PHOENIX - It was illegal for Gov. Jan Brewer and the Legislature to refuse to increase state aid to schools to fully account for inflation, the Arizona Court of Appeals ruled Tuesday.
The judges rejected arguments by attorneys for the Legislature that the wording of a 2000 ballot measure mandating inflationary increases permitted lawmakers to choose to boost spending for come components of state aid while denying most others.
Judge Michael Brown, writing for the unanimous court, said the wording of the ballot proposition coupled with a constitutional provision prohibiting lawmakers from altering what voters have approved, leaves legislators with no choice but to come up with the money.
Tuesday's ruling, unless overturned, potentially blows a hole in the state budget for the coming year.
The staff of the Joint Legislative Budget Committee said fully funding for inflation this coming year will cost an extra $82 million.
"It's just going to mean less money for other areas of government," said Rep. John Kavanagh, R-Fountain Hills, who chairs the House Appropriations Committee.
The court declined to order the state to provide the fund illegally withheld from schools this year and two prior years, estimated by different interests to be between $189 million and $250 million.
The order to provide the additional cash angered Sen. Don Shooter, R-Yuma, Kavanagh's counterpart in the Senate.
"If they can explain to me where we find that money or where we can get it, that should be part of their responsibility," he said. "If you're going to tell the Legislature what to do … then it would be helpful if they could tell us where that money's supposed to come from."
Judge Brown acknowledged the hit to the state budget.
"Without question, the Legislature faces substantial challenges in preparing the state's budget, particularly during difficult economic circumstances," he wrote. "But our constitution does not permit the Legislature to change the meaning of voter-approved statutes by shifting funds to meet other budgeting priorities."
Attorney Donald Peters, who represents the school boards, the Arizona Education Association and several individual districts, said it's irrelevant that lawmakers contend there isn't enough money.
"I guess it's unpopular these days but the job of the Legislature is to get the revenues they need," he said. And he said if there isn't enough being collected in taxes, it's up to lawmakers to find more.
But Kavanagh said higher taxes are not an option. He expects the Republican leadership to seek Supreme Court review of Tuesday's ruling, arguing the wording of the voter-approved law allows lawmakers to do what they did.
That 2000 ballot measure boosted the state's 5 percent sales tax by six-tenths of a cent. It also requires the Legislature to increase funding for schools by either 2 percent or the change in the gross domestic price deflator, whichever is less.
But attorneys for the state argued the 2000 vote cannot forever bind future legislators and deprive them of their ability to decide what are the priorities of the state.
The judges didn't buy it.
"These arguments are not supported by relevant authority," Brown wrote, noting lawmakers were ignoring the Voter Protection Act, a 1988 constitutional amendment prohibiting lawmakers from repealing or altering any measure approved by voters unless the change furthered the purpose of the original measure, and even then only with a three-fourths vote.
"Accepting the state's argument would render the (voter-approved) statute meaningless because the Legislature could ignore the inflation adjustment provision altogether, reasoning that a zero percent increase falls within its 'legislative discretion,'" the judge wrote.
Brown also pointed out that the 2000 ballot measure was not an initiative, but a referendum, referred to voters by the Legislature itself.
"It would be illogical to conclude that the Legislature may ask the voters to approve (the law) and then disregard their decision," he wrote.
The appellate judges also rejected legislative arguments that the ballot measure mandate to "increase the base level or other components of the revenue control limit" for state aid to schools allowed them the alternative of increasing all aid or just some components.
Choosing the latter, lawmakers in 2010 boosted funding just for the transportation and utilities segment of state aid. That meant a $5 million increase in the 2010-11 school year versus $60 million to fully offset inflation.
Brown conceded the statute does use the word "or," but said it is clear that was never the intent of voters in approving the measure in the first place.
He noted, when a legislative committee crafted an explanation of the measure for the 2000 ballot it computed the cost based on funding inflation for all state aid, and the legislation placing the measure on the ballot referred to increasing both the base level of school support and any other components of state aid.
Sen. Rich Crandall, R-Mesa, said the fallout could be that lawmakers will not have the money for other education priorities they hoped to address this year.
That includes not just cash for the new "common core standards" being implemented but also a request by the governor to adopt an incentive program to give additional dollars for schools that outperform others.
"If you're going to tell the Legislature what to do ... then it would be helpful if they could tell us where that money's supposed to come from."
Sen. Don Shooter,