Prop 204 violates the Arizona Constitution

August 22, 2012 JBudget & Spending, Taxes

As Bob Robb writes in the August 22 issue of the Arizona Republic, Proposition 204 (the so-called “Quality Education and Jobs” initiative) is in violation of Article 9, Section 23 of the Arizona Constitution.  Article 9. Section 23, passed by voters in 2004, requires initiatives that mandate spending to provide their own revenue sources – and the source cannot be the state’s general fund.  Prop 204 does provide a temporary source of revenue (a new sales tax) for its spending mandate (new education spending, plus maintenance of existing spending plus annual inflation).  But as Robb explains, that Prop 204 revenue will soon run out, and will come nowhere close to funding the spending mandated by the initiative:

Initiative supporters seem implicitly to accept that they can’t dictate what  the Legislature does, at least with respect to inflation funding. Although the  initiative purports to make inflation funding a general-fund obligation, it  nevertheless provides for inflation funding out of the new 1 percent sales  tax.

Inflation funding ends up quickly eating up almost all new K-12 money in the  initiative.

The initiative provides about $500 million a year to schools to do with  whatever they want and about $125 million to pay for inflation increases to  current state aid. But the do-what-you-want pot has to also pay for inflation if  the inflation pot proves insufficient.
According to an analysis by the Joint Legislative Budget Committee, the  do-what-you-want pot is drained after five years. And over 10 years, both pots  fall $1.4 billion short of paying for just inflation.

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