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Proposition 208 update: Arizona Supreme Court won’t block new tax on high-earners

Education Tax Challenge
Posted at 11:11 AM, Aug 19, 2021

PHOENIX — The Arizona Supreme Court says a new tax on high earners approved by the state’s voters in November can remain in effect while a lower court determines if the revenue it raises for schools will exceed a constitutional spending limit.

Thursday’s ruling from the high court is a major win for education proponents who worked for years to get the tax increase on the ballot.

Opponents said the new tax will hurt the state’s economy.

The court was considering whether Proposition 208 required a 2/3 vote to be enacted and ruled that voter initiatives do not. But the court said it can’t yet tell whether the money it raises can be legally spent so sent the case back to the lower court.

Earlier this year, a Maricopa County Superior Court judge dismissed most of the claims against Proposition 208, a surtax on the state’s highest earners to fund education, leaving the one claim to be taken up by the Arizona Supreme Court.

Governor Doug Ducey released the following statement:

"The Supreme Court has said it plainly and clearly: Prop 208 is, in their words, 'unconstitutional'. As one Justice put it: The framework 'almost certainly dooms the measure'. There is a clear legal path to Prop 208 being knocked down entirely, it's only a matter of time. Today's ruling is a very positive one for the state and for taxpayers. The out-of-state proponents of this measure drafted bad language, and now they are paying the price."

Senate President Karen Fann also responded, saying:

"I am pleased that the Arizona Supreme Court, in a near unanimous decision, found the Prop 208 tax increase unconstitutional. The proposition was built on a gimmick, that the tax increase was a 'grant', and therefore not in violation of constitutional restrictions on spending. The Court saw through that and ruled it unconstitutional. I expect the Superior Court to find clear evidence Prop. 208 revenues do exceed the expenditure limit, and because the Court also ruled the non-revenue provisions are not separately workable, the entire proposition will be thrown out."