AG lawsuit against regents dismissed


Attorney General Mark Brnovich has no legal right to challenge the tuition the Arizona Board of Regents sets for the state’s three universities – or even the policies used to come up with those numbers, Maricopa County Superior Court Judge Connie Contes decided today.

In a brief ruling, the judge accepted arguments by attorneys for ABOR that Brnovich can file lawsuits only when he has specific legislative authority or permission of the governor. In this case, Contes concluded, he had neither.

More to the point, he is unlikely to get the go-ahead from Gov. Doug Ducy to challenge the tuition hikes. While Ducey won office in 2014 at least in part on blaming Democrat Fred DuVal for increasing the cost of going to state-run universities, the governor has since told Capitol Media Services he believes “our universities are accessible and affordable.”

Central to the lawsuit is a constitutional provision that instruction at state universities be “as nearly free as possible.” Brnovich contends that universities are violating that, citing not just the actual tuition but also various mandatory fees for things like athletics.

His lawsuit is built on numbers.

In filing suit, he said tuition and mandatory fees at Arizona State University are 315 percent higher than they were in the 2002-2003 school year. That figure is 325 percent for Northern Arizona University and 370 percent for the main campus of the University of Arizona.

“In contrast to the increases in tuition, the consumer price index has increased only 36 percent over the same period,” Brnovich argued. And he said even if public universities are held to a different standard, what’s happened in Arizona outstrips the national average tuition increase for similar schools of slightly more than 19 percent.

But the heart of the challenge is Brnovich’s argument that the Board of Regents sets tuition not based on the actual cost of furnishing instruction — what he said is the constitutional touchstone — but also includes “a substantial subsidy for other university pursuits.”

All that is irrelevant, Contes concluded, since he has no right to sue.

An appeal is likely. But even if Brnovich wins that argument, he faces other legal hurdles that Contes did not consider, including the contention by the universities that the issue of what is appropriate tuition is a “political question” beyond the reach of the courts.

Challenge filed against ballot measure to tax the rich

(Deposit Photos/Alpha Baby)
(Deposit Photos/Alpha Baby)

Saying voters are purposely being misled, organizers of the #InvestInEd initiative asked a judge on Friday to force lawmakers to recraft the description of the measure that will go to voters.

Attorney Jim Barton said the ballot measure which seeks to hike income taxes on earnings of more than $250,000 will not affect a 2015 law which indexes tax brackets to account for inflation. Yet that is what the Republican-controlled Legislative Council voted last month to tell voters.

“Not only is this a misunderstanding of the initiative but it was designed to discourage voters from passing the measure,” he told Maricopa County Superior Court Judge Connie Contes.

But that isn’t the only problem Barton has with the description that will be mailed out to the homes of the state’s 3.6 million registered voters.

He said lawmakers are describing the tax increase that will be imposed on high-wage earners in a way designed to scare people into rejecting the measure, designed to raise $690 million a year for education. And Barton said lawmakers added other verbiage that also has the same goal.

All of that, he is telling Contes, runs afoul of state law which requires the council, made up of legislators, to prepare not only an “impartial” analysis of all ballot measures but one that does not contain false statements.

This new lawsuit is just one hurdle for initiative organizers. A hearing is set for later this month on a separate legal bid by foes, led by the Arizona Chamber of Commerce and Industry, to keep the issue from ever getting to the ballot in the first place.

Arizona has a tiered tax system, with different tax rates for different levels of income.

An individual pays 2.59 percent on the first $10,000 of taxable income, $2.88 percent on the next $15,000, 3.36 percent on the next $25,000, 4.24 percent on the next $100,000, and 4.54 percent on anything over $150,000. Those amounts are double for couples filing jointly.

The initiative would impose an 8 percent tax rate on individual earnings above $250,000 — double for couples — and 9 percent for anything over $500,000 for individuals and $1 million for couples.

Since 2015, the current brackets have been indexed for inflation. So, for example, the break point between the 2.59 percent and 2.88 percent bracket for individuals is now $10,346.

Challengers say the way the initiative is crafted undoes automatic indexing and resets the brackets to where they were before 2015.

That’s not true, Barton tells Contes, asking her to order that the ballot pamphlet not tell voters that’s what they are being asked to approve. And he said even if there is any “ambiguity” in the wording of the initiative — something he does not concede — the judge must side with initiative organizers.

More complex is Barton’s complaint about the math used by the Republicans in describing the tax increase.

It is clear that the top tax rate would go from 4.54 percent to 8 percent for some earnings and 9 percent for others. Barton said that should be explained as an increase of 3.46 percent and 4.46 percent, respectively, the mathematical difference.

But the GOP lawmakers on the council chose to list it as a percent change of the percentages, telling voters that tax rates will go up 76.2 percent and 98.2 percent.

“It is highly misleading,” Barton told the judge. “A voter might mistake the analysis as meaning that income over a half-million dollars is taxed at a rate of 98 percent.”

No date has been set for a hearing in this new case.


Judge allows ballots to say proposed tax on rich affects all taxpayers

No new taxes

Voters will be told that a proposed income tax hike on the richest Arizonans to fund education also would affect taxpayers who earn a lot less.

But the effect on the average Arizonan would be nowhere near as much as the impact on those at the top of the income scale.

Maricopa County Superior Court Judge Connie Contes ruled that the evidence supports the argument that Proposition 207, if approved, would repeal a 2015 law designed to protect Arizonans from paying more income taxes solely because their wages keep pace with inflation.

The net effect in revenues is only a fraction of the $690 million a year that the Invest in Ed initiative is designed to raise by boosting income taxes on individuals earning more than $250,000 a year and couples with incomes exceeding $500,000. Legislative budget staffers put the first-year cost to Arizona taxpayers of the repeal of inflation indexing at about $49 million.

To put that into perspective, though, that is only 1 percent of the $4.38 billion in individual income taxes expected to be collected this budget year from all Arizonans.

Without future inflation indexing, however, those effects would grow, to the point that legislative budget staffers predict the cost in a decade would be $288 million. But it is impossible to say what percent of the total income taxes owed by Arizonans that would be in 2028.

Contes’ ruling is a major setback for initiative organizers who argued that the entire burden of the plan for new education funding would fall entirely on the top 1 to 2 percent of Arizonans. Unless they can get the ruling overturned by the Supreme Court, it gives foes of the tax hike the ability to urge people to reject the initiative because it could affect them, too.

The judge’s ruling was not entirely a loss for initiative proponents.

Contes said Arizona law requires that explanations of ballot measures provide an accurate description and avoid advocacy. She said that explanation, which goes into brochures mailed to the homes of all 3.6 million registered voters, must be “an evenhanded assessment that does not omit, exaggerate, or understate material provisions.”

But Contes said the language crafted by the Republican-controlled committee effectively advocates that people vote against the measure by telling them they would be repealing a law “that protects taxpayer from paying more income tax due to inflation.” And Contes said the GOP lawmakers, who oppose the initiative, were overplaying the effect of the inflation-indexing provision, calling in an “ancillary issue” to the main focus of hiking income taxes on the most wealthy to fund education.

But Contes found no fault in lawmakers telling voters that the proposed 8 percent tax rate on earnings above $250,000 for individuals and $500,000 for couples will be increasing by 76.2 percent, with the 9 percent rate proposed on individual earnings above $500,000 and $1 million for married couples filing jointly translating out to a 98.2 percent increase.

The current tax rate on those earnings is 4.54 percent. So initiative proponents had sought to have the change described as an increase of 3.46 and 4.46 percent, respectively, essentially the difference between the current and proposed rates. And they argued the higher figures lawmakers sought to use in the description was designed to scare off voters.

Contes, however, said there’s nothing wrong with the analysis.

“This language is mathematically accurate and not misleading when considered in the contexts of each full sentence,” she said, pointing out the analysis does mention both the current and new rates. Anyway, Contes said, large percentage figures used in describing the impact on high-wage earnings “may be as or more likely to cause of voter to favor the initiative rather than against it.”

Attorney Jim Barton who represents initiative supporters said no decision has been made whether to appeal.

Whether the initiative even makes the ballot remains undecided.

Earlier this month Maricopa County Superior Court Judge James Smith slapped down a bid by the Arizona Chamber of Commerce to keep the measure off the November ballot. He rejected the claim that initiative organizers mislead people into signing petitions by understating the effects of the tax hike and failing to inform them that it also would affect income tax bracket indexing.

That case is now before the Arizona Supreme Court.

Judge can’t tell lawmakers how much money to give schools, attorney says

USA, Washington State, Bellevue, Interlake High School

An attorney for the state is telling a judge she has no legal right to tell the Legislature it isn’t providing enough money for school construction and repair.

In new court filings, Brett Johnson acknowledged that the Arizona Supreme Court ruled more than two decades ago that the state has an obligation to ensure that schools meet minimum adequacy standards for everything from building safety to equipment needs. The justices said at the time that it was unconstitutional to put that burden solely on local taxpayers, as it created gross disparities and left children in some schools without adequate education opportunities.

But Johnson told Maricopa County Superior Court Judge Connie Contes that she is powerless to rule on a claim by school districts that the amount of money now being provided by the state is inadequate.

“The question of how much should be appropriated for any particular item in a given year is clearly committed by our Constitution to those acting in a legislative capacity,” he said.

That theme was echoed in filings by attorney Bill Richards who separately represents House Speaker J.D. Mesnard and Senate President Steve Yarbrough.

Richards told Contes that what the school districts want would “improperly intrude on matters preserved to the discretion of the legislative branch.” And he said it would put the judge in the position of deciding what he called “political questions regarding the degree and nature of funding provided for or related to public school capital facilities.”

But Mary O’Grady, who represents the districts that sued earlier this year, said it is clearly within the power of courts to determine if lawmakers are meeting their constitutional obligations to provide “adequate” facilities for public education.

More to the point, she said judges are empowered to tell them to fix it. At that point it would be up to legislators to determine how to do that, though that decision could lead to further litigation if challengers remain dissatisfied.

But the case is clearly about money.

Tim Hogan, another attorney representing challengers, says lawmakers are shorting schools each year for the capital funds they need to the tune of about $300 million. And he said the cumulative loss to schools from the failure to properly fund capital needs is now close to $2 billion.

The lawsuit traces back to 1994.

Prior to then, construction of new schools and needed repairs were presumed to be solely the responsibility of local districts. But in a historic ruling that year, the high court said that created gross inequities — and left some schools and the children there without adequate facilities.

“Some districts have schoolhouses that are unsafe, unhealthy, and in violation of building, fire and safety codes,” the justices said, with schools without libraries, laboratories or gymnasiums. “But in other districts, there are schools with indoor swimming pools, a domed stadium, science laboratories, television studios, well-stocked libraries, satellite dishes, and extensive computer systems.”

All that, they said, runs afoul of a state constitutional obligation to maintain a “general and uniform” school system.

After several more rulings, lawmakers eventually created the School Facilities Board to come up with minimum guidelines and created a system to both finance new schools as needed and provide $200 million a year for upkeep.

Only thing is, lawmakers have not fully funded that formula for years.

The result, according to challengers, has been a shortage of funds to pay not only for repairs but for other needs ranging from school buses to textbooks. And that forces the districts to use locally raised funds — assuming voters are willing to go along — to pay for the needs that the Supreme Court concluded are the state’s responsibility.

O’Grady said Johnson’s claim that Contes cannot hear the challenge is based on a flawed reading of what is in the lawsuit.

She said what the Supreme Court ruled in 1994 was that the state has to have standards for what constitutes adequate classrooms.

“And you’ve got to have funding to meet the standards,” she said. O’Grady said she is seeking a ruling that the money being provided does not meet the constitutional — and court-ordered — requirement to meet those standards and ensure educational opportunities.

That issue, she said, is “absolutely within the reach of the courts.” And O’Grady said if Contes agrees with challengers that the funding is inadequate, “then it kicks back to the Legislature for a remedy,” meaning the courts not infringing on legislative prerogatives — assuming whatever they decide makes the funding scheme constitutional.

Questions of the power of judges aside, Johnson also contends that the districts themselves have no right to even be in court in the first place.

He said only those who have suffered a “particularized” injury to themselves have a right to assert any claim that the money they are getting is constitutionally inadequate. Instead, Johnson said, the lawsuit contends the overall amount of dollars available to fund new buildings statewide and maintain the ones that already exist is inadequate.

And Johnson said there is no evidence that the districts that filed suit had actually asked for cash from the School Facilities Board, which evaluates needs and distributes money. He said only if they are first turned down might they have a legal claim.

O’Grady brushed those claims aside.

“Our issues are not about funding for particular projects,” she said. She agreed that such a request  would go to the board.

“Our lawsuit is about the structure of the system overall and whether the structure of the system overall satisfies constitutional requirements,” O’Grady continued. “This isn’t about one district needing money for a specific project.

Contes is set to hear arguments in December.

Supreme Court refuses to hear AG’s tuition challenge

money school college debt tuition 620

The Arizona Supreme Court on Tuesday rebuffed the latest bid by Attorney General Mark Brnovich to have the method of setting tuition at the state’s three universities be declared unconstitutional.

Without comment the justices refused to hear his arguments that the Arizona Board of Regents are acting illegally by essentially deciding first how much they want to charge – or how much they think they can charge – and then justifying the amount later. Those factors, Brnovich said, include everything from median Arizona income and the availability of student loans to what state-run “peer universities” in other states are charging.

Brnovich said the Arizona Constitution requires the board to determine how much it costs to educate students and then set tuition based on that coupled with how much money the Legislature appropriates.

“With its unconstitutional tuition-setting policy, ABOR has abandoned its duty to serve as a check on the university presidents, and has engaged in an unprecedented series of lockstep tuition hikes across Arizona’s three public universities that has resulted in a 16-year tuition increase of over 300 percent at each school,” wrote Assistant Attorney General Beau Roysden for Brnovich.

Strictly speaking, Tuesday’s decision by the high court to refuse his petition does not end the dispute.

Arizona Attorney General Mark Brnovich (Photo by Katie Campbell/Arizona Capitol Times)
Arizona Attorney General Mark Brnovich (Photo by Katie Campbell/Arizona Capitol Times)

In fact attorneys for the Board of Regents urged the justices to butt out, at least for the time being, pointing out that Brnovich has nearly identical claims awaiting review at the Court of Appeals.

But the refusal of the Supreme Court to intercede now could prove crucial.

In a ruling last year, Maricopa County Superior Court Judge Connie Contes ruled that Brnovich has no legal right even bring a challenge to the tuition set for the state’s three universities – or even the policies used to come up with those numbers.

Contes concluded that Brnovich can file such lawsuits only when he has specific legislative authority or permission of the governor. In this case, the judge concluded, he had neither.

It is that ruling that awaits action by the state Court of Appeals.

But the attorney general all but conceded that if the appellate judges find that Contes is right – that he has no authority to bring the claim — that his efforts to fight the regents and the tuition could come crashing to a halt: In his petition to the Supreme Court, Brnovich told the justices that taking the case directly to them “is possibly the only way to obtain judicial review in asserting and obtaining relief on these claims.”

Brnovich spokesman Ryan Anderson said Tuesday’s ruling is not a surprise.

“We’re not idiots,” he said. “We knew this was an uphill battle from the beginning.”

But Anderson said this isn’t the end, as whatever the Court of Appeals rules ultimately will wind up back before the Supreme Court.

At the heart of the legal fight is a constitutional provision that mandates that instruction at state universities “shall be as nearly free as possible.”

“ABOR nonetheless adopted a tuition-setting process that did not consider the cost of instruction as a factor when setting tuition, but rather looked at other factors such as students’ ability to pay by taking on debt,” his lawsuit charges. “Subsequently, tuition has skyrocketed at Arizona’s three public universities.”

Brnovich also is challenging what he said is higher tuition for part-time and fully online students, and what he said are illegal mandatory fees unrelated to instruction.

Even if Brnovich can eventually get a court to conclude he has a legal right to sue, that still leaves him with a significant hurdle.

More than a decade ago, the state Supreme Court dismissed a lawsuit filed by some university students challenging a 39 percent year-over-year increase in tuition. The justices said the issue of tuition is a “political question” beyond the reach of the courts.

Brnovich, however, says his lawsuit is different as it challenges not the level of tuition but how it is set.

The appellate court will hear his appeal of the Contes ruling later this month.