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Tag: Arizona Constitution

Lawmakers face legal challenge over $1M gift to horse racing

Key Points:
  • State lawmakers face accusations of illegally giving away public funds
  • AG Mayes agrees a $1 million appropriation to Turf Paradise violates Gift Clause
  • AG previously targeted questionable public spending

State lawmakers are once again on the cusp of being found to have illegally given away public funds.

In new court filings, Attorney General Kris Mayes said she agrees with challengers that a $1 million appropriation to Phoenix racetrack Turf Paradise in the new state budget violates the Gift Clause of the Arizona Constitution. The move paves the way for Maricopa County Superior Court Judge Michael Herrod to sign an order on his desk declaring the funding illegal and barring the Arizona Department of Racing from distributing the cash.

In exchange, Howard Mechanic and Ralph Hess, the plaintiffs in the case, will drop their objection to lawmakers giving another $1 million to the Arizona Thoroughbred Breeders Association to be used to promote racing and provide more dollars to give to winners of horse racing in the state.

If the names of the challengers seem familiar, they should.

Both are Prescott residents. And Hess is a retired Yavapai County Superior Court judge.

More to the point, the pair were the plaintiffs in a lawsuit in which Maricopa County Superior Court Judge Scott Blaney just months ago declared the Legislature in violation of the Gift Clause, this one for earmarking $15.3 million in 2023 for the nonprofit foundation that runs the Prescott Frontier Days rodeo.

That issue has since been resolved with lawmakers recrafting the law to give the money directly to the city of Prescott to make improvements to the city-owned rodeo grounds.

But that may not be an option to fix the problem in this case. That’s because, unlike the rodeo grounds, Turf Paradise is privately owned.

It was that fact that caused Mechanic and Hess to sue over the $1 million appropriation.

Central to the issue is the Gift Clause. It makes it illegal for the state to “make any donation or grant, by subsidy or otherwise, to any individual, association or corporation.”

That does not bar the state from giving money to private entities. But it does require that the funding serves a public purpose and includes adequate “consideration,” meaning taxpayers are getting some benefit from the expenditure.

In filing suit last month, Mechanic and Hess said neither appropriation meets the test because they don’t require either Turf Paradise or the Arizona Thoroughbred Breeders Association to actually perform any public function in exchange for the money. The pair also said nothing in the appropriation gives either the state or the Arizona Department of Gaming any control or supervision over how the money is used.

Sen. John Kavanagh, who supported putting the dollars into the budget for the fiscal year that began July 1, disagreed. He said there is a public purpose.

“I think there’s an economic benefit to the state just in terms of revenue that tourists bring in, not to mention providing recreational amenity for residents and tourists alike,” he told Capitol Media Services when the lawsuit was filed. “We do it all the time.”

Danny Adelman with the Arizona Center for Law in the Public Interest, who filed suit on behalf of Hess and Mechanic, told the judge that’s not good enough.

He said the question of whether there is the legally required “consideration” is based on “direct benefits that are bargained for as part of the contracting party’s promised performance.” And Adelman said it does not include “anticipated indirect benefits.”

This isn’t the first time the state has given public funds for horse racing. Adelman said lawmakers set aside $10 million in both 2021 and 2022, with $6 million in 2023 and $5.5 million in 2024.

“The state has been giving away similar gifts for many years,” Mechanic told Capitol Media Services. He also said this agreement, coupled with the ruling about the funds for Prescott Frontier Days, should serve as a reminder of what is and is not allowed.

“I hope both the Legislature and the various state departments will now stop such expenditures,” Mechanic said. “The most effective way to avoid future gifts is for the state to develop a regular procedure to analyze the public costs and public benefits of most proposed expenditures intended to go to private parties.”

Mayes would not comment on the specific decision to settle the case. But press aide Richie Taylor said on Sept. 10 that it is in line with her views on the issue.

“Attorney General Mayes believes lawmakers need to be more mindful of the Gift Clause when making appropriations,” he said.

“The Gift Clause requires that public dollars be spent for true public purposes,” Taylor said. “Playing fast and loose with that standard risks litigation and wastes taxpayer money.”

This isn’t the first time that Mayes has said a line needs to be drawn around what constitutes a proper use of public funds.

Last year, she targeted money spent by the publicly funded Arizona Commerce Authority to wine and dine corporate CEOs who had come to Arizona for sporting events.

Mayes said the decision to entertain top executives could be considered to have a public purpose. She said it could be seen as part of the organization’s responsibility to market the state and get companies to expand or relocate here.

But Mayes said the amount of money spent on what were called “CEO Forums” – $2.4 million at the 2023 Super Bowl and Waste Management Phoenix Open over the prior six years — violates the Gift Clause.

“They give valuable benefits to a limited class of private persons without receiving any legally cognizable benefit in return,” she said.

The Commerce Authority got the message. It agreed to use mostly private funds at future events.

That most immediately played out at the 2024 Waste Management Open, in which the authority had a $123,000 budget for the five-day event.

Of that, $42,000 was to come from taxpayer dollars under the control of the authority.

But the tab for the big-ticket item — $65,000 for tickets to the event for corporate executives and sponsoring a suite — was picked up by the Greater Phoenix Leadership. That organization of 150 business leaders bills itself as a CEO roundtable promoting public policy initiatives.

Another $14,000 for hotel rooms at the downtown Phoenix Hyatt Regency became the responsibility of the Arizona Tourism & Lodging Association, made up of statewide hotels and resorts, tourism attractions, sports teams, airlines and related business partners. And Horizon Strategies, a lobbying and consulting firm, was responsible for $2,500 for “hospitality items ranging from snacks and sunscreen to hats and hand sanitizer.

What that left for taxpayers to pick up — and what Mayes found acceptable — was $25,000 to rent room space, catering, and audio-visual equipment for “informational sessions” with the invited guests, $12,000 for their transportation around Phoenix, and $5,000 for marketing materials which Scott Rooney, the authority’s legal counsel, said included mailings and items “highlighting Arizona’s value proposition.”

In reaching a deal with the Commerce Authority, Mayes made it clear that there has to be some proportional consideration for the expenditure of state funds. And she said the mere fact that businesses might relocate here is insufficient.

“Paying taxes applicable to all is not a consideration,” Mayes said. “Businesses inherently generate taxes and stimulate the economy, so permitting such impacts to justify public funds of private ventures would eviscerate the Gift Clause, even if the private ventures would not exist without public funds.”

Court finds Legislature failed to provide adequate public school maintenance funding

Key Points: 
  • Judge rules public school facilities funding scheme unconstitutional
  • Ruling identifies disparities between districts based on bonding capacity
  • Legislature found at fault, leadership plans to appeal ruling 

One school district boasts freshly renovated facilities, manicured turf fields and a new performing arts center, while another has hundreds of failing HVAC units and collapsed and leaking roofs. 

After years of litigation and discovery and a two-week bench trial in 2024, a Maricopa County Superior Court judge found the disparities in funding and subsequent state of school facilities across Arizona to be a constitutional failing, with blame falling squarely on the shoulders of the Legislature. 

“After carefully and thoroughly reviewing the record and considering the parties’ arguments, the Court concludes that the current public school capital finance system does not meet the constitutional minimum standards established by the Arizona Supreme Court,” Judge Dewain Fox wrote in a ruling on August 11. 

In 2017, four school districts, a taxpayer and three education organizations — the Arizona School Boards Association, the Arizona Education Association and the Arizona School Administrators — sued the state for facilitating an allegedly slow-moving and underfunded system that puts districts lacking the tax base and property wealth to pass bonds at a significant disadvantage in upkeep and condition of schools. 

The plaintiffs, represented by the Arizona Center for Law in the Public Interest, claimed the Legislature failed to meet obligations to provide a “general and uniform public school system” as provided in the state Constitution. One requires appropriate funds to ensure proper maintenance, development and improvement of all state educational institutions. 

The Arizona Center for Law in the Public Interest litigated the same issue before. It successfully argued that passing the buck to local taxpayers to pass bonds to cover school maintenance costs disadvantages low-income areas. 

In 1998, the Legislature enacted the Students FIRST Act and created the School Facilities Board to administer funds to cover capital needs across the state and determine a set of minimum adequacy guidelines to ensure schools could provide an environment conducive to achieving academic standards. 

The Legislature got off to a strong start, doling out about $1.2 billion to fix deficiencies in schools across the state and administer additional programs for building renewal and new facilities. 

But over time, appropriations to respective funds declined, or were repealed or modified in statute. 

For one, the Legislature changed Building Renewal funding from a formula structure based on the size and age of a facility to the Building Renewal Grant program, which excluded funds for any non-academic buildings and required that schools must fall below the minimum adequacy guidelines to qualify. 

Danny Adelman, attorney for the plaintiffs, said,“Initially, after those court rulings, they did it and fixed a lot of schools. And there were decent schools all throughout the state. And then just bit by bit, and then more than bit by bit, they started taking away all that funding until we’re largely right back where we were.” 

Adelman said the burden again falls to districts to seek bonds to make up the difference, which proves difficult for areas with low property wealth or with voters lacking a desire to greenlight a bond. 

“In either case, you’re just doing without,” Adelman said. 

In a 114-page ruling, Fox agreed with the plaintiffs that the state had failed to appropriate funds for the “establishment and maintenance of a general and uniform public school system,” in violation of the state Constitution.

Fox pointed out the Building Renewal grant program “routinely” lacks funding to complete approved projects and defers millions in repair year over year. 

Strapped funds make it so schools with “an eligible and urgent fire/life and safety” minimum adequacy guidelines (MAG) deficiency are pushed to the top, which creates a system that “guarantees that districts must operate below the MAG – often for significant periods of time – before state funding is provided to correct the deficiency,” Fox wrote.

And, because not all districts can secure bonds or override funds in the meantime, and solely rely on the Building Renewal Grant, they are left to “operate their schools in deficient facilities for months or even years while awaiting funding.” 

Fox’s ruling recounted schools with cracking walls, ceilings and floors, water damage, broken toilets and sinks, aging windows, failing HVAC units, collapsed and leaking roofs and sinkholes.

While others, with the bond capacity and voter base, could afford to fix deficiencies fast, as well as build and renovate schools and facilities. 

Fox found that the setup and lack of funding to the state system itself created the disparities, and it is therefore the responsibility of the Legislature to remedy them. 

In response to the ruling, the plaintiffs put out a joint statement. 

“Our state’s constitution requires the legislature to fund our public schools. It’s time for our legislature to fulfill its constitutional obligation to fund public schools in every corner of Arizona so that all students, whether or not they live in a wealthy area, can receive a quality public education.”

The court has yet to enter a final appealable judgment, but plans to do so soon. Fox noted, though, that he intends to grant a temporary stay while the issue makes its way through the appellate process. 

In a statement, Senate President Warren Petersen said, “We will appeal.” 

Adelman said the Legislature had “every right to do that,” but again made a plea for a more immediate fix. 

“They can say they’re going to appeal, but the evidence is the evidence, and the law is the law, and all they’re doing is digging the hole deeper,” Adelman said. 

He continued, “These roofs that are leaking, if they’re not fixed, it just causes more damage. And so when you do ultimately fix it, it’s more expensive, and there’s more things to fix, and there’s mold and you have to replace insulation, and it’s just not good management. They would never run their own buildings like that. They would never run their own businesses like that.” 

Education groups vow to campaign against school choice on Prop. 123

Key Points:
  • Republicans likely to unveil final Proposition 123 language on May 19 
  • Democrats, education groups oppose tying school choice to teacher pay proposal 
  • Opponents warn of lawsuits, campaigns if such a measure heads to voters 

A Republican-backed plan for Proposition 123, poised to raise teacher pay and create a constitutional protection for school choice, is likely to move through the Legislature on May 19. 

The goal was originally to push the plan through before both chambers took a prolonged recess, but Senate President Warren Petersen, R-Gilbert, and bill lead Sen. J.D. Mesnard, R-Chandler, said the caucus was still trying to reach consensus on the final language. 

“There’s still a few Is to dot and Ts to cross. And given the importance of this measure, and the interest level of the measure, whether folks are looking forward to it or not, I want to make sure we have it right,” Mesnard said. 

Anticipated movement on Prop. 123 comes after education groups and Democrats promised opposition to any plan that wraps in school choice protections, dashing any hopes of campaign support, drawing early lines in the sand and cementing a high likelihood the Republican majority’s proposal will pass on party lines.

School choice protections have long been part of the Prop. 123 conversation among Republicans, though any intersection of the two was deemed a nonstarter by Gov. Katie Hobbs and education groups. 

In a press conference on May 5, the Arizona Education Association, Save Our Schools Arizona and the House and Senate Democrats elevated their opposition and claimed any proposal tying teacher pay and school choice together is likely unconstitutional and unlikely to fly with voters.

“Prop. 123 is not a tool to be hijacked by Republicans to provide an untouchable lifeline to private school corporations,” Sen. Catherine Miranda, D-Laveen, said. 

With Prop. 123 set to expire at the end of the fiscal year, Mesnard, and Rep. Matt Gress, R-Phoenix, took the lead on retooling an education funding measure drawing on the state land trust fund to increase teacher pay. 

Ahead of the legislative session, Mesnard and Gress met with various stakeholders, including education groups and school choice proponents. Mesnard said meetings then moved into more one-on-one conversations, with a final proposal slowly coming together in tandem. 

An initial Prop. 123 package materialized in the House and Senate Education Committees in February, though with the caveat that negotiations were ongoing and a true final version would not come until later. 

Republicans have yet to unveil final language, but as it stands now, Mesnard said the Republican proposal would include about a $4,000 teacher raise, operating off a 6.9% distribution rate from the state land trust fund. Of that 6.9%, 4.5% of the distribution would be permanent and 2.4% would lapse in ten years. 

Teachers eligible for the raise would have to spend the majority of their time on classroom instruction and meet or exceed performance benchmarks set out in the state’s teacher evaluation process. 

In early April, Mesnard told the Arizona Capitol Times that the Republican caucus had been ironing out how exactly they wanted to incorporate school choice protections.

As of May 5, Mesnard said Republicans are still finalizing the language of the proposal, but that the main goal is “protecting what we have today — all the options that parents have from districts, charters, ESAs, open enrollment, private schools, online.” 

Hobbs’ spokesman Christian Slater called a Prop. 123 proposal incorporating school choice a “complete and total nonstarter,” in April. At a May 2 press conference, when asked if she would support such a proposal, Hobbs said, “absolutely not.” 

The Arizona Education Association, Save Our Schools Arizona and Democrat leadership convened on May 5 to say the same. 

Democrats and Save Our Schools Arizona staked out potential legal action under the state Constitution’s separate amendment clause, which requires voters to weigh in on distinct constitutional amendments separately.

Rep. Nancy Gutierrez, D-Tucson, said Democrats would rather see a clean continuation of Prop. 123 move forward. 

“It’s a false choice,” Gutierrez said. “These ideas don’t belong in the same bill.” 

“This was designed to prevent exactly what Republicans may be seeking to do — taking an unpopular issue and bundling it to a popular issue in an attempt to tie the hands of voters,” Miranda said. “Teacher pay increase is a popular issue, and our public schools have been seeking increased financial support from the Legislature for decades. However, universal private school vouchers funded by public money intended for public schools are not as popular. An overwhelming majority of families still choose public schools.” 

Sharon Kirsch, research director of Save Our Schools Arizona, similarly said the organization would have an attorney review any proposal from Republicans. 

“If it’s anything like what we’ve been hearing, what’s been reported, our message is: We’ll see it in court,” Kirsch said. 

Any lawsuit would have to come before the election. And as it stands now, Mesnard said the measure will likely run in November 2026. 

There is also the issue of support beyond the Legislature. 

Marisol Garcia, president of the Arizona Education Association, recalled that the last time Prop. 123 went to the ballot, it received broad support. She said if the proposal came out tied to school choice, the teachers’ union would be going on the offense in the form of an oppositional media campaign. 

Whether education groups would go as far as launching their own ballot measure in response to the Republican version of Prop. 123 is still up in the air. 

Garcia said, “Everything is on the table. Everything is always on the table. When it comes to education, when it comes to union work, everything has to be on the table.”

Mesnard said there are still myriad questions for Prop. 123’s passage beyond the Legislature, such as creating a campaign for public approval of the measure. 

“When you put something out there, especially something as important as this, something that I want to see pass as much as I want to see this pass, I’m sensitive to — who’s going to be our support? Who’s going to be our opposition? Is it going to be a state election? Are we going to see national money flowing in? How will this all play out?”

Mesnard said there had been preliminary conversations with groups supportive of school choice. 

Though he said it’s too early to put names of partners out there, he noted the familiar names pushing school choice, including the Goldwater Institute and the Free Enterprise Club. 

“It’s not entirely a shot in the dark, talking to groups out there that would be supportive based on the concepts we’re talking about,” Mesnard said. “We’ve been trying to lay the groundwork.” 

Daniel Adelman: The fight for Arizona’s Constitution

Daniel Adelman took up the helm at the Center for Law in the Public Interest in 2018. During his tenure, he led litigation to keep people housed during the pandemic, cut the Legislature’s ability to sneak provisions into budget bills, ensured funding for vital school facilities, and, most recently, challenged a $15 million pork appropriation to the Prescott Rodeo. As he transitions out of his role, he hopes his successor shares his passion for leaving the law better than he found it. 

What drew you to public accountability law? 

The school work was actually what drew me to the center. I joined the board in 1994 — the same year that the center won the first case that declared the way Arizona was financing its public schools as unconstitutional. I used to run this camp for underprivileged kids, and I used to go to the schools to meet with parents of these kids, so we could assure them their kids will be safe and everything. (The schools) were horrible. We won that case, and the state ended up putting in over a billion dollars fixing and building schools. I went back to those same schools, and they were nice … and it just drew me to the power of impact litigation and forcing the state to obey the Constitution.

How has the state changed in terms of compliance and constitutionality? 

In a lot of ways it really is worse than it’s ever been. 

Part of the reason that I really appreciate good journalism is people have to know what’s really going on, and if all you get is your social media feed, or all you look at are reporters that are going to agree with you and feed you whatever, it is really easy to try to take away people’s rights … I think that conspiracy-driven narrative is for real, and it’s taken hold, not by any means with all of the legislators, but with a lot of them.

Republicans were in charge of both houses (when I started), but everything was very fact driven. And people choose which facts they think are most important, and that’s fine, but it wasn’t all just fake, and I think that’s changed, and it’s scary.

Has your approach changed at all now that conspiratorial thinking has gained more legitimacy? 

It makes the law even more important, right? Because there’s this narrative that we’re increasing public school funding, and they’re just wasting it all on administration. And if all you’re doing is giving a press release, it’s super easy to say stuff like that. When you go to court, you have to prove it with evidence. There is no evidence to support that in Arizona. Arizona spends less on administration than every other state … I feel like it’s even more important with some of the battles between the different houses in the Legislature, or between the Legislature and the governor. There are times when you need a court and you need someone, like the reason. 

The center does pro-bono work. Why is that important? 

We advocate for people who otherwise would have no voice. We’re litigating the rodeo case. The reason we’re doing that case is the principle involved. There are these limitations in the Arizona Constitution. If the Legislature doesn’t follow them, all kinds of bad things can happen. It’s not just ‘Does a rodeo get the money or not?’ That isn’t the point. The point is, do they have to comply with the Constitution? Two residents who are just people in Prescott are the ones (who) retained us. It’s been a lot of work. They could never afford attorneys. Regular people could never afford that … The center, which is totally pro bono, it’s just this huge tool that gives regular citizens the power to challenge the legality of what’s going on.

How do your personal values lead you in the work you do? 

Family is hugely important to me. I have wonderful kids who are all adults now, and all successful and in wonderful stuff. I’m making sure that I am a good husband and a good dad, but also a good lawyer trying to make the world a better place. My parents are and were people who devoted their whole lives to making the world a better place. My dad was in the Air Force and a professor, and my mom was a principal. It was just a big part of everything we did, that our job here is to make the world a better place … that’s driven my whole career.

What are some of the concrete changes you’ve seen happen as a result of action the center has taken? 

When we did the budget reconciliation bill case, like you hear about that, and you think that is like the most boring constitutional law, who cares? But it was at the height of Covid and the things that they were putting in what were supposed to be budget bills had these really far reaching health consequences, and this emergency physician came up to me and just said, “You have no no idea how many lives you saved by having the Supreme Court rule that those things were unconstitutional.” A lot of doctors saved a lot of lives, not every lawyer gets to.

What parts of the cases you litigate stick with you? 

A lot of the witnesses in the school finance case, after they would testify about how bad it was and how they’ve been trying to get help fixing a roof, or whatever. Well, after they testified and they were in the case, that roof that they’ve been trying to get fixed for eight years suddenly got fixed.

Once you have these people under oath, they’re talking about what’s really happening. This isn’t somebody just saying something on social media. It’s like they really have skin in the game. The most frustrating thing is the kids are the ones who suffer from this. The people who are most responsible will never suffer any of the bad consequences of their decisions, like to not fund the capital needs of public schools. The children who have no responsibility for causing the problems, they’re the ones who suffer.

What are your next steps after the center? 

This has completely been a dream job for me, like it is exactly what I hoped it would be. And I feel like we’ve accomplished a lot of good things. There’s no shortage of public interest work in Arizona, but I’ve just been doing full time law for 38 years now. So it’s just time to kind of step back from the full time practice. I think I will continue to be involved in probably a fair amount of the center’s work … I plan to stay involved as the education finance case will likely be appealed no matter who wins. I put a lot into that case, and will certainly offer, like my predecessor did, to continue to help even after he stepped down. 

What are you looking forward to doing with a little more time? 

So I’m in a rock band. And I do plan to continue to do that and to do it some more. I have a bunch of hobbies, gardening, art, stuff like that. I’m hoping someday in the not too distant future to be a grandpa, and I plan to devote a lot of time to that, and I’ll probably stay in the law in some ways too. So yeah, I have a lot of interests. Excited. I definitely have both parts of my brain that like doing stuff.

Public universities ending diversity, inclusion statements

Arizona’s public universities are discontinuing diversity, equity and inclusion statements in job applications for faculty and staff. Representatives for the Arizona Board of Regents and the universities say they have...

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