PHOENIX — Gov. Doug Ducey is betting voters are willing to take money from the state land trust, cash now earmarked mainly for schools, to balance the budget.
A little-noticed provision in the spending plan approved just last week is contingent on the outcome of a measure put on the 2016 ballot overturning a state constitutional provision requiring proceeds from the sale or lease of trust lands be used almost exclusively for schools.
Ducey is banking on voter approval: The just-approved budget for 2016-2017 is built on the premise voters will allow him to fund the Land Department trust funds instead of the general fund.
But the governor on Monday provided no plan for selling the measure or even who would finance the campaign.
Sandy Bahr, lobbyist for the Sierra Club, said her group will fight what the governor and the Republican-controlled Legislature are trying to do.
“It sets a bad precedent,” she said of being able to raid a fund specifically meant to help fund public schools. She said the Land Department should be funded by taxpayers, just the same as the Department of Environmental Quality or any other agency.
And Tim Hogan of the Arizona Center for Law in the Public Interest, whose successful 2009 lawsuit against the state is making the ballot measure necessary, said the proposal is badly crafted.
“There’s nothing here that defines what you’re going to use the money for,” he said, giving lawmakers carte blanche to take money even if it ultimately does not help increase the value of state lands, but instead simply becomes a budget gimmick.
And Hogan said Congress also would have to amend the law it approved in 1912 making Arizona a state. So if either the ballot measure fails or Congress fails to act, the change Ducey wants will not take place, leaving a $12.6 million hole in the budget.
The fate of the trust land measure is not the only uncertainty in the budget.
Lawmakers also approved Ducey’s request to set aside $45 million of taxpayer dollars to help privately owned charter schools, many operated as for-profit companies, borrow money for school construction or refinance the loans they have taken out. The governor said state backing of their loans will result in lower interest, meaning more money to spend on education.
However, the Arizona Constitution makes it illegal for the state to loan its credit to any corporation. And Ducey has yet to provide details of how his plan, already part of the budget, would work.
“You want to get this stuff right,” Ducey said. And he promised that his final plan “will fall well within the Arizona Constitution.”
The state constitutional issue is what’s forcing Ducey to seek voter approval for his spending plan. When Arizona became a state the federal government gave it 10 million acres of land. The law creating the state, known as the “Enabling Act,” spells out that proceeds from the sale or leasing of the properties must go to specific beneficiaries, mostly public schools. About 9.2 million acres remain.
In 2009 lawmakers voted to let the state land commissioner divert up to 10 percent of what was raised the prior fiscal year in proceeds from all trust. That includes not just sales but revenues generated from the sale or minerals and timber. The idea — then as now — was to allow lawmakers to eliminate all taxpayer funding used to run the Land Department, so funds could be shifted to plug other budget holes.
Proponents argued it would actually help the trust and its beneficiaries in the long run by enabling the agency to get land ready to sell when the real estate market rebounded and, presumably, values increased. But the Arizona Supreme Court, ruling in 2011 in a lawsuit brought by Hogan, quashed the idea.
Justice Scott Bales, writing for the high court, said lawmakers ignored one thing: The Arizona Constitution requires that proceeds from the sale of state lands and of products from those lands must be deposited into the permanent fund.