Federal Judge rules Prop. 123 illegal, again

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Our lawless Republican legislature and governor believe that they can do whatever they want, and fabricate any justification for it, because with one party rule and control of the Arizona courts, they can simply get away with it. There is no checks and balances, or any accountability to the citizens of Arizona. “We decide, and you will obey!

Arizonans were warned, repeatedly, by then Arizona Treasurer Jeff DeWitt and the lawyers who write for this blog and others that Prop. 123 — Governor Ducey’s scheme to steal money from the  education trust fund to pay a pittance more for constitutionally mandated public education funding that our lawless Republican legislature and governor have unlawfully ignored for years in order to settle the inflation adjusted school funding lawsuit on terms most favorable to them — was illegal. Our lawless Republican legislature and governor responded “Pishaw! We can do whatever we want, and the courts will retroactively make legal what was illegal when we did it.”

They didn’t count on U.S. District Court Judge Neil Wake who ruled that Prop. 123 was illegally enacted, and did so again on Tuesday. The Arizona Capitol Times reports Court says 2016 school funding measure illegal:

Gov. Doug Ducey acted illegally in pushing his 2016 plan to take $2.2 billion over a decade for K-12 education out of a trust account without first getting congressional approval, a federal judge has ruled.

But Neil Wake won’t order the funding halted, at least not now.

In a sharply worded decision unveiled Tuesday, Wake said Ducey crafted the plan to make up for the fact that the state had long ignored voter-mandated requirements to properly fund schools. That solution became Proposition 123, which voters approved in 2016.

But Wake said that the state did not first obtain congressional approval for the shift. He said that is necessary because the federal Enabling Act that made Arizona (and New Mexico) into a state in 1912 gave it lands to hold in trust for schools.

“The state and its officers took those monies illegally and spent them,” Wake, a 2004 appointee of President George W. Bush, wrote.

More to the point, that federal law that Wake said Ducey and lawmakers ignored allows the state to use only the interest off the money earned. The idea was to preserve the body of the trust — and the interest that would earn for future generations.

By contrast, Prop 123 actually withdraws more than the earned interest, meaning the size of the trust, designed by Congress to be a permanent, reliable source of education dollars, actually is worth less now than it would have been without the ballot measure.

Our lawless Republican legislature and governor unlawfully stole $1 billion in seed corn from our children’s future educational needs. Nevertheless, Judge Wake appears willing to allow the annual theft to continue until Prop. 123 sunsets in 2025. How is this justice? The $1 billion unlawfully stolen to date should be ordered repaid to the education trust fund as restitution for the theft, and our lawless Republican legislature and governor ordered to fully comply with constitutionally mandated provisions to adequately fund public education in Arizona, as other states courts have ordered in recent years.

Current figures obtained by Capitol Media Services from the treasurer’s office show the current value of the trust at nearly $6.1 billion; without the extra withdrawals it would be worth about $1 billion more. That, in turn, will mean less in interest earnings for K-12 education once the extra distribution ends as scheduled in 2025.

The ruling has no immediate effect on school funding. It allows the state to continue to draw more than $200 million a year out of the trust to fund education through 2025.

“The governor’s assertion that he somehow was not involved is disingenuous,” the judge wrote. “The court is not fooled.”

The ruling drew derision from gubernatorial press aide Patrick Ptak who called it “incoherent,” “poorly reasoned” and “an example of massive judicial overreach and activism.”

“Rarely before have we seen such a blatant disregard of facts, precedent and common sense to push forward an agenda of one biased, activist judge,” he wrote, vowing an appeal.

Translation: Our lawless Republican legislature and governor believe that they can do whatever they want, and fabricate any justification for it, because with one party rule and control of the Arizona courts, they can simply get away with it. There is no checks and balances, or any accountability to the citizens of Arizona. “We decide, and you will obey!” it is arrogance in the extreme.

The record, however, shows that Ducey was on notice of legal problems even before he had Prop 123 put to voters in 2016: Jeff DeWit who at the time was state treasurer, told lawmakers they could not do what the governor was proposing.

At the root of the issue is a 2013 Arizona Supreme Court ruling that the state had ignored a 2000 voter-approved mandate to increase state aid to schools annually to keep pace with inflation.

Ducey, who took office in 2015, declined to increase taxes to comply with that ruling. [In other words, he defied a lawful court order.] Instead he and legislative leaders came up with a scheme to tap into the special trust fund that consists of money the state earns from the sale and lease of about 10 million acres of land Arizona was given by the federal government when it became a state.

As originally enacted in 1912, schools were to get the interest earned, leaving the “corpus” of the fund untouched.

Proposition 123, however, set the distribution at 6.9 percent, regardless of how much the fund actually was earning in interest, to generate $2.2 billion over a decade. That meant actually taking more out than interest earned, cutting into the trust fund itself.

The plan had broad support in the education community. [They agreed to the settlement only because they believed that getting something was better than getting nothing from our lawless Republican legislature. It was a defeatist position to take.] But the judge said, no one bothered to first seek congressional OK.

That led to the lawsuit by Michael Pierce and Wake’s first 2018 ruling.

Now, unless overturned, this new decision precludes a similar change in trust distributions in the future without first going to Congress. And Wake, in his ruling, said that the history of education funding in Arizona strongly suggests that there will be a new effort to raid the trust in 2025 when Prop 123 dollars run out.

“Arizona has followed a long-term policy of cutting funding for public education,” the judge wrote, rather than raise taxes.

These lawless Republicans will be back to steal more seed corn from our children’s future educational needs, rather than ever raise taxes on their wealthy benefactors in order to pay for public education as the Arizona Constitution mandates. They have gotten away with their lawless disregard of the Arizona Constitution for decades. Until someone stops them, they will continue their defiance of the constitution.

By 2025, Wake said, “the state will be habituated to the generous distributions from the School Land Trust to make up for decades of tax cuts and other refusal to fund current education from taxes.”

And Wake said a future bid to tap the trust is even more likely because of the difficulty in raising the revenues from taxes that state courts have said are necessary to properly fund K-12 education.

The judge suggested some of that is due to a provision in the Arizona Constitution.

The “Two-thirds for Taxes amendment,” Prop. 108 (1992), otherwise known as the GOP’s weapon of mass destruction. It empowers an anti-tax tyranny of a minority to obstruct the policy goals of the majority to properly fund government services, like public education, in lickspittle service to their wealthy benefactors’ tax avoidance. I have argued for years that this anti-democratic measure needs to be repealed. It will take a citizens initiative.

Wake said lawmakers can, and have cut taxes with a simple majority vote. Yet it takes a two-thirds vote to raise them. That, said Wake, means a minority of lawmakers can effectively block raising new revenues, forcing the full Legislature to look to alternatives like taking extra dollars out of the trust.

That question of what happens after 2025 was on the mind of state schools chief Kathy Hoffman.

The next step our state must take is finding a sustainable revenue source that will fully restore education funding to pre-recession levels,” she said in a statement.

“We do need a sustainable funding source,” agreed Senate President Karen Fann. But the Prescott Republican said she supports an appeal of Wake’s ruling, saying lawmakers need the flexibility to be able to use trust dollars as needed.

Sen. Martin Quezada, D-Glendale, said the ruling is not really a surprise.

This is what happens when politicians refuse to raise needed revenues and have to come up with legally questionable ways of funding Arizonans’ needs and values,” he wrote in a Twitter post. “We need leaders who will make tough decisions and do what is needed to fund our schools.”

Arizonans must stop electing lawless Republicans who disregard the mandates of the Arizona Constitution and willfully violate lawful court orders, and steal money from the educational needs of our children, all in lickspittle service to their wealthy benefactors’ tax avoidance.




2 COMMENTS

  1. And now Doug is very upset with the Federal judge messing with his ambitions. Poor Doug, he was born with a silver ice cream cone in his mouth. “I did NOT say anything bad about Nike!”

  2. There were a number of plantiffs in the lawsuit. It is easy to beat up the plantiffs after the fact. The settlement was offered. The option was to continue to pore money into lawyers, knowing this governor and this legislative majority would resist doing the right thing, or get what they could get for kids immediately. None of the plantiffs thought the settlement was a great idea. Even then there was tons of skepticism about the Trust lands issue. But the plantiffs settled holding their noses. Now this entire issue is 100% on Ducey. He cant wiggle out. But he is determined to “solve” any issue, bragging he did it without raising taxes, or by “deregulation”. Its his fetishes. And ambitions.

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