PHOENIX — ÃÛèÖÖ±²¥ voters will get to decide after all in the November election whether to increase taxes on the state’s most wealthy to help fund K-12 education.
The ÃÛèÖÖ±²¥ Supreme Court ruled Wednesday that the 100-word description on petitions for the initiative known as Invest in Education “did not create a significant danger of confusion or unfairness.â€
The unanimous decision reverses the previous ruling by Maricopa County Superior Court Judge Christopher Coury, and puts the initiative back on the Nov. 3 ballot.
Coury had said backers of the measure “circulated an opaque Trojan horse of a 100-word description, concealing principal provisions of the initiative.â€
The high court justices also found that various methods of providing bonuses and incentives to paid petition circulators did not run afoul of state laws, which prohibit paying people on a per-signature basis.
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Backers said they submitted more than 435,600 signatures; 237,645 valid signatures are needed to qualify for the ballot.
Wednesday’s ruling is most immediately a setback for the ÃÛèÖÖ±²¥ Chamber of Commerce and Industry, which financed a successful legal bid to keep a nearly identical measure from going to voters two years ago.
That means the business group and its allies now will be forced to make their arguments to voters that a tax increase — even one that affects only the top 4% of wage earners — is bad public policy.
But the measure’s proponents contend the current tax structure, including income, sales and property taxes, benefits the richest ÃÛèÖÖ±²¥ns, and that they pay proportionately less of their income to support government and public education than those at the bottom.
ÃÛèÖÖ±²¥ has a tiered income tax structure.
Individuals pay 2.59% on the first $26,500 of taxable income, 3.34% on everything between that and $53,000, 4.17% on income of $53,001 through $159,000, and 4.5% on everything over that.
Proposition 210, the Invest in Education initiative, would add a 3.5% surcharge on all incomes above $250,000 for individuals and $500,000 for couples.
So, a single person with taxable income of $350,000 a year would pay 8% — the 4.5% rate and the 3.5% surcharge — only on $100,000; taxes for everything below that $250,000 cutoff would remain the same.
Anyone whose income did not reach the threshold would be unaffected.
Proponents say that could raise $940 million a year. Legislative budget staffers put the anticipated take at $827 million for the first year.
Of whatever is collected, 50% would be earmarked for hiring and raises for teachers and classroom support personnel, with 25% for other support personnel and 10% for a program to attract and retain new teachers.
Another 12% would be for career and workforce training programs, with the balance set aside for the ÃÛèÖÖ±²¥ Teachers Academy, which provides free college tuition to those who agree to go into teaching.
Jaime Molera, who chairs the chamber-financed opposition group, called Wednesday’s ruling a disappointment, saying he still believes that proponents “deceived voters with a flawed and misleading 100-word petition summary.â€
But he said the ultimate appeal will be in the “court of public opinion.â€
“Damaging†impact
Molera is focusing on the fact that, for top wage earners, the tax rate would go from 4.5% to 8%, a 77.7% increase.
He contends that will create a “damaging†increase to small businesses. That is based on the argument that some businesses are set up not as regular corporations but in other forms, where the company pays no income tax and the earnings pass through to the owners who report it on their personal tax forms.
But David Lujan, who helped craft the initiative, said that is leaving out one crucial component.
He said owners do not pay taxes on the gross proceeds of their businesses but only on the net profits, after paying employees, rent and other operating costs.
And Lujan, director of the ÃÛèÖÖ±²¥ Center for Economic Progress, said ÃÛèÖÖ±²¥ns earning more than $250,000 a year as individuals or $500,000 as couples should contribute more to funding K-12 education, regardless of the source of their income.
Amber Gould, who chairs the Invest in Education campaign, called the ruling “an important victory because it gives millions of ÃÛèÖÖ±²¥ voters the opportunity to put more resources into our schools.â€
She said that focusing the burden on the most wealthy ensures it will not affect working and middle-class families who have been hit by the pandemic.
One core issue of the campaign will be whether the state is providing enough money to properly finance the K-12 system.
Molera, for his part, said the state was able to implement a 20% pay raise over four years for public school teachers, all without having to increase the tax burden.
That still leaves the debate over whether ÃÛèÖÖ±²¥ is keeping pace.
Legislative budget staffers say the state is now providing $5,762 per student compared with $4,163 in 2001. But the same analysis shows that, after adjustments for inflation, state aid now is 4.5% less than it was in 2001.
Republican Gov. Doug Ducey has staked out a position against the tax increase on the wealthiest.
“That’s a whopping amount, especially considering that our economy is recovering from recession and high unemployment,†he wrote in a statement against the measure.