In a decision that could put a $10 million hole in the current state budget, a judge has ruled it’s unconstitutional for Arizona to use money from proceeds of trust land sales to help pay for running the Land Department instead of having it flow into schools and public institutions.
Land Commissioner Maria Baier said Monday the state plans to appeal the ruling, which Judge Gary Donahoe of Maricopa County Superior Court issued Friday in a lawsuit filed on behalf of taxpayers and a Phoenix school district, Cartwright Elementary.
A 2009 budget law approved by legislators struggling to close big budget shortfalls authorized creation of a management fund consisting of up to 10 percent of the annual proceeds of trust land sale proceeds. The state has 9.2 million acres of trust land left from a federal government grant at statehood nearly a century ago.
Nearly $10 million was designated for that purpose last year, and a similar diversion is being made this year. Those appropriations had the effect of reducing the state’s general funding spending to pay for running the Land Department, which has a nearly $15 million budget this year.
But Donahoe’s ruling said using proceeds of sales of trust land for administrative purposes clearly violates the Arizona Constitution’s requirement that the money only be used to benefit K-12 public schools, universities and other trust beneficiaries.
The drafters of the constitutional requirement “left no doubt about the limits on how state land proceeds can be spent,” Donahoe wrote.
The judge also said the Legislature violated a separate constitutional protection for voter-approved laws.
Donahoe’s ruling has no immediate effect because he asked the challengers’ lawyer to submit a proposed enforcement order by Oct. 15.
The challengers’ lawsuit asked that the court declare use of the money for administration to be illegal, prohibit it from being used that way and require that any money already spent on administration be returned to the trust fund.
The case is one of several lawsuits challenging budget-balancing steps taken by legislators in recent years. Other challenges deal with inflation funding for schools and diversions of money from special funds for transit projects, underground water storage and injured workers.