Arizona Treasurer: Appropriations Act Violates State's Constitution

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DALLAS - Arizona Treasurer Dean Martin said on Monday that a fiscal 2009 appropriations act requiring counties and incorporated towns to deposit a total of almost $30 million into the state's general fund violates the Arizona Constitution.

The provision for the deposit of $29.7 million was included in HB 2209, a general appropriations act adopted by the Legislature in the final days of the 2008 session in June and signed by Gov. Janet Napolitano.

The deposits must be made in fiscal 2009, which ends June 30.

The League of Arizona Cities and Towns filed a lawsuit with the Arizona Supreme Court on Nov. 14 challenging the budget measure because it did not pass by the two-thirds majority required for bills that raise taxes or increase spending.

Martin, the state's chief fiscal officer, is a lead defendant in the suit, along with Napolitano.

In a letter to Arizona solicitor general Mary O'Grady, Martin directed her to "file a brief in this case that is in agreement with the charges filed by the plaintiffs and request that the court should strike down the act as unconstitutional."

Martin said he agreed with the two main points raised by the plaintiffs in the case.

"The law enacted by the Legislature requiring $30 million to be deposited into the general fund by cities and towns in Arizona violates the Arizona Constitution because it failed to receive a two-thirds vote required by the Proposition 108 clause of the Constitution," he said. "The law also violated the Constitution since it was 'log-rolled' into the general appropriations act. All motions and filings on my behalf shall be in agreement and support of these positions."

Oral arguments in the case are set for January.

A spokeswoman for Napolitano said the treasurer's opposition had been anticipated. She said the governor has sought and obtained permission from Attorney General Terry Goddard to have a Phoenix law firm represent the state in the lawsuit. Solicitor O'Grady will represent Martin.

The amount required from each city, town, and county in the budget bill is based on the formula used to disburse state highway user revenue taxes to local entities.

The deposit requirements as determined by the Joint Legislative Budget Committee total $18.3 million from cities and $11.4 million from counties. The allocations includes $5.6 million from Phoenix, $4.7 million from Maricopa County, $4 million from Pima County, $2.2 million from Tucson, and $1.7 million from Mesa.

Martin is also asking the state's high court to strike down other parts of the budget act that are expected to bring in an additional $70 million a year. Those provisions include a $65 surcharge on defensive driving courses, a $165 surcharge on photo radar citations, and a variety of new fees by six state agencies.

Ken Strobeck, executive director of the of Arizona Cities and Towns - which represents 90 municipalities - said the budget bill sets a bad precedent.

"We feel it is just an effort to balance the state budget because they did not know where else to find the money," he said. "Our budgets were already set and determined as required by state law when this bill was passed. This money would come from locally approved taxes designated for local needs, and not through a withholding of state funds."

"If we don't fight this now, the Legislature could come back next year and tell us they want $100 million or more," Strobeck said. "It is really a matter of principle."

The lawsuit was filed as a special action with the Supreme Court to avoid a lengthy delay in going through several layers of lower courts, he said.

"The requirement for a special action is that we have to demonstrate irreparable harm if we did not avoid the lower courts," Strobeck said. "Our members don't have the ability to blow out their budgets for this."

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