that the wording of a 2000 ballot measure mandating inflationary increases permitted lawmakers to pick and choose which of several components of that aid to boost. Judge Michael Brown, writing for the unanimous court, said the wording of that law, coupled with a constitutional provision prohibiting lawmakers from altering what voters have approved, leaves legislators with no choice but to come up with the cash.
Tuesday's ruling, unless overturned, potentially blows a hole in the state budget for the coming year.
The staff of the Joint Legislative Budget Committee said properly funding for inflation according to the court's ruling this coming year will add $82 million in state aid to schools more than what lawmakers said they are required to provide under the legal theory rejected by the court.
"It's just going to mean less money for other areas of government,'' said Rep. John Kavanagh, R-Fountain Hills, who chairs the House Appropriations Committee.
The court, however, declined to order the state to cough up the funds illegally withheld from schools this year and two prior ones, a figure likely to exceed $200 million.
The order to provide the additional cash angered Sen. Don Shooter, R-Yuma, Kavanagh's counterpart in the Senate.
"If they can explain to me where we find that money or where we can get it, that should be part of their responsibility,'' he said. "If you're going to tell the Legislature what to do ... then it would be helpful if they could tell us where that money's supposed to come from.''
Brown acknowledged the hit to the state budget.
"Without question, the Legislature faces substantial challenges in preparing the state's budget, particularly during difficult economic circumstances,'' he wrote. "But our constitution does not permit the Legislature to change the meaning of voter-approved statutes by shifting funds to meet other budgeting priorities.''
Shooter conceded the point about the voter mandate.
"They're our boss,'' he said.
And Donald Peters, the attorney who represents the Arizona Education Association and the school districts that sued, said it's irrelevant that lawmakers contend there isn't enough money.
"I guess it's unpopular these days but the job of the Legislature is to get the revenues they need,'' he said. And he said if there isn't enough being collected in taxes, it's up to lawmakers to find more.
But Kavanagh said higher taxes are not an option. He expects the Republican leadership to seek Supreme Court review of Tuesday's ruling, arguing the plain wording of the voter-approved law allows lawmakers to do what they did.
That 2000 ballot measure boosted the state's 5 percent sales tax by six-tenths of a cent. It also requires the Legislature to increase funding for schools by either 2 percent or the change in the gross domestic price deflator, whichever is less.
But attorneys for the state argued that what voters approved in 2000 cannot forever bind future legislators and deprive them of their ability to decide what are the priorities of the state.
The judges weren't buying that.
"These arguments are not supported by relevant authority,'' Brown wrote. More to the point, he said lawmakers were ignoring the Voter Protection Act.
That constitutional amendment, approved in 1998, prohibits lawmakers from repealing or altering any measure that had been approved by voters. It allows only changes that "further the purpose'' of the original voter-approved measure -- and only with a three-fourths vote.
And Brown said there is little wiggle room.
"Accepting the state's argument would render the (voter-approved) statute meaningless because the Legislature could ignore the inflation adjustment provision altogether, reasoning that a zero percent increase falls within its 'legislative discretion,' '' the judge wrote.
Brown also pointed out that the 2000 ballot measure was not an initiative but actually a referendum, referred to voters by the Legislature itself.
"It would be illogical to conclude that the Legislature may ask the voters to approve (the law) and then disregard their decision,'' he wrote.
The appellate judges were no more convinced that lawmakers have the option of using an alternate way of figuring inflation funding.
That 2000 measure directs the Legislature to "increase the base level or other components of the revenue control limit'' for state aid to schools.
Kavanagh pointed to the use of that word "or.'' He said that means lawmakers can adjust either the full funding formula for inflation or simply any one of its components.
Choosing the latter course, lawmakers in 2010 decided it was OK for them to simply boost funding for the transportation and utilities segment of state aid. That meant a $5 million increase in the 2010-11 school year versus the $60 million change that would come from accounting for all aid.
Brown conceded that the statute does, in fact, use the word "or.'' But he said it is clear that was never the intent of voters in approving the measure in the first place.
In fact, he noted, when a legislative committee crafted an explanation of the measure for the 2000 ballot it computed the cost based on funding inflation for all state aid. And the legislation directing the Secretary of State to put the measure on the ballot referred to increasing both the base level of school support and any other components of state aid.
"If we were to adopt the construction the legislators urge, the Legislature could easily undermine the purpose of the measure while still complying with its express terms,'' Brown wrote. For example, he said, they could forever increase only the transportation aid, "thereby gradually and significantly reducing the buying power of schools over time.''
"Taking such actions would directly contravene what the voters intended,'' he wrote.
Sen. Rich Crandall, R-Mesa, said the fallout could be that lawmakers will not have the money for other education priorities they hoped to address this year. That includes not just cash for the new "common core standards'' being implemented but also a request by Gov. Jan Brewer to adopt an incentive program to give additional dollars for schools that outperform others.