Court Asked to Block Tax Cut Initiative From Ballot
By Howard Fischer
Capitol Media Services
PHOENIX -- An attorney for business interests asked a judge Friday to block the public from voting on -- and possibly vetoing -- the $1.9 billion tax cut that largely benefits the wealthy approved last year by the Republican-controlled legislature.
Kory Langhofer detailed what he said are a series of mistakes made by people when they signed up to circulate petitions to refer the tax cut to voters. And what that means, he told Maricopa County Superior Court Judge Katherine Cooper, is that all the signatures those people gathered cannot be counted.
What makes that important is that Langhofer contends there are enough of those invalid signatures to leave Proposition 307 short of the 118,823 needed to put the measure on the November ballot.
But Roopali Desai, representing Invest in Arizona, said the requirements that Langhofer is claiming circulators ignored simply do not exist in statute.
More significant, she said even if there were technical violations -- a point Desai is not conceding -- they fall by the wayside because they would run afoul of provisions in the Arizona Constitution which specifically empower voters to second-guess the actions of the legislature.
Hanging in the balance is the plan to scrap the current income tax system.
It sets variable tax rates, starting at 2.59% for taxable earnings up to $26,500 a year for individuals and twice that for married couples filing jointly. The top rate is 4.5% for individuals earnings more than $159,000 a year.
The legislation approved last year on a party-line vote and signed by Gov. Doug Ducey would replace all that with a single 2.5% tax rate beginning in 2025. Legislative budget staffers peg the reduction in state revenues at $1.9 billion a year.
Ducey has repeatedly sought to portray the measure as providing a tax cut of about $300 a year for the "average Arizonan.'' But what actual Arizonans would get varies widely.
An analysis by legislative budget staffers shows annual savings of just $11 for someone making between $25,000 and $30,000, a figure that increases to $96 for those in the $50,000 to $75,000 taxable range.
At the other end, taxpayers with income between $250,000 and $500,000 would net an average $3,071 in annual savings; those in the $500,000 to $1 million range would benefit to the tune of $7,300 a year.
Foes gathered about 215,000 signatures, far more than the minimum required to put the tax cut on hold until voters get the last word in November. That led to the bid by the Free Enterprise Club, which lobbies for lower taxes, to quash the petition drive as illegal.
Cooper already tossed the first part of the organization's complaint, rejecting the idea that matters involving taxes are not subject to referendum. Langhofer already has appealed that to the state Supreme Court.
But meanwhile he is back with new arguments that there are sufficient irregularities in the petitions to disqualify enough signatures to leave it short of the minimum requirement.
Many of these relate to requirements added by lawmakers that out-of-state and paid circulators first register with the secretary of state.
For example, Langhofer told Cooper, some circulators did not comply with requirements to provide a full address because they failed to list an apartment or hotel room number. He said that's necessary if petition challengers want to question those people.
Desai, however, said that requirement does not exist in statute. And an attorney for the secretary of state's office noted that the form circulators have to fill out does not seek that information.
Then there's the question of whether those people have to register each time they circulate a new petition and sign a new affidavit in front of a notary and not just register online.
"Obviously, the internet is not a notary,'' Langhofer said. "The notary confirms you are the person you say you are.''
But Desai told Cooper that once people have registered, even to circulate a petition in a prior year, there is no such requirement to start from scratch each year.
Ultimately, Langhofer said, the judge has to honor the fact that state statutes require "strict compliance'' with all election laws. He said that "substantial compliance,'' the standard for some other election issues, is not sufficient.
Desai, however, told Cooper that there's an even higher authority she has to consider.
"Plaintiffs don't mention, not once, the constitutional right of referendum granted to the people of Arizona (under the constitution) as a backdrop to all of these statutes that have been passed regulating circulators and petition circulation,'' she said. And Desai said the judge has to consider that right when deciding whether to accept Langhofer's arguments about whether the alleged violations of the law can keep the referendum off the ballot.
Consider, she said, the question of the lack of an apartment or hotel room number on the application to circulate petitions.
"It cannot be that that absence of number, that has no legitimate legislative purpose, and has no bearing on whether or not you can find them, invalidates every signature of every Arizona elector who signed a petition of that circulator,'' she said. And Desai told Cooper she has to look at not just the statute but whether there is a legitimate purpose for a requirement -- or whether it simply erects a roadblock to the right of Arizonans to refer measures to the ballot.
"What if the legislature next cycle includes a requirement that every circulator has to list every pet they've ever owned?'' she said.
"What if you leave Fluff off the list?'' Desai continued. "All of the petitions that you've gathered, every signature that you've collected, is invalid?''
Ditto, she said, of a requirement to complete a math equation or a Wordle puzzle.
Langhofer dismissed those as "hypotheticals'' that don't exist, the constitutionality of which could be debated if lawmakers were to attempt such a thing.
And he said legal precedent is on his side, citing cases where courts have struck petitions over such technical violations as leaving the serial number off petition sheets or stapling the legally required 300-word explanation to the petitions instead of actually being on the documents.
"This is strict compliance,'' Langhofer said.
"You have to follow the rules or the signatures are invalid,'' he continued. "Honest mistakes have nothing to do with it.''
Cooper set no date to issue a decision. But she acknowledged that whatever she rules is likely to be appealed to the Arizona Supreme Court.
This lawsuit isn't the only current effort by the Free Enterprise Club to affect what is on the ballot in November. The organization is financing a separate initiative drive by Sen. J.D. Mesnard, R-Chandler, to ask Arizonans to impose new restrictions on voters before they can cast a ballot.
It would add a requirement that anyone dropping a ballot in the mail also must provide a date of birth or other identification like a driver's license number or the last four digits of a Social Security number. That same requirement also would apply to those who drop off their early ballots at polling places.
All that would be in addition to the current requirement for a signature on the ballot envelope. That is the only thing county officials now use, comparing it to what is on file to determine whether the person submitting the ballot is the person to whom it was sent.
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